Air Transportation

Virgin takes low-risk punt to lift its UK flights

11 Jan 2019

Richard Branson’s airline is part of a group buying loss-making Flybe for a token 2 mln pounds. The domestic operator’s turboprops could funnel more people onto Virgin’s long-haul flights. Joining up with infrastructure firm Stobart and private equity firm Cyrus spreads the risk.

IAG tests EU appetite for destruction

9 Jan 2019

The parent of British Airways and Spain’s Iberia may fall foul of European ownership rules if the UK leaves without a deal, according to the FT. That could force it to sell Iberia. IAG’s best hope is that European states have little to gain from unwinding airline consolidation.

Budget air guru was passenger more than pilot

4 Jan 2019

Herb Kelleher’s Southwest Airlines took the romance out of flying, and undercut the industry’s luxury pricing with cheap, direct flights. Budget travelers owe him thanks, but they owe more to the influence of plunging airplane-manufacturing costs and rising passenger demand.

Hapless oil bets will drive airline M&A

4 Jan 2019

Air operators are divided into two camps on fuel prices. Ryanair and Lufthansa are prepared for a hike after locking in hedges. Smaller carriers are hoping for a fall. If their bet goes wrong, they could be gobbled up.

Airlines’ nosedive hints at wider turbulence ahead

3 Jan 2019

Delta sent sector stocks plunging by warning of slightly slower revenue growth even as it affirmed earnings guidance. With high fixed costs, the industry is vulnerable to any slowdown. Investors’ outsized reaction suggests fear about the economy has the upper hand over greed.

Drones prove disruptive capacity – in a bad way

20 Dec 2018

Rogue devices forced London's Gatwick airport to close, grounding flights and stranding thousands of passengers the week before Christmas. Even known risks with new technology - already highlighted by UK aviation authorities - can be hard to manage.

Thomas Cook epitomises Brexit cliff-edge risk

27 Nov 2018

The UK travel operator gave a second profit warning in two months. Foreign bookings hit by a hot summer aren’t the issue. Rising leverage, a suspended dividend and an outlook that depends on strong consumer demand are – and will stay bad until Britain’s EU exit is clarified.

EasyJet valuation is heading for lower altitudes

20 Nov 2018

The budget airline carried a record number of passengers in 2018. That will be hard to replicate since rivals are finally resolving their problems. Stiffer competition and higher costs will weigh on revenue. The premium at which the company is trading over most peers will shrink.

India could clear flight for Singapore Airlines

14 Nov 2018

The $8 bln carrier posted dismal quarterly earnings, weighed down by fuel costs. But opportunity may be knocking, as indebted rival Jet Airways comes into play. A deal by Singapore’s influential Indian partner Tata would bring newfound clout in a promising growth market.

Air France take-off will be pipped by Lufthansa

31 Oct 2018

The French carrier boosted revenue in the third quarter and is finally resolving long-running problems with unions whereas its German rival has been forced to scale back ambitions for 2019. However, the former has lower passenger targets and may take time to reach full speed.

Ryanair wings recovery on consolidation prayer

22 Oct 2018

Strikes, lower fares and higher fuel costs lopped 7 pct off the budget airline's earnings in its busiest season. Ryanair's high margins and oil hedges are a buffer. But it's relying on less well-protected rivals stalling for its own performance to take off.

Italy tries more state medicine to heal Alitalia

12 Oct 2018

The radical government wants the finance ministry and local railways to support a 2 bln euro rescue for the ailing airline. State involvement may scare off potential international partners and make it harder to cut costs. Taxpayers would once again bear the costs of failure.

Losing reliability is biggest threat to Ryanair

1 Oct 2018

Europe’s largest budget airline cut its full-year profit forecast by 12 pct due to strikes and higher fuel costs. Less profitable rivals are facing similar headwinds. But Ryanair customers are unsure it will fly at critical times like Christmas. That’s a harder issue to fix.

Fastjet turbulence flags African continental drift

28 Sep 2018

The airline set up by easyJet founder Stelios Haji-Ioannou needs equity after Tanzanian intransigence. A bet on Africa’s growing middle class, it underplayed local resistance. Hostility to foreign capital means less investment, fewer cross-border firms and lower growth.

India’s Jet can redeem some air miles to ease pain

28 Aug 2018

After a quarterly net loss of $190 million, the country’s second-largest airline badly needs cash. It has laid out a list of planned fixes, including somehow tapping its loyalty programme. That won't solve its engine trouble, but may help smooth out some of the turbulence.

Unions the first of many fights for Air France CEO

17 Aug 2018

As the airline’s first foreign boss, Ben Smith will face labour strife that ousted his predecessor and has cost 335 million euros. But the former Air Canada executive must also tackle the weak governance, competition and soaring costs that threaten the carrier’s survival.

Ryanair budget model is being eroded

23 Jul 2018

The carrier’s post-tax profit fell by a fifth due to strikes and a heatwave that encouraged people to holiday at home. But these one-off problems pose less of a challenge to CEO Michael O’Leary’s low-cost business than rising staff costs and the risk of a chaotic Brexit.

HNA’s market thaw provides only cold comfort

20 Jul 2018

Three listed units of the troubled Chinese conglomerate lost a combined $1.5 bln in value after long trading halts ended. It signals a lack of confidence about HNA’s restructuring plans as it regroups without its late chairman. Pity investors trapped by a 10 pct downside limit.

Europe airlines show strike pain is for passengers

18 Jul 2018

EasyJet expects a 45 pct rise in pre-tax profit in 2018 thanks to more passengers and charges on checked bags. The limited damage that French air controllers’ strikes inflicted on the company and its peers reveals such disruptions are more a problem for customers than carriers.

Delta’s refinery is short of fuel-price alpha

12 Jul 2018

The $35 bln U.S. airline’s growing top line has so far outpaced the rising cost of oil. But the company warned fuel will squeeze its profit for the full year. The 2012 purchase of a refinery has only modestly mitigated the problem. To justify owning it, Delta needs more juice.