HOW QUICKLY THE PRESENT BECOMES the good old days in the air transport industry! Twelve months ago, providers of maintenance, repair and overhaul services were confidently eyeing new markets and growth opportunities in line with rising airline traffic and capacity. The aging of the fleet and higher aircraft utilization meant that demand for MRO services was increasing. Private equity was turning its attention to the sector and places like India seemed ripe for exploration (ATW, 11/07, p. 46).
Compagnia Aerea Italiana, the consortium of investors negotiating a bid for Alitalia, reportedly walked out of talks with labor unions late Wednesday night, putting its bid for the failing flag carrier in doubt ( ATWOnline, Oct. 30). It was scheduled to present its offer this evening. CAI head Roberto Colaninno said he was "very worried about the situation caused by the breakdown of negotiations" in a statement cited by press reports.
Northwest Airlines closed a $500 million secured revolving credit facility led by U.S. Bank with Citigroup and Morgan Stanley as co-lead arrangers and joint book runners. Financing comprises a three-year, $200 million secured revolving credit facility priced at LIBOR plus 4.5% with a final maturity on Oct. 28, 2011, and a 364-day, $300 million secured revolving credit facility with a final maturity on Oct. 28, 2009, bearing interest at LIBOR plus 3.5%.
Arab Air Carriers Org. is urging Arab governments to take responsibility for security costs, to relax bilateral agreements and ownership rules and to "genuinely review" taxes and charges imposed on air transport in order to revitalize traffic and reduce the impact of the global economic crisis on the industry.
Republic Airways Holdings reported third-quarter net income of $17 million, a 15.7% drop from the $20.2 million earned in the year-ago period. Operating revenue rose 16.7% year-over-year to $385.2 million and expenses climbed 19.2% to $325 million. Operating income was up 4.8% to $60.2 million from $57.4 million last year. During the quarter the company incurred $7.4 million in expenses related to the estimated return costs of 11 ERJ-135s and $8 million in carrying costs tied to unallocated E-170s returned from service with Frontier Airlines.
China Southern Airlines yesterday reported an CNY810 million ($118 million) net loss for the third quarter, joining "big three" rivals Air China and China Eastern Airlines deep in the red. CA and CEA earlier reported CNY1.9 billion ( ATWOnline, Oct. 29) and CNY2.33 billion ( ATWOnline, Oct. 30) three-month losses respectively. China Southern's operating revenue dropped 11.6% year-over-year to CNY14.59 billion against a 14.2% increase in expenses to CNY14.07 billion.
Virgin Atlantic Airways, which has held several discussions with bmi over a possible tie-up, still believes a combination is possible and reportedly is seeking a partnership with its UK counterpart and its future-owner Lufthansa ( ATWOnline, Oct. 30). "Everyone has speculated that it would make sense for Virgin Atlantic and bmi to combine their long-haul and short-haul networks," CEO Steve Ridgway told Reuters. "There is now a major opportunity to do that and create a new, strongly viable competitor to British Airways.
Silver Air, a charter and ACMI carrier based in Dubai, said it has received its UAE air operator's certificate. It has three 737-200s and one 737-300 and said it plans to operate 10 737 Classics by 2010.
Boeing this week forecast that China will need 3,710 new aircraft worth approximately $390 billion over the next 20 years, an increase from last year's projection of 3,400 planes ( ATWOnline, Sept. 19, 2007). "China will continue to be the fastest-growing aviation center in the world, requiring 41% of the entire Asia/Pacific region airplane demand," Commercial Airplanes VP-Marketing Randy Tinseth said. Single-aisle aircraft will account for 70% of the new purchases.
Frontier Airlines Holdings, which continues to operate Frontier Airlines and Lynx Aviation under bankruptcy protection, reported a $29.7 million net loss in the fiscal second quarter ended Sept. 30 and a $5.8 million operating loss. In September, when it lost $20.8 million, it reported $7.0 million in reorganization costs and $2.1 million in unrealized losses on fuel hedges. It recorded gains of $9.9 million from the sale of two aircraft.
Air Berlin confirmed that it will absorb its dba subsidiary by Nov. 30, ending branded flying by the carrier AB acquired two years ago ( ATWOnline, Aug. 18, 2006). Dba operates nine aircraft and three of its 737-300s will leave the AB fleet entirely. Dba's 120 pilots and 175 cabin crew will be transferred elsewhere within AB or offered buyouts.
Kenya Airways reported a KES736 million ($8.5 million) profit in its fiscal first semester ended Sept. 30, down 62.7% from the KES1.97 billion earned in the year-ago period, as fuel prices rose and it managed only "paltry" passenger growth owing to the tourism decline caused by the violence that followed last December's elections.
US Dept. of Transportation said this week that the average US domestic itinerary fare in the second quarter rose 8.1% year-over-year to $352, the highest three-month figure in the 13 years of measurable data. Fares averaged $336 during the first quarter. DOT used the data to support its effort to institute slot auctions at New York JFK, LaGuardia and Newark starting in January ( ATWOnline, Oct. 16). "Even though caps can cut delays, they also eliminate competition, and without competition airfares rise," Secretary Mary Peters said.
Hawaiian Airlines parent Hawaiian Holdings reported third-quarter net income of $6 million, down 69.4% from $19.6 million in the year-ago quarter, explaining that improvements in inter-island and transpacific revenue were "offset by the high cost of fuel."
Delta Air Lines will launch flights from Atlanta to Tegucigalpa (Dec. 18), Guayaquil, Manaus (both Dec. 19), Santiago, Dominican Republic (Dec. 20) and Recife (Dec. 21) and from New York JFK to Buenos Aires, Bogota (both Dec. 18) and Bonaire (Dec. 20). Nashville-Cancun begins Dec. 27. Alaska Airlines launched twice-daily Seattle-Minneapolis/St. Paul aboard 737-800s.
Delta Air Lines yesterday began the 12- to 24-month process of integrating Northwest Airlines, now a wholly owned subsidiary of DL, with the flying public likely to begin noticing changes in the first half of 2009. NWA stockholders each will receive 1.25 DL shares based on the latter's closing price on Oct. 29, an exchange rate that is the equivalent of $9.99 per NWA common share. DL said its code will be added to "nearly all of the Northwest system" by year end and "a fully consolidated worldwide flight schedule" will be launched in advance of summer 2009.
Ethiopian Airlines said it posted a ETB507 million ($51.2 million) profit in the fiscal year ended June 30, which would mark a significant improvement over profits of just over $14 million in each of the prior two fiscal years. Revenue rose 34% year-over-year to ETB9.2 billion while expenses were up 31% to ETB8.8 billion. Passenger numbers climbed 20% to 2.5 million.
As the strike by the International Assn. of Machinists and Aerospace Workers appeared to be concluding, Boeing's largest airline customer for the 787, Qantas Group, confirmed that its first Dreamliner could be up to an additional six months late.
Delta Air Lines said it completed its acquisition of Northwest Airlines yesterday, hours after the US Dept. of Justice said it would not challenge the merger that creates the world's largest airline operating more than 800 mainline aircraft and generating more than $35 billion in annual revenue.
Bombardier completed what it called "a civil aviation first," the first flight of a civil aircraft "equipped entirely with an all-electric braking system." The system is being developed for the CSeries. The 7-hr. test, which included five landings and a series of high-speed braked ground runs, was carried out Tuesday in Wichita. Demonstrator aircraft was equipped with Meggitt's electric braking system known as the EBrake and Messier-Dowty landing gear with electric brake wiring harnesses. The technology couples brake-by-wire control with electric brake actuation.
LAN Airlines reported third-quarter net income of $80.4 million, up 2% from $78.8 million in the year-ago period, and said it is optimistic about 2009 despite economic uncertainty. The Santiago de Chile-based carrier plans to raise passenger capacity 10% and cargo capacity 8% next year. "We continue to see opportunities for expansion in the region," CFO Alejandro de la Fuente told analysts yesterday. "We believe that our financial strength and diverse business strategy will give us the flexibility to adjust to changing market conditions. .
Compagnia Aerea Italiana, the consortium attempting to purchase and revive Alitalia, agreed to inject €1.1 billion ($1.37 billion) into the holding company established to purchase the airline, according to a statement cited by widespread press reports. CAI reportedly must present its binding bid Friday, although it continues to negotiate contract terms with unions and said it required approval from both labor and European authorities before making its offer.
China Eastern Airlines suffered a CNY2.33 billion net loss in the third quarter, reversed from a CNY976.5 million profit in the year-ago period, on a 13.7% decrease in operating revenue to CNY10.81 billion.
