Air Transportation

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.

Mining fever burns bright in Canada

23 May 2007

Norilsk s latest $6.3bn bid for nickel producer LionOre is 49% higher than Xstrata s first offer. An auction for Alcan also looks likely. But with metal prices high and funding cheap especially for the Russians it s easy to justify paying up.

Jet Blue CEO ouster only a first step

10 May 2007

Removing the founder from the executive suite should accelerate fixing the airline s biggest problem: overzealous expansion. If the US lowcost airline is to return to profitability, the new CEO needs to focus on expanding where rivals fear to tread.

Easyjet’s share price fall is overdone

9 May 2007

Fares are dropping across the board, and so are shares in airline stocks. The simple answer is that there is too much capacity. But that doesn t mean that airlines like Easyjet will stop growing. Its share price drop looks overdone. Investors are worried about overcapacity driving down fares. Easyjet's shares have fallen nearly 10%. This seems unfair. Overcapacity is more of a problem for network carriers. Easyjet actually looks wellplaced to grow through any turbulence.

Time takes its toll on the Qantas offer

1 May 2007

Because equity markets are strong, buyouts which take long to close are exposed to shareholder pushback. Qantas is the latest example. One shareholder wants to take stub equity. But the buyout s tax advantages diminish if too many investors hold out.

BA holds the whip in Iberia auction

24 Apr 2007

Any private equity bidder wanting to take over the Spanish airline will have to talk to BA first. But while BA might be kingmaker, it will have to reign over a motley crew of investors. Is it worth the headache?

Why is Aeroflot interested in Alitalia?

11 Apr 2007

The strategic rationale is thin on the ground. That leaves politics. Either Italy is willing to trade Alitalia for access to Russian energy. Or Aeroflot might simply be doing Rome a favour by injecting some muchneeded competitive tension in the auction.

Chocks away for European airline M&A

4 Apr 2007

Open Skies has increased the pressure on Europe s midsized carriers to consolidate. Several possible deals are already underway. But they may not takeoff. The sector is riddled by crossshareholdings that complicates dealmaking, just as in EU banking and energy M&A.

What should BA do with Iberia?

2 Apr 2007

The UK flag carrier s 10% stake in the Spanish airline makes it the kingmaker. But buying Iberia outright would be hard to justify. Instead, BA could join Texas Pacific Group s bid provided it can get a decent put option down the line.

TPG’s E3.4bn Iberia bid may not spark auction

30 Mar 2007

The Spanish carrier's attempts to find a partner have finally borne fruit. But not with a trade buyer and at a discount to the share price. It may struggle to get an auction going. Iberia s shares are pricey, and buyers like BA or Lufthansa may be less willing than thought.

EU gives itself a 50th birthday present

22 Mar 2007

The open skies agreement doesn t come to much, in the short term. But it is a worthy example of the EU s history of messy compromises. The end of flag carriers will eventually make travel cheaper and more efficient. Small steps like this have helped the EU thrive.

No obvious big winners from open skies

9 Mar 2007

There has been a lot of talk about the potential losers from the socalled open skies aviation pact, such as BA. What about the winners? These look small and the gains marginal, in the short term: British Midland, Aer Lingus, and some US carriers.

Buffett’s private-jet bet takes flight

9 Mar 2007

NetJets, the quirky fractional ownership jet company he owns, has finally turned a profit in both Europe and the US. Global wealth trends and airborne terror are two reasons why. But the Sage of Omaha shouldn t unfasten his seatbelt just yet.

Open skies agreement not terribly open

5 Mar 2007

In theory, a pact to ease restrictions on transatlantic travel between the EU and US could make sense for both sides. But the US refuses to give up restrictions on foreign ownership of its airlines. It s hard to see why the EU should roll over.