Printer Friendly

Airline Finance News - Europe.

May 17, 2009

The European Commission yesterday published a "blacklist" of 12 airlines including Aeroflot, Emirates, Northwest Airlines (now a part of Delta Air Lines), Olympic Airways, Turkish Airlines and Royal Air Maroc that it said failed to address concerns about misleading customers on website ticket prices and breaching EU regulations. EC officials said they are alarmed by carriers disguising charges until the end of the booking process, offering online advertisements for very low fares to draw Web traffic even if those fares are not actually available and confusing consumers by posting fares in various currencies. Several major European network carriers including British Airways and Air France KLM narrowly avoided being put on the list after committing yesterday morning to address the shortcomings, EU Consumer Protection Commissioner Meglena Juneva said during a press conference called to present the results of the final report on an EU-wide "enforcement investigation" of misleading advertising and unfair practices regarding online airline ticket sales. May 15, 2009

A group of low cost airlines have come together to demand that the European Union (EU) gets the ball rolling on harmonising European air traffic management and implementing the long-awaited Single European Sky initiatives. The European Low Fares Airline Association called on the EU to start converging national aviation authorities into one efficient body [ETH] and deliver passengers and the environment considerable gains. A central recommendation urged the creation by 2010 of a single European aviation authority to handle both traffic management and safety issues, using the existing national authority headquarters as regional bases. May 13, 2009

European business aviation is pressing ahead with a move to better balance potentially huge and unnecessary costs of administering carbon trading. The Lisbon Strategy, the European Union's own action plan designed to make it the most dynamic and competitive knowledge-based economy in the world, was never going to sit comfortably with the impact of carbon trading on aviation's more modest emitters. At the heart of the 2000 blueprint was a commitment to Europe's smallest businesses to reduce additional administrative burdens coming from new EU regulations such as environmentally targeted market-based measures. That is why the move by the European Commission to wrap business aviation into the EU Emissions Trading Scheme from 2012 has met with such keen resistance, with its champions claiming that a one-size-fits-all approach is tantamount to regulatory slaughter. May 11, 2009

Aegean Airlines, Star Alliance

Aegean Airlines is expected to become a Star Alliance member. An event will be held by the end of this month in Athens, a source from the alliance told this website. Newest member is EgyptAir which joined Star last year as No. 21. Star CEO Jaan Albrecht said earlier that the alliance is working on a long-term project to become an alliance of the 50s, meaning up to 50 members. May 14, 2009

Aer Lingus

Aer Lingus has suffered a collapse in passenger numbers and revenue as it searches for a new chief executive, but low-cost rival Ryanair continues to grow its traffic. Aer Lingus' first-quarter revenues were 16 percent down on those for the same period in 2008. Total passenger numbers fell 6.5 percent and long-haul traffic suffered an even sharper drop, of 12.5 percent. Against this backdrop, the airline is to "review its long-term requirement for the long-haul capacity on order with Airbus". May 14, 2009

Aer Lingus

Aer Lingus will remove one of three aircraft at its Belfast International base next winter and temporarily cut five destinations owing to poor demand. It plans to drop BFS-Milan Malpensa in September with services to Faro, Paris Charles de Gaulle, Barcelona and Rome Fiumicino going in October. It said the aircraft and most of the routes at Belfast will be restored from March. It will also remove one aircraft at Dublin. May 13, 2009

Air France KLM, Boeing

KLM appointed Cabot Aviation to remarket 13 Boeing 737-300s/-400s to be phased out between 2010 and 2012. May 12, 2009


Alitalia said passengers are returning to fly despite lingering union issues and a barrage of complaints over flight delays, the Italian airline's CEO said Wednesday. Italy's national airline went bankrupt last year and was sold to a group of private investors, who relaunched it in January as a smaller airline with fewer staff. Air France-KLM bought a 25 percent stake in the relaunched carrier, which hopes to re-conquer the fourth-largest aviation market in Europe amid a severe industry downturn and stiff competition from a new high-speed rail service. But the airline has had a difficult rebirth, with low occupancy rates initially, sporadic threats by unions to go on strike and delayed flights that drew the ire of passengers. CEO Rocco Sabelli acknowledged the airline had struggled with punctuality in April but said the situation had improved. Flight occupancy rates have also been rising, with the load factor for flights to or from Rome rising to 68 percent in April from a low of 48 percent in January, he said. May 14, 2009


Alitalia plans to sign a deal soon with Rome's airport operator Aeroporti di Roma worth EUR100 million euros a year as part of the airline's greater presence here, he said. Air France-KLM CEO Jean-Cyril Spinetta also gave Alitalia a vote of confidence last week, saying the relaunch had been going as planned and that its finances are stronger than expected. Sabelli said the airline has been looking at ways to attract customers on the lucrative Rome-Milan route and plans to introduce new features such as a ticket subscription service and live television and email on board in the coming months. Alitalia filed for bankruptcy in August after years of losses due to strikes and inefficiencies. The assets that were not bought by the group of investors are being liquidated. May 14, 2009

American Airline, British Airways

A proposed alliance between American Airlines and British Airways would create a "monster monopoly," British entrepreneur Richard Branson said Thursday. Branson, whose Virgin Group controls BA rival Virgin Atlantic, said in a statement that an alliance between BA and American would strangle airline competition on routes between London's Heathrow Airport and the United States. Virgin Atlantic has asked the US Department of Transportation to reject the proposed alliance, which would allow BA and American Airlines to cooperate on schedules, fares and cost-cutting. Before it can approve the alliance, which includes other airlines in the OneWorld alliance, the Obama administration will accept public comment on the joint business arrangement. The application seeks an exemption from certain antitrust provisions. A final decision is expected within six months. AMR argues that there is no risk of a monopoly because more than 40 airlines fly between Europe and the United States. The company also said travelers will have greater access to cheap fares and smoother connections. The application, the second attempt by American and British Airways to expand their long-standing marketing ties, was submitted last August. The previous attempt failed in 2002 on questions over access to Heathrow. BA is the dominant carrier at Heathrow, where American also has a key presence. May 15, 2009

American Airlines, British Airways

A tie-up between British Airways and American Airlines would create a "monster monopoly", Virgin Atlantic boss Sir Richard Branson warned yesterday (May 14). Sir Richard said passengers would suffer from a tie-up which could allow the two airlines to set prices on key transatlantic routes. "If the proposed merger between BA and American Airlines is allowed to go ahead then the result for passengers, employees, communities and for fair and healthy competition, would be disastrous," he said. www.aa.comEE May 14, 2009

Austrian Airlines, Lufthansa

Lufthansa's offer for Austrian Airlines has been accepted by more than 85 percent of the Vienna-based carrier's shareholders, including state holding company OIAG, with a 41.56 percent stake, and the syndicate of Austrian core shareholders that account for about 7 percent. Austrian executive board member Peter Malanik says a deal -subject to European Commission competition approval and EUR500 million (USD 682.7 million) in restructuring aid -should close this summer. Austrian made a EUR77 million first-quarter operating loss. May 13, 2009

Austrian Airlines, Lufthansa

Lufthansa has filed its formal request for EC approval for its bid to take over Austrian Airlines. The EC is already reviewing the bid over its concerns about the price and the restructuring plan. The first phase of its review is expected to be completed by June 17. Wolfgang Mayrhuber, Lufthansa's chairman and ceo, has said that his airline will not proceed if the EC rules against it. The EC launched its investigation into the take over in February citing three elements of the deal with which it was unhappy. In the first part of the deal, Lufthansa agreed to pay the Austrian government U366,268 for its 41.6 percent stake. The second part of the agreement was that the Austrian state received a "debtor warrant" from Lufthansa which might lead to additional payments. The last element was that the Austrian government paid Lufthansa U500m for a "capital increase" in Austrian Airlines. As well as concerns over the price, the EC said it also doubted "whether the sale was truly open, transparent and unconditional and whether the State really acted as a market economy investor." www.aua.comEE May 11, 2009

Austrian Airlines, Lufthansa

Lufthansa's share offer for Austrian Airlines has ended in success May 11 after 85 percent of shareholders agreed to sell. The figure, not including the 41.56 percent stake held by Austrian, fulfils the 75 percent threshold set under the terms of the takeover. Lufthansa and Austrian said the exact number of shares would be released later this week. Austrian Airlines board member Dr Peter Malanik said: "By achieving the 75 percent threshold, we have fulfilled an essential condition in the takeover contract. www.lufthansa.comEE May 11, 2009

AWAS, Cargoitalia

AWAS delivered the first MD-11F to re-launched Cargoitalia. The aircraft will enter service this month. May 13, 2009

Bmi, Lufthansa

European Union antitrust authorities on Thursday approved the takeover of British carrier Bmi by Lufthansa. The German carrier agreed to take control of bmi last October after founder Sir Michael Bishop exercised an option to sell it his 50 percent plus one share stake. Lufthansa already had a 30 percent minus one share stake, while Scandinavian airline SAS has 20 percent. In Germany, a Lufthansa spokeswoman said that with the approval one of the conditions for the takeover was met, "but not all". She declined to go into further detail. The Commission is also investigating Lufthansa's proposed takeover of loss-making Austrian Airlines, having questioned the price and restructuring, and also its plan to buy Belgian rival Brussels Airlines. May 15, 2009

Bmi, Lufthansa

German flag-carrier Lufthansa has secured European clearance to acquire a controlling share in the UK operator BMI, after regulators concluded that the two airlines already co-operated on routes where their networks overlapped. Lufthansa is planning to raise its share of BMI to 80 percent. The European Commission, having analysed the proposal, says that it will "not significantly impede effective competition". May 14, 2009

Bmi, Lufthansa

Lufthansa is asking fellow shareholders in Britain's Bmi to inject more capital into the carrier ahead of an agreed acquisition, according to a source close to the talks. The German carrier agreed to take control of bmi last October after founder Sir Michael Bishop exercised an option to sell it his 50 percent plus one share stake. Lufthansa already had a 30 percent minus one share stake, while SAS Scandinavian Airlines has 20 percent. Lufthansa will be forced to pay a price for the stake agreed when the original deal was struck in 1999 -- which the source said was around GBP300 million pounds (USD$455.5 million) -- but since then the value of airlines has deteriorated. Royal Bank of Scotland analyst Andrew Lobbenberg said he was not surprised Lufthansa was pushing for a better deal. Lufthansa, which is also working on takeovers of Austrian Airlines and Brussels Airlines, declined to comment. Bmi also declined to comment. Bmi slumped to a pre-tax loss of GBP100 million in 2008 on turnover of over GBP1 billion, having made a small profit in 2007, but analysts say its main value lies in its ownership of slots at Heathrow. Passenger numbers fell to 10 million from 10.6 million in 2008, and the load factor was 68.4 percent. The European Commission is expected to approve the sale of Bishop's stake to Lufthansa in the coming days. May 12, 2009

Bmi, Lufthansa

bmi's founder Sir Michael Bishop has snubbed Lufthansa's request for a GBP 100m capital injection into the British airline, reports said today (May 12). Lufthansa, currently in the process of taking over bmi, is reported to have asked shareholders to recapitalise or risk breaching regulatory rules. Sir Michael is understood to have turned down Lufthansa's request and denied any possible rule-breaking. Lufthansa is said to be concerned over a breach of a UK Civil Aviation Authority rule forcing an airline to have enough cash to operate for three months or risk losing its licence. But it has been claimed the request is an attempt to sweeten the takeover of bmi which has been hit hard by the economic downturn. www.lufthansa.comEE May 12, 2009

Cyprus Turkish Airlines

The legal action brought by Cyprus Turkish Airlines (CTA) to challenge the ban on direct flights to northern Cyprus will be heard this Monday, May 18 in the Administrative Division of the High Court. CTA and its UK tour operator, CTA Holidays Limited, is suing the Civil Aviation Authority (CAA) to compel it to lift the ban on direct flights between UK airports and northern Cyprus, which has lasted 35 years. Currently, CTA, together with all other airlines, must land in Turkey en route both to and from northern Cyprus. This increases flight times, airfares and fuel emissions, but has absolutely no operational justification. CTA claims the ban on direct flights to and from northern Cyprus is both unlawful and unjust. Recent legal advice seems to bear out CTA's claim. Two eminent QCs have already stated that there is no legal reason why the UK should not allow direct flights. May 16, 2009


Spain's prime minister on Wednesday proposed EUR240 million euros (USD$327.6 million) a year in support to airlines, the latest in a flood of initiatives to combat the country's worst recession in 60 years. Iberia and other airlines serving the country, such as British Airways and Lufthansa, would have their airport charges waived in return for boosting passenger numbers under the proposal. Airlines would have 100 percent of their monthly airport fees waived if they manage to equal or increase 2008 passenger numbers. Socialist leader Jose Luis Rodriguez Zapatero has proposed a string of economic stimulus measures during Spain's two-day State of the Nation debate, including support for the car industry, tourism, tax breaks for small businesses and an end to tax rebates on mortgages. Spanish passenger traffic in March dropped 18.9 percent year on year, figures from airports operator AENA showed, as recession-hit travelers cut back on travel. Spain is expected to be the last European Union member to return to growth, probably in 2011, according to the European Commission. Spain's tourism industry, the second largest in the world, is feeling the pinch as the global recession keeps foreign visitors, such as British and German tourists, at home while Spaniards rein in restaurant and hotel spending. The sector is worth about 11 percent of gross domestic product, making it Spain's second most important sector after construction. The country's once-thriving construction sector has been hit hard by the credit crisis, and unemployment is now the EU's highest at over four million, or 17.4 percent. May 14, 2009


Iberia should return to profitability next year, but management is so preoccupied with the worst downturn in memory that merger talks with British Airways are on the back burner, its bosses said. Iberia Chairman Fernando Conte said he was still hopeful of a tie-up to create Europe's third-largest carrier, even if it was taking longer than expected, partly because of market volatility and its effect on BA's pension deficit. Earlier on Tuesday, Iberia reiterated expectations of a net loss in 2009 after the company posted a worse-than-expected EUR147 million euro (USD$200 million) first quarter operating loss. In response to a 9.5 percent fall in demand in the first quarter, the airline outlined a plan to save between EUR110 million to EUR125 million by cutting 10 percent of the 21,500-strong work force, cutting 4.3 percent of capacity and other savings affecting its offices, suppliers and IT. In addition it will cut planned investments by EUR80 million to EUR90 million. Iberia's first quarter capacity reduction from January to February was greater than those by Air France, Lufthansa and British Airways, reflecting the particularly dire position of the Spanish economy and the effect on traffic. Analysts said a return to profit next year was expected since Iberia would enjoy the full benefit of lower fuel prices, however it was Conte's subtly upbeat comments on traffic trends that helped it lead a rise in European airline shares. He said traffic on short and medium haul routes would continue to enjoy the tentative stabilization recorded in March and April. Summer bookings were still unclear, he said, due to a trend towards last-minute reservations. May 12, 2009


Iberia has announced "severe" cost cutting measures after suffering a EUR92.6m loss in the first quarter. The plan will see EUR200m in savings through cuts in capacity, staff pay, purchases and external costs. The Spanish airline group blamed a steep decline in demand but said business travel had been hit hardest. Capacity cuts will be "selective and temporary", Iberia said, affecting those routes struggling the most from falling demand. Iberia denied cuts would affect any strategic routes and would not signal a withdrawal from any market. May 12, 2009


Iberia has said it plans to cut jobs and target pay to save more than U200 million (USD 272 million) after announcing worse-than-expected Q1 results Tuesday. The troubled airline said it lost U92.6 million (USD 126 million) during the first three months of 2009, adding that it was unlikely to post a profit in 2009 under current economic conditions. Iberia lost U28.3 million (USD 38.8 million) during the same period last year. Analysts had forecast a loss in the region of U117.5 (USD 161 million) for the same quarter this year. The airline said it had been hit by a decline in overall traffic accentuated by a dropoff among business travelers. May 12, 2009


Discover the World Marketing is handling sales and marketing for Icelandair in Italy. It already handles the carrier in Spain and Portugal. May 14, 2009

London City Airport

Airlines are "sailing close to the wind" in the way they present their fare prices, Richard Gooding ceo of London City Airport, said. He quoted one example of a fare advertised at GBP 2.49 but which came to GBP 93 when taxes and other charges were added. Mr Gooding said he found it "astonishing" the way airlines presented their fares in the way they do.He compared it unfavourably with how a shop gave the price of an item and its delivery with no extras with how airlines simply gave the basic fare. "Do airlines know they are misleading the consumer who wants to know what the cost is. It is quite hard to find out. "It seems to me that airlines are sailing close to the wind and that Brussels might be taking a look at what they are doing," he said. E May 12, 2009


Ryanair, the European budget airline known for adding an array of extra charges to its typically low base fares, announced new fees Wednesday as it abolishes check-in desks in favor of on-line ticketing, an innovation being studied by airlines worldwide. The Dublin-based company said everyone booking a seat on a Ryanair flight from May 20 onward will be required to print out their own tickets-at a mandatory cost of euro10 or 10 British pounds ($13.70 to $15.30) per passenger per round-trip journey. Anyone who fails to do this will suffer a euro40 or 40-pound ($55 to $61) penalty at the airport. This fee policy replaces Ryanair's previous practice of offering free on-line ticketing and charging extra for anyone who opted for face-to-face check-in. The old policy discriminated against passport-holders from outside the European Economic Area, who were barred until recently from checking in via Ryanair's Web site. May 13, 2009


Ryanair's CEO Michael O'Leary said he had not raised the company's outlook for 2008-09, denying an earlier news agency report. Following a press briefing in Milan earlier on Tuesday, Italian news agency ANSA had reported that O'Leary had said he now expected net profit of EUR60 million - EUR80 million (USD$82 million - USD$109 million) for 2008-09. In April, O'Leary said there was no reason to change guidance of EUR50 million - EUR80 million for the year ending March 31, 2009. Ryanair is due to report results for the year to March 31, 2009 at the beginning of June. O'Leary said he now expected it to take another 2-3 years until the opportunity arose for the budget carrier to enter the long-haul market. He also said price competition in long-haul was much fiercer than in European flights, making such routes less viable. At the moment, he said he expected carriers offering primarily European routes to benefit from jitters that flights to places such as Mexico and Latin America could raise the risk of contracting H1N1 swine flu following the recent outbreak there. Mexico's death toll from the H1N1 flu outbreak has risen to 56, the health ministry there said on Monday. Some 30 countries have reported cases of the flu, which has killed people in Canada, the United States and Costa Rica as well as Mexico. Rival easyJet's CEO Andy Harrison said last week there had been "no impact yet" from the swine flu outbreak. May 13, 2009


Ryanair called for the early sale of London Stansted after BAA figures confirmed that passenger traffic at the airport dropped 14 percent year-over-year in the first four months of 2009, including a 13 percent decline in April. May 12, 2009

Star Alliance

Star Alliance has enhanced its Conventions Plus product to include travel to major sports and cultural events. The airline alliance said it was keen to target a new group of event organisers on its network. Conventions Plus aims to give event organisers access to simplified travel arrangements across the Star Alliance network. Star Alliance said organisers would also receive a support programme including tickets and promotional help. May 14, 2009

Star Alliance

The Star Alliance is preparing a new corporate governance scheme that will prepare the group for a massive increase in members. The airline group has launched an "alliance of the 50s" initiative that is supposed to enable Star to increase the number of airline members from the current 21 to up to 50. The scheme is to be through the final stages of negotiations in June, and is understood to be presented in Kuala Lumpur on the sidelines of the IATA World Air Transport Summit. Star Alliance is adding more members, such as Air India and TAM Brazil, but it is talking to additional candidates that, according to industry sources, include Copa and Taca in Central America where the alliance has no local member yet. In its earnings announcement last week, Copa noted that Continental has announced its intention to leave SkyTeam effective Oct. 24, and "due to the long-standing alliance relationship with Continental, and in order to ensure Copa remains fully aligned with Continental on a number of important joint initiatives, Copa will also be leaving SkyTeam concurrently with Continental on Oct. 24, 2009." Star CEO Jaan Albrecht says that internal workings of the group have evolved as the alliance grew, but that further enhancements are needed. He declined to be more specific about details of the new governance as parts of it are not finalized yet reported AWST. May 11, 2009


A row between European travel company TUI and its largest shareholder John Fredriksen sent shares in the tourism group down by 8.5 percent Wednesday as the Norwegian tycoon questioned TUI's shape. Fredriksen, who raised his stake to about 18 percent in the run-up to the annual shareholder meeting, questioned how TUI would be able to service its debt load, which added up to EUR2.6 billion euros (USD$3.55 billion) in May. Fredriksen's has twice tried to oust TUI Chairman Juergen Krumnow and make himself a member of the supervisory board. The audience applauded Troim's criticism of TUI's failure to pay a dividend, was outraged when he listed TUI's proposals to solve the enduring battle for board seats, and laughed when he tried to sooth concern about a future rift on the board. TUI CEO Michael Frenzel appeared unimpressed and said turning TUI into an asset management company was unacceptable. TUI holds a 51 percent stake in Europe's largest leisure travel company TUI Travel -- which made up almost all of the group's sales last year. Both the shipping and tourism industries have been hit badly by the global economic downturn which has forced companies and households to tighten travel budgets, while shipping companies mothball vessels as freight rates dive. Losses at TUI widened in the first quarter despite having cut capacity to offset lower travel demand. May 14, 2009

Ukraine International Airlines

Ukrainian government intends to sell its 62 percent stake in Ukraine International Airlines, according to a government statement cited by Reuters. Existing shareholders Austrian Airlines (22.5 percent) and European Bank for Reconstruction and Development (10 percent) will have rights of first refusal. May 11, 2009


Vueling said it increased passenger traffic by 11.3 percent in April on the back of Easter travel and new ways of selling its tickets. Vueling bucked grim industry trends last month by predicting it would make its first full year profit this year after turning around the airline with a new route network focused towards business travelers, an income boost from non-fare revenue and cost cutting. Easter fell in March last year, inflating the April numbers, but the spokesman said the seasonal effect was only part of the story. Vueling's decision to sell through electronic booking systems such as Amadeus as well as travel agents employed by corporate customers, was a big factor. Among rivals, British Airways flew 0.9 percent more passengers in April, EasyJet 6.3 percent more and Ryanair posted a 12 percent jump. Iberia publishes data on Tuesday. Vueling is in the process of merging with Iberia's low-cost start-up Clickair and said last week that the new airline -- also known as Vueling -- expected synergies of some EUR65 million euros (USD$88.45 million) a year. May 12, 2009

ZZ AirGuideBusiness 090518

Editorial eMail: For Air Transport & Travel Business Experts contact our Director of Content Aram Gesar eMail: For Advertising and Marketing: For Custom Content: ISSN 1939-666X - Copyright [c] 2009 AirGuide / Pyramid Media Group, Inc. All rights reserved. May 17, 2009
COPYRIGHT 2009 Pyramid Media Group, Inc
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2009 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:AirGuide Business
Geographic Code:4EUUK
Date:May 18, 2009
Previous Article:Airline Finance News - Asia / Pacific.
Next Article:Airline Finance News - Latin America / Caribbean.

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters