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Airline Finance News - Europe.

Nov 27, 2006

Aer Lingus

Impact, which represents Aer Lingus cabin crew, pilots and "middle managers," said the takeover "would have led to massive job losses, intolerable working conditions and a near monopoly on air travel from Ireland to key destinations." The vote came a day after Ryanair CEO Michael O'Leary confirmed the LCC's intention to keep its bid at [euro]2.80 ($3.59) per share. Nov 23, 2006

Aer Lingus

Aer Lingus staff holding 12.6 percent of the airline rejected on Wednesday a takeover bid from budget carrier Ryanair, effectively ending the current approach. Ryanair faced intense opposition to its planned takeover from management, staff and major shareholders and was not expected to get enough shareholders to accept it without raising the 2.80 euro per share offer. Some 97 percent of the Employee Shareholder Ownership Trust (ESOT) -- the third largest shareholder in Aer Lingus after the Irish government and Ryanair -- who participated in the ballot voted to reject the offer. Nov 22, 2006

Aer Lingus

Aer Lingus's share price held above the 2.80 euro offer price for more than four weeks after the October 5 approach -- and at one point rose as high as 3.05 euros -- on expectations Ryanair would have to raise the bid. But the shares have slipped back in the past two weeks amid thin trading. They were down 1.2 percent at 2.65 euros on Wednesday afternoon, but still well above their 2.20 euro listing price. Nov 22, 2006

Aeroflot

Aeroflot CEO aims for increases in domestic share, long-haul fleet. Aeroflot currently holds 14% of the domestic market and flies to 25 destinations in Russia. Okulov said it is aiming for a 30% share by 2010. Aeroflot Chairman and CEO Valery Okulov said during an interview in Vienna that the carrier will post a 2006 profit of more than $200 million (it earned $220 million in 2005) and that there are no plans for an IPO despite the Russian government's August hint that it was prepared to part with its interest in the flag carrier. Nov 22, 2006

Aeroflot

Aeroflot's next step is to expand European services and connect them more effectively via Moscow Sheremetyevo to the Far East. "We want to build a bridge between Europe and Asia. Our investment in the new Sheremetyevo 3 terminal is $150 million," he said. Russian banks have chipped in another $300-$400 million. By Nov. 30, 2007, all flights operated by SU and its partners will transfer to the new facility. Nov 22, 2006

Aeroflot, Dalavia Far East Airways, SAT Airlines

Aeroflot involved are Dalavia Far East Airways and SAT Airlines, according to an Aeroflot statement cited by Reuters, which said the move is part of the government's effort to transfer all state-owned airline stakes to Aeroflot. SAT flies from Yuzhno-Sakhalinsk to eight Siberian, three Japanese, one Chinese and two Korean destinations. Data on Dalavia was unavailable. SU earlier launched Aeroflot Don in Rostov and Aeroflot Nord in Arkhangelsk. Nov 21, 2006

Air France KLM

Air France KLM fuel charges rose 29 percent in the quarter to EUR1.17 billion (USD$1.5 billion), while commercial and distribution costs fell 6.9 percent and widely watched staff costs rose 6.7 percent. Nov 23, 2006

Air France KLM

Air France KLM on Thursday reported second quarter operating earnings up 7.8 percent to EUR568 million (USD$735 million) and increased its merger synergy targets as it remained confident on full-year earnings. The gap came as a 19 percent increase in passenger operating profit to EUR505 million (USD$653.5 million) met headwinds from a EUR6 million (USD$7.7 million) loss in cargo operations, triggered by price pressure in Asia. Several analysts had expressed hopes Air France KLM would provide specific outlook figures given the importance of the second quarter, which includes the northern hemisphere summer. Nov 23, 2006

Air France KLM

Air France KLM said on Thursday it was in exploratory tie-up talks with Alitalia at the request of the Italian airline. Air France KLM Chief Executive Jean-Cyril Spinetta told a press conference the French and Italian airlines had always targeted a merger in the long-term. However, he said there was no change in his airline's position on Alitalia. It has repeatedly said Alitalia must be privatized and turned around financially before a merger. Italian Prime Minister Romano Prodi challenged Air France KLM in a newspaper interview, published on Thursday, to clarify its position on a merger. Nov 23, 2006

Air France KLM

Air France KLM said unit revenue per "equivalent available seat kilometre," a profitability measure which combines passenger and cargo operations, rose 3.6 percent as group revenues rose 8.8 percent to EUR6.13 billion (USD$7.93 billion). Nov 23, 2006

Air France KLM

Air France KLM, the world's largest airline by revenues, also posted a sharp drop in net profit for the three months to end-September to EUR374 million (USD$484 million), but this was expected because of a large capital gain a year earlier on the sale of a reservations system stake. Nov 23, 2006

Air France KLM

Air France KLM's Spinetta said that the airline had always supported the idea of an eventual merger and was discussing with the Italian airline how soon its turnaround plans would bring it back to breakeven, whether they shared the same vision and what synergies could be created. Spinetta's comments sent Air France KLM shares down more than 6 percent. Air France KLM on Thursday posted a higher second-quarter profit and lifted its synergy targets. Nov 23, 2006

Air France KLM

Air France KLM's yield, the underlying amount it makes from each passenger, rose 4.7 percent as it adopted a firmer price policy to ease its high load factor, executives said. Unit costs per available seat kilometre fell 1.1 percent. An aviation consultant to the Italian government suggested on Tuesday Italy should purchase aircraft worth EUR4.5 billion (USD$5.8 billion) from France-based Airbus to convince Air France KLM to buy a sizeable stake of struggling Alitalia. Economist Alfredo Roma, a former head of Italy's aviation authority, also said saving Alitalia would be "one of the main subjects" at a meeting between Italian Prime Minister Romano Prodi and French President Jacques Chirac starting with dinner in the Italian town of Lucca later on Thursday. Nov 23, 2006

Air France KLM, Alitalia

France is apparently reluctant to commit itself on a foray into the Italian market, expectations of a breakthrough faded on Thursday when Prodi told a French newspaper he had many doubts about a possible tie-up between the carriers. Air France KLM is seen anxious to calm any immediate merger talk resulting from the Franco-Italian summit until Alitalia's future becomes more certain. It has repeatedly said Alitalia must be privatized and restored to financial health before their small cross-shareholdings can be expanded into a full merger. Nov 23, 2006

Air France KLM, transavia

Air France KLM's new airline would be a jointly owned subsidiary of Air France (60%) and transavia.com (40%). It would be registered in France and personnel would have a working contract under French labor law. Flights would be sold via tour operators and directly on a seat-only basis to customers in France and the destinations served. Direct sales would be undertaken via the transavia.com website and its call center. Commencement of operations is planned for spring 2007. Nov 20, 2006

Airbus EADS

Analysts say Airbus EADS could mount a rights issue or new bond, with some suggesting the company could need EUR3 billion (USD$3.93 billion) to see it through development of the A350 XWB (extra wide body). A weakening dollar is also a threat as planes sell in dollars and EADS sources many components in euros, a currency which hit a fresh 19 month high against the dollar on Friday. The company also faces lower-than-expected income for several years because of delays of the A380 superjumbo, triggering speculation that EADS will need to find fresh funding, possibly by attracting new investors. Russian bank Vneshtorgbank has already bought a stake of more than 5 percent and the Spanish government has said it could be interested in raising its 5.5 percent holding. The exit of European defence firm BAE Systems from Airbus this year has added to speculation that new investors could be on the horizon. Yet analysts said the French will be hesitant about ceding too much control to new investors ahead of French elections set for next April. Nov 24, 2006

Alitalia

Italian Prime Minister Romano Prodi said in a newspaper interview he had many doubts about a possible tie-up between Air France KLM and Italian carrier Alitalia. A diplomatic source said on Wednesday that Prodi would look into whether the struggling Italian airline could strike a deal with Air France KLM at an Italian-French summit in Italy on Friday. Air France KLM has long been considered a possible suitor for Alitalia, but the Franco-Dutch group has said no merger would be possible until the Italian airline showed it had turned itself around. In a clear reference to French soccer hero Zinedine Zidane's infamous head butting against Italian player Marco Materazzi in the World Cup final in July, Prodi said the two countries needed to avoid "headbutts to the chest" to preserve their strong ties in various fields. Nov 23, 2006

Alitalia

Alitalia flew 3.4 billion RPKs in October, up 2.6% on the year-ago month. Capacity rose 1.7% to 4.51 billion ASKs and load factor improved 0.7 point 75.3%. Nov 20, 2006

British Airways

British Airways flew 9.58 billion RPKs in October, a 1.1% increase over the year-ago month. Capacity rose 0.8% to 12.78 billion ASKs and load factor was up 0.2 point to 74.9%. Nov 21, 2006

British Airways

British Airways yielded to union concerns over its effort to raise the normal retirement age to 65 from 55 for aircrew and 60 for ground staff as part of a series of concessions required to tackle the [pounds sterling]2.1 billion deficit in the New Airways Pension Scheme. "The airline has now included the option of a normal retirement age of 60 in return for increased contribution rates," BA said. Contribution by aircrew will rise to 11.25% from 6.5% for the first five years and by ground staff to 10% from 5.25%. All rates will be 10% after five years. Meanwhile, the company will raise its annual contribution to [pounds sterling]272 million from [pounds sterling]235 million. "Staff can still choose not to pay extra but it will mean working longer to get the same pension," CFO Keith Williams said. Nov 20, 2006

Finnair

Finnair's Asian traffic is increasing by over 20 percent a year and the carrier currently operates over 30 flights a week to China and Japan. Nov 24, 2006

Finnair

Finnish flag carrier Finnair said today that an agreement reached between the European Union and Russia on Siberian overflight payments will reduce its annual costs by EUR20 million (USD$26.16 million). The two sides announced the deal over the payments, which consist of navigational and extraordinary royalties, at the EU-Russia summit in Helsinki. Overflight payments at present cost Finnair close to EUR30 million each year. Over half of that consists of extraordinary royalty payments on air routes between Europe and destinations in China and Japan. For flights to Thailand and India the navigation payments are according to normal international standards. Nov 24, 2006

Lufthansa

Lufthansa said on Friday foreign shareholders now owned more than 45 percent of its stock but that it had no plans for a capital increase. In order to retain its operating license under European law and air traffic rights to international destinations outside Europe, an airline's foreign ownership may not exceed 50 percent of the share capital. The carrier has the right to issue new shares to domestic investors if foreign ownership breaches the 45 percent level. Nov 24, 2006

Lufthansa

Lufthansa spokeswoman said the company had no plans for such a step. The firm was confident that even without counter-measures, the foreign-owned stake would not reach 50 percent. The company is able to take a number of measures to ensure that its shareholder structure remains predominantly German. It is entitled to buy back its own shares once more than 40 percent are foreign-owned. Foreign holdings in the firm breached that level in August, but Lufthansa at the time welcomed the mainly US and British investors and said it had no plans to buy back any stock. Lufthansa is obliged to issue a statement when certain levels of foreign ownership are exceeded. If foreign holdings were to breach the 50 percent mark, Lufthansa can intervene, for example by denying foreign investors the right to enter their stock into its shareholder register, the spokeswoman said. Nov 24, 2006

Virgin Atlantic

Virgin Atlantic Airways argued that the UK-US regulations also should be removed immediately, saying there is "little if any connection between the sum-of-sector policy and...regulation of the flexible economy fare," according to CAA. The body maintained there is a connection, citing as an example how direct carriers' adherence to a Saturday-night-stay condition on most UK-US economy fares has limited the alternatives to the Y2 fare more so than in other markets. Nov 21, 2006

Z

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Nov 13, 2006
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Date:Nov 27, 2006
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