Fuel costs, overcapacity and falling yields hit SAS Group hard in the first quarter, resulting in a SEK1.13 billion ($189.5 million) loss that represented a massive deterioration from the SEK47 million deficit reported in the year-ago quarter. In response, the company announced a short-term "action plan" called Profit 2008 under which it will seek to generate SEK1.05-SEK1.15 billion through "price adjustments, changes to the traffic programs, additional efficiency enhancements of overheads and the discontinuation and postponement of certain planned activities."
Finnair reported a first-quarter profit of €5.5 million ($8.6 million), down 40.9% from the €9.9 million earned in the year-ago period, and warned that "difficult terrain" is ahead for the remainder of the year owing to high fuel costs.
Iberia flew 4.54 billion RPKs in March, up 1% on the year-ago month, against a 0.5% fall in capacity to 5.55 billion ASKs. Load factor rose 1.2 points to 81.8%. LAN Airlines flew 2.3 billion system RPKs in March, a 14.2% increase over the year-ago month. Capacity climbed 9.2% to 2.89 billion ASKs and load factor rose 3.5 points to 79.5%. Estonian Air carried 63,946 passengers in March, up 16.3% year-over-year, helping boost first-quarter boardings to 163,230, up 17%.
Lufthansa intends to use its call option and purchase the 50%-plus-one-share stake in bmi held by Chairman Michael Bishop, CFO Stephan Gamkow told the dpa news agency last week without providing further details. LH holds 30%-minus-one-share in the UK carrier, with the remaining stake held by SAS, which intends to divest ( ATW, April 2008). Gemkow said LH still has no interest in Alitalia, but it does see a future in the Italian market.
Frontier Airlines Holdings named Jim Young VP-distribution, sales and marketing and Tom Bacon VP-planning and revenue management. Both are new to the company.
China Southern Airlines expects to open 7-8 new international routes this year, expanding on a plan that saw it open 10 new foreign destinations in 2007 ( ATWOnline, March 11). This year's routes will originate mostly in Guangzhou and serve neighboring countries in Southeast Asia, in addition to a London flight scheduled to start in the fourth quarter, Chairman Liu Shaoyang said.
AirTran Airways parent AirTran Holdings is offering more than 22.3 million shares of common stock at $3.20 per share, it said Friday. It additionally will offer $65 million of 5.5% convertible senior notes due in 2015. Notes can be converted into common stock at the rate of 260.417 shares per $1,000 principal amount of notes, or $3.84 per share. Offerings are expected to close April 30 and proceeds will be used for the purchase of government securities and for general corporate purposes including retirement of debt.
Shanghai Airlines was unable to reap the benefits related to rising demand and yuan appreciation enjoyed by its rivals in 2007 as it reported a CNY497.6 million ($70.9 million) net loss that widened considerably from a CNY6.5 million deficit the year before, although it enjoyed a slight reversal of fortune in the first quarter of 2008.
Eos Airlines became the second all-business-class carrier to shut down and the fifth US-based airline to declare bankruptcy in the past month, announcing Saturday that "some issues arose" that prevented potential investors from following through and that bankruptcy was the only option.
Continental Airlines said it will not merge with another airline, squelching speculation that it was interested in a tie-up with United Airlines, which conversely said that it would "pursue all options" and reportedly is in talks with US Airways about a possible combination.
Regional Express Holdings (Rex) will take full control and ownership of its joint venture pilot training academy at Mangalore, the Australian regional announced. It will be renamed Australian Airline Pilot Academy. First batch of cadets is scheduled to graduate this year and commence conversion training to Rex's Saab 340s.
Air China posted a net profit of CNY1.04 billion ($149.2 million) in the first quarter, up 147% from the CNY422.7 million earned in the year-ago quarter, on a 21% lift in operating revenue to CNY12.76 billion. Operating expenses jumped 15.43% to CNY12.04 billion. In addition to "stable growth in domestic demand," CA credited capacity increases and "accelerated" yuan appreciation for the improved result. It released no other details.
Austrian Airlines Group suffered a €60.4 million ($95.3 million) loss in the first quarter, widened from a €16.3 million deficit in the year-ago period, which prompted the company to say it expected a fall in full-year adjusted EBIT "due to the time-lagged effect of measures implemented through adjustment of fares and surcharges." Despite the "continued deterioriation in market conditions," OS has not given up on expansion.
Air New Zealand said it will miss its full-year earnings target owing to "continued increases in the price of jet fuel." It said in February when releasing its half-year earnings that it expected to improve on its full-fiscal-year earnings before taxation and unusual items, but now it "will not achieve this outcome." Based on projected fuel costs and "the current demand environment," it is targeting NZ$200-NZ$220 million ($158.4-$174.2 million) in normalized earnings for the year ending June 30. March passenger numbers rose 4.5% year-over-year and yield fell 0.5%.
Republic Airways Holdings reported first-quarter net income of $20.2 million, up 4.5% from $19.3 million earned in the year-ago period. Revenue grew 25.3% to $363.9 million while operating expenses rose 26.5% to $298 million. Operating income incrased 20% to $65.8 million from $54.8 million. "The big news happened after the quarter closed," CEO Bryan Bedford said, referring to Frontier Airlines' cancellation of its air service agreement ( ATWOnline, April 24).
In a surprise move, SkyWest Inc. made an unsolicited bid to acquire financially beleaguered ExpressJet Holdings Inc. and revealed that it had negotiated a capacity purchase agreement with Continental Airlines contingent on the acquisition taking place. ExpressJet Holdings announced Friday that it had rejected SkyWest's offer of $3.50 a share in cash, which represented a 67% premium over the April 24 closing price of $2.09 per share. It called the offer an "opportunistic attempt to acquire the company" below its true value.
American Airlines flew 11.6 billion system RPMs in March, down 2.8% from the year-ago month, against a 4.6% decline in capacity to 13.82 billion ASMs. Load factor rose 1.5 points to 83.9%. American Eagle Airlines flew 685.1 million RPMs, down 9.5%, and 933.6 million ASMs, down 8.6%. Load factor fell 0.7 point to 73.4%. Alaska Airlines flew 1.7 billion RPMs in March, up 10.7% from the year-ago month, against a 5.2% increase in capacity to 2.1 billion ASMs that lifted load factor 4 points to 80.8%.
TAM changed the name of its cargo business from TAM Express to TAM Cargo. The growing unit generates revenue from carrying cargo in the bellies of its 110 passenger aircraft. It said it will invest BRL30 million ($17.9 million) this year on infrastructure for domestic cargo terminals and national and international freight systems. Its gross cargo revenue totaled BRL776.8 million in 2007, up 60% over 2006, comprising 9.2% of the Brazilian airline's total revenue.
Delta Air Lines CEO Richard Anderson and Northwest Airlines President and CEO Doug Steenland promoted the carriers' merger before Congress yesterday, insisting that the combination wouldn't affect competition and is necessary to allow the US industry to compete against large European and Asian airlines.
Wizz Air will open at a base at Kiev Boryspil and launch service to seven destinations on July 11. A320 service will be to L'viv (four-times-weekly), Kharkov (four-times-weekly), Odessa (daily), Zaporyzhzhia (thrice-weekly) and Simferopol (10-times-weekly). It also will operate from Simferopol to Kharkov (thrice-weekly) and L'viv (four-times-weekly).
Frontier Airlines flew 942.4 million mainline RPMs in March, up 14.7% from the year-ago month, against a 4.5% rise in ASMs to 1.12 billion. Load factor climbed 7.6 points to 84.8%. Yield increased 0.7% to 11.81 cents and unit revenue was up 10.5% to 9.96 cents. Allegiant Air flew 427.7 million system RPMs in March, a 36.6% increase over the year-ago month. Capacity climbed 32.7% to 492.6 million ASMs and load factor rose 2.5 points to 86.8%.
Deccan Aviation, which is in the process of merging its Deccan subsidiary with Kingfisher Airlines, reported a pre-tax loss of INR1.98 billion ($49.6 million) in the third fiscal quarter ended March 31, improved slightly from a INR2.12 billion deficit in the year-ago period. It credited a 36% rise in yield to INR3,274 for the result. Deccan said the combined network will be rationalized beginning with the summer schedule ( ATWOnline, March 31). In addition, it said that Chairman N.S.
Alaska Air Group, parent of Alaska Airlines and Horizon Air, reported a $35.9 million first-quarter loss that deepened from a $10.3 million deficit in the year-ago period. Excluding the effect of mark-to-market fuel hedge accounting, AAG lost $36.3 million compared to $15.8 million last year. Chairman and CEO Bill Ayer said the company "is in a good position relative to the rest of the industry," but that "high fuel prices are eroding our profits and revenues are not increasing enough to offset them."
