The relaunch of Italy's shambolic national carrier is close. Alitalia is due to take off on Tuesday with Air France-KLM having paid a notable premium for a 25pc stake.
This long-running national pantomime has created many winners, from Silvio Berlusconi, the Italian prime minister, on down. And yet the big loser seems to be the Italian taxpayer.
Berlusconi is said to have given approval for Air France-KLM to buy a quarter of Alitalia for €320m. That's a victory for the tycoon politician.
The deal should mark a definitive break for the state from the basket-case airline that had already leached an estimated €3bn before the proposed deal surfaced. That is all the more welcome given the mounting indebtedness of the Italian economy.
Roberto Colannino, the former Telecom Italia executive, also comes up trumps. He led a group of Italian investors who bought out Alitalia's "good company" in December 2008 for €1.05bn - €427m in cash and the assumption of €625m in debt.
Just a month later - and in a dire market for airlines - they now look set to sell part of their investment to Air France-KLM at a 30pc premium.
Intesa Sanpaolo, the deal's banker, comes home with fees, favour with the government and the satisfaction of having folded Air One - a struggling minor airline and a creditor - into the new Alitalia.
Still, Air France-KLM isn't getting such a raw deal for a chunk of Europe's fourth biggest aviation market.
When it came close to buying Alitalia last spring - before being torpedoed by unions and populist electioneering by Berlusconi - it was going to have to take on a very different beast. Alitalia would have come with €1.2bn of bad debts, as well as business units that Air France-KLM probably did not want. But Alitalia's resurrection under Berlusconi has funnelled off those undesirable pieces into a so-called "bad company", funded by the treasury.
Italian taxpayers are paying the price for Alitalia having become a political pantomime. They have assumed an estimated €2bn of costs run up since unions vetoed Air France-KLM's last offer, egged on by Berlusconi.
It is said that countries get the leader they deserve. Italy may now have the airline it deserves too.
lunedì 12 gennaio 2009
martedì 6 gennaio 2009
Air Security Could Involve Private Jets
One of the biggest convenience’s of private aviation is the speed with which passengers can get on the plane and off the ground.
But that may be about to change. The Department of Homeland Security is proposing to extend to private aviation many of the security rules imposed on commercial airlines. Those include requiring fingerprint-based background checks on pilots, checking passenger
names against a government watch list and restricting what items may be carried onto the airplane.
The proposal could affect 10,000 previously exempt air operators, including not only wealthy businessmen like Microsoft’s co-founder, Paul Allen, who owns a Boeing 757, but also fractional jet ownership companies and even some recreational fliers.
The proposal to extend the jurisdiction of the Transportation Safety Administration to include private jets has angered many. Organizations representing private airplane owners have complained so vigorously that the Transportation Department has extended the comment period for the proposal and scheduled a series of public meetings. The first will be held Tuesday at Westchester County Airport in White Plains, one of the nation’s busiest for private and corporate aviation.
“Businesses have airplanes in order to transport what they produce, sometimes because it’s too difficult or impossible to carry onto an airliner,” said Ed Bolen, president of the 8,000-member National Business Aviation Association. “Tool companies that can’t take their own products, sporting goods companies that can’t take their own products on to their own airplanes, that doesn’t make sense.”
Even airplanes the size of commercial airliners, if operated privately, are currently exempt from the 9/11 security measures. It is this inconsistency that prompted the proposed regulation.
In its notice, published in the Federal Register last October, the Transportation Security Administration suggests that the improvements in safeguarding public air carriers have shown the weaknesses in private operations. “Terrorists may view general aviation aircraft as more vulnerable and thus attractive targets.”
In an interview, Christopher White, a spokesman for the security agency, said: “What we’re looking to do is address risk based on size and weight. Whether it’s public or private doesn’t matter. It’s based on the weight of the plane.”
The proposal would affect owners of any airplane weighing more than 12,500 pounds — considered “large” by federal standards. For the most part, these are jet aircraft. But even a Beechcraft King Air 350, a twin-engine turboprop that seats 11, would be included.
The idea that large planes are flown for the most part by large companies that can afford to hire a security chief, pay to check passengers against the watch list and security auditing is a misconception, according to the business aviation association.
Eighty-five percent of its members are small to midsize businesses, the association says, and many of the planes they fly are small enough to fit, nose to tail, across the width of a Boeing 747.
“The size of the aircraft they have picked is very, very small,” Mr. Bolen said. “To suggest that an airplane weighing 12,500 pounds is similar to a commercial transport airplane doesn’t hold water.”
On Tuesday, more than a hundred aircraft owners are expected to argue that the proposed rule will have a major impact on general aviation. For the smaller operators, in particular, they say, the requirements may be too onerous.
“We want the feedback from the community. We need their input to be able to make sure it works for everyone,” said Michal Morgan, general manager of business operations for the T.S.A. Final action on the proposal is not expected before late spring.
The Westchester meeting is the first of five scheduled nationwide, a response to the request from the general aviation industry and a letter to the Department of Homeland Security from Representative Sam Graves, a Missouri Republican who is a private pilot.
“My focus is rare antique airplanes and rare vintage warbirds,” Mr. Graves said. “Some of these not-for-profits, they give rides to help support the upkeep and maintenance of the airplane, and this will place an undue burden on them.”
Private jet owners are also angry that the security agency is proposing to hand security functions over to private companies, notable since the T.S.A. was created after 9/11 in part because of concerns that private companies had failed to adequately screen passengers at commercial airports.
In seeking to significantly expand the number of airplane operators subject to security, the T.S.A. would depend on private firms that it would certify.
“They’re expanding their regulatory scope so dramatically and outsourcing regulatory oversight,” said Andy Cebula, executive vice president for government affairs at the Aircraft Owners and Pilots Association. “That’s like the most basic responsibility of government to go out and enforce its regulations.”
Hiring security experts to conduct audits on so many private airplane operations is expected to be the most expensive part of the regulation. Airplane operators would pay about 83 percent of the total costs, estimated at $196 million annually. The T.S.A. calculates that would represent about $44 a flight.
The price is certain to be a large part of the debate at the public meetings, with proponents of general aviation arguing that the T.S.A. is trying to fix something that is not broken and the government arguing that reducing the risk of using airplanes as terror weapons is worth the increased supervision.
But that may be about to change. The Department of Homeland Security is proposing to extend to private aviation many of the security rules imposed on commercial airlines. Those include requiring fingerprint-based background checks on pilots, checking passenger
names against a government watch list and restricting what items may be carried onto the airplane.The proposal could affect 10,000 previously exempt air operators, including not only wealthy businessmen like Microsoft’s co-founder, Paul Allen, who owns a Boeing 757, but also fractional jet ownership companies and even some recreational fliers.
The proposal to extend the jurisdiction of the Transportation Safety Administration to include private jets has angered many. Organizations representing private airplane owners have complained so vigorously that the Transportation Department has extended the comment period for the proposal and scheduled a series of public meetings. The first will be held Tuesday at Westchester County Airport in White Plains, one of the nation’s busiest for private and corporate aviation.
“Businesses have airplanes in order to transport what they produce, sometimes because it’s too difficult or impossible to carry onto an airliner,” said Ed Bolen, president of the 8,000-member National Business Aviation Association. “Tool companies that can’t take their own products, sporting goods companies that can’t take their own products on to their own airplanes, that doesn’t make sense.”
Even airplanes the size of commercial airliners, if operated privately, are currently exempt from the 9/11 security measures. It is this inconsistency that prompted the proposed regulation.
In its notice, published in the Federal Register last October, the Transportation Security Administration suggests that the improvements in safeguarding public air carriers have shown the weaknesses in private operations. “Terrorists may view general aviation aircraft as more vulnerable and thus attractive targets.”
In an interview, Christopher White, a spokesman for the security agency, said: “What we’re looking to do is address risk based on size and weight. Whether it’s public or private doesn’t matter. It’s based on the weight of the plane.”
The proposal would affect owners of any airplane weighing more than 12,500 pounds — considered “large” by federal standards. For the most part, these are jet aircraft. But even a Beechcraft King Air 350, a twin-engine turboprop that seats 11, would be included.
The idea that large planes are flown for the most part by large companies that can afford to hire a security chief, pay to check passengers against the watch list and security auditing is a misconception, according to the business aviation association.
Eighty-five percent of its members are small to midsize businesses, the association says, and many of the planes they fly are small enough to fit, nose to tail, across the width of a Boeing 747.
“The size of the aircraft they have picked is very, very small,” Mr. Bolen said. “To suggest that an airplane weighing 12,500 pounds is similar to a commercial transport airplane doesn’t hold water.”
On Tuesday, more than a hundred aircraft owners are expected to argue that the proposed rule will have a major impact on general aviation. For the smaller operators, in particular, they say, the requirements may be too onerous.
“We want the feedback from the community. We need their input to be able to make sure it works for everyone,” said Michal Morgan, general manager of business operations for the T.S.A. Final action on the proposal is not expected before late spring.
The Westchester meeting is the first of five scheduled nationwide, a response to the request from the general aviation industry and a letter to the Department of Homeland Security from Representative Sam Graves, a Missouri Republican who is a private pilot.
“My focus is rare antique airplanes and rare vintage warbirds,” Mr. Graves said. “Some of these not-for-profits, they give rides to help support the upkeep and maintenance of the airplane, and this will place an undue burden on them.”
Private jet owners are also angry that the security agency is proposing to hand security functions over to private companies, notable since the T.S.A. was created after 9/11 in part because of concerns that private companies had failed to adequately screen passengers at commercial airports.
In seeking to significantly expand the number of airplane operators subject to security, the T.S.A. would depend on private firms that it would certify.
“They’re expanding their regulatory scope so dramatically and outsourcing regulatory oversight,” said Andy Cebula, executive vice president for government affairs at the Aircraft Owners and Pilots Association. “That’s like the most basic responsibility of government to go out and enforce its regulations.”
Hiring security experts to conduct audits on so many private airplane operations is expected to be the most expensive part of the regulation. Airplane operators would pay about 83 percent of the total costs, estimated at $196 million annually. The T.S.A. calculates that would represent about $44 a flight.
The price is certain to be a large part of the debate at the public meetings, with proponents of general aviation arguing that the T.S.A. is trying to fix something that is not broken and the government arguing that reducing the risk of using airplanes as terror weapons is worth the increased supervision.
lunedì 5 gennaio 2009
New flight paths for Heathrow will bring jets’ roar to millions
Hundreds of thousands of homes will be exposed to more aircraft noise from planned new flight paths that will allow 60,000 more aircraft a year to use Heathrow’s existing runways.
The flight paths will be phased in, the first as early as next year, and will affect people living up to 30 miles (48km) from the airport.
The Government is expected within the next two weeks to approve plans for a third runway and sixth terminal at Heathrow, to open by 2020. But ministers are also preparing to authorise more intensive use of the airport’s existing runways.
The Times has learnt that this expansion will require a complete redesign of the flight paths of approaching aircraft.
The points at which aircraft turn to enter their final approach, either from the east or west, will be moved eight miles farther from the airport. Aircraft will already be as low as 4,000ft (1,200 metres) when they reach these points.
Longer landing paths are needed to accommodate “mixed mode”, under which the two runways are used for both take-offs and landings. At the moment one runway is used for landings and the other for take-offs, with the roles switched each day at 3pm to give residents half a day’s respite from the worst noise.
Aircraft will take different routes from the holding stacks to the new turning points, meaning there will be winners and losers in terms of noise.
Residents in many parts of inner London will no longer have aircraft passing within earshot, but millions of people in outer London and the Home Counties will either be exposed to aircraft noise for the first time or find many more aircraft flying directly overhead. The main losers will be those living close to the new turning points, which will be over Reading to the west and Dartford and Woolwich to the east.
Noise levels will also increase in Watford, Amersham, Camberley, High Wycombe, Barking, Rainham, Ilford, Leytonstone, Walthamstow, Barnet, Carshalton and Beckenham. People in Hampstead, Highgate, Islington, Hackney, Mile End, Stratford, Harrow, Ruislip and Henley will no longer hear any Heathrow-bound air traffic.
The Government did not make clear in its consultation document on Heathrow expansion, published in November 2007, that so many people would experience a significant change in aircraft noise. It is possible to work out the changes only by comparing two small-scale maps on pages 53 and 78 of the document.
A report mentioned in a footnote contains more details and states that the extra flights would require “major airspace changes”. The report, by National Air Traffic Services, says that the changes to Heathrow’s flight paths would be so extensive that aircraft departing from Gatwick would have to be rerouted.
John Stewart, chairman of ClearSkies, which represents people living under Heathrow flight paths, accused the Government of expanding the airport by by stealth. “The Department for Transport [DfT] has buried the bad news about new flight paths which will disturb millions of people living in outer London and the Home Counties,” he said.
“It would be the biggest change to flight paths since Heathrow opened over 60 years ago, but it is being done by stealth. Most people who will be affected have no idea what is in store for them.
“The DfT continues to sell the introduction of mixed mode as little more than a technical change.”
Martin Salter, Labour MP for Reading West, said: “Mixed mode will have a significant impact on many people who are not exposed to much aircraft noise at present. We need a better Heathrow, not a bigger Heathrow.”
The flight paths will be phased in, the first as early as next year, and will affect people living up to 30 miles (48km) from the airport.
The Government is expected within the next two weeks to approve plans for a third runway and sixth terminal at Heathrow, to open by 2020. But ministers are also preparing to authorise more intensive use of the airport’s existing runways.
The Times has learnt that this expansion will require a complete redesign of the flight paths of approaching aircraft.
The points at which aircraft turn to enter their final approach, either from the east or west, will be moved eight miles farther from the airport. Aircraft will already be as low as 4,000ft (1,200 metres) when they reach these points.
Longer landing paths are needed to accommodate “mixed mode”, under which the two runways are used for both take-offs and landings. At the moment one runway is used for landings and the other for take-offs, with the roles switched each day at 3pm to give residents half a day’s respite from the worst noise.Aircraft will take different routes from the holding stacks to the new turning points, meaning there will be winners and losers in terms of noise.
Residents in many parts of inner London will no longer have aircraft passing within earshot, but millions of people in outer London and the Home Counties will either be exposed to aircraft noise for the first time or find many more aircraft flying directly overhead. The main losers will be those living close to the new turning points, which will be over Reading to the west and Dartford and Woolwich to the east.
Noise levels will also increase in Watford, Amersham, Camberley, High Wycombe, Barking, Rainham, Ilford, Leytonstone, Walthamstow, Barnet, Carshalton and Beckenham. People in Hampstead, Highgate, Islington, Hackney, Mile End, Stratford, Harrow, Ruislip and Henley will no longer hear any Heathrow-bound air traffic.
The Government did not make clear in its consultation document on Heathrow expansion, published in November 2007, that so many people would experience a significant change in aircraft noise. It is possible to work out the changes only by comparing two small-scale maps on pages 53 and 78 of the document.
A report mentioned in a footnote contains more details and states that the extra flights would require “major airspace changes”. The report, by National Air Traffic Services, says that the changes to Heathrow’s flight paths would be so extensive that aircraft departing from Gatwick would have to be rerouted.
John Stewart, chairman of ClearSkies, which represents people living under Heathrow flight paths, accused the Government of expanding the airport by by stealth. “The Department for Transport [DfT] has buried the bad news about new flight paths which will disturb millions of people living in outer London and the Home Counties,” he said.
“It would be the biggest change to flight paths since Heathrow opened over 60 years ago, but it is being done by stealth. Most people who will be affected have no idea what is in store for them.
“The DfT continues to sell the introduction of mixed mode as little more than a technical change.”
Martin Salter, Labour MP for Reading West, said: “Mixed mode will have a significant impact on many people who are not exposed to much aircraft noise at present. We need a better Heathrow, not a bigger Heathrow.”
domenica 4 gennaio 2009
Ferrovial's BAA holding at risk
The controlling shareholder in BAA risks losing more of its equity in the airports operator unless it can overcome two debt refinancings costing upwards of £3.7bn.
Ferrovial, the Spanish construction group that owns 56pc of BAA, must lead a refinancing of £1.55bn of subordinated debt, currently trading at only about 60p in the pound. The debt must be repaid by May 2011 – a tight timeframe given the carnage in the credit markets.
Questions are also being asked about how Ferrovial plans to refinance a €2.3bn (£2.25bn) loan that funds its equity stake in the holding company for BAA, given the lack of cash flow from its airport and construction interests. This loan, which is backed by Ferrovial's controlling stake in road toll operator Cintra – itself highly leveraged – must be repaid by 2014. The first €630m instalment is due in 2010.
The issues are raised in a detailed note to investors by Robert Crimes, an analyst at Credit Suisse. He sees a "35pc probability of a BAA default".
"We see two causes of this scenario," Mr Crimes said. "Firstly, BAA is unable to issue new bonds in the next 29 months to upstream cash to pay down the holdco [holding company] subordinated debt.
"Secondly, the debt at Ferrovial Infraestructuras, which we consider effectively to be fully recourse, [cannot] be paid down from cash and asset sales by April 2014."
BAA's shareholders pulled off a complex £13.4bn refinancing last summer, including rolling over £4.5bn of existing bonds into the new structure. At the time, Ferrovial's equity stake was cut from 61pc to 56pc.
Most of the debt is secured against BAA's three regulated airports – Heathrow, Gatwick and Stansted – with £1.26bn against the non-regulated quartet of Glasgow, Edinburgh, Aberdeen and Southampton.
Under the structure, cash raised by selling Gatwick and Stansted – which Mr Crimes expects to reach £3.3bn – must be used to pay down a new £4.4bn bank facility to £1.3bn before there can be any dividend distribution up to the holdco, and thereby Ferrovial. The £1.55bn of subordinated debt is held at the holdco level.
Mr Crimes believes BAA will need to raise £1.7bn of new bonds just to pay down the subordinated debt.
Ferrovial, the Spanish construction group that owns 56pc of BAA, must lead a refinancing of £1.55bn of subordinated debt, currently trading at only about 60p in the pound. The debt must be repaid by May 2011 – a tight timeframe given the carnage in the credit markets.
Questions are also being asked about how Ferrovial plans to refinance a €2.3bn (£2.25bn) loan that funds its equity stake in the holding company for BAA, given the lack of cash flow from its airport and construction interests. This loan, which is backed by Ferrovial's controlling stake in road toll operator Cintra – itself highly leveraged – must be repaid by 2014. The first €630m instalment is due in 2010.
The issues are raised in a detailed note to investors by Robert Crimes, an analyst at Credit Suisse. He sees a "35pc probability of a BAA default".
"We see two causes of this scenario," Mr Crimes said. "Firstly, BAA is unable to issue new bonds in the next 29 months to upstream cash to pay down the holdco [holding company] subordinated debt.
"Secondly, the debt at Ferrovial Infraestructuras, which we consider effectively to be fully recourse, [cannot] be paid down from cash and asset sales by April 2014."
BAA's shareholders pulled off a complex £13.4bn refinancing last summer, including rolling over £4.5bn of existing bonds into the new structure. At the time, Ferrovial's equity stake was cut from 61pc to 56pc.
Most of the debt is secured against BAA's three regulated airports – Heathrow, Gatwick and Stansted – with £1.26bn against the non-regulated quartet of Glasgow, Edinburgh, Aberdeen and Southampton.
Under the structure, cash raised by selling Gatwick and Stansted – which Mr Crimes expects to reach £3.3bn – must be used to pay down a new £4.4bn bank facility to £1.3bn before there can be any dividend distribution up to the holdco, and thereby Ferrovial. The £1.55bn of subordinated debt is held at the holdco level.
Mr Crimes believes BAA will need to raise £1.7bn of new bonds just to pay down the subordinated debt.
sabato 27 dicembre 2008
Blow for BAA as Virgin and easyJet look out of the running for Gatwick
The bidding for Gatwick airport is expected to be a two-horse race as rival consortiums have struggled to raise financing.
Hochtief AirPort, a division of the German engineering firm, and Citigate Infrastructure, a consortium that includes the Citigroup bank, are almost certain to be in the running for the £2 billion airport but sources close to the deal have revealed that other interested parties are not in a position to make a bid. These include the proposed consortium that was to have been led by Virgin Atlantic and easyJet.
The two airlines had hoped to attract financial backers into a standalone consortium but are understood to be seeking an alliance with one of the other bidders.
A spokesman for Virgin Atlantic said: “We are now focused on offering our experience and help to one of the other bidders. We are not looking to put our own money into this but we have valuable customer experience — and that is what the new owners of Gatwick will need.”
Manchester Airports Group is also thought to be trying to raise financing but it is understood not to have done so yet.
Calpers, the California Public Employees’ Retirement System, and Calsters, the California State Teachers’ Retirement System, have held talks with a number of possible partners but are both thought to have walked away.
The Citigate consortium is made up of Citigroup, Vancouver Airports and John Hancock, the US financial institution. The group bought Chicago’s Midway airport for $2.5 billion (£1.7 billion) this year.
Hochtief AirPort has shareholdings in Athens, Budapest, Düsseldorf, Hamburg, Sydney and Tirana airports and its Gatwick bid is expected to be given backing by the parent company’s finance arm.
Early bids are expected to be submitted in January but if only two consortiums are involved Gatwick may struggle to command an attractive price.
BAA, the airports operator that owns Gatwick, had hoped to raise between £2 billion and £2.5 billion from the sale of the London airport, but analysts believe that it is unlikely to make more than £1.8 billion.
Ferrovial, the Spanish infrastructure company, bought BAA in 2006 for £10.5 billion but has since struggled to refinance the debt it took on and has been divesting non-core units such as World Duty Free to reduce its debt mountain.
BAA began the auction for Gatwick earlier this year partly to reduce the group’s debt but also to pre-empt a sale order from the Competition Commission. The commission is investigating BAA’s monopoly ownership of London’s three main airports — Heathrow, Gatwick and Stansted — and its preliminary report found that ownership of all three was bad for consumers. It wants BAA to sell both Gatwick and Stansted.
BAA is understood to be fighting to retain Stansted but has appointed HSBC and RBS to find buyers for Gatwick.
“The men and boys will be separated in a few weeks when we find out who really has the money and the ability to do this deal,” said a source close to the negotiations.
“Initially there were lots of expressions of interest but we expect the number to drop dramatically probably to just two when we start talking money.”
So far, the potential bidders have received little information from BAA about Gatwick’s finances and the bidding process.
In addition, a number of the potential bidders have expressed concern that any interference by the Competition Commission could delay the sale process until late next year. It has been widely reported that BAA would be disappointed if the deal is not closed by the summer.
Hochtief AirPort, a division of the German engineering firm, and Citigate Infrastructure, a consortium that includes the Citigroup bank, are almost certain to be in the running for the £2 billion airport but sources close to the deal have revealed that other interested parties are not in a position to make a bid. These include the proposed consortium that was to have been led by Virgin Atlantic and easyJet.
The two airlines had hoped to attract financial backers into a standalone consortium but are understood to be seeking an alliance with one of the other bidders.
A spokesman for Virgin Atlantic said: “We are now focused on offering our experience and help to one of the other bidders. We are not looking to put our own money into this but we have valuable customer experience — and that is what the new owners of Gatwick will need.”
Manchester Airports Group is also thought to be trying to raise financing but it is understood not to have done so yet.
Calpers, the California Public Employees’ Retirement System, and Calsters, the California State Teachers’ Retirement System, have held talks with a number of possible partners but are both thought to have walked away.
The Citigate consortium is made up of Citigroup, Vancouver Airports and John Hancock, the US financial institution. The group bought Chicago’s Midway airport for $2.5 billion (£1.7 billion) this year.
Hochtief AirPort has shareholdings in Athens, Budapest, Düsseldorf, Hamburg, Sydney and Tirana airports and its Gatwick bid is expected to be given backing by the parent company’s finance arm.
Early bids are expected to be submitted in January but if only two consortiums are involved Gatwick may struggle to command an attractive price.
BAA, the airports operator that owns Gatwick, had hoped to raise between £2 billion and £2.5 billion from the sale of the London airport, but analysts believe that it is unlikely to make more than £1.8 billion.
Ferrovial, the Spanish infrastructure company, bought BAA in 2006 for £10.5 billion but has since struggled to refinance the debt it took on and has been divesting non-core units such as World Duty Free to reduce its debt mountain.
BAA began the auction for Gatwick earlier this year partly to reduce the group’s debt but also to pre-empt a sale order from the Competition Commission. The commission is investigating BAA’s monopoly ownership of London’s three main airports — Heathrow, Gatwick and Stansted — and its preliminary report found that ownership of all three was bad for consumers. It wants BAA to sell both Gatwick and Stansted.
BAA is understood to be fighting to retain Stansted but has appointed HSBC and RBS to find buyers for Gatwick.
“The men and boys will be separated in a few weeks when we find out who really has the money and the ability to do this deal,” said a source close to the negotiations.
“Initially there were lots of expressions of interest but we expect the number to drop dramatically probably to just two when we start talking money.”
So far, the potential bidders have received little information from BAA about Gatwick’s finances and the bidding process.
In addition, a number of the potential bidders have expressed concern that any interference by the Competition Commission could delay the sale process until late next year. It has been widely reported that BAA would be disappointed if the deal is not closed by the summer.
mercoledì 24 dicembre 2008
BAA looks for £1.8bn from sale of Gatwick
BAA is budgeting for a net £1.8bn proceeds from the sale of Gatwick, with the deal done by July 1 next year, the airports operator has told investors.
In a report to backers of the £12.1bn refinancing of its three regulated airports – which also include Heathrow and Stansted – BAA forecasts it will clear a sum equivalent to 1.1 times Gatwick's regulated asset base of £1.62bn after all transaction costs.
BAA insists the figure is only for budgeting purposes and "is not in any way indicative of the expected sale price". Even so, it will give bidders something to shoot for with their offers.
BAA put Gatwick up for sale in September, before the Competition Commission forced it to sell the Sussex airport. Since then the competition regulator has indicated that both Stansted and Edinburgh will also have to be sold from the company's seven-strong portfolio of UK airports.
BAA, which is 56pc-owned by Spain's Ferrovial, reassures investors that despite the looming sale of Gatwick and the downturn in the aviation market that "all financial ratios are forecast to be in excess of relevant trigger event ratios".
Excluding Gatwick, BAA forecasts that revenues will increase in 2009 by 10pc to £1.98bn at Heathrow and Stansted, mainly due to the step-up in aeronautical charges at Britain's premier airport. Earnings before interest, tax, depreciation and amortisation are expected to rise 21pc to £895m, excluding any one-off costs.
BAA is projecting a 4pc fall in passenger traffic through the three airports to just under 120m in 2009, owing to the "challenging economic outlook".
Net debt is forecast to decline from £9.5bn in 2008 to £8.3bn by the end of 2009 "with operating cash flow and proceeds from the assumed sale of Gatwick more than offsetting capital expenditure," BAA said.
Capital expenditure next year is expected to total £1.2bn.
In a report to backers of the £12.1bn refinancing of its three regulated airports – which also include Heathrow and Stansted – BAA forecasts it will clear a sum equivalent to 1.1 times Gatwick's regulated asset base of £1.62bn after all transaction costs.
BAA insists the figure is only for budgeting purposes and "is not in any way indicative of the expected sale price". Even so, it will give bidders something to shoot for with their offers.
BAA put Gatwick up for sale in September, before the Competition Commission forced it to sell the Sussex airport. Since then the competition regulator has indicated that both Stansted and Edinburgh will also have to be sold from the company's seven-strong portfolio of UK airports.
BAA, which is 56pc-owned by Spain's Ferrovial, reassures investors that despite the looming sale of Gatwick and the downturn in the aviation market that "all financial ratios are forecast to be in excess of relevant trigger event ratios".
Excluding Gatwick, BAA forecasts that revenues will increase in 2009 by 10pc to £1.98bn at Heathrow and Stansted, mainly due to the step-up in aeronautical charges at Britain's premier airport. Earnings before interest, tax, depreciation and amortisation are expected to rise 21pc to £895m, excluding any one-off costs.
BAA is projecting a 4pc fall in passenger traffic through the three airports to just under 120m in 2009, owing to the "challenging economic outlook".
Net debt is forecast to decline from £9.5bn in 2008 to £8.3bn by the end of 2009 "with operating cash flow and proceeds from the assumed sale of Gatwick more than offsetting capital expenditure," BAA said.
Capital expenditure next year is expected to total £1.2bn.
giovedì 18 dicembre 2008
Gatwick and Stansted must go in BAA sales
BAA faces being forced to sell three of its seven UK airports in the biggest industry shake-up for more than 20 years after competition regulators rejected the company's arguments against a break-up.
The Competition Commission told BAA that it must sell Gatwick, Stansted and Edinburgh airports, so breaking the South-East and Scottish monopolies the company has enjoyed since flotation in 1987.
The commission said it also planned an overhaul of regulation to ensure that "investment and levels of service at Heathrow, and possibly Gatwick and Stansted, meet more effectively the needs of airlines, passengers and other airport users".
At Aberdeen airport, the commission plans measures "to promote investment linked to rebates on charges". BAA might yet be allowed to sell Glasgow rather than Edinburgh airport. It has until the end of the inquiry in March to persuade the commission to change its view. Otherwise, barring an appeal, it will have to sell three airports in a recession, when passenger volumes are falling and bidders are struggling to raise debt.
The disposals add to the headaches of Ferrovial, the Spanish construction group that controls BAA, following its debt-laden £10.1bn takeover in 2006. Ferrovial shares fell 1.85pc to €21.21.
The sales are complicated by the commission's insistence that an independent "monitoring trustee" oversees the process.
BAA has already put Gatwick up for sale, though it remains to be seen whether the Sussex airport will fetch more than the value of its £1.8bn regulated asset base (RAB). Stansted has a £1.3bn RAB, while analysts value the unregulated Edinburgh at £500m-£600m.
Andrew Fitchie, a Collins Stewart analyst, said: "You have to question whether they can even get the RAB in this current environment."
Colin Matthews, BAA chief executive, could barely disguise his displeasure with the commission. "We do not believe that it has set out compelling evidence to support its view that selling Stansted as well as Gatwick, pictured, will increase competition and we remain concerned that its proposed remedies may actually delay the introduction of new runway capacity," he said.
Michael O'Leary, the Ryanair boss, countered: "I don't think anyone is going to mourn the break-up of BAA. We're going to see three competing airports in the South-East and a lot less of BAA's regulatory scamming going on."
Bidders include 3i in a consortium with two Canadian pension funds; Babcock & Brown with Deutsche Bank; Manchester Airport with Canada's Borealis; and Citigroup with Vancouver Airport.
The commission said it also planned an overhaul of regulation to ensure that "investment and levels of service at Heathrow, and possibly Gatwick and Stansted, meet more effectively the needs of airlines, passengers and other airport users".
At Aberdeen airport, the commission plans measures "to promote investment linked to rebates on charges". BAA might yet be allowed to sell Glasgow rather than Edinburgh airport. It has until the end of the inquiry in March to persuade the commission to change its view. Otherwise, barring an appeal, it will have to sell three airports in a recession, when passenger volumes are falling and bidders are struggling to raise debt.
The disposals add to the headaches of Ferrovial, the Spanish construction group that controls BAA, following its debt-laden £10.1bn takeover in 2006. Ferrovial shares fell 1.85pc to €21.21.
The sales are complicated by the commission's insistence that an independent "monitoring trustee" oversees the process.
BAA has already put Gatwick up for sale, though it remains to be seen whether the Sussex airport will fetch more than the value of its £1.8bn regulated asset base (RAB). Stansted has a £1.3bn RAB, while analysts value the unregulated Edinburgh at £500m-£600m.
Andrew Fitchie, a Collins Stewart analyst, said: "You have to question whether they can even get the RAB in this current environment."
Colin Matthews, BAA chief executive, could barely disguise his displeasure with the commission. "We do not believe that it has set out compelling evidence to support its view that selling Stansted as well as Gatwick, pictured, will increase competition and we remain concerned that its proposed remedies may actually delay the introduction of new runway capacity," he said.
Michael O'Leary, the Ryanair boss, countered: "I don't think anyone is going to mourn the break-up of BAA. We're going to see three competing airports in the South-East and a lot less of BAA's regulatory scamming going on."
Bidders include 3i in a consortium with two Canadian pension funds; Babcock & Brown with Deutsche Bank; Manchester Airport with Canada's Borealis; and Citigroup with Vancouver Airport.
BA and Qantas merger talks collapse
British Airways (BA) confirmed this morning that talks over a merger with Qantas Airways, the Australian national carrier, had ended, with neither side able to agree over key terms.
A successful marriage had been looking increasingly unlikely, with many in the airline industry claiming it would bring little benefit to either company.
In a joint statement, BA and Qantas Airways said that after detailed discussions about a potential merger, talks had now ended.
They added: "Despite the potential longer term benefits to both British Airways and Qantas, the airlines have not been able to come to agreement over the key terms of a merger at this time.
"British Airways and Qantas will continue to work together on their joint business between the UK and Australia and as part of the oneworld alliance." Shares in BA tumbled 4.1 per cent to 164.9p in early trading.
Under the oneworld alliance, regulators allow them to fix prices and codeshare on the kangaroo route through a joint service agreement that has enabled BA to reduce its Australian flights to twice daily to Sydney.
Last week' Alan Joyce, the chief executive of Qantas, raised doubts over the merger. Of particular concern, he said, was BA's £1.7 billion pension liability, which dwarfs the smaller liabilities carried on Qantas's own accounts.
He said he was also seeking assurance on an appropriate merger ratio, and further clarity on the state of the industry before he could agree to the merger.
He also told BA that a proposed three-way tie up between BA, Qantas and Iberia airlines would not work. BA would have to chose which partner to go with, he said.
Fernando Conte, the chief executive of the Spanish flag-carrier, had also expressed doubt that a three-way deal could work, suggesting that such a move would be “too complex”.
Analysts have suggested that BA's talks with Qantas were an attempt to force Iberia to put its pension deficit concerns aside and get on with negotiating the details of the deal.
Potential cost savings from a merger with Iberia have been estimated at about £400million, but a Qantas deal might have produced only between £100 million and £200 million of savings because of the geographical separation of the airlines.
A successful marriage had been looking increasingly unlikely, with many in the airline industry claiming it would bring little benefit to either company.
In a joint statement, BA and Qantas Airways said that after detailed discussions about a potential merger, talks had now ended.
They added: "Despite the potential longer term benefits to both British Airways and Qantas, the airlines have not been able to come to agreement over the key terms of a merger at this time.
"British Airways and Qantas will continue to work together on their joint business between the UK and Australia and as part of the oneworld alliance." Shares in BA tumbled 4.1 per cent to 164.9p in early trading.
Under the oneworld alliance, regulators allow them to fix prices and codeshare on the kangaroo route through a joint service agreement that has enabled BA to reduce its Australian flights to twice daily to Sydney.
Last week' Alan Joyce, the chief executive of Qantas, raised doubts over the merger. Of particular concern, he said, was BA's £1.7 billion pension liability, which dwarfs the smaller liabilities carried on Qantas's own accounts.
He said he was also seeking assurance on an appropriate merger ratio, and further clarity on the state of the industry before he could agree to the merger.
He also told BA that a proposed three-way tie up between BA, Qantas and Iberia airlines would not work. BA would have to chose which partner to go with, he said.
Fernando Conte, the chief executive of the Spanish flag-carrier, had also expressed doubt that a three-way deal could work, suggesting that such a move would be “too complex”.
Analysts have suggested that BA's talks with Qantas were an attempt to force Iberia to put its pension deficit concerns aside and get on with negotiating the details of the deal.
Potential cost savings from a merger with Iberia have been estimated at about £400million, but a Qantas deal might have produced only between £100 million and £200 million of savings because of the geographical separation of the airlines.
martedì 16 dicembre 2008
Can Airbus Keep Its Edge on Boeing?
A strike and Dreamliner troubles have hurt Boeing plenty, but if Airbus falls further behind on its A350, it could be in even deeper trouble
It has been a rotten year for Boeing's (BA) commercial jet business. Production glitches and a 58-day machinists' strike this fall have pushed its newest plane, the 787 Dreamliner, a full two years behind schedule. Archrival Airbus (EAD.PA) has pulled ahead in the race for new orders, logging 756 net sales this year, compared with 657 for Boeing. At the same time, Airbus seems finally to have untangled its A380 mega-jet's production mess. And the strengthening of the dollar against the euro has boosted Airbus' bottom line and helped the European planemaker regain some of its competitive edge.
All that, and yet the market for big planes looks worse than it has in years. Total orders this year are likely to be half the level in 2007, and some financially strapped airlines are canceling or delaying earlier orders. "Traffic is collapsing," says Nick Cunningham, a London aerospace analyst with Evolution Securities.
It's a perilous time—but it could be even more dangerous for Airbus than for Boeing. Airbus' A350, its planned competitor to the Dreamliner, looks to be falling behind schedule, too. The company had expected to settle on a detailed design for the A350 by October, but now that timetable has slipped into 2009 as the planemaker negotiates with airlines over specific design features. That makes it almost certain that the A350 won't enter service before 2014, at least 4 years behind the Dreamliner's delayed launch in early 2010.
Permanent Majority?
The danger for Airbus is that further slippage on the A350 will seal Boeing's dominance in the high-volume, richly profitable market for midsize widebody jets. "Boeing may be guaranteed a permanent majority," says Doug McVitie, an analyst with Arran Aerospace in Dinan, France. Already, the Dreamliner has racked up 910 orders, almost twice the 478 logged by the A350.
The strengthening of the dollar, which has risen almost 20% against the euro since the summer, certainly offers short-term relief to Airbus. When the dollar was sinking, the company noted that every 10¢ rise in the euro would knock more than $1.3 billion off its bottom line, because airplanes are priced in dollars but most of the manufacturing costs are in euros. Airbus has launched a series of cost-saving measures, known as Power 8, aimed at slashing more than $4 billion in operating costs.
But such savings will be much harder to achieve if Airbus has to trim production in a downturn, because fixed costs such as buildings and equipment will account for a higher percentage of total expenses. Airbus already has said it will postpone a planned increase in production rates, and CEO Tom Enders said last month the company could take "further action if the situation deteriorates." Evolution's Cunningham thinks production cuts are inevitable, as he predicts annual aircraft deliveries worldwide will fall as much as 50% from 2009 to 2013. What's more, the dollar is now weakening again.
Danger could also lurk in Airbus' seemingly healthy order backlog. For example, more than half of its A350 sales come from Middle East airlines and leasing companies, leaving it far more exposed than Boeing to a downturn in that region. Although Middle Eastern carriers such as Emirates Airline have expanded rapidly in recent years, many analysts contend the rate of growth was unsustainable even before the global recession hit. A slowdown could threaten orders from carriers such as Qatar Airways and Etihad Airways of Abu Dhabi, each of which has dozens of planes on order from Airbus.
Certainly, Boeing faces risks of its own. For example, it has more planes on order than Airbus does from financially weak airlines in India and China. And Boeing's problems with the Dreamliner have clearly helped Airbus by providing a textbook case of how not to build a new aircraft. Indeed, according to a recently leaked copy of an October 2008 report, "Boeing 787 Lessons Learnt," Airbus has assigned an "engineering intelligence" team to study the Dreamliner's woes in detail.
No doubt its Chicago-based rival is now gearing up for a similar exercise on the A350.
All that, and yet the market for big planes looks worse than it has in years. Total orders this year are likely to be half the level in 2007, and some financially strapped airlines are canceling or delaying earlier orders. "Traffic is collapsing," says Nick Cunningham, a London aerospace analyst with Evolution Securities.
It's a perilous time—but it could be even more dangerous for Airbus than for Boeing. Airbus' A350, its planned competitor to the Dreamliner, looks to be falling behind schedule, too. The company had expected to settle on a detailed design for the A350 by October, but now that timetable has slipped into 2009 as the planemaker negotiates with airlines over specific design features. That makes it almost certain that the A350 won't enter service before 2014, at least 4 years behind the Dreamliner's delayed launch in early 2010.
Permanent Majority?
The danger for Airbus is that further slippage on the A350 will seal Boeing's dominance in the high-volume, richly profitable market for midsize widebody jets. "Boeing may be guaranteed a permanent majority," says Doug McVitie, an analyst with Arran Aerospace in Dinan, France. Already, the Dreamliner has racked up 910 orders, almost twice the 478 logged by the A350.
The strengthening of the dollar, which has risen almost 20% against the euro since the summer, certainly offers short-term relief to Airbus. When the dollar was sinking, the company noted that every 10¢ rise in the euro would knock more than $1.3 billion off its bottom line, because airplanes are priced in dollars but most of the manufacturing costs are in euros. Airbus has launched a series of cost-saving measures, known as Power 8, aimed at slashing more than $4 billion in operating costs.
But such savings will be much harder to achieve if Airbus has to trim production in a downturn, because fixed costs such as buildings and equipment will account for a higher percentage of total expenses. Airbus already has said it will postpone a planned increase in production rates, and CEO Tom Enders said last month the company could take "further action if the situation deteriorates." Evolution's Cunningham thinks production cuts are inevitable, as he predicts annual aircraft deliveries worldwide will fall as much as 50% from 2009 to 2013. What's more, the dollar is now weakening again.
Danger could also lurk in Airbus' seemingly healthy order backlog. For example, more than half of its A350 sales come from Middle East airlines and leasing companies, leaving it far more exposed than Boeing to a downturn in that region. Although Middle Eastern carriers such as Emirates Airline have expanded rapidly in recent years, many analysts contend the rate of growth was unsustainable even before the global recession hit. A slowdown could threaten orders from carriers such as Qatar Airways and Etihad Airways of Abu Dhabi, each of which has dozens of planes on order from Airbus.
Certainly, Boeing faces risks of its own. For example, it has more planes on order than Airbus does from financially weak airlines in India and China. And Boeing's problems with the Dreamliner have clearly helped Airbus by providing a textbook case of how not to build a new aircraft. Indeed, according to a recently leaked copy of an October 2008 report, "Boeing 787 Lessons Learnt," Airbus has assigned an "engineering intelligence" team to study the Dreamliner's woes in detail.
No doubt its Chicago-based rival is now gearing up for a similar exercise on the A350.
mercoledì 10 dicembre 2008
First report from the Emirates A380
Singapore was first, but now Emirates is in the superjumbo club. Richard Green was on its inaugural flight to London
Singapore Airlines was the first to get its hands on the A380 “superjumbo”, but last week, Emirates launched a rival version. Singapore’s headline-grabber was “double beds in first class”. Yes, showers. So the pampered premiums don’t have to wait until they reach the airport to wash.
For the rest of us mere mortals, there’s the slim hope that our days of cattle-class flying might be over.
With 50% more floor space than a 747, this A380 is configured with only 35% more seats — 489 seats in total. Its not as good as Singapore’s 471, but it’s still roomier than what we’re used to.
On the inaugural flight into London, I began in business. Up on top deck, the interior width is similar to that of other wide-bodied aircraft, but with seats in an interlocking pattern, 1-2-1 across. They all recline flat and have a personal minibar (soft drinks, no booze), but the layout makes choosing the right seat vital.
Some of the window seats are a couple of feet from the fuselage, and in every other row the centre seats are a few feet apart, so not good for conversation. Other than that, the seats are fairly standard business-class, flat-bed stuff, albeit with a roomy side table.
The bar is the big innovation on the premium deck. The width of the plane, it has a couple of curvy leather sofas along each wall and a big screen showing a live map of the ground below. Pacing the length of it, I got to eight strides, though not without bumping into a Frenchman called Chris, who had a wide smile on his face and a glass of champagne in his hand. He lives in Dubai and works in private equity. He was initially unaware that he’d booked the first A380 flight, but would definitely try to book it again.
His smile would have been wider if he’d made it into one of the 14 first-class suites, at the front section of the upper deck, where you’ll find more walnut veneer than in a Bentley showroom. Each large seat area is a capsule with a minibar and a pop-up vanity mirror with a tray of beauty products. Lady Penelope, taking the weight off her strings, would feel right at home.
This is where you’ll find those “shower spas” — posh toilets, really, with a wide leather bench seat concealing a loo underneath, a full-length mirror, a hairdryer, and spa-style smellies. The shower itself is a small cubicle at one end — and, if you’ve shelled out the £3,000- plus it costs to fly from London to Dubai in first, you can book a 25-minute slot in here. For five minutes of that, you’re allowed the water on.
Of course, there’s an environmental cost as well as a financial one in having showers on planes. The A380 has to heave an extra 1,100lb of water into the sky on takeoff. The airline says that new engines on the A380 mean the plane is 20% per seat more fuel-efficient than the latest 747s, and that, per passenger, the A380 emits about half the European Union’s target for new cars. Maybe so, but no showers would mean less fuel.
And what of the 399 passengers who have to slum it on the lower deck? No shower. No bar. Diddums. But the first thing I notice down below is the lack of noise. Even at the rear of the plane, always the noisiest and bumpiest during turbulence, it is remarkably quiet and stable. The plane’s extreme weight and bulk help it to wallow through the worst knocks.
In economy, the march of seat backs and heads looks familiar, but the cabin is 14in wider than a 747, which means a crucial extra inch of width per seat. You get an adequate, not revolutionary, 33in of legroom, but the base of the seats rolls forward slightly when you recline. This gives you another inch.
In all classes, the lighting is co-ordinated to the time of day it is where you’re heading, with a purpley twilight, stars on the ceiling at night, even chirpy birdsong with the dawn.
Even in economy, there are good seat-free areas for leg-stretching DVT paranoiacs, but most people were glued to the seatback TVs: 10.6in in economy (compared with 6.4in on BA), 17in in business and 23in in first). All are touch-screen.
Each seat on the aircraft has a USB port and a new in-flight entertainment system: 1,100 on-demand channels, seat-to-seat phone, e-mail and texting (the latter two $1 per message sent) — and, coolest of all, live footage of the flight’s progress streamed from three exterior cameras. One records the view below, one points forward, and one is atop the tailplane, looking down on the rest of the craft — providing a surreal out-of-plane experience.
That’s the view I was watching as we came in to land at Heathrow, and at 88ft above the ground, it made other taxiing aircraft appear rather small. I’m not looking forward to my next flight on a not-so-superjumbo.
Singapore Airlines was the first to get its hands on the A380 “superjumbo”, but last week, Emirates launched a rival version. Singapore’s headline-grabber was “double beds in first class”. Yes, showers. So the pampered premiums don’t have to wait until they reach the airport to wash.
For the rest of us mere mortals, there’s the slim hope that our days of cattle-class flying might be over.
With 50% more floor space than a 747, this A380 is configured with only 35% more seats — 489 seats in total. Its not as good as Singapore’s 471, but it’s still roomier than what we’re used to.
On the inaugural flight into London, I began in business. Up on top deck, the interior width is similar to that of other wide-bodied aircraft, but with seats in an interlocking pattern, 1-2-1 across. They all recline flat and have a personal minibar (soft drinks, no booze), but the layout makes choosing the right seat vital.
Some of the window seats are a couple of feet from the fuselage, and in every other row the centre seats are a few feet apart, so not good for conversation. Other than that, the seats are fairly standard business-class, flat-bed stuff, albeit with a roomy side table.
The bar is the big innovation on the premium deck. The width of the plane, it has a couple of curvy leather sofas along each wall and a big screen showing a live map of the ground below. Pacing the length of it, I got to eight strides, though not without bumping into a Frenchman called Chris, who had a wide smile on his face and a glass of champagne in his hand. He lives in Dubai and works in private equity. He was initially unaware that he’d booked the first A380 flight, but would definitely try to book it again.
His smile would have been wider if he’d made it into one of the 14 first-class suites, at the front section of the upper deck, where you’ll find more walnut veneer than in a Bentley showroom. Each large seat area is a capsule with a minibar and a pop-up vanity mirror with a tray of beauty products. Lady Penelope, taking the weight off her strings, would feel right at home.
This is where you’ll find those “shower spas” — posh toilets, really, with a wide leather bench seat concealing a loo underneath, a full-length mirror, a hairdryer, and spa-style smellies. The shower itself is a small cubicle at one end — and, if you’ve shelled out the £3,000- plus it costs to fly from London to Dubai in first, you can book a 25-minute slot in here. For five minutes of that, you’re allowed the water on.
Of course, there’s an environmental cost as well as a financial one in having showers on planes. The A380 has to heave an extra 1,100lb of water into the sky on takeoff. The airline says that new engines on the A380 mean the plane is 20% per seat more fuel-efficient than the latest 747s, and that, per passenger, the A380 emits about half the European Union’s target for new cars. Maybe so, but no showers would mean less fuel.
And what of the 399 passengers who have to slum it on the lower deck? No shower. No bar. Diddums. But the first thing I notice down below is the lack of noise. Even at the rear of the plane, always the noisiest and bumpiest during turbulence, it is remarkably quiet and stable. The plane’s extreme weight and bulk help it to wallow through the worst knocks.
In economy, the march of seat backs and heads looks familiar, but the cabin is 14in wider than a 747, which means a crucial extra inch of width per seat. You get an adequate, not revolutionary, 33in of legroom, but the base of the seats rolls forward slightly when you recline. This gives you another inch.
In all classes, the lighting is co-ordinated to the time of day it is where you’re heading, with a purpley twilight, stars on the ceiling at night, even chirpy birdsong with the dawn.
Even in economy, there are good seat-free areas for leg-stretching DVT paranoiacs, but most people were glued to the seatback TVs: 10.6in in economy (compared with 6.4in on BA), 17in in business and 23in in first). All are touch-screen.
Each seat on the aircraft has a USB port and a new in-flight entertainment system: 1,100 on-demand channels, seat-to-seat phone, e-mail and texting (the latter two $1 per message sent) — and, coolest of all, live footage of the flight’s progress streamed from three exterior cameras. One records the view below, one points forward, and one is atop the tailplane, looking down on the rest of the craft — providing a surreal out-of-plane experience.
That’s the view I was watching as we came in to land at Heathrow, and at 88ft above the ground, it made other taxiing aircraft appear rather small. I’m not looking forward to my next flight on a not-so-superjumbo.
martedì 9 dicembre 2008
Airlines industry expected to lose $2.5B in '09
GENEVA
The global airline industry can expect a bleak 2009, with sector-wide losses of $2.5 billion despite deep cost cuts by U.S. carriers this year, the International Air Transport Association said Tuesday.
IATA chief executive Giovanni Bisignani told reporters in Geneva that next year would see the worst revenue environment in 50 years, but that U.S. carriers -- many of which have already slashed capacity and cut staff as high oil prices sapped revenue during 2008 -- could still turn a modest profit in 2009.
"North America will be the only region in the black, but the expected $300 million profit is less than 1 percent of their revenue," Bisignani said. "2009 will be another tough year for everyone."
Airlines in the Asia-Pacific region will see losses double to $1.1 billion, slightly more than the $1 billion loss European carriers are likely suffer.
Middle East and Latin American airlines are predicted to lose $200 million next year. African carriers will be even worse off, losing $300 million in 2009.
IATA forecasts that global passenger traffic will drop 3 percent in 2009, the first decline since 2001 when the terrorist attacks on the United States abruptly slowed global air traffic by 2.7 percent.
Lower oil prices will help cushion the blow, with the average cost per barrel next year predicted to hover around $60, translating into an industrywide fuel bill of $142 billion.
"This is $32 billion lower than in 2008 when oil averaged $100 per barrel," Bisignani said.
In fact, lower oil prices will help overall industry losses to narrow from 2008, when IATA expects a loss of $5 billion. That is slightly lower than the $5.2 billion it had predicted in September, revised due to the rapid decline in fuel prices.
"North American carriers were hit with the full impact of high fuel (in early 2008) and will post a loss of $3.9 billion this year," said Bisignani. "To cope, they cut capacity early and are now benefiting from the full impact of low spot prices for fuel."
IATA said it expects U.S. carriers to use much of the profit to replace their aging fleet. Even so, with further capacity cuts already expected next year by giants such as Delta Air Lines Inc. and American Airlines, orders for new planes will likely be deferred or canceled, said IATA's chief economist
"We are moving into an environment when extra capacity is what airlines don't need," said Brian Pearce, adding that further job cuts are also likely as flight plans continue to shrink.
Cargo traffic should drop 5 percent in 2009 following a decline of 1.5 percent in 2008, IATA said. This compares with a 6 percent drop in 2001.
IATA, which represents 240 airline companies worldwide, expects the knock-on effects of the downturn to be felt throughout the 32-million strong global travel industry, with as many as 400,000 workers losing their jobs.
For now the only upside, according to Pearce, is that fares could be lower for consumers next year.
"Competitive pressure is going to intensify even more."
The global airline industry can expect a bleak 2009, with sector-wide losses of $2.5 billion despite deep cost cuts by U.S. carriers this year, the International Air Transport Association said Tuesday.
IATA chief executive Giovanni Bisignani told reporters in Geneva that next year would see the worst revenue environment in 50 years, but that U.S. carriers -- many of which have already slashed capacity and cut staff as high oil prices sapped revenue during 2008 -- could still turn a modest profit in 2009.
"North America will be the only region in the black, but the expected $300 million profit is less than 1 percent of their revenue," Bisignani said. "2009 will be another tough year for everyone."
Airlines in the Asia-Pacific region will see losses double to $1.1 billion, slightly more than the $1 billion loss European carriers are likely suffer.
Middle East and Latin American airlines are predicted to lose $200 million next year. African carriers will be even worse off, losing $300 million in 2009.
IATA forecasts that global passenger traffic will drop 3 percent in 2009, the first decline since 2001 when the terrorist attacks on the United States abruptly slowed global air traffic by 2.7 percent.
Lower oil prices will help cushion the blow, with the average cost per barrel next year predicted to hover around $60, translating into an industrywide fuel bill of $142 billion.
"This is $32 billion lower than in 2008 when oil averaged $100 per barrel," Bisignani said.
In fact, lower oil prices will help overall industry losses to narrow from 2008, when IATA expects a loss of $5 billion. That is slightly lower than the $5.2 billion it had predicted in September, revised due to the rapid decline in fuel prices.
"North American carriers were hit with the full impact of high fuel (in early 2008) and will post a loss of $3.9 billion this year," said Bisignani. "To cope, they cut capacity early and are now benefiting from the full impact of low spot prices for fuel."
IATA said it expects U.S. carriers to use much of the profit to replace their aging fleet. Even so, with further capacity cuts already expected next year by giants such as Delta Air Lines Inc. and American Airlines, orders for new planes will likely be deferred or canceled, said IATA's chief economist
"We are moving into an environment when extra capacity is what airlines don't need," said Brian Pearce, adding that further job cuts are also likely as flight plans continue to shrink.
Cargo traffic should drop 5 percent in 2009 following a decline of 1.5 percent in 2008, IATA said. This compares with a 6 percent drop in 2001.
IATA, which represents 240 airline companies worldwide, expects the knock-on effects of the downturn to be felt throughout the 32-million strong global travel industry, with as many as 400,000 workers losing their jobs.
For now the only upside, according to Pearce, is that fares could be lower for consumers next year.
"Competitive pressure is going to intensify even more."
BAA to be fined for poor service at Stansted
BAA, the airports operator, will be fined if it fails to improve customer service and cut security queues at Stansted.
The Civil Aviation Authority (CAA) said today that a penalty system similar to one operated at Gatwick and Heathrow would be introduced at Stansted, following criticism from passengers and airlines.
Ryanair has been vocal in its anger about the length of security queues at Stansted and even created a website to monitor the number of scanning machines in use.
Yesterday the budget airline was particularly scathing after members of the group Plane Stupid, protesting at proposed airport expansion, managed to cause chaos by setting up a demonstration close to the Essex airport's runway. 49 people were charged this morning with aggravated trespass with a further seven released on bail.
The CAA also said today that landing charges at Stansted should only increase by the rate of inflation plus 1.63 per cent over the next five years, which is much lower than BAA had asked for.
The increase will take the charge per passenger levied on airlines using Stansted from £6.34 this year to £7.05 in 2013/14. The charge was £6.05 last year.
BAA had asked for charges to increase by the rate of inflation plus 7.1 per cent. The Competition Commission, which is investigating BAA's monopoly control of London's airports, had already indicated that BAA's proposed level of increase was unacceptable.
The pricing system announced by the CAA today is even lower than the one recommended by the Competition Commission last month because BAA's non-passenger revenue, such as cargo, has been excluded from the calculation.
BAA had argued that it needed higher landing fees to pay for new infrastructure at the airport, which has become a hub for budget airlines. A second runway is proposed and BAA also wants to build a new terminal.
However, low-cost carriers, such as easyJet and Ryanair, are likely to be disappointed with the charge increases as they have argued that BAA, which also owns Heathrow and Gatwick, should not be allowed to raise the landing fee any further.
Harry Bush, the CAA’s head of economic regulation, said: “Our proposed price controls protect passengers and airlines whilst maintaining good levels of service."
Last year the CAA said that it would not regulate landing fees at Stansted because there was sufficient competition between London's airports to make it unnecessary. The Department of Transport overruled that decision.
The Competition Commission will report on whether BAA's control of London's airports is anti-competitive early next year and is expected to call for the sale of Gatwick and Stansted. BAA has already put Gatwick up for sale but wants to retain Stansted.
The Civil Aviation Authority (CAA) said today that a penalty system similar to one operated at Gatwick and Heathrow would be introduced at Stansted, following criticism from passengers and airlines.
Ryanair has been vocal in its anger about the length of security queues at Stansted and even created a website to monitor the number of scanning machines in use.
Yesterday the budget airline was particularly scathing after members of the group Plane Stupid, protesting at proposed airport expansion, managed to cause chaos by setting up a demonstration close to the Essex airport's runway. 49 people were charged this morning with aggravated trespass with a further seven released on bail.
The CAA also said today that landing charges at Stansted should only increase by the rate of inflation plus 1.63 per cent over the next five years, which is much lower than BAA had asked for.
The increase will take the charge per passenger levied on airlines using Stansted from £6.34 this year to £7.05 in 2013/14. The charge was £6.05 last year.
BAA had asked for charges to increase by the rate of inflation plus 7.1 per cent. The Competition Commission, which is investigating BAA's monopoly control of London's airports, had already indicated that BAA's proposed level of increase was unacceptable.
The pricing system announced by the CAA today is even lower than the one recommended by the Competition Commission last month because BAA's non-passenger revenue, such as cargo, has been excluded from the calculation.
BAA had argued that it needed higher landing fees to pay for new infrastructure at the airport, which has become a hub for budget airlines. A second runway is proposed and BAA also wants to build a new terminal.
However, low-cost carriers, such as easyJet and Ryanair, are likely to be disappointed with the charge increases as they have argued that BAA, which also owns Heathrow and Gatwick, should not be allowed to raise the landing fee any further.
Harry Bush, the CAA’s head of economic regulation, said: “Our proposed price controls protect passengers and airlines whilst maintaining good levels of service."
Last year the CAA said that it would not regulate landing fees at Stansted because there was sufficient competition between London's airports to make it unnecessary. The Department of Transport overruled that decision.
The Competition Commission will report on whether BAA's control of London's airports is anti-competitive early next year and is expected to call for the sale of Gatwick and Stansted. BAA has already put Gatwick up for sale but wants to retain Stansted.
lunedì 8 dicembre 2008
More delays for Boeing 787 Dreamliner
NEW YORK: The Boeing 787 Dreamliner is facing yet another delay, and the first plane will not be delivered until 2010 at the earliest, nearly two years behind the original schedule, according to senior airline executives.
The delivery date of the Dreamliner, an innovative and high-profile project, has already been pushed back three times. All Nippon Airways will receive its planes first, with other customers not able to take delivery until 2011 or beyond.
This would be nearly two years after the company had expected to begin delivering the planes to airlines, which have rushed to place orders for the fuel-efficient jet. Their enthusiasm had made the Dreamliner the most popular program in Boeing history, with more than 60 airlines placing orders for more than 800 planes.
But high expectations for the aircraft have met with some hard realities, mainly the difficulty of producing a plane that relies on technological breakthroughs, like an airframe made from lightweight composite material instead of aluminum. It also relies on a supply chain that stretches across the globe, as multiple suppliers in many countries are producing the more than four million parts that will go into the plane.
Boeing said it would neither confirm nor deny a setback, which was reported Friday in The Wall Street Journal. But the senior airline executives, who spoke on the condition of anonymity because they were not authorized to speak for Boeing, confirmed the delay. It is expected that the Dreamliner's first test flight will not take place until well into 2009.
Yvonne Leach, a spokeswoman for Boeing Commercial Airplanes, declined to comment on the reports of the delay, adding Friday that she would neither confirm nor deny them.
"We're currently conducting the assessment and it's not complete yet," Leach said. Asked when any decision might be announced, she said: "We don't have a firm date. We truly have not decided when we are going to announce."
News of the possible delay was not unexpected. At first it caused Boeing's shares to fall in early trading Friday, but the stock recovered and closed at $39.53, up 34 cents. Boeing shares have fallen by nearly 55 percent since the beginning of the year, hurt by the Dreamliner delays, a two-month strike by machinists and the weakening stock market in general.
"There has been a lot of buzz out there for some time about the 787," said Howard Rubel, an analyst at Jefferies & Co. "So it is not a revelation that there will be delays with the 787. It's been clear for a while that a slippage had developed."
The next-generation jet had faced a number of production setbacks, including the strike by 27,000 assembly workers that shut down Boeing's commercial aircraft factories for two months this autumn. But the larger issues looming over the program are linked to an optimistic timetable promised by Boeing when it first announced the plane, and a series of complicated production problems that the company, based in Chicago, is seeking to fix.
The Dreamliner, a midsize twin-engine plane, was an instant hit among airlines, which lined up to buy it because of its fuel-sipping engine and lightweight airframe, both of which save on fuel consumption and costs. Since then, however, engineering and production problems have presented one challenge after another.
Many of these issues are chronicled in an internal study by Boeing's main rival, the European plane maker Airbus. The study, titled "Boeing 787 Lessons Learnt," was posted Wednesday on Flightblogger, a widely followed aviation Web site.
Airbus was plagued with its own substantial delays in the production of the A380 superjumbo jet.
Among the problems at Boeing was concern about software glitches, the plane's titanium wings and the use of low-wage foreign workers in countries with little aerospace experience. Some of those problems have been resolved.
There have been shortages of parts, especially fasteners, and the plane still remains overweight.
"It is very easy not to get everything right," Rubel said. "The human challenges in putting this together are beyond belief. What's causing the delay? It's just been a lot of little things."
Rubel added, however, that given the current slowdown in aviation, the Dreamliner's delay may be a blessing in disguise because an on-time delivery would have added capacity in an airline system that already has too many planes.
The delivery date of the Dreamliner, an innovative and high-profile project, has already been pushed back three times. All Nippon Airways will receive its planes first, with other customers not able to take delivery until 2011 or beyond.
This would be nearly two years after the company had expected to begin delivering the planes to airlines, which have rushed to place orders for the fuel-efficient jet. Their enthusiasm had made the Dreamliner the most popular program in Boeing history, with more than 60 airlines placing orders for more than 800 planes.But high expectations for the aircraft have met with some hard realities, mainly the difficulty of producing a plane that relies on technological breakthroughs, like an airframe made from lightweight composite material instead of aluminum. It also relies on a supply chain that stretches across the globe, as multiple suppliers in many countries are producing the more than four million parts that will go into the plane.
Boeing said it would neither confirm nor deny a setback, which was reported Friday in The Wall Street Journal. But the senior airline executives, who spoke on the condition of anonymity because they were not authorized to speak for Boeing, confirmed the delay. It is expected that the Dreamliner's first test flight will not take place until well into 2009.
Yvonne Leach, a spokeswoman for Boeing Commercial Airplanes, declined to comment on the reports of the delay, adding Friday that she would neither confirm nor deny them.
"We're currently conducting the assessment and it's not complete yet," Leach said. Asked when any decision might be announced, she said: "We don't have a firm date. We truly have not decided when we are going to announce."
News of the possible delay was not unexpected. At first it caused Boeing's shares to fall in early trading Friday, but the stock recovered and closed at $39.53, up 34 cents. Boeing shares have fallen by nearly 55 percent since the beginning of the year, hurt by the Dreamliner delays, a two-month strike by machinists and the weakening stock market in general.
"There has been a lot of buzz out there for some time about the 787," said Howard Rubel, an analyst at Jefferies & Co. "So it is not a revelation that there will be delays with the 787. It's been clear for a while that a slippage had developed."
The next-generation jet had faced a number of production setbacks, including the strike by 27,000 assembly workers that shut down Boeing's commercial aircraft factories for two months this autumn. But the larger issues looming over the program are linked to an optimistic timetable promised by Boeing when it first announced the plane, and a series of complicated production problems that the company, based in Chicago, is seeking to fix.
The Dreamliner, a midsize twin-engine plane, was an instant hit among airlines, which lined up to buy it because of its fuel-sipping engine and lightweight airframe, both of which save on fuel consumption and costs. Since then, however, engineering and production problems have presented one challenge after another.
Many of these issues are chronicled in an internal study by Boeing's main rival, the European plane maker Airbus. The study, titled "Boeing 787 Lessons Learnt," was posted Wednesday on Flightblogger, a widely followed aviation Web site.
Airbus was plagued with its own substantial delays in the production of the A380 superjumbo jet.
Among the problems at Boeing was concern about software glitches, the plane's titanium wings and the use of low-wage foreign workers in countries with little aerospace experience. Some of those problems have been resolved.
There have been shortages of parts, especially fasteners, and the plane still remains overweight.
"It is very easy not to get everything right," Rubel said. "The human challenges in putting this together are beyond belief. What's causing the delay? It's just been a lot of little things."
Rubel added, however, that given the current slowdown in aviation, the Dreamliner's delay may be a blessing in disguise because an on-time delivery would have added capacity in an airline system that already has too many planes.
Qantas will consider deal with Asian airlines if BA merger falls through
The new chief of Qantas, Alan Joyce, has said his company would look to Asia if merger talks with British Airways don't result in a deal.
Speaking publicly for the first time since the talks became public last week, Mr Joyce cautioned that there was no certainty that the talks would be a success. The proposed merger of 
the two airlines faced "major obstacles", he said.
He said while the airline was not in talks with any other carrier, it would look at opportunities in Asia if the BA deal.
"There's nothing on the plate at the moment but we'll always continue to look at our options. That may occur in Asia and elsewhere," said Mr Joyce.
British Airways is also in talks with Spanish airline Iberia and Mr Joyce said that only one transaction could take place.
"There is a resonable chance that this might not go ahead," he said.
"We still are in a position where we have significant hurdles to overcome," he added, citing the terms of the proposed share merger, BA's pension liabilities of about $2.2 billion and the economic outlook.
Qantas shares were up 7.6 per cent in afternoon trade, outperforming a 4.3 per cent rise in the broader market, though one broker attributed the gains largely to recent falls in the oil price.
Mr Joyce, in a speech to a business lunch in Sydney, said a BA merger had the potential for major revenue and cost savings but, when later pressed by reporters on the issue, added it was still unclear if there were enough synergies to justify a deal.
Mr Joyce met his BA counterpart, Willie Walsh, in Hong Kong on Saturday to discuss the merger proposal, the Australian Financial Review said on Monday, adding that Mr Joyce was due to brief the Qantas board on his latest talks on Wednesday.
The Australian government has threatened to scupper the deal if it amounts to an effective takeover of Qantas, which is protected by special legislation that forbids majority foreign ownership and also ensures its head office, listing and key facilities stay at home.
the two airlines faced "major obstacles", he said.He said while the airline was not in talks with any other carrier, it would look at opportunities in Asia if the BA deal.
"There's nothing on the plate at the moment but we'll always continue to look at our options. That may occur in Asia and elsewhere," said Mr Joyce.
British Airways is also in talks with Spanish airline Iberia and Mr Joyce said that only one transaction could take place.
"There is a resonable chance that this might not go ahead," he said.
"We still are in a position where we have significant hurdles to overcome," he added, citing the terms of the proposed share merger, BA's pension liabilities of about $2.2 billion and the economic outlook.
Qantas shares were up 7.6 per cent in afternoon trade, outperforming a 4.3 per cent rise in the broader market, though one broker attributed the gains largely to recent falls in the oil price.
Mr Joyce, in a speech to a business lunch in Sydney, said a BA merger had the potential for major revenue and cost savings but, when later pressed by reporters on the issue, added it was still unclear if there were enough synergies to justify a deal.
Mr Joyce met his BA counterpart, Willie Walsh, in Hong Kong on Saturday to discuss the merger proposal, the Australian Financial Review said on Monday, adding that Mr Joyce was due to brief the Qantas board on his latest talks on Wednesday.
The Australian government has threatened to scupper the deal if it amounts to an effective takeover of Qantas, which is protected by special legislation that forbids majority foreign ownership and also ensures its head office, listing and key facilities stay at home.
giovedì 4 dicembre 2008
Britain delays decision on Heathrow expansion
Britain says it has delayed its decision on whether to build a third runway at London's Heathrow airport.
Transport Secretary Geoff Hoon says the decision will be made in January instead of this month as had been planned.
Airports operator BAA says Heathrow needs an extra runway by 2020 to cope with increased demand. Heathrow is Europe's busiest airport.
Campaigners have opposed the plan, saying expansion will increase noise pollution and harm the environment.
Some officials favor building a new airport rather than expanding Heathrow. London Mayor Boris Johnson has suggested a new site in the Thames River estuary, east of London.
Hoon said Thursday he will consider the issue further before making a decision on the runway.
Transport Secretary Geoff Hoon says the decision will be made in January instead of this month as had been planned.
Airports operator BAA says Heathrow needs an extra runway by 2020 to cope with increased demand. Heathrow is Europe's busiest airport.
Campaigners have opposed the plan, saying expansion will increase noise pollution and harm the environment.
Some officials favor building a new airport rather than expanding Heathrow. London Mayor Boris Johnson has suggested a new site in the Thames River estuary, east of London.
Hoon said Thursday he will consider the issue further before making a decision on the runway.
British Airways’ premium numbers plunge
Cuts by City banks in their business-class travel contributed to a 10.8 per cent year-on-year fall in the number of premium passengers carried by British Airways last month.
Nine of BA’s twenty largest corporate customers are understood to be City banks and the financial crisis has forced them to slash travel budgets. The nine include Barclays, HSBC and Royal Bank of Scotland. Lehman Brothers was also a large BA customer until it collapsed in September. UBS is understood to have recently banned its bankers from travelling business class on flights of less than five hours.
BA declined to comment on the number of banks in its top 20 client list, but in the past it has admitted that they are a big part of its premium business. As the largest airline operating out of Heathrow, it has been particularly badly hit by this drop in City business-class passengers.
Its strategy of keeping fares high is also thought to have contributed to the fall in premium passengers as a number of its competitors have slashed their fares. However, BA believes that if it can keep the yield from its premium seats high it will quickly return to high profit margins once the economy recovers.
The economic slowdown has hit many airlines and BA is trying to cope with the fall in demand by cutting management jobs and seeking mergers with rival carriers. It announced two days ago that it had begun merger talks with Qantas, the Australian flag carrier, to create a new, dual-listed company.
The British carrier is also in merger talks with Iberia and hopes to expand its alliance with American Airlines.
Analysts said yesterday that the BA-Qantas deal could lead to cost-cutting synergies of between £100 million and £200 million a year, less than the £400 million it is estimated that the Iberia merger could generate.
Andrew Fitchie, an aviation analyst at Collins Stewart, said: “Given the geographical remoteness of Qantas and its relative efficiency, it is unlikely that synergies would be as great, but [they] could comfortably be in the range of £100 million to £200 million.”
If BA can pull together Qantas, Iberia and American, it would create the world’s largest airline and be the first global carrier – but there are numerous regulatory hurdles to be crossed with all three deals and analysts are unsure that these can be overcome. For example, the Qantas Sale Act limits foreign ownership in the Australian flag carrier to 35 per cent. The Australian Government has proposed lifting this to 49 per cent but is refusing to raise it any further.
Wayne Swan, the country’s Treasurer, said yesterday: “Our bottom line is the Flying Kangaroo remains majority Australian-owned and based.”
Nick Cunningham, an analyst with Evolution Securities, said: “The postprivatisation history of BA is littered with putative but failed deals with United, American, KLM etc. That alone should act as a warning not to get carried away about the prospects for completing any one of these deals, let alone all three.” BA’s traffic figures revealed that it carried 205,000 fewer people last month, compared with the same period the year before. The largest drop was in its short-haul business within the UK and Europe. Flights to the Americas and Asia were also weak but Middle East flights were down only slightly.
The airline’s load factor, which is a measure of how full each aircraft is, fell 2.2 percentage points to 74.4 per cent. The carrier said that trading conditions remained unchanged and in line with recent downward trends.
BA’s share price fell 0.2p to 156.9p yesterday after a 17.4p gain the day before.
Ryanair, Europe’s largest airline, said that its passenger numbers had risen by 11 per cent to 4.32 million last month. The low-cost carrier increased its load factor by one percentage point to 81.5 per cent. High flyers
Banks thought to be in BA’s top 20 customer list
Barclays
HSBC
Credit Suisse
JPMorgan
Royal Bank of Scotland
Citigroup
UBS
Merrill Lynch
Deutsche Bank
Nine of BA’s twenty largest corporate customers are understood to be City banks and the financial crisis has forced them to slash travel budgets. The nine include Barclays, HSBC and Royal Bank of Scotland. Lehman Brothers was also a large BA customer until it collapsed in September. UBS is understood to have recently banned its bankers from travelling business class on flights of less than five hours.
BA declined to comment on the number of banks in its top 20 client list, but in the past it has admitted that they are a big part of its premium business. As the largest airline operating out of Heathrow, it has been particularly badly hit by this drop in City business-class passengers.
Its strategy of keeping fares high is also thought to have contributed to the fall in premium passengers as a number of its competitors have slashed their fares. However, BA believes that if it can keep the yield from its premium seats high it will quickly return to high profit margins once the economy recovers.
The economic slowdown has hit many airlines and BA is trying to cope with the fall in demand by cutting management jobs and seeking mergers with rival carriers. It announced two days ago that it had begun merger talks with Qantas, the Australian flag carrier, to create a new, dual-listed company.
The British carrier is also in merger talks with Iberia and hopes to expand its alliance with American Airlines.
Analysts said yesterday that the BA-Qantas deal could lead to cost-cutting synergies of between £100 million and £200 million a year, less than the £400 million it is estimated that the Iberia merger could generate.
Andrew Fitchie, an aviation analyst at Collins Stewart, said: “Given the geographical remoteness of Qantas and its relative efficiency, it is unlikely that synergies would be as great, but [they] could comfortably be in the range of £100 million to £200 million.”
If BA can pull together Qantas, Iberia and American, it would create the world’s largest airline and be the first global carrier – but there are numerous regulatory hurdles to be crossed with all three deals and analysts are unsure that these can be overcome. For example, the Qantas Sale Act limits foreign ownership in the Australian flag carrier to 35 per cent. The Australian Government has proposed lifting this to 49 per cent but is refusing to raise it any further.
Wayne Swan, the country’s Treasurer, said yesterday: “Our bottom line is the Flying Kangaroo remains majority Australian-owned and based.”
Nick Cunningham, an analyst with Evolution Securities, said: “The postprivatisation history of BA is littered with putative but failed deals with United, American, KLM etc. That alone should act as a warning not to get carried away about the prospects for completing any one of these deals, let alone all three.” BA’s traffic figures revealed that it carried 205,000 fewer people last month, compared with the same period the year before. The largest drop was in its short-haul business within the UK and Europe. Flights to the Americas and Asia were also weak but Middle East flights were down only slightly.
The airline’s load factor, which is a measure of how full each aircraft is, fell 2.2 percentage points to 74.4 per cent. The carrier said that trading conditions remained unchanged and in line with recent downward trends.
BA’s share price fell 0.2p to 156.9p yesterday after a 17.4p gain the day before.
Ryanair, Europe’s largest airline, said that its passenger numbers had risen by 11 per cent to 4.32 million last month. The low-cost carrier increased its load factor by one percentage point to 81.5 per cent. High flyers
Banks thought to be in BA’s top 20 customer list
Barclays
HSBC
Credit Suisse
JPMorgan
Royal Bank of Scotland
Citigroup
UBS
Merrill Lynch
Deutsche Bank
martedì 2 dicembre 2008
British Airways in Talks With Qantas
British Airways said Tuesday that it was in talks with the Australian carrier Qantas Airways that could lead to a merger.
British Airways “confirms that it is exploring a potential merger with Qantas Airways Limited via a dual-listed company structure,” the company said in a terse statement, written in response to speculation.
Qantas could not immediately be reached for comment.
British Airways said the talks about a potential combination with the Spanish carrier Iberia, announced in July, were continuing.
American Airlines, British Airways and Iberia Airlines in August signed a joint business agreement for flights between the United States and Europe, and are seeking antitrust approval for that arrangement. The addition of Qantas would add a significant Asia-Pacific element to that grouping.
British Airways cautioned Tuesday that there was no guarantee a deal with Qantas would be reached.
Shares of British Airways, which have lost 53 percent of their value this year, rose 15 percent in London after the announcement.
British Airways “confirms that it is exploring a potential merger with Qantas Airways Limited via a dual-listed company structure,” the company said in a terse statement, written in response to speculation.
Qantas could not immediately be reached for comment.
British Airways said the talks about a potential combination with the Spanish carrier Iberia, announced in July, were continuing.
American Airlines, British Airways and Iberia Airlines in August signed a joint business agreement for flights between the United States and Europe, and are seeking antitrust approval for that arrangement. The addition of Qantas would add a significant Asia-Pacific element to that grouping.
British Airways cautioned Tuesday that there was no guarantee a deal with Qantas would be reached.
Shares of British Airways, which have lost 53 percent of their value this year, rose 15 percent in London after the announcement.
lunedì 17 novembre 2008
Kingfisher chief to sell 25% stake in airline
Vijay Mallya, the Indian entrepreneur, is preparing to sell 25 per cent of his Kingfisher airline to a foreign rival as the Indian aviation industry continues to haemorrhage cash.
Mr Mallya says he has received several expressions of interest in India's second-largest private carrier, which only weeks ago defied the worst industy conditions in years when it went head-to-head with British Airways and launched its first international service, between Heathrow and Bangalore.
The flamboyant businessman is also locked in talks with Diageo, the British drinks giant, to explore the divestment of a stake in United Spirits, his drinks business, which is the world's third largest producer of spirits.
Mr Mallya has been among the hardest hit of India's mega rich in the wake of the global credit crunch. Last week, he suffered the ignominy of falling off the Forbes list of India's 40 richest tycoons and losing his billionaire status.
It has been reported that he hopes to raise as much as $500 million by selling 15 per cent of United Spirits.
The proceeds could be could be used to reduce United's debt of $1.2 billion, a hang-over from the group' purchase of the Scottish distillery Whyte & Mackay in 2007.
Potential partners for Kingfisher may include British Airways, Sir Richard Branson's Virgin and Singapore Airlines.
However, any deal will require a change in India's laws, which currently forbid foreign companies from taking stakes in the country's airlines.
"I have requested the government to allow foreign airlines to acquire up to 25 per cent in Indian carriers," Mr Mallya said. "This will secure the future of Indian aviation …I have received expressions of interest from foreign airlines."
Indian carriers are expected to collectively post a loss of nearly $2 billion in the year to March 2009. In a bid to slash costs, Kingfisher last month agreed an unprecedented alliance with its arch rival Jet, India's largest private carrier, which they had hoped would allow them to weather a severe industry downturn.
Jet Airways and Kingfisher Airlines, previously sworn enemies who control 60 per cent of India's domestic market, said they had decided to work together "in the larger national interest and to help stabilise India's aviation sector."
The cost-cutting pact, the first of its kind in India, cover joint fuel management, ground handling, ticketing and crew sharing. The two groups will also discuss which routes they will fly, but deny the arrangement amounts to a cartel.
The arrangement underscored the dramatic turnaround in sentiment surrounding the airline sector across South Asia. Just months ago in India, where passenger volumes surged 30 per cent last year, the talk was of airlines that could not recruit enough pilots to meet demand.
easyJet row intensifies as Stelios speaks out
A legal dispute has broken out at easyJet over whether its founder Sir Stelios Haji-Ioannou has the right to appoint two new non-executive directors to the low-fare carrier’s board unless he also takes the highly divisive step of becoming chairman.
The dispute is the latest twist in a boardroom bust-up between Sir Stelios and the rest of the board, which broke out publicly on Friday.
Sir Stelios, the airline’s major shareholder with a 26.9pc stake, told The Daily Telegraph by email last night that he categorically did not want to return to the chairman’s role he relinquished in 2002.
But he still wanted to appoint two new directors. They are understood to be Anthony Robb-John and Andrew Cooper, executives at his easyGroup, which spans hotel, car hire and pizza delivery businesses.
Sir Stelios’ rights to appoint new non-execs are enshrined in a legal agreement struck just before easyJet’s float in November 2000. He has admitted, however, that the agreement is unclear and that lawyers on the two sides disagree over its meaning.
Sir Stelios said: “The articles are clear that I can be chairman and I can appoint an additional two non-executive directors. But what complicates matters is that I do not want to be chairman. What’s not that clear in the wording of the articles, I have to admit, is if I can be a non-executive director (but not chairman) and still appoint two additional neds? Lawyers on both sides are trying to clarify as we speak.”
Under the 2000 agreement, Sir Stelios can take the chair as long as he holds at least 10pc of the shares. On Thursday night, he warned the board that he was ready to exercise that right – effectively ousting incumbent Sir Colin Chandler - if the other eight directors refused to allow him to appoint his two nominees.
His threat infuriated easyJet’s board, whose non-executives include Sir David Michels, deputy chairman of Marks & Spencer, Five boss Dawn Airey and Alliance & Leicester chief David Bennett.
Sir Stelios appeared to acknowledge the difficulties of his position, saying: “I have no desire to be the chairman of any plc. It is not what I enjoy doing in life. That is why I stepped aside voluntarily from easyJet when I did in 2002. I respect the combined code that calls for the chairman to be independent. As a major shareholder I am not independent of easyJet.”
However, he wants to exert more influence on the board, believing easyJet should conserve its cash during the current recession by slowing its pace of growth – notably over aircraft orders – and start paying dividends by 2011. His call for the start of dividend payments led to speculation that Sir Stelios may be running short of cash, despite the wealth he has tied up in easyJet – rumours he angrily denied last night.
“I am not about to run out of cash,” Sir Stelios said. “The other easyGroup businesses are small and are mostly using franchising so they are not capital intensive. I am doing OK financially considering the crisis because I made sure I have entered the crisis with practically zero leverage as an entrepreneur.”
venerdì 7 novembre 2008
Singapore Airlines reports profit decline of more than a third
Singapore Airlines reports profit decline of more than a third
Singapore Airlines announced a 36 per cent fall in profits yesterday and British Airways is expected to reveal a reduction of up to 90 per cent today as the economic downturn hits passenger numbers.Singapore Airlines, the world's most valuable carrier, said that its profits in the three months to September 30 had fallen to S$324 million (£137 million).The airline, which owns 49
per cent of Virgin Atlantic, also gave warning that advance passenger bookings for the new year were weak.Meanwhile, BA is due to report its financial results for the six months to September 30. Analysts believe the combination of record high fuel prices during the summer and falling consumer demand will devastate profits.Evolution Securities has estimated that the British flag carrier will report revenues slightly up on last year at £4.6 billion, but earnings before tax will fall 78 per cent to £124 million.Dresdner Kleinwort is more pessimistic, forecasting that BA's earnings before tax will fall 89 per cent to £63 million. The average fall predicted by City analysts is 84 per cent.Dresdner analysts said: “British Airways' [first-half] results are likely to see a substantial decline from the record profits reported last year. We see downside risk to the full-year revenue guidance, and the October traffic statistics reported concurrently are likely to be grizzly.”BA has yet to issue any formal guidance for the carrier's likely profitability for this year. Singapore, which is valued at more than £6 billion, said yesterday that passenger numbers had fallen because of the global economic slowdown, which had cut corporate and leisure travel. The airline has responded by reducing flights to destinations in Asia.BA is expected to be hit harder than Singapore by the economic slowdown because it has greater exposure to the North American and European markets, where the turmoil has been greatest. BA has responded to the difficult environment by pledging to cut the number of flights it operates this winter. It is also cutting costs and hundreds of managers are expected to be given redundanc.An aviation source said: “We are being flooded with CVs from BA people who need to get out.”Ashley Steel, head of transport and infrastructure at KPMG, said: “All airlines, whether traditional flag carriers or low-cost airlines, face a long winter ahead. This is creating a ‘challenge beyond all challenges' for an industry already struggling with rising oil prices and now a falling pound.“Traditional flag carriers must now move closer to the low-cost model and do so rapidly. Capacity cuts, cost cutting and cash management must be the new mantra. Despite this [action], many carriers will still be in trouble and swift and efficient consolidation may be the only way out for some.”BA's share price has fallen 62 per cent in the past year. It closed down 17p at 130p yesterday.Singapore Airlines, which is 55 percent-owned by Temasek, Singapore's sovereign wealth fund, has seen its share price fall by 29 per cent since the start of this year. Cathay Pacific has fallen by 54 per cent and Qantas by 47 per cent.Despite the gloom over falling passenger numbers, airlines have benefited from a steep drop in the price of oil. Oil hit a peak of $147 a barrel in July but is now $61, which will cut overheads in the coming months as the airlines' hedging strategies unwind.
Singapore Airlines announced a 36 per cent fall in profits yesterday and British Airways is expected to reveal a reduction of up to 90 per cent today as the economic downturn hits passenger numbers.Singapore Airlines, the world's most valuable carrier, said that its profits in the three months to September 30 had fallen to S$324 million (£137 million).The airline, which owns 49
per cent of Virgin Atlantic, also gave warning that advance passenger bookings for the new year were weak.Meanwhile, BA is due to report its financial results for the six months to September 30. Analysts believe the combination of record high fuel prices during the summer and falling consumer demand will devastate profits.Evolution Securities has estimated that the British flag carrier will report revenues slightly up on last year at £4.6 billion, but earnings before tax will fall 78 per cent to £124 million.Dresdner Kleinwort is more pessimistic, forecasting that BA's earnings before tax will fall 89 per cent to £63 million. The average fall predicted by City analysts is 84 per cent.Dresdner analysts said: “British Airways' [first-half] results are likely to see a substantial decline from the record profits reported last year. We see downside risk to the full-year revenue guidance, and the October traffic statistics reported concurrently are likely to be grizzly.”BA has yet to issue any formal guidance for the carrier's likely profitability for this year. Singapore, which is valued at more than £6 billion, said yesterday that passenger numbers had fallen because of the global economic slowdown, which had cut corporate and leisure travel. The airline has responded by reducing flights to destinations in Asia.BA is expected to be hit harder than Singapore by the economic slowdown because it has greater exposure to the North American and European markets, where the turmoil has been greatest. BA has responded to the difficult environment by pledging to cut the number of flights it operates this winter. It is also cutting costs and hundreds of managers are expected to be given redundanc.An aviation source said: “We are being flooded with CVs from BA people who need to get out.”Ashley Steel, head of transport and infrastructure at KPMG, said: “All airlines, whether traditional flag carriers or low-cost airlines, face a long winter ahead. This is creating a ‘challenge beyond all challenges' for an industry already struggling with rising oil prices and now a falling pound.“Traditional flag carriers must now move closer to the low-cost model and do so rapidly. Capacity cuts, cost cutting and cash management must be the new mantra. Despite this [action], many carriers will still be in trouble and swift and efficient consolidation may be the only way out for some.”BA's share price has fallen 62 per cent in the past year. It closed down 17p at 130p yesterday.Singapore Airlines, which is 55 percent-owned by Temasek, Singapore's sovereign wealth fund, has seen its share price fall by 29 per cent since the start of this year. Cathay Pacific has fallen by 54 per cent and Qantas by 47 per cent.Despite the gloom over falling passenger numbers, airlines have benefited from a steep drop in the price of oil. Oil hit a peak of $147 a barrel in July but is now $61, which will cut overheads in the coming months as the airlines' hedging strategies unwind.
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