Air Transportation

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.

Continental’s decision to fly solo could pay off

28 Apr 2008

The US carrier has opted out of the airline mating scene, for now. That could make sense. With a relatively young fleet and a respected management team, it s better placed than legacy rivals to hold out and reap the benefits as others do the dirty work of merging.

BAA break-up wouldn’t necessarily help

22 Apr 2008

The UK Competition Commission is wary of the airport operator s London nearmonopoly. It thinks a split in ownership might help. But Heathrow and Gatwick are both already full, and will be for the foreseeable future. An overhaul of regulation might make more sense.

Alitalia funk gets worse under Berlusconi

21 Apr 2008

The Italian premier is suggesting that Aeroflot could be a suitable partner for the bankrupt airline, after suggesting that Air France could be back in the running. Meanwhile any public subsidies for the carrier would be illegal. And Alitalia is running out of flying time.

Berlusconi’s Putin mania is really worrying

21 Apr 2008

The new Italian PM s meeting with the new Russian premier underscored their longstanding chumminess and included a sick joke about shooting a journalist. As expected, Berlusconi s Russianleaning diplomacy threatens to take him away from European commitments.

US airline consolidation a solution – but not a cure

14 Apr 2008

The industry has burned $29bn in capital over eight years. Old planes are the standard and bankruptcy the norm. Fuel costs are rising as is competition, making mergers like Delta/Northwest inevitable. If only execution were, too.

Silverjet takeover talks look like an act of faith

10 Apr 2008

The discount businessclass only airline says it's in talks with potential suitors. This act of faith in the future of the low cost luxury market would save it from a possible bankruptcy. Passengers will be relieved. But shareholders aren't likely to have many reasons to cheer.

American Airlines pays for its good behaviour

10 Apr 2008

Maintenance checks have caused the cancellation of hundreds of flights. The only major US carrier to have dodged bankruptcy has one of the oldest fleets in the air. It's an industry problem. For US airlines, bankruptcy keeps them in business, and investment rarely pays off.

Berlusconi to blame for Alitalia fiasco

3 Apr 2008

Air France has walked away after unions torpedoed the deal. They had no incentive to accept job cuts, once the opposition leader in a naked bout of electioneering pledged to veto any deal and come up with an Italian solution. Realistically, that means bankruptcy.

ATA is toppled canary in low-cost airlines’ coalmine

3 Apr 2008

The carrier s bankruptcy highlights the big risks other discount airlines face. Record fuel prices, older, gasguzzling jets and a slowing economy weighs on the whole sector. If fuel prices continue to rise, ATA s competitors could soon be in trouble.

Eads’ defence on insider probe is misguided

1 Apr 2008

The French stock market watchdog has made its probe into insider trading at Eads official. It alleges the FrenchGerman Airbus manufacturer misled markets on its airliners woes in 2006. Eads shouldn t side with the executives who bent the rules. It should fire them.

British Airways defies gravity

1 Apr 2008

It s not just the planes that fly (sometimes), it s the shares. They re up, despite the ongoing disaster at the new Terminal 5. There are two perfectly rational explanations for this. But they only hold as long as the T5 bounces back quickly, and CEO Walsh regrows his wings.

Another reason for US airlines to merge: old planes

27 Mar 2008

Years of financial distress prevented legacy carriers ordering new aircraft. Now, ageing fleets are costing them dear in fuel and maintenance. Even if they could afford new planes, they wouldn't arrive for years. For some, merging with a younger carrier could be the answer.

British Airways won’t give up on Iberia

19 Mar 2008

British Airways has upped its stake in the Spanish airline to 13.1% and says it might buy more. But unlike Air France with Alitalia, the UK carrier probably won t bid before Iberia has restructured. It is mainly keeping its options open.

Air France offer for Alitalia looks generous

17 Mar 2008

The FrancoDutch carrier s offer for its Italian rival values it at a fifth of its market capitalisation. That s generous, considering Alitalia is nearly bankrupt. The deal depends on approval from the unions and the next Italian government. These are tricky obstacles.