Air Transportation

Leverage weighs on infrastructure funds

21 Aug 2008

Babcock & Brown has run into trouble. And one of Macquarie s funds is selling assets to pay down debt. That looks like a reasonable precautionary measure. But it shows that even good infrastructure investments can suffer if they have too much debt.

Could BAA be a case of buy high and sell low?

20 Aug 2008

When Ferrovial bought the UK airport operator in 2006, the price was considered rich, even by the era s frothy standards. The Competition Commission has decided the Spanish owner should sell off three airports. There are many bidders, but none of them may be willing to pay up.

BA-AA alliance should finally take flight

14 Aug 2008

Regulators have twice turned down proposals by the two carriers to work together. But in the world of Open Skies and expensive fuel, its hard to see the third approach with Spain's Iberia thrown in being rejected. The alliance would only be in third place on the Atlantic.

Berlusconi should put his own money into Alitalia

31 Jul 2008

The Italian prime minister says he has a plan to save the near bankrupt national airline. The billionaire politician isn t usually shy of mixing business and politics. If he thinks he has a good deal for Alitalia, he should put his money where his mouth is.

BA-Iberia merger wouldn’t just be crisis control

29 Jul 2008

A deal would make sense for both airlines. BA can feed traffic to Latin America, and Iberia avoids turning into a regional airline. Revenue gains could be juicy. But for now, the carriers still have to grapple with costly fuel and fewer passengers.

Ryanair has itself to blame for profits warning

28 Jul 2008

The budget airline has grown too fast. The only way to keep its planes full in a weakening economy is to slash fares, which will hit the bottom line. Fortunately, it has kept a tight lid on costs, and has a strong balance sheet to weather the crisis.

Southwest keeps its edge with hedges

24 Jul 2008

Alone among big US airlines, the discount carrier managed a secondquarter profit largely thanks to fuel hedges. But longrunning cash constraints have made it difficult for competitors to emulate Southwest. With oil coming off record highs, it could be too late.

US airline stocks are looking like options on oil

22 Jul 2008

Three more carriers posted losses and announced capacity cuts. But investors optimistic about cheaper oil have sparked a rally in their stocks. Even if the costcutting measures pay off, the industry will remain at the whim of the energy markets.

No easy answer to the airline crisis

16 Jul 2008

Airlines are flying into a financial storm: high oil prices and weakening demand will wipe out profits at most carriers. They will have to look for salvation in cost cuts, capacity cuts and consolidation. But bidders may prefer to wait for the inevitable crash landings.

Seven reasons to steer clear of Alitalia

15 Jul 2008

Some leading Italian businessmen are thinking about investing in the basketcase statedominated airline. The list is said to include turnaround guru Roberto Colannino. But he would be wise to stay away in current conditions. Any investor would face seven potentially fatal flaws.

Three-way airline venture wouldn’t be a cure-all

3 Jul 2008

BA, American and Iberia are reportedly mulling a joint venture. Getting antitrust immunity from the US authorities could be tricky. The venture would be good for the airlines, if they cut capacity. But it wouldn t solve the carriers biggest problem: rocketing fuel bills.

The problems with air-mile IPOs

1 Jul 2008

Airlines can make more money from loyalty programmes than from actually flying. That fact might explain why Qantas is considering an IPO of its frequent flier scheme. But separating the businesses out carries risks. And now is hardly the ideal time for a sale.

BAA bondholders can still squeeze Ferrovial

3 Jun 2008

The Spanish construction group s £7.65bn debt refinancing depends on convincing bondholders to migrate to a new financing structure. Hedge funds might try and squeeze BAA for more. But the airports group may not have to offer too much of a carrot to get them to bite.

US airlines fly toward mass bankruptcies

28 May 2008

With oil at $130 a barrel, nearly every US airline is burning cash. If fuel prices remain high and passenger volumes decline as is likely in a recession several could go bust.

Silverjet hanging by a thread

23 May 2008

The last of the dying breed of allbusiness class airlines is in desperate need of cash after a new investor failed to provide an expected lifeline. It's not clear how long it can survive. But it s a brave soul who would invest in this risky venture with oil at $135 a barrel.

Air France disappoints at a bad time

22 May 2008

The French airline has missed profit expectations when airline investors are rightly spooked by rising fuel costs. Air France might be hedged this year, but profits could plunge next year. A massive E530m provision for pricefixing doesn´t help.

American Airlines decides less is more

21 May 2008

The US legacy carrier will cut capacity sharply. It's what the whole industry needs to avoid frequent brushes with bankruptcy. But it's a risky move if rivals fill in the gaps rather than following suit. At least American has alreadydepreciated planes that are cheap to ground.

This is as good as it gets for British Airways

16 May 2008

The UK airline has achieved the holy grail of a 10% operating margin for 2007/8 and is restoring its dividend. But it s all downhill from here, with soaring oil prices and a hairy economic outlook. In that context, cutting capacity looks like a wise choice.

Investors are too bearish on budget airlines

7 May 2008

With oil above $120 a barrel and European economies slowing, it s all too easy to be downbeat about airlines like Easyjet in the UK. But budget airlines are more recession proof than investors think. Just look at Southwest in the US.

Eos crash shows flawed flying model

28 Apr 2008

Before fuel prices rocketed and the banking business turned down, startup discount allbusiness class airlines may have had a chance. In tougher times, they are falling. Eos is the latest to run out of cash and backers. Bigger airlines are more suited for this niche product.