Air Transportation

Christmas comes early for BAA

21 Dec 2009

The UK Competition Commission had ordered the airport group, controlled by Spain's Ferrovial, to sell three airports. But a court has decided the decision was tainted. BAA may still have to, or want to, sell more airports. But it will certainly have a better negotiating position.

BA can’t declare victory yet

16 Dec 2009

The UK airline has averted a Christmas strike. Unions have suffered a credibility blow. But the episode has damaged the BA brand and fully exposed the dire state of labour relations. Willie Walsh, the already unpopular CEO, must keep up the pressure. BA badly needs restructuring.

Striking at BA’s pension deficit

14 Dec 2009

The future beneficiaries of the pension schemes that threaten to bankrupt British Airways told the management what they think of them today. By a ninetoone margin, the employees have voted to ground the airline for what might be described as the 12 days of Christmas.

China will blow Blackberry a raspberry

8 Dec 2009

Research In Motion is hailing China as the next frontier for Blackberry. But don't expect too much success out of the world's largest mobile market. Blackberry will not appeal to China's masses, and some of the expats have already been served out of Hong Kong.

American could be more immediate prize for BA

20 Nov 2009

British Airways may hear before Christmas what it will need to do to get a deal with American Airlines approved. That could bring more shortterm benefits than the Iberia deal provided regulators on both sides of the ocean don t force BA to give up too many slots at Heathrow.

BA pension trustees face dilemma in Iberia tie-up

19 Nov 2009

Contrary to popular belief, the UK airline s pension scheme is not ringfenced and could pose a threat to Iberia s cashpile in their proposed merger. The pension fund trustees will have to play current negotiations with BA carefully if they do not want to scare Iberia away.

BA/Iberia structure is an unappealing fudge

13 Nov 2009

Like Air France/KLM before them, the UK and Spanish flag carriers have devised a convoluted structure to circumvent regulatory hurdles. The snag is that neither party has real control. Extracting the claimed E400m of synergies will be tough. This deal is off to a bad start.

BA and Iberia a marriage of necessity

12 Nov 2009

The lossmaking UK and Spanish airlines are close to a deal after 16 months of onoff talks. The intervening fall in BA s shares means Iberia shareholders will now enjoy more of the value created. But both groups have their work cut out to demonstrate the scale of the synergies.

BA still struggling for survival

6 Nov 2009

The UK airline is haemorrhaging cash and frantically cutting costs to deal with a probable £1bn fall in sales this year. It is hard to see how BA can pull off its longdiscussed merger with Spain s Iberia in this state. But while progress is slow, BA s fortunes may be bottoming.

Ryanair should take its foot off the gas

2 Nov 2009

The budget airline says it may abandon its aggressive growth strategy from 2012 and start paying dividends. This may be a tactic to scare Boeing into sweetening terms on a massive order for planes. Either way, the discipline of dividends could support Ryanair s drifting shares.

Gatwick auction back from the dead

20 Oct 2009

Spanish infrastructure group Ferrovial postponed the sale of the London airport in May. The conditions for an auction are now more favourable and BAA, the subsidiary that owns Gatwick, is in better shape. Still, that doesn t mean the asset will fetch the £1.6bn its vendor wants.

Dividend might keep Ryanair out of trouble

28 Sep 2009

The European budget carrier has the sort of problem other airlines dream of too much cash. But its E2.8bn provides firepower that can easily be misdirected, as in Ryanair s stake in Aer Lingus. Shareholders should clamour for the cash and discipline that come with a dividend.

AMR shareholders should temper their enthusiasm

17 Sep 2009

The American Airlines parent raised $1bn by selling frequent flier miles upfront and secured $1.9bn by hocking assets. The stock soared as concerns about liquidity dissipated. But the cash may end up diverted to purposes that don't create much additional value.

Airline recovery still pie in the sky

16 Sep 2009

Things appear to be looking up for airline investors. The traffic slump is easing. August was Heathrow s busiest month ever. And the broader economy is turning. But one crucial element is missing from the apparent airline recovery: pricing power. That may never quite come back.

Ryanair land grab comes at a cost

27 Jul 2009

The European budget airline has to slash ticket prices to fill up its planes. But Ryanair is still solidly profitable while rivals are bleeding cash. As long as the company can afford its growth plans, investors should be willing to put up with some lower profits.

US corporate profit surprises may not last

23 Jul 2009

A third of the way through the US reporting season, secondquarter earnings look far better than expected thanks to cost and inventory cuts. But those are relatively quick, easy fixes. Longer term, profits depend on economic growth and rising sales. Those will come more slowly.

Shrinking jet-set doomed service for hurried rich

23 Jun 2009

Clear promised that its advanced biometric screening service would make airport security hassles obsolete. All it really amounted to was a $200 annual fee for the privilege of a special queue. That might have appealed in good times, it didn t in bad.

British Airways switches to survival mode

22 May 2009

The UK airline has axed its dividend following results that are as gloomy as they come. BA is burning cash. Its response cutting capacity, capex and costs will need to be brutal if it is to work. In the meantime, the hopedfor deal with Iberia looks further away than ever.

Argentine saga reminds investors to avoid airlines

18 Dec 2008

The tale of Aerolineas Argentinas demonstrates that airlines are among the least attractive emerging market assets for foreign investors. They are asset heavy, only modestly profitable even in good times and horribly vulnerable to nationalists when things get tough.

US airlines’ weak credit is a temporary advantage

9 Dec 2008

They mostly aren't financially strong enough to hedge fuel costs. That made them losers in 2008 but with oil prices slashed, they could squeak into the black in 2009. With the global industry flying into an economic gale, though, the boost will probably be minor and brief.