Air Transportation

London’s island airport may yet fly

2 Sep 2014

Opponents of the plan to build a brand new airport in the Thames estuary have won support from a government-appointed arbiter. The four-runway project is hard to square financially. But Boris Island has a champion who may yet win the power needed to push the proposal through.   

Qantas maps out smoother flight path for investors

28 Aug 2014

The Flying Kangaroo has capped a torrid year with a record loss. But CEO Alan Joyce is cutting costs, writing down the value of Qantas’ fleet, and separating its international unit. Debt is down, while capacity growth in the industry is slowing. No wonder the shares are rising.

Aircraft leasing flies back into vogue in Asia

12 Aug 2014

Western financial groups bailed out of the business after the crisis. Now China’s sovereign fund and Li Ka-shing may be getting on board. Strong forecast demand for aircraft orders explains the appeal. Even so, access to cheap and reliable sources of finance will be crucial.

Virgin America needs clear skies for IPO to fly

11 Aug 2014

Executives reckon the airline’s worth $1 bln. If it can keep climbing at a fast clip and hold costs down, that’s possible. But the industry’s prone to regular painful downturns. And those using Richard Branson’s Virgin brand don’t have the best track record as public companies.

Malaysia throws airline investors a parachute

8 Aug 2014

The state investment fund is paying $436 million to buy out the remaining shares of Malaysia Airlines. The offer gives investors a price they last saw in February, before the already-troubled carrier was struck by two disasters. Taxpayers and employees may not be so fortunate.   

Safeguarding the A380’s future will cost Airbus

30 Jul 2014

Investors welcomed the aircraft maker’s strong sales and improving margins. But the slow-selling flagship A380 needs a costly redesign and could benefit from Airbus’ expertise in modernising proven models. In the short run, that will dent profit. 

U.S. airline payouts to investors neglect history

25 Jul 2014

A year out of bankruptcy, American has set its first dividend in 34 years. United will buy back stock. But the industry has a woeful record of rarely covering its cost of capital and often losing billions. On a 7-9 year cycle, U.S. carriers should already be conserving cash.

Low-cost plan at Air France-KLM is a bad idea

25 Jul 2014

The Franco-Dutch carrier is mulling a move on Europe’s no-frills carriers. Air France-KLM has reaped rewards from a painful but mostly successful cost-cutting programme. It could undo the good work by challenging super-efficient budget airlines Ryanair and easyJet.

Asian airlines strive for return to mediocrity

22 Jul 2014

Tragedy and political upheaval provide a chance for Malaysia Airlines and Thai Airways to restructure deeper than before. State shareholders can help or hinder. Even when in good shape, running an airline in an oversupplied region is a tough business.

Business faces tough adjustment to post-MH17 world

21 Jul 2014

Western governments are rounding on Russia after the crash of MH17. Sanctions against the country will be toughened, regardless of business not being ready for a prolonged economic conflict. Obstinate Russian bulls should be prepared to pay the price of escalating tensions.

Malaysia Airlines plight points to riskier world

18 Jul 2014

Fatal air passenger accidents almost never happen. Malaysia Airlines has been struck by tragedy twice in four months. The aviation industry has its own challenges. Yet even more robust businesses need to consider political risk carefully.

Boeing can weather the loss of U.S. Ex-Im Bank

10 Jul 2014

The export lender financed 18 pct of the jet maker’s deliveries last year, or about $8 bln worth of planes. If Congress grounds the bank, Boeing might have to triple the credit it extends to sometimes risky customers. That could cloud the bottom line but won’t ruin the forecast.

Lufthansa embarks on ill-fated no-frills odyssey

9 Jul 2014

New CEO Carsten Spohr is pushing the German carrier into a high-risk experiment – pioneering low-cost, long-haul flights. The strategy rests on an unproven business model and is hobbled by inconsistencies. Lufthansa might want to cancel the flight.  

French persist in dead-end strong-euro moaning

8 Jul 2014

The Airbus CEO is the latest to complain about the strength of the single currency, echoing similar grumbles by the French prime minister a week ago. But the ECB is right: exchange rates can’t be a primary target of monetary policy.

Rakuten’s airline adventure a worry for investors

2 Jul 2014

Taking an 18 pct stake in AirAsia’s new budget carrier may be small for Japan’s $18 bln e-commerce giant. But the justification – boosting its travel website – is a stretch at best. Rakuten’s patchy investment track record is another reason to be sceptical about the new venture.

Alcoa tries to fly over Chinese aluminum glut

26 Jun 2014

The manufacturer is paying some $3 bln to buy private equity-owned Firth Rixson and expand its aerospace parts business. The deal looks pricey, but it does jet in handy cost savings and, potentially, fast growth in a high-margin business free of irrational Chinese competition.

China may get less than it bargains for from UK

18 Jun 2014

Britain’s $23.5 bln package of Chinese trade and investment comes with unspoken terms: keep quiet on politics, and don’t expect reciprocity. That’s not such a bad deal. Rule of law means Chinese money buys less influence in the UK than it would back home. China may be getting more rambunctious, but openness is still the best response.

New Lufthansa chief starts with crash landing

11 Jun 2014

A few weeks into office, Lufthansa’s new CEO Carsten Spohr shocked investors by admitting the carrier will miss its 2014 profit target due to tough competition. The group will have to double down on cost-cutting. But regaining credibility will be a long-haul flight.

Etihad’s Alitalia grab not as loony as it looks

2 Jun 2014

After spending another 300 mln euros on struggling Air Berlin, the Abu Dhabi carrier gives Italy’s stricken flag carrier another lease of life. Acquiring yet another minority stake in a loss-making peer does make sense. And Etihad buys much-needed political clout in Europe.

China’s state-private battle takes to the skies

27 May 2014

Spring Airlines is typical of companies taking on government-backed rivals with a good idea and a knack for cutting costs. Help can come from unexpected places, like vain local authorities. Even if the upstarts don’t win the war, China is better off for their efforts.