Finnair so far isn’t seeing a major impact on financial performance from economic headwind, but management concedes growth is slowing and the airline isn’t insulated from market pressures. In reporting first quarter results, Finnair saw profit fall slightly to €12.1 million euros from €13.7 million in the prior year despite a more than 9% increase in turnover. Although operating results were up, CEO Jukka Hienonen says, “The sector is moving, however, into clearly more difficult terrain.”
Anticipating a glut of flight requests from prospective commercial operators of small unmanned aircraft systems (UAS) in the next several years, FAA has assembled a rulemaking committee to develop regulations for their use. The group’s first meeting is scheduled for next month, according to Doug Davis, head of FAA’s UAS program office. The committee’s goal will be to develop draft policies for the commercial use of UAS below a specified weight, speed and/or altitude.
U.S. airlines employed 3% more staff in February 2008 than in February 2007, the U.S. Transportation Dept.’s Bureau of Transportation Statistics reports. Airline employment jumped from 406,000 full-time equivalent employee (FTE) levels in February 2007 to 418,300 FTEs last February in the 13 consecutive month-on-month increase, BTS said. FTE calculations count two part-time employees as one full-time employee.
Through an agreement with parent AeroSur Bolivia (ASB), fledgling AeroSur Paraguay (ASP) will soon improve international connections to Asuncion, a city deprived of former scheduled services by international carriers. Plans call for ASP to link Asuncion with ASB’s hub in Santa Cruz, Bolivia, for regional connections to neighboring destinations such as Sao Paulo and Buenos Aires and long-hauls to the U.S. and Europe. Next-generation Boeing 737s will be used initially and the services will be upgraded later to 767s.
The U.S. Customs and Border Protection agency last week expanded its Model Ports program to an additional 18 international airports. The program, which launched in April 2007 at Houston and Washington Dulles, will be broadened to include the 20 top U.S. airports by number of foreign arrivals, the CBP said. Among the airports selected are New York Kennedy, Miami, Los Angeles International, Newark, and Chicago O'Hare.
Airline business confidence took a sharp hit in the first quarter of this year, the latest data from an IATA survey of airline CFOs show. Half of the respondents to the IATA survey of business confidence said they thought profitability declined in the first quarter, and 61% expected profits to fall for the balance of the year--the first time since the survey began in 2005 that respondents have been negative about airline profitability.
Jetstar Asia, the Singaporean offshoot of Qantas’s budget carrier, is negotiating to buy a stake in Taiwan’s bankrupt Far Eastern Air Transport, according to a Taipei press report. Such an investment would be the next move in the Asia-Pacific budget airlines’ maneuvering for strings of franchisees based across the region. The latest such step was Qantas’s agreement this month to turn Vietnam’s Pacific Airlines into a Jetstar-branded carrier, replicating the operations and service of the Australian budget airline.
Shanghai Airlines has become the only listed Chinese airline to post a loss for 2007. The company, which analysts say is a ripe takeover target because of its strong position in Shanghai and weakness elsewhere, lost a net CNY497 million (US$71 million) last year, compared with a profit of CNY82.2 million in 2006. The loss occurred despite the strong growth in Chinese aviation demand of around 15% last year. Shanghai Airlines itself enjoyed revenue growth of 23%, but suffered even faster cost growth even though its aircraft flew with fuller cabins.
Finnair and Icelandair have decided to code share, starting next month. The agreement covers Helsinki-Reykjavik service operated by Icelandair; that service will reach four times per week in June. In return, Icelandair flight numbers will be added to Finnair’s Helsinki-Warsaw service.
Colombia-based AeroRepublica on May 24 will start daily nonstop flights with 106-seat Embraer 190 regional jets between Medellin, Colombia, and Caracas, Venezuela. The airline, controlled by Panama’s Copa, will offer an introductory fare of $199 roundtrip. CEO Roberto Junguito called the move “a huge step forward in our international expansion strategy to key destinations in neighboring countries.”
Passenger and cargo demand rose 6% each in February over February 2007, both driven by increases in international traffic, reports Airports Council International (ACI). International passenger traffic rose 9.6% to 97.5 million travelers in February, said ACI. Regions posting the highest growth were the Middle East, up 18.6% to 5.5 million passengers, and Africa, up 18.1% to 3.7 million.
Northwest and Delta are moving to combine some employee benefits even before the airlines’ merger receives the approval of regulators. From May 6, the airlines plan to give eligible employees and retirees reciprocal access to flight benefits on both networks. Delta CEO Richard Anderson claims such a move “has never been undertaken this quickly following the announcement of a major airline merger.”
Eos CFO Tom Martin says his airline received “several unsolicited expressions of interest” in acquiring some of the carrier’s assets or the “entire business” after it filed for Chapter 11 bankruptcy protection late Saturday. Eos “intends to pursue all expressions of interest aggressively,” Martin added in court documents. “However, under the circumstances, the debtor has been forced to commence a wind-down of its business pending further development of these expressions of interest.”
It’s business as usual for Mesa, which yesterday took delivery of a CRJ-900 for Freedom Airlines’ Delta Connection flying despite a dispute with the major over Freedom’s ERJ-145 Connection flying (DAILY, April 4). “While it is disappointing that Delta and Mesa are involved in litigation regarding Delta’s previously announced decision to terminate Freedom’s Embraer ERJ-145 flying, the delivery of this CRJ-900 underscores the positive relationship we wish to have with Delta,” Mesa Chairman and CEO Jonathan Ornstein said in a statement.
Marsans/Air Comet head Gonzalo Pascual’s plan to “Argentinize” Aerolineas Argentinas (AR) by selling equity shares to new Argentine private investors is on hold for the moment. Talk about the issue was postponed until private discussions could be held between Argentine President Cristina Kirchner and her Spanish counterpart Luis Rodriguez Zapatero.
SkyWest is still considering every alternative, from giving up on the proposed acquisition to making a hostile bid, in response to ExpressJet rejecting the airline’s offer last week, a SkyWest executive said Monday. Mike Kraupp, SkyWest’s VP-finance and treasurer, also said SkyWest has not ruled out making the higher bid ExpressJet said it is seeking. But Kraupp also indicated SkyWest is not likely to raise its bid by much, if at all.
The European Commission “has doubts” about the nature of the EUR300 million bridging loan Italy is granting Alitalia to keep the flag carrier alive until a new rescue plan can be hammered out. “We have written to the Italian government to obtain more information,” European Transport Commissioner Jacques Barrot said Sunday. The aim of the European Union’s competition watchdog “is to establish accurately the nature of this intervention, to understand whether it is a commercial operation or whether there are elements related to state aid,” added Barrot.
Avianca subsidiary SAM is planning a December 2008 launch of service to Miami. The carrier would operate as Avianca and fly daily Fokker 100 services from Baranquilla, Cartagena and Miami, pending regulatory approval from the U.S. Transportation Dept. [DOT-OST-2008-0143].
Korean Air has won final government approval to start operating Air Korea, a new low-cost subsidiary, after four years of preparation. Air Korea will begin flying in July using Boeing 737-800s ad Airbus A300-600s, Bang Sun-Oh, VP- international affairs and alliance team, told The DAILY. “We will launch with domestic flights, eventually expanding to Japan, China and Southeast Asia,” he said. The first flight will be from Jeju, an island in the southern part of the country.
Correction: ExpressJet, as part of its response to SkyWest’s attempt to acquire the airline, said Friday that it will start discussions with Continental regarding a new capacity purchase agreement. The DAILY on April 28 incorrectly identified the airline renegotiating the capacity purchase agreement.
The demise of Eos Airlines, which ceased operations Sunday and filed for Chapter 11 bankruptcy protection, is the latest afflicting full-price, non-network or long-haul-only carriers. The all-business-class operator was flying between New York Kennedy and London Stansted airports but ran into financial difficulty. One week ago, it said it had secured $50 million in capital from a current investor in a transaction scheduled to close May 1. It also had expansion planned in May and July to Newark and Dubai, respectively, from Stansted.
