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

[iam802]

I wonder if SIA has a trading team of their own...or do they let their bankers do it.??

eg.
We help you with all the bank loans and financing.....why not let us handle some of your hedging as well..?

[kennynah]

whatever the case...if they can be so screwed up....better you and i do the trades for them...and pocket the service fees...hahaha... UAUA also had the same problems with wrong hedges... actually, i am not so sure that "hedge" is the correct term when applied to consumers buying futures as a form of containing and controlling their costs of goods.

hedge is rightfully used when producers sell in the futures markets but they are producers of those goods...in that sense, the term hedge is more appropriately used.

but what these consumers, like SIA, do is buying forward contracts, rather than hedging... if this is the argument, then their purchasing team is damn f**k up man...and to make matters worse, after Long forward positions are taken, they do nothing to hedge their downside risks...now the term "hedge" is appropriate here...which apparently, is something they did not do....so as to be stuffed with ~usd120pbl CL

[winston]

China '08 air traffic growth slows to single digits

SHANGHAI, Feb 6 (Reuters) - China's air travel growth fell into single digits, the first time in five years, as a slowing economy hit air travel demand, official data showed on Friday.

Air China (601111.SS) (0753.HK), the country's flag carrier and other Chinese carriers handled 191.91 million passengers last year, up 3.3 percent from 2007, while cargo volume climbed 0.3 percent to 4.03 million tonnes, the Civil Aviation Administration of China said on its website.

Passenger traffic in December rose 8.2 percent to 15.67 million, but freight volume fell 15.2 percent to 307,853 tonnes, the data showed.

China's three biggest carrier, which also include China Eastern (600115.SS) (0670.HK) and China Southern Airlines (600029.SS) (1055.HK) have all projected losses for the year.

But Liu Shaoyong, chairman of China Eastern said this week the outlook could improve this year as China's aggressive stimulus plan and supportive policies take effect.

Domestic air traffic could be on its way to recovery in the second half of this year, Liu told reporters.

Internation travel, however, has not hit the bottom and might show signs of recovery in the first or even second half of 2010, he added.

Beijing has unveiled a wide range of policies recently to help nurse its ailing airline sector back to health, including fee rebates and unprecedented aggressive cash aid to China Eastern and China Southern.

[winston]

Twice as many U.S. companies as previously expected are cutting their travel spending this year in response to economic weakness and uncertainty.

The Association of Corporate Travel Executives says 71% of its member companies now plan to spend less on travel this year than in 2008. That's a huge and unprecedented shift in corporate travel managers' plans from just five months ago, says Susan Gurley, the association's executive director.

Never have corporate spending plans deteriorated this much, or this fast, she says.

"Not even after 9/11," she says."

– USA Today

[winston]

World airlines are set to lose $4.7 billion this year as a result of the global recession that has shrunk passenger and cargo demand, industry body IATA said.

The International Air Transport Association had estimated in December the industry would lose $2.5 billion in 2009.

"The state of the airline industry today is grim. Demand has deteriorated much more rapidly with the economic slowdown than could have been anticipated even a few months ago," Director-General Giovanni Bisignani said on Tuesday.

"The relief of lower fuel prices is overshadowed by falling demand and plummeting revenues. The industry is in intensive care."


– Reuters

[winston]

It's Fun to Know: The Good News About Airline Baggage Fees

Checked-baggage fees may be an expensive annoyance for airline passengers, but for the carriers... they're a big hit.

The airlines made $1.1 billion in checked-baggage fees in 2008, according to the U.S. Department of Transportation. That's more than double the revenue from 2007, when most airlines charged only for an "overweight" or second checked bag. American Airlines is the front-runner, with $278 million collected last year.

The checked-bag fees program has been so successful that several airlines have announced plans to drop their prices on airfare... (Just kidding!)

(Source: Minneapolis-St. Paul Star-Tribune)

[winston]

It's Fun to Know: Tourism Continues to Drop

Worldwide tourist travel dropped by 8 percent in the first two months of 2009, continuing a downward trend initiated by the financial crisis in the last six months of 2008.

Tourism in Europe, with an 8.4 percent drop, has been the hardest hit, followed by the United States with a 3.4 percent drop. The World Tourism Organization expects those numbers to improve somewhat over the year.

(Source: Associated Press)

[winston]

It's Good to Know: Jet Makers Feeling Recession Pinch

When profits are down and bankruptcy is right around the corner, it's hard to justify whisking executives around in company planes. As a result many struggling corporations are downsizing or eliminating this perk. And that means manufacturers of private jets are hurting.

Sales are down 7.1 percent, and 12 percent of the workforce has been laid off. This is a big hit to what was once a $150 billion industry with 1.2 million employees, most of them in the United States.

Thanks to the trip made to Washington last year by the blatantly brazen CEOs of the Big 3 automakers - in three separate jets - public opinion has turned firmly against the practice. But aviation industry officials claim that private fleets are a necessary expense for many companies, especially those in areas without adequate commercial service.

They also say CEOs have better things to do than go through security, risk delays, and so on. (You know... like everybody else has to do when they fly.)

(Source: Wired)

[winston]

How would this affect SQ, CX and Air Asia ?

US$9b losses

The world's airlines will collectively lose US$9 billion (HK$70.2 billion) this year - nearly double the previous projections - and face a slow recovery as the economic crisis saps air travel and cargo demand, the International Air Transport Association warned yesterday.

IATA, which represents 230 airlines worldwide, said the losses reflected a "rapidly deteriorating revenue environment."

Weak consumer confidence, high business inventories and rising oil prices pose headwinds for future recovery, the association said during a two-day global aviation conference in Kuala Lumpur.

Revenues are expected to decline by US$80 billion - an unprecedented 15 percent from a year ago - to US$448 billion this year, and the weakness will persist into 2010, it said.

"There is no modern precedent for today's economic meltdown," said IATA chief executive Giovanni Bisignani. "The ground has shifted." ASSOCIATED PRESS

[winston]

On CNBC:-

Boeing CEO sees greenshoot ....

( Swine Flu not a problem ? Plane Cancellations no longer a problem ? )