Airline Finance News.

Airlines expand fuel hedging programs. Some airlines are expanding their fuel hedging programs to protect themselves against a possible climb in oil prices. Soaring fuel costs have caused airlines to post large losses in recent years. Mar 24, 2006

IATA halved its loss forecast for 2006 to $2.2 billion from a previous forecast of $4.3 billion and now expects the world's airlines to earn $7.2 billion in 2007, increased from earlier estimates of a $6 billion profit next year. The improvement is being driven by events in North America and particularly the US, where a 3% reduction in domestic capacity coupled with strong traffic is producing double-digit unit revenue growth. Mar 24, 2006

IATA now expects US carriers to lose $5.4 billion this year, down from $10.4 billion in 2005. "Restructuring in the US industry has produced some impressive results, including a 34% increase in productivity," DG and CEO Giovanni Bisignani stated. Nonetheless, he said that at 33% of operating costs, "US labor costs are higher than their competitors in both Europe and Asia." Asia/Pacific carriers are forecast to earn $2 billion this year, reduced from $2.9 billion last year, while European airlines will see profitability decrease to $1.4 billion from $1.8 billion. The revised forecasts are based on crude oil prices of $57 per barrel (Brent) in 2006 and $52 in 2007. Mar 24, 2006

Airlines will post $7.2 billion profit in 2007, group says. The International Air Transport Association expects the world's airlines to post a profit of $7.2 billion in 2007, up from previous projections of $6.2 billion. IATA predicts the industry will lose $2.2 billion in 2006. The group expects carriers to benefit from strong demand and more efficient operations.

Mar 23, 2006

Airlines post higher yields, regain pricing power. Airlines yields indicate the industry is regaining its pricing power. Domestic yields have posted their biggest year-over-year increase since August 1993, according to the Air Transport Association. Domestic yield rose 12.2% in February for seven major carriers. Mar 23, 2006

High rents, fees curtail growth of Canadian carriers, official says. Canadian airlines face high airport rents and other fees that threaten their productivity, said Cliff MacKay, president and chief executive of the Air Transport Association of Canada. MacKay noted a new Open Skies agreement with the U.S. is set to begin in September and said continued high costs could affect related economic development. Mar 23, 2006

Pilot leaders help ailing airlines survive. Pilot leaders must walk a fine line as they negotiate contracts and pay cuts. On Wednesday, Bill Pollock stepped down as union chairman at US Airways, where he negotiated pay cuts that allowed the carrier to emerge from bankruptcy protection. "It was the full spectrum of human emotion and character," Pollock said. "It ranged from, on the one hand, the idealist cause of working hard to see the company return to profitability, to, on the other hand, every man for himself." Mar 23, 2006

Large airlines will continue recovery, analyst says. Large airlines will increase prices again and continue recovering, according to analyst Ray Neidl. Neidl raised his rating on most large airlines on Tuesday, citing strong demand and lower costs. Mar 22, 2006

US scheduled airlines' January employment rolls dropped 6.1% from January 2005 to 405,000, according to a US Dept. of Transportation report released yesterday, marking the 13th consecutive monthly decline in the number of full-time equivalent employees. The seven network airlines employed 270,000 FTEs, or 66.5%, while LCCs employed 17% and Regionals 14%. The latter figure represents a 1.8% year-over-year fall, the first decrease in Regional employment during the 13-month period. Mar 22, 2006

Airline stocks post gains ahead of summer season: Expectations of a strong summer travel season have pushed airline stocks higher in the past week. "We're going into the strong season of the year, fuel prices are perceived to be higher than the supply-demand equilibrium suggests, there's been significant pulldown in capacity, and pricing leverage is back in the airline industry," said Vaughn Cordle, chief executive officer of AirlineForecasts LLC and a pilot at a large carrier. "Add all those things up, and you have a nice, robust move upward in the airline sector." Mar 22, 2006

Airline workers struggle to book free flights. Airline employees are having a harder time booking free flights because so many planes are full. On average, planes fly with 22% of seats unsold, but many of those seats are on unpopular routes or at undesirable times. Mar 21, 2006

Experts praise progress in US Airways-America West merger. The merger of US Airways and America West is drawing praise from some industry observers. Chief Executive Doug Parker is carefully combining the company's employee groups. "We've certainly gotten through enough stuff that we have confidence that what's left is manageable," Parker said. "We've climbed a bit of the mountain, and the rest is sort of the same grade." US Airways saw its revenue per available seat mile increase 16% in the fourth quarter. Mar 21, 2006

Organizations differ over user fees. Some organizations are disagreeing over how much business aviation should pay to maintain the nation's air-traffic control system. The National Business Aviation Association says general aviation generates $500 million to $600 million a year for the Airport and Airway Trust Fund. However, the Air Transport Association says that contribution is less than 10% of the estimated $2 billion in trust fund revenue, and business aviation accounts for about one-third of flights under control of the nation's air traffic system. Mar 21, 2006

Airlines may be poised for more consolidation. The airline industry may experience more consolidation, some experts say. Carriers have reduced their costs, and three of the six major carriers are in bankruptcy protection. Mesa Air Group Chief Executive Jon Ornstein said the industry is near the end of a cycle of bankruptcies that resulted from high fuel costs and competition. Mar 21, 2006

Italian government said Friday that it conditionally approved Alitalia's [euro]38 million ($45.9 million) takeover of struggling Volare Airlines, according to press reports. Alitalia's bid had been challenged in court by domestic competitor Air One, which will continue to press its claims. The acquisition depends on Alitalia's keeping Volare's operations going for at least two years while maintaining year-end 2005 employment levels. If it fails to abide by these conditions or if Italy's antitrust authority opposes the deal, then Air One will be adjudged the winner of the bid, the Industry Ministry said in a statement. A partnership between Italian LCC Meridiana and former Alitalia subsidiary Eurofly will take Volare if Air One is unable to proceed. The ministry is overseeing the so-called extraordinary administration of Volare, which received permission earlier this month to take a [euro]25 million, six-month loan from the government. Earlier last week, Alitalia won its appeal in a Rome court against a previous ruling in favor of Air One. Mar 20, 2006

Latin American Airline Assn. members flew 10.88 billion RPMs in January, a 1.7% rise over the year-ago month. Capacity grew 1.3% to 15.02 billion ASMs, raising load factor 0.2 point to 72.5%. Mar 20, 2006

ANA - ALL NIPPON AIRWAYS

ANA and its subsidiary airlines face a 24-hr. strike Thursday by pilots dissatisfied with management's stance on new pay and working condition demands. If the strike goes ahead, ANA warned that up to 50% of domestic flights will be affected. Mar 22, 2006

DELTA AIR LINES

Delta, union must return to talks, arbitrator says. The head of an arbitration panel ordered Delta Air Lines and its pilots union to return to negotiations immediately. Delta says it must reduce costs related to the pilots' contract by more than $300 million a year; the union says the company does not need such deep cuts. Mar 24, 2006

DELTA AIR LINES

Delta pilots will not ratify deep pay cut, union leader says. Delta Air Lines' pilots are unlikely to approve the more than $300 million in concessions requested by the company, union leaders say. Delta says it needs the pay cuts to survive. Mar 23, 2006

Delta does not need deep cuts, pilots union says. Delta Air Lines' pilots union said the carrier does not need the $325 million in cuts it wants from the workers. An economic expert hired by the union told an arbitration panel Delta faces less competitive pressure than other major airlines. The carrier says it needs the cuts to survive. Mar 22, 2006

Delta bookings drop in April, May, CEO says. Bookings at Delta Air Lines have dropped because of the threat of a pilots strike, said Chief Executive Gerald Grinstein, who noted bookings for April and May are below normal levels. Delta's pilots said they may strike if an arbitration panel allows the carrier to void their contract, but Grinstein believes a settlement on a new labor contract will be reached this spring. Mar 21, 2006

Delta asks to void stock options: Delta Air Lines asked a bankruptcy judge to allow it to void some stock options held by current and former workers and directors. Delta said creditors and its pilots union support the move. Mar 21, 2006

Delta needs pilot deal, won't survive strike, Grinstein emphasizes. Delta Air Lines needs to have a cost-saving agreement with its pilots soon, CEO Gerald Grinstein said yesterday. Mar 21, 2006

Delta says it needs pay cuts to survive. Delta Air Lines says it must lower pilot pay to keep operating and to eventually emerge from bankruptcy protection. The pilots oppose the size of the cuts the airline says it needs. Mar 20, 2006

GOL LINHAS AEREAS INTELIGENTES

Gol announced that subsidiary Gol Finance is offering perpetual notes to finance the acquisition of 737NGs. The notes will be senior unsecured debt obligations and have no fixed maturity date; however, they are callable at par after five years. The amount of the offering was not announced. Mar 21, 2006

Mesa Air, Hawaiian Airlines

Mesa Air Group has countersued Hawaiian Airlines, according to the Honolulu Star Bulletin. In September, Mesa announced plans to start an inter-island carrier dubbed Project Hele with service to begin in the second quarter of 2006. In an effort to hold off the would-be competition, Hawaiian filed suit, claiming Mesa used proprietary information to bolster its startup proposal (, Feb. 15). Two years ago, Mesa expressed an interest in the Hawaiian carrier when the latter was in bankruptcy and had access to confidential information, and Hawaiian claims that information was used illegally. In turn, Mesa said Hawaiian is violating antitrust laws. It also charged that the carrier has pressured two local freight forwarding companies to refuse to handle parts and equipment for Mesa. Mar 21, 2006

NORTHWEST AIRLINES

Northwest speeds through bankruptcy. Northwest Airlines is moving quickly through bankruptcy, securing concessions with most major labor groups. Some experts say the bankruptcy process may damage the company's relationship with its employees and possible merger prospects. Mar 24, 2006

Northwest pilots leadership neutral on contract. Leaders of Northwest Airlines' pilots union took a neutral position on a tentative agreement reached with the company. Pilots will vote on the deal in April. Northwest, which filed for bankruptcy protection, said it must lower costs to keep operating. Separately, Northwest has indicated it might ask the Metropolitan Airports Commission for financial help. Mar 20, 2006

Commercial pilots deserve solid pay for expertise. Airline pilots deserve decent pay for getting airplanes from departure to destination, Bob Buck writes in this opinion piece in the New York Times. Buck, a former airline pilot, is the author of "North Star Over My Shoulder: A Flying Life." Delta Air Lines and Northwest Airlines are in contract negotiations with their pilots unions. Mar 20, 2006

Royal Jordanian

Royal Jordanian's profits increase 25%. Royal Jordanian reported a 2005 profit of JOD21.7 million ($30.6 million) before deducting a share to be distributed to employees, up 25% from net earnings of JOD17.2 million in 2004. Mar 22, 2006

Saudi Arabian Airlines 

Saudi government approved the privatization of Saudi Arabian Airlines Tuesday, according to a statement from the Supreme Economic Council cited by local press reports. Mar 23, 2006

United Airlines

United upgrades service to attract customers. After three years in bankruptcy court, United Airlines is trying to win back customers, the Wall Street Journal's Scott McCartney writes. The company is adding in-flight entertainment and larger storage bins, for example. United also plans to push down its costs and fly its airplanes more. Mar 21, 2006

World Airways

World Airways pilots, represented by the International Brotherhood of Teamsters, ratified a three-year contract by a vote of 242 to 132. Pilots and company officials reached a tentative agreement Feb. 5. Mar 24, 2006