Air Transportation

Italy’s corporate zombies haunt Letta reboot

9 Oct 2013

The Italian premier has derailed Silvio Berlusconi’s attempt to take down his government. Now his grand reform promises are tested by the problems of Alitalia and Telecom Italia, both victims of past attempts to block foreign ownership. So far, not so good.

Airbus has got the sales. Now how about profit?

7 Oct 2013

The European aircraft maker won over Japan Airlines, one of the few remaining Boeing-only carriers. The order of 31 A350 jets confirms the string of Airbus’ recent sales successes over its U.S. competitor. Now it should get to work on what its rival does better: profit.

Doubling down on Alitalia bad idea for Air France

3 Oct 2013

After having burnt 1.1 billion euros since its 2009 “fresh start”, the loss-making Italian carrier is once again close to the brink. It is trying to convince Air France-KLM to add to its 25 percent stake. The French group isn’t overly excited at the prospect - for good reasons.

Ryanair’s gloom may signal end of growth era

4 Sep 2013

Europe’s biggest low-cost airline has issued a profit warning barely a month after it got embroiled in a debate about potential safety issues. The group stresses that there’s no link between the two events. In any case, it looks like it must brace for times of slower growth.

Ryanair should reflect on why it is getting flak

16 Aug 2013

The airline complies with all safety regulations and has a good record. Yet its safety culture is in focus following a pilots’ survey that Ryanair disputes. The saga is a culmination of needlessly toxic labour relations that bring little obvious benefit to the group.

Lufthansa restructure puts it on right flight path

2 Aug 2013

Europe’s largest airline is in the midst of a painful reformation. It could be a long haul, but despite dismal headline figures for the first half, it has made headway in bringing costs down. Much hinges on a success of Lufthansa’s revamped no-frills airline Germanwings.

HS2 train decision must wait for Heathrow 2015

4 Jul 2013

The HS2 high-speed rail project is under fire as cost estimates mount. But that is not the only problem with this massive project. A financial commitment now would pre-empt the 2015 report on airport strategy. Better to wait and not box the country into keeping the Heathrow hub.

Brazilian airline IPO requires sky-high optimism

4 Jun 2013

David Neeleman, JetBlue’s founder, is taking public his latest creation, Azul. Based on its U.S. cousin’s valuation, it’s worthless. Potential shareholders need to assume Azul keeps climbing fast and encounters no economic or operational turbulence to justify jumping on board.

The refining business may yet pay off for Delta

22 May 2013

The biggest U.S. airline’s decision to buy a refinery a year ago looked barmy. Yet there are signs that for the price of a Boeing 777, the deal is helping reduce Delta’s $12 bln fuel bill in meaningful ways. Just shaving a nickel off jet fuel prices justifies the purchase.

Turkish Airlines can ride out turbulence

16 May 2013

Big aircraft orders and celebrity adverts signal the airline’s desire to be in the global top 10. Now Turkish must contend with strikes and its CEO taking leave. Still, the firm’s strategy is credible. Good execution and removal of an overhang would close the shares’ discount to peers.

Record aircraft orders point to global growth bump

8 May 2013

When airlines embark on a frenzy of expansion, economic slowdown tends to follow. That’s the conclusion implied by Breakingviews’ study of historical data. If the relationship holds, recent big orders by Asian airlines suggest rising risks of turbulence in the economy next year.

Lufthansa governance farce marks new low point

7 May 2013

Europe’s largest airline was hit by turbulence of its own making on the eve of its AGM. Former CEO and nominated chairman Wolfgang Mayrhuber initially dropped his candidacy - then changed his mind again. The bizarre flip-flops tarnish the new chairman and the company.

Etihad bets on India in pricey Jet Airways deal

24 Apr 2013

The Abu Dhabi carrier is throwing indebted Jet Airways a $600 mln lifeline for a 24 pct stake and control of its loyalty programme. But the generous 32 pct premium suggests Etihad will expect more than a minority role at the Indian airline.

Turkish IPO market faces key test in Pegasus sale

22 Apr 2013

The low-cost carrier’s $360 mln IPO is the largest deal in Turkey’s lumpy new-issues market since 2010. Secondary offerings dominate the equity pipeline but success could encourage other families to IPO big businesses - and help Istanbul’s ambition to be a major financial centre.

Growth doesn’t justify Southeast Asia’s airline boom

2 Apr 2013

Budget carrier Lion Air is expanding its fleet again with a $24 bln order. The prospect of deregulation and the region’s expanding middle class will boost demand for cheap flights. But competition from equally bullish rivals like AirAsia may mean less profit to go around.

Lufthansa’s cost-cutting zeal could backfire

20 Feb 2013

The savings plan of Europe’s biggest airline is ahead of schedule. Nevertheless, it will double down and suspend dividends. Lufthansa does need to change, but should not overdo it. Otherwise it could annoy customers, employees and shareholders - all at the same time.

M&A advisers get a lot of Valentine’s Day love

14 Feb 2013

Cupid’s two big deals alone, Heinz and American Airlines, required the services of two dozen banks and law firms. Some $36 bln of corporate hugs on Thursday pushed the 2013 global deals tally 17 pct ahead of where it was a year ago. Hearts must be racing across Wall Street.

U.S. airlines need to fly abroad for better returns

14 Feb 2013

The $11 bln union of US Airways and AMR should boost the industry’s profitability. But earnings won’t gain more altitude until America’s airlines team up with overseas rivals and boost margins by cutting cost. That requires Congress to lift curbs on foreign ownership.

India’s Jet a better bet than Kingfisher for Etihad

14 Dec 2012

The Abu Dhabi airline is spoilt for choice in India. It can rescue and run grounded Kingfisher, or buy a smaller stake in better-managed Jet Airways. The latter offers a better fit. Besides, a low-key and passive entry into a market that is just opening up makes more sense.

Delta buys premium Heathrow seat for economy fare

11 Dec 2012

Being Richard Branson’s junior partner cost Singapore Airlines two-thirds of its investment in Virgin Atlantic. Delta, however, is buying the 49 pct stake at a discount to what slots at London’s premier airport usually command. That should help the new joint venture take flight.