Sen. Charles Schumer (D. N.Y.), who has opposed previous attempts at airline consolidation, now is setting his sights on the proposed union of US Airways and American Airlines.
Chinese regional carrier Okay Airways aims to expand with an order for 20 aircraft and a subsidiary airline that would be open to strategic investors. It plans to order 20 Xian MA60s, which will add to a fleet that already contains five of the type and expects to add two more due in the next few months, Deputy President Liu Jieyin tells local media, adding that Okay is preparing its application to the Civil Aviation Administration of China to set up the subsidiary. Like its parent company, the new airline will operate regional routes.
Export Credit Agency (ECA) financing will continue to play an important role, says DVB Bank Managing Director for Aviation Finance Bartrand Grabowski, who predicts it will account for 20-25% of all financing for new aircraft. ECA currently supports about 30-35% of all aircraft financing, and while some in the industry predict this will fall to as low as 10%, Grabowski says he thinks a more reasonable expectation is for ECA to settle at 20-25% of all financing.
Delta Air Lines’ decision to get into the oil-refining business could be a brilliant strategic move or pure folly, but until full details of the carrier’s deal with BP and Phillips 66 are known, the outcome remains a brainteaser for analysts.
Pinnacle Airlines, which is restructuring under Chapter 11 protection, wants to cut current pay rates for its pilots and freeze the new salaries until 2014.
Virgin America, which fell $27.4 million short of its goal to achieve an operating profit in 2011, believes it can produce an operating income this year with jet fuel prices as high as $135-137 a barrel, CEO David Cush tells Aviation Week. The San Francisco-based airline built its 2012 expectations on a per-barrel price of $125, Cush says. That price has been averaging $135-140 but has dropped to about $125 in recent days.
Capacity control and the resulting increase in yields helped EasyJet reduce its first half-loss to £112 million (US$180.8 million). For the first six months of the fiscal year, the low-fare airline recorded a 15.7% increase in revenue, to £1.5 billion. Passenger numbers also were up, 5.4%, and, the airline says, a growing percentage of this increase is being generated from passengers travelling for business.
Financially struggling Air India has invited proposals from banks and financial institution to raise the funds for $500 million in bridge financing for four Boeing 787s scheduled for delivery between June and December, and a further $300 million for its subsidiary Air India Charters Ltd., which operates low-cost Air India Express. The airline is likely to offer aircraft or some other equivalent collateral as security and will repay the loan after selling and leasing back the four aircraft, an Air India official tells Aviation Week.
Military unmanned aerial vehicles are coming to the U.S. National Airspace System, and lawmakers from the House of Representatives want to know how the Defense Department (DOD) plans to keep up training until new safety regulations allow routine access.
Two nearly new Bombardier Q400 aircraft that Pinnacle Airlines returned under its Chapter 11 bankruptcy restructuring are back on the market for sale. U.K.-based SkyWorld Aviation, an aircraft remarketing agent that specializes in regional aircraft, sold two Republic Airways-owned Q400s last June and November. It now has two more Q400s that Pinnacle returned to Iselin, N.J.-based Siemens Financial Services last month that were manufactured early in 2011, and each one has fewer than 2,400 hours and cycles.
The Transport Workers Union (TWU) Local 514 in Tulsa, Okla., while appearing supportive of its members accepting American Airlines’ “last best” concessions package developed under parent company AMR Corp.’s Chapter 11 reorganization, still favors US Airways’ takeover proposal. The 7,000 unionized workers at American’s largest maintenance base can begin voting at midnight May 10, with polls closing four days later. Rejecting the last best offer could result in the loss of 2,600 jobs in Tulsa, while accepting the offer accepts 1,300 layoffs.
The unions representing pilots, flight attendants and ground workers at Mexicana de Aviacion are exploring a “Plan B” and talking to a new group of investors interested in acquiring the grounded airline’s shares.
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Pinnacle Airlines yesterday presented cost-cutting proposals to its unions that seek wider concessions than those requested before the U.S. regional carrier’s April 1 filing for Chapter 11 protection. In an internal letter, CEO Sean Menke prepared employees for the pending proposal, telling them that Pinnacle needs to “look beyond the wages and work rules we were focused on prior to our bankruptcy filing.” These new concessions, he adds, will “include wages, work rules and modifications to our health and 401(k) plans.”
The proposed merger between LAN Airlines and Grupo TAM has slipped to the end of July, marking yet another delay in the creation of Latin America’s largest carrier. LAN CFO Alejandro de la Fuente Goic notes the latest delay in a message posted on Chile’s securities regulator’s website. The companies now hope to complete the deal within the first half of 2012, says the CFO. That process has been helped with the final clearance from Brazil’s regulators, which de la Fuente notes is an “important step” in the merger process.
Turkish Airlines is nearing a bid for a minority stake in LOT Polish Airlines, with Chairman Hamdi Topcu telling local media that the two sides are close to an agreement. Istanbul-based Turkish, which is implementing a major network expansion, has been seeking acquisitions targets in Central Europe to accelerate growth and improve its visibility across Europe. Meanwhile, the Polish government, which owns LOT, has been trying to dispose of the unprofitable airline for years.
