Air Transportation

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.

Eads’ investors should take profits

20 Feb 2007

The FrancoGerman Airbus maker is in dire straits. Political meddling is preventing management from executing its turnaround plan. What s more, it is facing major industrial risks and its financial situation is shaky. The 20% discount to Boeing isn t enough.

American Airlines makes unlikely LBO candidate

16 Feb 2007

British Airways and Goldman are supposedly mulling a joint bid for the biggest US carrier, according to a report. Formidable legal obstacles stand in the way of such a bid. And AMR makes a poor buyout target too.

Everyone ends up in knots after Eads stake sale

9 Feb 2007

Daimler has sold a third of its 22% stake in Eads to a group of banks but is having to pay them to take it on. They assume the risk on Eads share price, but get no votes, and the aerospace s shareholder register is even more complex than before.

Alitalia deserves a bid discount

24 Jan 2007

The airline is the most expensive airline stock in Europe despite being the most unprofitable. Restructuring it looks risky and difficult. Any rational bidder would struggle to get anywhere near the share price. Alitalia shareholders are dreaming if they expect a premium.

Is Minc still a force to be reckoned with?

22 Jan 2007

The consultant and writer s traces are seen everywhere in machinations around Pinault, Suez and Vinci. But this might be misleading. The new generation of French CEOs doesn t rely on connections and friendships as much as their elders. Minc s model may be on the wane.

BA’s Walsh isn’t a second Ayling

18 Jan 2007

Ayling was binned by the UK carrier seven years ago partly because he couldn't handle the unions. Now Walsh is at war with them too. Could Walsh share his predecessor's fate? It would be harsh: BA is in better shape today than under Ayling, and Walsh's fight is necessary.

Alitalia board implodes

17 Jan 2007

This latest defection may hint at an Air France bid but what does it say about Alitalia that it can't muster a slate of directors? There are just two people left on the board after the resignation of Air France s boss. Technically, that means it has to be dissolved.