Air Transportation

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.

British Airways in not-so-shock profit warning

6 Mar 2008

The UK carrier has abandoned its longheld 10% operating margin target, thanks to a rise in fuel costs and slowing demand. The mystery is why the airline is still so upbeat on business class traffic. The bad news is probably far from over.

Open Skies may help Delta deal clear antitrust hurdles

19 Feb 2008

The company s merger with Northwest looks nearly certain. Now comes the hard part: convincing US regulators, which loathe consolidation. But cajoling the Feds could be easier now that the Open Skies treaty promises more competition from European airlines.

Europe’s airline stocks have lost too much altitude

16 Jan 2008

Rising fuel prices, expected price pressure from the open skies transatlantic air deal, and falling consumer confidence have caused a selloff. But investors are failing to differentiate between stronger lowcost carriers and more vulnerable network operators.

Vinci’s stake in Paris airports shouldn’t make it favourite buyer

2 Jan 2008

The French construction company has bought a 3% stake in stateowned airport operator ADP, hoping to muscle in as the favoured buyer if and when the company is privatised. The French government should make it clear other contenders will have a chance.

Lufthansa gets to first base with JetBlue

13 Dec 2007

The German airline s $300m investment in the lowcost US carrier gives JetBlue a muchneeded infusion of cash. It's a relative snip for Lufthansa, at a historically low price. But even if it works as a financial investment, it's unlikely to stay that way for long.

Alitalia isn’t worth much after all

13 Dec 2007

Air France has offered just E240m for the government s stake in the Italian airline half its last quoted value. At least that beats rival bidder Air One, which bid close to zero. The Prodi government has only itself to blame for turning the auction into a farce.

American Airlines needs a breakup artist

6 Dec 2007

Chief executive Gerard Arpey shouldn t stop with jettisoning American s regional carrier. Breaking up all of AMR, parent of the largest US airline, could unlock some $2.3bn of value for shareholders and deliver a 45% boost to the stock.

Air France should set own terms for Alitalia acquisition

6 Dec 2007

The FrancoDutch carrier is officially interested in buying its Italian bankrupt competitor. If picked by the Italian government as the buyer of choice, it should stand firm on the conditions it would set to a merger. Alitalia isn t worth too much trouble.

US airline capacity cuts are a good sign

4 Dec 2007

Southwest s decision to follow Continental and Delta in cutting capacity amid concerns of a slowdown in the US economy will help keep the industry s dismal profit margins from disappearing.

Fight for Spanish skies heats up with Iberia bid

15 Nov 2007

The airline has opened its books to Gala, an allSpanish group which wants to pay as much as E3.90 per share. That would top the mooted E3.60 bid from TPG and partners. A high price, two billionaires and a local airline magnate may give Gala victory. But rivals could emerge.

Delta-United merger is second-best solution

15 Nov 2007

The cost savings from such a deal would be far less than from individual mergers with airlines with overlapping routes. But given regulators allergy to regional industry concentration, this mediocre matchup may be the best shareholders can hope for.

Delta looks on a hopeful track

16 Oct 2007

The US airline reported respectable profits in the third quarter, beating analyst estimates. Rising costs tempered the joyous mood. But if the airline, recently emerged from bankruptcy, can continue cutting domestic capacity and control costs, the outlook could be promising.

Should loyalty programmes jettison airlines?

27 Sep 2007

As backwards as that may sound there may be more value in airline frequent flyer programmes than in their core business. Where it s been done, in Canada, it was a home run. That s why the Vikings have locked their harpoons on American Airlines.

Air France unlikely to lose head over Alitalia

6 Sep 2007

The FrenchDutch airline says it would listen if approached for a takeover of the Italian company. Markets aren t amused. But Air France has worries of its own. It would likely set stringent conditions before it buys into a bankrupt competitor.

Cartels may hurt airlines more than passengers

2 Aug 2007

BA and Korean Air Lines have to pay $850m for agreeing on fuel surcharges. That probably dwarfs the gains from breaking the law. Pricesignalling is hard to avoid in commodity industries. Companies just have to remember to do it legally.

Rosy airline profits mask lurking threats

19 Jul 2007

This is the first time in years that all the major US air carriers are out of bankruptcy. And they re reporting respectable profits. But airlines haven t solved their main problems overcapacity and spiralling costs. This may come back to haunt them.

Italy gets real over Alitalia, at last

19 Jul 2007

The charade that Alitalia might find a bidder is over, and ministers admit that liquidation may be the carrier s only option. A humiliating Sabenastyle bankruptcy, or less ignominious Parmalat restructuring, will likely mark Alitalia s final end.

Lear shareholders may regret snubbing Icahn

17 Jul 2007

The auto supplier s owners rejected his $2.9bn bid, despite its reasonable price and their lack of alternatives. The CEO s sweetheart deal raised eyebrows. But with the industry in a spiral, Icahn s deal might have been shareholders best bet.

Will Singapore find a buyer for Virgin Atlantic?

9 Jul 2007

Singapore Airline s 49% investment in the UKbased carrier hasn t exactly gone to plan. Reports that it wants to sell are all too plausible. But finding a buyer won t be easy. It all depends on whether Richard Branson is prepared to relinquish control.