Air Transportation

Euro defence monster flies out of crisis

12 Sep 2012

Civil aviation and defence both are cyclical businesses. But marrying EADS, the continental outfit behind Airbus, with UK defence giant BAE should yield a stronger combined group. Cost savings will be limited, and the terms favour BAE. But EADS becomes a less political animal.

Priceline books industry ticket back to reality

8 Aug 2012

The travel site’s strong growth and lock on small European hotels convinced investors it was worth as much as $38 bln. But disappointing second-quarter results from it and rival Orbitz have burst the bubble. And Priceline faces the added problem of growing competition.

Investors may be happy to ride on renovated JAL

3 Aug 2012

The airline’s plans to raise roughly $8.5 bln in an IPO may seem a heavy lift amid weak markets and a perennially limping industry. But big funds will likely clamor for seats on a flight fueled by a mix of government largesse and one of Japan’s most promising turnaround stories.

How can India’s Liquor Baron keep his Kingdom?

19 Jul 2012

Vijay Mallya’s woes at Kingfisher Airlines are infecting the rest of his empire. The airline’s debt is backed by guarantees from his holding company. Unless he saves Kingfisher, he risks losing another jewel in his crown. And Diageo and Heineken are waiting in the wings.

World’s new air giant taking off at turbulent time

18 Jun 2012

The marriage of Brazil’s TAM with Chile’s LAN has taken nearly two years to consummate and will create the most valuable airline in the world. The promise of greater regional integration is fueling big expectations that will be difficult to meet given economic headwinds.

Emirates reaches limits of organic growth strategy

18 Apr 2012

The Dubai carrier is mulling acquisitions again after a decade of organic growth. Tough competition and a unique chance to win volume from India are strong incentives for Emirates to brave the risk of buying minority stakes in regional rivals.

Delta would be crackers to fly into refining

5 Apr 2012

Pricey fuel is the airline’s nemesis. But buying Conoco’s idled plant would increase Delta’s risk. It wouldn’t hedge volatile crude prices and would leave the company exposed to the financial challenges of running a refinery. There are better ways for Delta to cut its costs.

Why 100 pct FDI could save India’s Kingfisher

20 Feb 2012

Mounting debts and deteriorating service levels are bringing the airline to the brink. The can has been kicked further down the road, but eventually something must give. New investors are in very short supply. A proposal to allow 49 pct FDI does not go far enough.

Indian airlines get the wrong help

7 Feb 2012

The country’s beleaguered aviation sector needs a boost. But letting airlines avoid punitive state taxes by directly importing fuel isn’t smart. Some tax is necessary to pay for environmental costs. The real target should be the vast state subsidy given to loss-making Air India.

China has moral high ground over "dirty skies"

6 Feb 2012

Beijing’s principle of non-interference looks callous when it lends support to oppressive regimes, as in Syria and Sudan. But the refusal to pay the EU’s pointless, extraterritorial and unilateral airline carbon tax is right, even if Chinese doubts about global warming are not.

Catalan airline succumbs to predictable collapse

30 Jan 2012

Spain’s fourth largest carrier couldn’t compete in today’s ruthless aviation market without help from Catalonia’s regional government. Spanair could hardly expect to survive on handouts long term. Other second-tier European airlines will have to rely on self help or mergers.

TPG can be forgiven its mile-high club fetish

17 Jan 2012

A successful contrarian bet on bankrupt Continental in 1993 was the buyout firm’s seminal deal. Since then, David Bonderman has chased airlines across the globe, including now American, and scored with a few like Ryanair. Even bad romances like Midwest can’t dampen the thrill.

Japan makes better hangar for RBS air unit

17 Jan 2012

Selling its aircraft leasing arm to Sumitomo of Japan for $7.3 bln frees up vital capital for the UK lender at a good price. It’s better yet for the buyer, which has low funding costs, a strong yen and needs to diversify. If only divestments were always so easy.

Usual suspects finally drag down American Airlines

29 Nov 2011

Parent company AMR was the only big U.S. airline to avoid bankruptcy - until now. Rivals had already scrubbed out the worst of their handicaps. Now American gets its chance to cut its labor costs and debt load and fight again despite high fuel costs and ruinous competition.

Gulf airlines can afford a little arrogance

16 Nov 2011

Qatar Airways’ CEO gave Airbus a lecture on strategy before placing a $6 bln order, just after rival Emirates did an $18 bln deal with Boeing. It may sound like hubris. But it’s not hard to see how investment could become market share in a recovering world.

Qantas vindicated in workforce battle

4 Nov 2011

The Australian airline’s decision to ground its fleet a week ago looked like commercial madness, and followed tactical errors by the CEO. But a resolution with recalcitrant unions is in sight. The gamble will pay off as long as Qantas wins back passenger confidence.

Abu Dhabi’s airline strategy lacks coherence

19 Oct 2011

Etihad, the UAE’s official national carrier, wants tie-ups with Virgin Atlantic and Aer Lingus via minority stakes. Its ambition is to catch up with Dubai rival Emirates. Such deals may deliver tactical gains. But they won’t replicate Emirates’ impressive organic success.

Air France-KLM will struggle to gain altitude

18 Oct 2011

The Franco-Dutch carrier is being squeezed on all sides. It has high costs, stiff competition and large debts. Market conditions are poor, too. Changes to the boardroom crew will help if they approach restructuring seriously. But investors are right to be sceptical.

American Airlines feels market’s Darwinian wrath

3 Oct 2011

In volatile markets, the weak are hunted. The U.S. airline’s struggling parent, AMR, fell prey on Monday, with its stock diving 41 pct on bankruptcy talk. Kodak and Morgan Stanley have been in the crosshairs, too. Hoards of cash may be the only way to survive.

Kuwait Airways sale may not be a runway success

2 Aug 2011

The state of Kuwait wants to offload a 35 pct stake in its national carrier to a strategic partner. But the airline has been in the red for two decades, the asking price is lofty and bidders risk political pitfalls. Plans for a regional rail link don’t help the business case.