Air Transportation

Ryanair’s E750m bid puts Aer Lingus on the spot

1 Dec 2008

The lowcost carrier is having another pop at Aer Lingus after pulling a hostile bid in 2006, and has cut its offer by 50%. Aer Lingus s poor performance has made the airline vulnerable. But investors should still price in the risks of renewed union and EU opposition to any deal.

Stelios risks trashing his own investment

17 Nov 2008

Easyjet s founder is at odds with the board over the discount airline s fundamental strategy. He wants slower growth and dividends by 2011. That sounds out of kilter in a recession, and could hurt the share price.

BA-Iberia merger can wait

7 Nov 2008

The two airlines have more than enough to do on their own. They should focus on dealing with the current bleak market. BA will find it hard to fulfil its hope of ending the year in the black. Calculating merger ratios now would be tricky, and a dangerous distraction.

Lufthansa finally gets British Midland

29 Oct 2008

This might look like a bad deal for the German airline, since it has bought a 50% stake in the UK airline as part of a put option agreed in the heady year of 1999. Valuations have since plummeted. But BMI s valuable Heathrow slots mean Lufthansa is unlikely to lose money.

Alitalia fiasco makes Italy look sick

18 Sep 2008

Union intransigence in the midst of a global crisis has torpedoed yet another deal. Berlusconi, whose electioneering rabblerousing killed off an earlier deal, now has the chance to put Alitalia out of its misery and teach the unions a lesson. But will he?

It’s time for Berlusconi to channel Thatcher

12 Sep 2008

Silvio Berlusconi has long liked to compare himself to Margaret Thatcher. Until now, that comparison was unsound. But the media baron turned Italian prime minister now has the perfect chance to emulate his hero. He can stand firm against the Alitalia unions.

Alitalia rescue is good politics, bad policy

28 Aug 2008

Berlusconi has kept his promise to find an allItalian solution for Alitalia, although the Italian airline will probably end up with a European partner. The new plan may enrich some businessmen investors, but won't calm fears that politics guide corporate dealings.

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.