Airlines & Lessors

Kunpeng Airlines, the Xi'an-based JV regional carrier created by Shenzhen Airlines and Mesa Air Group, is scheduled to launch services today by opening 11 routes to destinations including Taiyuan, Tianjin, Yichang, Huhehaote, Nanchang, Zhengzhou and Hefei. It is noteworthy that Kunpeng was registered in Beijing but its operating base is located in Xi'an. Chinese industry analysts suggest that this "western attraction" for regional startups is driven partly by CAAC's policy of encouraging growth in the region through subsidies.

Air India could finalize another aircraft order by the end of November and the Indian government will not delay granting approval, according to Civil Aviation Minister Praful Patel. "If they complete their fleet planning by November-end, we can give in-principle approval by December," he told India's Economic Times.

A full-fledged bidding war for AeroMexico is now underway as the Saba family yesterday boosted its offer by more than 58% to MEX1.74 billion ($158.8 million), topping the bid valued at more than $150 million made earlier this month by a group of investors represented by Banamex.

Air France KLM is preparing to launch a bid for Iberia in conjunction with several Spanish companies, Madrid's Expansion newspaper reported. The consortium likely would include investment firm Torreal and publishing house Grupo Planeta, which currently is the largest shareholder in Vueling Airlines. The AF KLM offer would keep 51% of Iberia in Spanish hands, allowing it to maintain its traffic rights for non-EU and US routes. In recent weeks, AF KLM Chairman and CEO Jean-Cyril Spinetta has stated several times that the group is "studying" the Iberia dossier.

Kidde Aerospace & Defense, Monogram Systems and Moog were added as partners for Boeing's 787 GoldCare lifecycle support program. Kidde, an operating unit of Hamilton Sundstrand, is the exclusive supplier of fire detection and suppression systems for the 787. Monogram Systems will provide the complete water and waste systems for the aircraft while Moog will supply the primary flight control actuation system, which will control all of the primary flight control surfaces including spoilers and horizontal stabilizer.

Delta Air Lines yesterday rolled out an ambitious international expansion program for New York JFK that will include nine destinations not served by any other carrier operating at the airport. DL's new JFK schedule, which includes 14 new international destinations, will be launched next summer. "We are bringing service to new and unique locations around the world," CEO Richard Anderson said. "This is profitable and sustainable flying.

Gol's consolidated traffic (including Varig operations) increased 20.8% in August to 1.63 billion RPKs on a 71.8% rise in capacity to 2.99 billion ASKs, producing a load factor of 54.2%, down 22.9 points.

Midwest Airlines' recent sale to investment firm TPG Capital will result in hefty payouts of stock and cash to carrier executives, the Associated Press reported. Chairman Tim Hoeksema reportedly will receive more than $10 million in cash and stock while VPs Carole Skornicka and David Reeve are in line for $1.6 million each. CFO Curtis Sawyer and VP Scott Dickson will receive about $1 million each. Northwest Airlines is the largest shareholder in the TPG acquisition.

Alitalia Chairman Maurizio Prato testified before an Italian parliamentary committee yesterday that the troubled airline is in even worse shape than is generally acknowledged, a striking admission given the already wide acceptance of AZ's financial difficulties.

Continental Airlines' consolidated traffic increased 8.1% in August to 9.1 billion RPMs on a 4.4% rise in capacity to 10.6 billion ASMs, producing a load factor of 85.3%, up 2.9 points. Copa Airlines' traffic increased 20.5% in August to 441.2 million RPMs on a 21.1% rise in capacity to 565.6 million ASMs, producing a load factor of 78%, down 0.4 point. Sister carrier Aero Republica's traffic decreased 2.8% for the month to 88.4 million RPMs on a 3.1% lift in capacity to 149.5 million ASMs, producing a load factor of 59.2%, down 3.6 points.

China Eastern Airlines said yesterday it is moving to complete a stake sale deal with Singapore Airlines "as soon as possible" following Cathay Pacific Airways' decision earlier this week to back away from a CEA share purchase.

Southwest Airlines said in an investor update yesterday that third-quarter unit costs will rise 4%-5% owing mainly to a $25 million charge related to its voluntary employee buyout program. The cost increase is more than double its projected growth in quarterly unit revenue and caused analysts to project lower-than-expected earnings for the LCC in the quarter. JP Morgan's SWA third-quarter earnings estimate was lowered to 20 cents per share from 23 cents previously.

SAS said yesterday that it expects its fleet of 27 Q400s to remain grounded "for at least another week" to allow for required inspections and the replacement of landing gear components.

Oman Air signed an agreement with Aviation Lease and Finance Co. to lease six 787s for 12 years, with deliveries occurring in 2012, 2014 and 2015, the Arab Air Carriers Organization reported.

AirAsia X officially will announce its first long-haul, low-cost route and open bookings Friday, CEO Azran Osman-Rani told ATWOnline at the Routes Leaders Forum in Stockholm.

Cathay Pacific Airways abruptly backed away yesterday from its proposed bid to buy a stake in China Eastern Airlines that could have trumped the share sale agreement between CEA and Singapore Airlines. SIA and its parent Temasek earlier this month agreed to purchase 15.7% and 8.3% stakes respectively in CEA but the deal has not yet been approved by CEA shareholders ( ATWOnline, Sept. 5).

American Airlines parent AMR Corp. projected in a regulatory filing that third-quarter unit revenue will increase 3.7%-4.7%, surprising Wall Street analysts who had predicted growth of more than 5% and causing AMR's stock price to fall more than 14% yesterday. It marked the company's largest single-day share price drop since 2003.

AeroMexico's board said a $151 million bid by a group of Mexican investors represented by Banamex to take a controlling stake in the airline is "reasonable." The carrier, which currently is controlled by government holding company Consorcio Aeromexico, previously said that a $100 million bid by Mexico's Saba family was reasonable. It is unknown how long a decision could take on whether to sell the country's second-largest airline.

Air Canada introduced paperless boarding passes for customers who check in using a PDA or cell phone. The service allows the option of receiving an electronic boarding pass in the form of an SMS text message that the customer shows to airport security screening personnel and Air Canada gate agents in lieu of a paper boarding pass. The mobile service currently is available for boarding domestic Canada flights and those to international (non-US) destinations, including connecting flights, from 60 airports across Canada served by Air Canada and Jazz.

Malev Vice Chairman Peter Leonov has taken over the CEO position as well, replacing Lloyd Paxton, who left unexpectedly citing personal reasons.

Shenzhen Airlines plans to seek a share listing in three years when it enters into the second phase of its "369" strategy, Chairman Zhao Xiang told China Business News last week. The 369 strategy is divided into three phases, namely to expand its fleet to 70 aircraft in three years, 100 in six years and 160 in nine years. "Currently we don't have to go listed, which won't make any financial sense to us now," Zhao said. The carrier has negotiated more than CNY30 billion ($4 billion) in bank credits since its May 2005 transition from a state-owned enterprise to a private company.

Mesa Air Group placed CFO Peter Murnane on administrative leave late Friday following allegations by Hawaiian Airlines that he deleted data that could be material to the ongoing legal dispute over Mesa-owned go!'s entrance into the inter-island market last year.

Lufthansa Technik intends to invest close to €50 million ($70.1 million) to build a new engine MRO shop in Hamburg that is expected to boost repair capacity from 320 engines per year currently to 400. Construction of the facility, which will have 15,000 sq. m. of floor space, is set to begin next month with the first engine overhaul planned for early 2009. According to LHT Executive Board Chairman August Henningsen, "the new hall will make it possible to design engine overhaul production and processes so as to incorporate the latest thinking on these subjects.

Shanghai Airlines denied widespread speculation that Air China or China Eastern Airlines will merge with it to expand their market share in Shanghai, with one official insisting that SAL plans to "go its own way and become an international carrier."

Ryanair upheld its full-year profit guidance and said it expects net profits for the current fiscal year ending March 31 to rise 10% on the prior year.