Air Transportation

Norwegian Air is lesson in bare-bones bailout

14 Apr 2020

The airline’s future hinges on creditors swapping $4.3 bln of debt for its nearly worthless equity. That would unlock enough state funds to allow the company to operate as a regional carrier. Its loss-making dream of a low-cost transatlantic revolution is dead whatever happens.

Rolls-Royce secures extra viral flying time

6 Apr 2020

The aero engine maker axed its 2019 dividend and borrowed an extra 4 bln pounds. That buys it time to cope with grounded planes which are costing it 50 mln pounds a week. Its key market, long-haul flights, may be the last to recover. But Rolls should have enough cash in the tank.

Virgin has bailout headwinds besides Branson

3 Apr 2020

The bearded businessman’s airline wants 500 mln pounds in UK state aid. Supplier Rolls-Royce wants it to stay aloft; arch-rival British Airways does not. Branson’s non-resident status, a big U.S. co-owner and Virgin’s shaky financial record mean the government may agree.

Airlines face overdue dilemma taking Treasury cash

1 Apr 2020

U.S. bailout funds come with strings attached, like handing the feds stock. Taking the money means keeping more employees, but diluting shareholders. For arch-capitalists, that's objectionable. For society at large – and to ensure readiness for a recovery – it's only fair.

Corona Capital: GE, Oaktree, M&A back doors

1 Apr 2020

Concise views on the pandemic’s corporate and financial fallout. GE delivers its own form of cash injection, hedge fund boss Howard Marks praises heavy-handed Covid-19 responses, and a car-parts maker flirts with bailing on a deal.

Singapore Airlines secures business-class bailout

27 Mar 2020

State investor Temasek is supporting a whopping $13 bln funding package. Deeply discounted equity and a zero-coupon convertible bond provide other shareholders a chance to bet on a post-crisis recovery. The hard-to-copy playbook could even give the carrier a longer-term edge.

America should bail out airlines the American way

26 Mar 2020

A $50 billion government lifeline hardly sounds like capitalism. But the U.S. has been an outlier in not propping up its airlines. Bank bailouts already showed the public can emerge better off. The key is to strike a good deal, even if that means taxpayers end up holding equity.

Korean Air drama risks ending in corporate tragedy

25 Mar 2020

Feuding siblings, white knight Delta Air Lines, and a pushy activist are all battling over the country’s top carrier. Change is overdue, but debt worth 862% of equity has left Korean Air more vulnerable than peers to a pandemic. Any victory from the proxy battle will be pyrrhic.

New Zealand airline rescue puts taxpayers in first

24 Mar 2020

The national carrier has received a $514 mln state lifeline that ensures its survival. A high interest rate should ensure any loan is repaid quickly, while shareholders share the pain through suspended dividends. It’s a model for other countries considering bailouts to follow.

Chinese travel site charts course out of virus fog

19 Mar 2020

As most of the world hunkers down in place, $12 bln Trip reckons it may be through the worst of it. First-quarter sales are expected to halve, but boss Jane Sun also sees a rebound at home where the epidemic may be ebbing. It offers a glimmer of hope in a sea of economic gloom.

Trump bumps smart infrastructure punters to coach

12 Mar 2020

The U.S. president’s Europe travel curbs crushed securities in the region’s top airports. Robust revenues attracted sharp, long-term investors to hubs like Paris-de Gaulle and London Heathrow. Plummeting footfall and high debt levels will challenge their status as safe havens.

Virus-hit airlines can fly without state thrust

12 Mar 2020

A U.S. ban on European travellers hammered airline stocks on both sides of the Atlantic. Washington doled out $15 bln of aid after the post-9/11 shutdown. But airlines are bigger now and fitter, letting them ride out turbulence. Regulatory leeway may suffice.

U.S. virus bailouts require good instructions

11 Mar 2020

Donald Trump wants to help airlines weather the hit from Covid-19. Unlike cruise lines, also on his list, that makes sense. Some carriers, like Delta and United, may not need aid. But taxpayer rescues can work with the right structures. Breakingviews offers a bluffer’s guide.

Boeing airworthiness takes new viral hits

9 Mar 2020

The aircraft maker’s shares have plunged 25% in under a month – double the damage to the S&P 500. On top of the 737 MAX grounding, a possible pandemic weakens Boeing’s airline customers while also disrupting its supply chain. New CEO David Calhoun needs more than an apology tour.

Airlines are pure punt on V-shaped virus recovery

5 Mar 2020

The coronavirus has hammered demand for air travel, knocking share prices and pushing UK budget carrier Flybe into bankruptcy. Yet past outbreaks like SARS suggest it will be a blip on air travel’s steady upward trajectory. If that’s the case, stronger airlines will bounce back.

Rolls-Royce takeoff requires disbelief suspension

28 Feb 2020

The engineer made a $1 bln operating loss after issues in its aerospace arm. Shares rose after CEO Warren East said charges related to the Trent 1000 engine were now mostly over. To hit a $1.3 bln free cash flow target, investors used to bruising one-offs must take his word.

Viewsroom: BP, Delta shift out of climate neutral

20 Feb 2020

The British fossil-fuel giant and the largest U.S. airline have each pledged to effectively stop emitting carbon over time. The ambition is encouraging and puts them ahead of most rivals. But both fall short on all-important details. There’s plenty of runway to do better.

Air France lays down worrying coronavirus marker

20 Feb 2020

The Franco-Dutch airline’s shares fell 7% as it warned of a 200 mln euro hit from the virus. Rivals BA-owner IAG and Lufthansa will also feel the travel drag. Yet Air France-KLM’s estimates count on a quick resolution. That suggests even more pain could be ahead for investors.

Gulf thumbs up may limit new IAG CEO’s horizons

19 Feb 2020

Qatar Airways has upped its stake in the BA-owner to 25%. It’s a vote of confidence in Luis Gallego, who takes over the controls from Willie Walsh next month. But having a larger non-EU shareholder may reduce his scope for deals, especially across the Atlantic.

Delta’s climate journey needs better flight plan

14 Feb 2020

The airline is committing $1 bln over 10 years to be carbon neutral. CEO Ed Bastian makes the right noises from planting trees to working with stakeholders. But these grand pledges lack detail and accountability. That needs to change for such goals to be taken seriously.