Air Transportation

Only pilots can end Air France’s flight to nowhere

24 Jul 2015

Debt-ridden Air France-KLM has announced yet another round of cost-cutting after first-half losses rose to 638 mln euros. Closing loss-making routes and cutting winter flights are a start. But success requires the French pilots to follow the Dutch with substantial concessions.

Rolls-Royce’s new pilot puts safety first

6 Jul 2015

The aero-engine maker’s brand new chief has halted a share buyback programme. The stock slid 9 pct. The decison flags growing cashflow woes but safeguards a crucial investment grade rating. Rolls-Royce’s Warren East is acting with the kind of boldness the company requires. 

Heathrow offers quaint lessons in infrastructure

1 Jul 2015

After at least six years of heated debate, a British government-appointed panel has backed the idea of a third runway for London’s largest airport. China has built 44 new airports in that time. The UK’s deliberative approach has advantages, but now it’s time to start building.

AirAsia takes multi-stop route to capital-raising

18 Jun 2015

Concerns over debt and accounting have hammered shares in Asia’s largest budget carrier. It says a rights issue isn’t needed and can recoup cash from overseas offshoots. But this requires investors to put fresh capital into the loss-making affiliates. That won’t be an easy sell.

Kirk Kerkorian: the carmaking king who wasn’t

16 Jun 2015

The billionaire, who has died at age 98, helped shape Las Vegas. He was less successful, though, at trying to inject a unique brand of fuel into Detroit’s engine. Kerkorian’s career is a sobering lesson for Fiat boss Sergio Marchionne, who drives his own brand of auto activism.

TCI picks high-stakes fight in Spain

5 Jun 2015

Chris Hohn’s fund, the largest private investor in airport group Aena, is joining the company in challenging what it thinks is a misguided antitrust authority. Antagonising the supervisor is risky, but the accounting dispute puts more than 1 billion euros of value at stake. 

European pair channel Brussels in internet bust-up

4 Jun 2015

Accor and Lufthansa are taking on web-based distribution and booking platforms. The hotelier and the airline want to save money and profit from their proprietary data. But customers may not be keen on these independent digital strategies. Fragmentation could breed resentment.

BA owner flies in no-frills bid for Aer Lingus

27 May 2015

The Irish government has backed British Airways’ parent in its 1.4 bln euro offer for Aer Lingus. The 40 pct premium is less generous than it looks, given the wider rise in airline shares. Key shareholder Ryanair could push for more, but other investors shouldn’t bank on it. 

Jumpy easyJet investors mix up short and long haul

12 May 2015

Shares in the 7 bln stg no-frills carrier lost 7 pct after it toned down its full-year outlook. But the caution is mainly due to temporary woes like an air traffic control strike. EasyJet’s long-term ascent, fuelled by growth, low costs and rivals’ weakness, looks set to go on.

FedEx bets $5 bln on Europe’s potential with TNT

7 Apr 2015

The U.S. shipper’s cash bid for its Dutch rival comes two years after Brussels killed a takeover by rival UPS. The price is 20 times the weakened target’s 2016 earnings. That sounds high. But a strong dollar, cheap debt and sizeable synergies could help deliver decent returns.

Edward Hadas: Airline safety after the crash

1 Apr 2015

The German prosecutor says Andreas Lubitz was certified as a pilot despite treatment for suicidal tendencies. He seems to have deliberately crashed the Germanwings plane he was flying. The disaster looks like an aberration, but the industry’s approach to pilots needs a rethink.

Germanwings tragedy requires industry response

27 Mar 2015

The crash has drawn attention to less evident aspects of flight safety – possible risks posed by crew rather than passengers. That raises questions about procedures at parent Lufthansa and all airlines. But safety is an iterative process that innovates for unforeseen situations. 

Ryanair can afford to delay long-haul take-off

23 Mar 2015

Europe’s top no-frills carrier has confused investors with ambiguous statements about its intentions toward the transatlantic market. It’s easy to see why Ryanair might be in two minds. One problem is a lack of planes. And “low-cost long-haul” is a model full of contradictions.

Asian airlines need the right kind of mojo

23 Mar 2015

A soon-to-be-launched Malaysian carrier, Flymojo, is the latest cloud in Southeast Asia’s overcrowded skies. More competition is the last thing a recovering sector needs. It’s a reminder that in aviation, overcapacity and financial losses are always just around the corner.

U.S. airlines throwing stones from glass hangars

27 Feb 2015

Delta, United and American want trade deals changed, arguing Gulf rivals are unfairly subsidized. That’s rich, given the bailouts, antitrust exemptions and other goodies these three enjoy. Blowback from domestic peers may persuade them that whining to Uncle Sam won’t fly.

Weak euro can lift Airbus profit further

27 Feb 2015

The European aircraft maker pleased investors with higher-than-expected operating profit and a 60 pct dividend hike. Higher profitability was driven by a weaker euro. With that currency tailwind likely to persist, the annual results give a foretaste of future improvements. 

Dividend shocker puts Lufthansa aerobatics to test

20 Feb 2015

The airline is scrapping payouts for the second time in three years - after two profit warnings and a long-running labour dispute. And new CEO Carsten Spohr has a worrying appetite for growth in a challenged industry. He needs some successes before his credibility is grounded.

Rolls-Royce’s margin of error is narrowing

13 Feb 2015

The UK engineer has met lowered 2014 revenue and profit targets but has become more pessimistic. Free cashflow, down 42 pct last year, is likely to halve again this year. Rolls’ strong balance sheet can cope for now. But if the trends continue, management faces some tough choices.

Aena IPO marred by its success

11 Feb 2015

The privatised Spanish airports group rose 20 pct on its debut thanks to a chunky yield and faith in the Iberian recovery. The issue did not look underpriced based on fundamentals. Even so, in Spain’s politically charged atmosphere, taxpayers may feel shortchanged.

Heathrow upstarts have London’s best airport plan

4 Feb 2015

A new runway may be finally built near the UK capital at a cost of up to $28 billion. The three rival proposals all seem to be financially viable, but the independently conceived scheme that would double the length of one of Heathrow’s existing runways looks best placed.