Air Transportation

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.

BAA isn’t a disaster for Ferrovial

3 Jul 2007

The market is gloomy about Ferrovial s investment in the UK airports group. It seems to believe the deal destroys over £1bn of value. True, things don t look great for the Spanish construction company. But the market may be too pessimistic.

Brussels’ rejection of Ryanair deal is heavy-handed

26 Jun 2007

The deal would have created a de facto monopoly at Dublin airport. But there could have been less drastic remedies. One byproduct of the EU's action could be to further complicate Alitalia's privatisation. Its suitor, Air One, would also have a monopoly.

Is the all-business class airline sustainable?

18 Jun 2007

There is a market for the likes of Silverjet. But realistically, only one or two outfits are likely to survive. BA is already cutting back fares to compete, making it even harder for the new entrants to make money.

Italy the loser in Aeroporti di Roma squabble

15 Jun 2007

Macquarie and oldstyle Italian capitalists are copartners in the airport. But they ve squabbled continually and the project has stalled. After some arcane wheelerdealing, the Australians are set to leave, at a good price. The result may be less efficient transport in Italy.

Why is Ryanair hoarding cash?

5 Jun 2007

The budget airline is making serious money and has the firepower to buy back far more than the 4% of its shares it plans to. Airlines like to keep a cushion for a rainy day. But Ryanair isn t nearly as cyclical as legacy airlines. It ought to be more generous. Airlines like to keep a cushion for a rainy day. But Ryanair isn t as cyclical as oldstyle flagcarriers. It ought to be more generous.

Alitalia auction disintegrates

30 May 2007

The Italian government s rules proved too much for TPG. That leaves just two bidders: Italy s Air One and Russia s Aeroflot. The Italians look a shooin. Auctions are generally a good thing for sellers. But an auction gone wrong is just plain embarrassing.

Rome checks out of Alitalia

23 May 2007

Italy s decision to sell its entire 50% stake should be great news for the airline. Alitalia s woes are rooted in political meddling. But if Rome is really serious about reform, it should go the whole hog and loosen other conditions too.