New markets across Asia, the Middle East and South America grew 25% during CAE’s fiscal 2008, boosting revenue by C$173 million (US$172.3 million) and net income almost 20% compared with the same period last year. Revenue, at C$1.42 billion, was up 13.8% year-on-year on solid growth in both civil and military markets sectors. North American sales accounted for 40% of this total. Operating income for the year to March 31 grew 32.8% to C$251.5 million, strengthening CAE’s operating margin to 17.7%.
Brazilian sister carriers GOL and VRG saw load factor improve 1.6 percentage points to 52.9% in April, as traffic managed to keep ahead of a 33% increase in seat offer. Consolidated revenue passenger kilometers in the international market were up 37.2% year on year to 453,700, while seat offer stood at 858,200 available seat kilometers. On the domestic side, traffic jumped by 13.9% to 1.85 million RPKs and capacity by 22.8% to 2.79 million RPKs. Load factor fell 5.3 percentage points year over year to 66.3%.
Wyoming-based Great Lakes’ essential air service flying remains profitable despite increased fuel costs, and the airline stands to win big thanks to the shutdown of several of its competitors.
Consolidated operating margins reported by 20 U.S. carriers showed the first loss posted by U.S. airlines since the first quarter of 2006, and data compiled by the U.S. Transportation Dept.’s Bureau of Transportation Statistics show for the first time the role that fuel played in those results.
Geneva-based regional carrier FlyBaboo has been renamed Baboo. The carrier, which was officially renamed on May 13, earlier this month took delivery of a Baboo-branded Embraer 190 and already has placed the aircraft into service. FlyBaboo was launched in 2003, but before it launched the airline issued several press releases calling itself Baboo Airways.
Copa Holdings filed a registration statement May 13 to sell most or all of Continental’s 10% stake in the Panamanian airline. Under the proposed maximum offering price of $35.88, Continental could take in more than $150 million from the sale of the stock, but the actual offer price will be announced May 15.
Some Latin carriers are looking to their governments for some relief in the face of high fuel prices. The government’s role in alleviating fuel pressures varies from country to country. In Argentina, for example, airlines get monthly government subsidies estimated on the consumption and price of fuel for each individual airline and number of flights.
The weak U.S. dollar in Europe and economic concerns apparently are curbing Americans’ willingness to pay for a European trip. April Trans-Atlantic load factors on the leading carriers fell to a six-year low of 77.8%. Traffic is still up, but the increases are slim and are behind the pace of capacity growth, says Martin & Co. In 2007, Europe’s market share for U.S. travelers was 42.7%, tying with 1986 lows during the Chernobyl nuclear accident and terrorism concerns.
Three carriers have submitted proposals to the U.S. Transportation Dept. for essential air service (EAS) flying at Athens and Macon, Ga., but one--Wings Air--may already have plans for the service wehther it receives subsidies or not.
In the face of high fuel costs, Frontier will at least temporarily cut staff pay by as much as 10% as it tries secure debtor-in-possession financing. Cuts take effect June 1 and will range from 1% to 10% based on salary, with the 10% cut applying to employees paid $12 per hour or more.
United Airlines has replaced its codeshare with defunct Aloha Airlines with a new Hawaiian Airlines agreement. The Hawaiian codeshare, expected to begin this summer, connects United passengers to inter-island flights from four island destinations: Honolulu, Kona, Lihue and Maui, says an airline spokesman. United operates 18 daily flights to these four airports.
British Airways is again contemplating anti-trust immunity with American following the recently successful application by Skyteam carriers and the relaxation of access to London Heathrow airport. CEO Willie Walsh, talking exclusively to The DAILY after a Monday analyst meeting in New York, said an application makes sense “in light of the current regulatory environment.” He would not comment, however, on a possible timeline for such an application and noted that evidence of approval “would have to be strong” before a final decision is made.
Although the date has been set for the sunset of Mesa Air Group subsidiary Air Midwest, decisions are still pending about Air Midwest’s 20 Beech 1900 aircraft. The 19-seat aircraft are a standby for essential air service markets like those served by Air Midwest. The market for the aircraft, however, has been tight, so EAS operators will be closely watching Mesa as it weighs its next moves.
American altered a credit agreement last week arranged by Citigroup and JPMorgan to remove certain cash-flow covenants. The previous covenant included a minimum ratio of cash flow to fixed charges, but these have been waived until June 30. The loan consists of an undrawn $225 million revolving credit facility maturing June 17, 2009, and a fully drawn $440 million secured term loan facility maturing Dec. 17 2010.
Ryanair, which already uses its Web site to sell a large range of products and services, has added another one. On May 15, in partnership with Web Reservations International, it launched Ryanairvillas.com to let property owners pay to promote their holiday rentals to the low-cost airline’s vast audience of online consumers.
South Korean carrier Jeju Air will begin flying internationally on July 11, linking Hiroshima in Japan with its base on the southern holiday island Jeju. The service will make it one of only three South Korean airlines flying abroad, the others being Asiana and Korean Air. But there will soon be more. Other airlines are starting operations, some saying they will be budget carriers, and the government is dropping restrictions that have prevented new airlines from flying internationally.
Continental will pay departing executive VP and CFO Jeff Misner nearly $3 million on his retirement from the company Aug. 31, the airline disclosed in a May 16 filing with securities regulators. In exchange, Misner agreed to forgo competing against the company for 12 months from his retirement date, and to surrender the outstanding profit-based restricted stock unit awards from 2006, 2007 and 2008.
US Airways, Northwest and United appear most at risk for Chapter 11 bankruptcy filings out of the 10 major U.S. carriers, according to new research by JPMorgan. At current fuel prices, “legacy bankruptcies and/or merge-at-all-costs attempts are a question of when and not if,” say JP Morgan analysts. However, they also note that with mergers offering capital-raising potential, and low Chapter 11 incentives, “a sprint to the courthouse may be avoided if airlines raise sufficient capital now.”
The furor over the U.S. Transportation Dept.’s plan to impose slot auctions at Newark and New York Kennedy continues unabated, with airlines and airline groups stoking the fire and hinting at legal action.
During talks on the second-stage transatlantic open skies agreement last week, the lead EU negotiator once again called for the U.S. to loosen rules on ownership and control, even as his U.S. counterpart earlier in the week had offered to loosen nationality restrictions on air service rather than ownership rules.
Airbus in July plans to start a new round of A320 winglet flight tests, this time with Aviation Partners. The goal is to deliver a 1%-2% fuel burn improvement, as part of a larger effort to shave 4%-5% from A320 fuel burn by 2011, says John Leahy, Airbus chief operating officer for customers.
Air New Zealand will set up an academy to train pilots, cabin crew, engineers and management. The carrier, which is still in talks with potential partners, expects the Air New Zealand Aviation Academy to produce 200 to 300 pilots and engineers each year. Few details are currently being disclosed. The airline says more information will be announced in the coming year.
