Aviation Industry (incl Maintenance) 01 (Dec 08 - May 20)

[iam802]

Spanair Collapse Puts Europe’s State Airlines on Alert

http://www.bloomberg.com/news/2012-01-3 ... stors.html

Spanair SA’s collapse on the weekend after the withdrawal of state funding suggests Europe’s debt crisis may spark airlines from the Mediterranean to the Baltic to consider mergers or risk failure.

The first collapse of a scheduled European airline since the last recession comes as cash-strapped governments mull disposing of at least half a dozen other carriers in auctions pitting Qatar Airways Ltd., which had been in talks with Spanair, and other emerging-market bidders against Air France- KLM Group (AF), Deutsche Lufthansa AG (LHA) and British Airways parent IAG.

Governments are becoming reluctant to save ailing airlines as the debt crisis forces austerity programs in other parts of the economy. State investors in Stockholm-based SAS AB (SAS), Aer Lingus Group Plc (AERL) of Ireland, Portugal’s TAP and the flag carriers of Poland, Hungary and the Czech Republic have all signaled plans to reduce direct support and seek new investors.

“Governments don’t have the financial wherewithal to support airlines in the same way as in the past,” said John Strickland, an aviation analyst at JLS Consulting in London. “Regulations requiring a level playing field have also made it tougher. It could put other carriers in a similar position.”

Ryanair Opening

SAS, which had an 11 percent stake in Spanair, fell as much a 9.5 percent today and was trading 6.3 percent lower at 8.90 euros as of 9:45 a.m. in Stockholm after saying it would take a 1.7 billion kronor ($251 million) writedown over the collapse.

Vueling Airlines SA (VLG), Spain’s second-biggest airline, surged almost 18 percent to 4.80 euros, the sharpest gain since March 30, 2009, while IAG, parent of Iberia, the No. 1 operator, was little changed. Ireland’s Ryanair Holdings Plc (RYA), which carries more people on routes to Spain than any airline based there, said it could target some of Spanair’s more attractive routes, and the shares rose as much as 2.7 percent to 4.22 euros.

Europe’s second-tier airlines are pondering their futures after being left behind following the formation of the three big groupings. Air France purchased KLM in 2004 to form the region’s biggest airline, Lufthansa (LHA), the No. 2, expanded through bolt-on deals in neighboring Austria, Belgium and Switzerland, and IAG, or International Consolidated Airlines Group SA (IAG), was formed a year ago via a $9 billion merger of BA and Iberia.

Mideast Moves

Spanair, which employs 2,000 people, said in a statement on Jan. 28 it folded after Qatar Air (105701QD) halted takeover talks and the Catalonia government indicated it would no longer supply funds. The final flight landed at 10 p.m. on Jan. 27.

Spain is cutting spending as it grapples with the euro area’s third-largest budget deficit, with Catalonia the second- most indebted region. Barcelona-based Spanair was founded in 1986 and was Spain’s fourth-biggest airline by passenger numbers, carrying almost 13 million in 2011 from 15 Spanish airports using a fleet dominated by Airbus SAS A320 series jets.

The carrier would have been the third from Europe in less than a year to sell stock to a Middle Eastern bidder. Qatar Air bought a 35 percent stake in Luxembourg’s Cargolux International SA, the region’s largest specialist freight airline, last June and Abu Dhabi-based Etihad Airways said Dec. 19 it would spend $350 million to lift a stake in Air Berlin Plc to 29.2 percent.

‘Only Natural’

Qatar Air Chief Executive Officer Akbar Al Baker said in an interview at London’s Heathrow airport on Jan. 26 that he would remain on the lookout for opportunities.

“We will be interested in an airline with potential, but restricted in growth due to financial constraints,” he said, adding that he’ll “keep very quiet” about specific ambitions after previous comments helped push up the share price of SAS, owner of Scandinavian Airlines. The airline is the Nordic region’s largest carrier, with the Danish, Norwegian and Swedish governments each holding stakes.

The Norwegian government won parliamentary approval to sell its SAS shares last June, a spokesman said Jan. 27, while declining to comment on its intentions. Sweden’s government has a similar mandate, spokeswoman Victoria Ericsson said, and will wait for the “right time” before acting. Denmark’s Socialist Party, a minority member of the ruling coalition, wants to preserve Copenhagen’s hub status and is reluctant to sell, according to Anne Baastrup, its transport spokeswoman.

The Irish government has said that it’s interested in selling its 25 percent holding in Aer Lingus as part of a drive to raise 2 billion euros ($2.6 billion) from asset disposals, in line with commitments to the International Monetary Fund.

Etihad Meeting

Ireland has no plan to sell the stake to Etihad, government spokesman John Carroll said Jan. 6 after transport minister Leo Varadkar arranged to meet James Hogan, the Gulf carrier’s CEO. Talks were limited to “tourism matters,” Carroll said. Concern about the state exiting Aer Lingus has centered on the loss of control over slots at London Heathrow, something a tie-up in the Gulf might ease by offering alternative connections with Asia.

Aer Lingus spokesman Declan Kearney said yesterday from Dublin that the issue is “a matter for government.” The carrier recently decided not to join a global alliance because of cost and connectivity issues, he said. An Etihad spokesman declined to comment and said that Hogan was unavailable.

Gulf carriers, themselves backed by governments often enriched by oil receipts, are targeting Europe’s stragglers to help provide feed to long-haul hubs that they’re building at their home airports in a challenge to Air France, Lufthansa and BA, whose Heathrow base in the biggest transfer airport.

Turkish Ambitions

Turkish Airlines (THYAO), or Turk Hava Yollari AO, seeking to build a Gulf-style hub in Istanbul, said Jan. 23 it was one of two bidders in talks to buy a stake in Polskie Linie Lotnicze LOT SA from the Polish government. Treasury Ministry spokeswoman Magdalena Kobos said the second party is publicly traded.

Poland has been seeking to sell shares of LOT since 2009 after buying back a 25 percent stake from Swissair’s bankruptcy receiver following an earlier abortive disposal. The government got four offers last year, with Air France-KLM and BA among the bidders, as well as THY, newspaper Rzeczpospolita said Oct. 16.

Czech national carrier Ceske Aerolinie AS or CSA is also in talks with potential investors, according to comments Jan. 20 from Michaela Lagronova, a spokeswoman for Cesky Aeroholding, which was formed from a merger with Prague airport operator Letiste Praha AS after the government failed to sell the airline in 2009. Czech Prime Minister Petr Necas said Dec. 18 that a disposal is the only way of saving the business.

Malev Talks

In Hungary, a buyer is being sought for unprofitable Malev Zrt. (MALEV) after the state took a 95 percent stake to replace Russian bank Vnesheconombank as controlling shareholder when a previous privatization failed. Hungary is in “advanced” talks with possible investors after China’s Hainan Airlines withdrew from negotiations, the government said last month. The European Commission on Jan. 9 ordered Hungary to reclaim “unlawful aid” it ruled was paid to Malev from 2007 to 2010.

With their own outlooks crimped by a slowing economy, Europe’s biggest carriers may be reluctant to enter a bidding contest for unprofitable companies with rivals from emerging markets, and inter-continental deals could offer better value.
IAG is working to identify takeover targets including long- haul operators, according to Chairman Antonio Vazquez, who said of European takeover prospects in an interview on Jan. 23 that “everything is really taken, so it’s difficult to do anything.”

Sale Imminent

CEO Willie Walsh has identified TAP SGPS SA as the European carrier he’d most like to buy after sealing a deal for BMI, Lufthansa’s U.K. unit, which owns slots at crowded Heathrow. Buying the Lisbon-based airline would add routes from Europe to South America, something which might become a priority should Oneworld alliance partner Lan Airlines SA (LAN) of Chile switch global groupings after a merger with Brazil’s Tam SA (TAMM4), a Star member.

Portugal will begin the process of selling TAP “in a few weeks” and aims to complete it in 2012 after privatizations in sectors such as energy, airline spokesman Antonio Monteiro said.

Air France-KLM’s airline purchases have been limited to investment in Alitalia SpA of Italy and the acquisition of U.K. turboprop operator VLM, with interest in Iberia, Austrian Airlines, CSA and SAS failing to lead to deals. Spokeswoman Eloise de Parscau wouldn’t comment on its plans yesterday.

At Cologne-based Lufthansa, CEO Christoph Franz hasn’t extended the sequence of takeovers racked up by predecessor Wolfgang Mayrhuber since taking over last year. The German carrier wouldn’t comment on further merger prospects and said Franz was focused on making the existing business profitable.

‘Armageddon’

Ryanair, Europe’s biggest low-cost airline, has sent staff to Spain to lure former Spanair clients with “emergency fares,” Chief Financial Officer Howard Millar said in an interview, while adding that there’s no prospect of a bid for its assets.

Ryanir CEO Michael O’Leary said Jan. 26 during a visit to Budapest that carriers reliant on state support aren’t worth saving, and that there are signs Europe’s economic crisis may be undermining a tendency for them to be kept on “life support” by governments.

“Everywhere we look we’re suddenly talking to airports who are worried,” he said in an interview, adding that “imploding” carriers such as Spanair will spur growth at discount airlines. “There is a realization they may have an Armageddon event.”

[winston]

THE BIG AIRLINE RALLY ARRIVES

It took a few months, but our "bad to less bad" airline idea is producing big gains right now…

Late last year, we ran several charts of the hated airline sector… and noted these stocks could stage an explosive rally if the broad market firmed up.

Keep in mind… airlines are legendarily horrible long-term investments. They sport thin profit margins, they're subject to wild swings in fuel costs, and they require lots of capital expenditures to keep the businesses running.

But for traders, they are an attractive sector. Airlines tend to go through big, tradable booms and busts. You just have to buy them when conditions look dark and everyone is bearish… and sell when things look bright and everyone is bullish.

Last fall was dark for airlines. The economic recovery was in doubt. The sector had suffered a huge selloff. But as you can see from today's chart of industry leader Delta, airlines have rebounded hard in the past month.

And we're not "cherry picking" with Delta… Most every member of the airline complex sports a similar chart. This "bad to less bad" rally has taken many players 25% higher in one month.


www.dailywealth.com

[winston]

I guess they have not factored in China building their own planes and maybe exporting it as well ...

Airlines need 33,500 new planes by 2030: Boeing

Global airlines will need 33,500 new planes valued at $4.0 trillion in less than two decades, with Asia accounting for about 35 percent of the total, US aircraft maker Boeing said on Monday.

Asia-Pacific carriers will require 11,450 new aircraft, worth $1.5 trillion, by 2030, Boeing's vice president for commercial planes Randy Tinseth said at a news conference on the eve of the Singapore Airshow.

"This is the largest market in the world for single-aisle airplanes... for twin-aisle airplanes... for big airplanes. Any way you look at it, this is a big, big market, and this is a growth market," he said.

Tinseth, updating earlier Boeing estimates, said the biggest demand in the region will be for single-aisle aircraft that normally seat between 90 and 200 passengers -- the models most sought after in the budget-airline market.

Of the 33,500 new planes needed globally, about 60 percent will be for fleet expansion, with the remainder replacing ageing stocks.

In the Asia-Pacific region, 80 percent will be for fleet growth.

Boeing said the world's passenger fleet stood at 19,410 planes in 2010, and is projected to reach more than 39,500 by 2030.

To meet demand, Tinseth said Boeing will ramp up production of models including the next-generation single-aisle 737 MAX, which will undergo the final phase of wind-tunnel testing next week.

Boeing is also considering rolling out a bigger version of its mid-size 787 Dreamliner to be called the 787-10X that can seat up to 320 passengers, or 40 more than the 787-9 model.

Mark Jenks, vice president of development of the 787 programme, said on Sunday that Boeing aims to ramp up production of the long-delayed Dreamliner to 10 planes a month by the end of 2013, up from the current two or three.

Tinseth meanwhile said capital markets and leasing companies will likely play an increasingly bigger role in financing aircraft deliveries as funds from European banks ease due to the continent's debt crisis.

"I think over the long term... airlines will be looking at other sources to finance aircraft (deliveries)," he said.

Boeing and its European rival Airbus have a major presence at the biennial Singapore Airshow, which runs from February 14-19.

Source: AFP Global Edition

[winston]

A PICTURE OF THE BIG AIRLINE RALLY

When airline stocks rally, they rally hard. That's the idea behind today's chart…

Late last year, concerns over the global economy helped hammer airline stocks 30%-40% in just months. After the fall, we pointed out how the beaten-up sector could stage a big "bad to less bad" rebound rally. It's simply the nature of this "boom and bust" sector.

Keep in mind: Airlines are legendarily bad long-term investments. They sport thin profit margins, they're subject to wild swings in fuel costs, and they require lots of capital expenditures to keep the businesses running.

This wild business model causes big swings in airline stock prices. You just have to buy them when conditions look dark and everyone is bearish… and sell when things look bright and everyone is bullish. We noted JetBlue (JBLU) as a buying candidate.

As you can see from today's chart, JBLU is performing as expected. When we identified the stock's potential back in October, it traded for $4.50. It has since rallied to $6 per share (a 33% gain). JBLU's competitors have staged similar rallies. We state again… when airline stocks rally, they rally hard.


Source: Daily Wealth

[winston]

Standoff on jet after it lands 17 hours late

Angry mainland passengers refused to disembark from a Hong Kong Airlines jet for hours at Chek Lap Kok yesterday following a nearly 17-hour delay.

http://www.thestandard.com.hk/news_deta ... 20224&fc=8

[winston]

The International Air Transport Association has cut its forecast for global airline profits this year due to a sharp rise in oil prices, saying a spike to $150 per barrel could lead to losses as high as $5.3 billion.

Source: Reuters

[winston]

Maybe I should I write a book about my experiences with the Chinese Airlines ...

China Passengers Storm Airport Tarmac After 15-Hour Delay By Jasmine Wang

Simon Meng’s flight to Harbin, China, was supposed to take about five hours. Instead, he had a two-day delay, arguments with airline staff, a nighttime wait in the rain, a trip to the hospital, and a dispute with police.

About 30 other passengers on the Shenzhen Airlines Co. flight also forced their way onto a Shanghai Pudong International Airport taxiway after being stranded for about 15 hours.

That April 11 demonstration was followed by a similar incident two days later as Chinese travelers begin to get fed up with delays affecting at least one in four flights.

http://www.bloomberg.com/news/2012-04-2 ... delay.html

[winston]

HKIA

Both passenger numbers and aircraft movements at Hong Kong International Airport recorded significant year-on-year growth in April, up 7.8 percent and 4.8 percent respectively compared to the same month last year, the Airport Authority said.


Source: WEN WEI PO

[winston]

not vested

DJ IATA Keeps US$3B Net Profit Forecast for Global Airline Industry in 2012

BEIJING--The global airline industry will likely post a second consecutive year of net profit declines, as the impact of a deepening European debt crisis offsets the boost from lower oil prices, stronger-than-expected growth in passenger traffic and an improved freight market, an industry trade group said Monday.

The International Air Transport Association, or IATA, kept its US$3 billion net profit forecast for the global airline industry this year, after earlier cutting the forecast in March from US$3.5 billion. The profits are less than half of the US$7.9 billion made in 2011, and an even sharper fall from the record US$15.8 billion profit for the industry in 2010.

The latest forecasts for the global aviation industry comes as top airline executives gather in Beijing for the association's annual general meeting, with still-high oil prices, intensifying competition, and increased government taxation among key issues they will need to tackle.

"Fuel prices are now lower than previously anticipated, but that's on the expectation of economic weakness ahead," said Tony Tyler, director general at IATA, an industry's global trade group, which represents about 240 airlines comprising 84% of scheduled international traffic.

Source: Dow Jones Newswire

[winston]

China says to build 70 new airports by 2015

China will build 70 new airports within the next three years, the head of the country's aviation watchdog said Monday, as part of ambitious expansion plans in the industry despite an economic slowdown.

Civil Aviation Administration of China (CAAC) chief Li Jiaxiang also reiterated pledges that carriers would buy on average more than 300 planes a year from 2011 to 2015 -- the country's current five-year economic plan.

"China plans to build 70 new airports in the next few years and to expand 100 existing airports," he told delegates in Beijing at the annual general meeting of global airline industry group IATA.

He added that the number of airports would reach more than 230 by the end of 2015, and that Chinese carriers would operate around 4,700 planes by then.

http://www.newsmeat.com/news/meat.php?a ... &buid=3281