Air Transportation

O’Leary takes on the Irish state

8 Oct 2006

He may be able to buy Aer Lingus cheaply, or trade it for regulatory concessions or financial gain. But it will take his eye off the ball. Ryanair s bid for Aer Lingus is not a reckless affront to the Irish government. The airline s maverick boss has considered most angles.

Ryanair launches shock hostile bid for Aer Lingus

5 Oct 2006

O'Leary's budget airline is offering a budget cost price for its domestic rival just an 8% premium to the Irish carrier s fair value. This is a big Uturn. It takes Ryanair into the unfamiliar long haul market. And competition issues mean there's plenty of execution risk.

Aircraft leasers hit the eject button

21 Sep 2006

The airline leasing business is booming. One operator, Q Aviation, has put itself up for sale and another has floated on the stock market. Q Aviation s owners, who bought at the bottom of the cycle, have done well. But the good times can t last forever.

Focus’s distress highlights risks from LBO boom

8 Sep 2006

The UK DIY retailer is wrestling with too much debt at a time of weak trading. It overgeared itself through a leveraged recap last year. Its problems may make lenders think hard about backing these deals. They will encourage vulture funds that hope to profit from LBO distress.

BAE throws in the towel with Airbus

7 Sep 2006

It s hard to see the UK aerospace giant s decision to exit Airbus at Rothschild s low price as anything but bearish for the planemaker. But fair value wasn t BAE s only consideration. It was fed up with its minority stake and wants to press on with its US expansion.

Tacit collusion thrives in US skies

31 Aug 2006

Take the recent launch by Jet Blue of cheap daily NYWashington flights, which raised the prospect of competition on a lucrative route. But Delta and USAirways are clinging to identical $608 fares. There s more than just loyalty for the "Shuttle" service at work here.

Aer Lingus shouldn’t be greedy at IPO

30 Aug 2006

The Irish flag carrier likes to call itself a lowcost, low fare airline. In the runup to the IPO, it s easy to see why. But it is no Ryanair. And while its growth strategy might make sense, it s still risky.

Marsh is a good breakup candidate

29 Aug 2006

Mike Cherkasky inherited a mess when he took the helm of Marsh & McLennan in the wake of regulatory scandal. He has stabilised the business, but it remains well below its breakup value. Activists and bargain hunters take note.

Ryanair threat against UK looks duplicitous

18 Aug 2006

Michael O Leary, the outspoken boss of the lowcost airline, is clearly angry about the way BAA has handled extra airport security. But it is hard to avoid the impression that the real reason for his outburst is to try to force a breakup of BAA.

Naps kill Boeing’s $1bn in-flight internet system

18 Aug 2006

The US aircraft maker s inflight internet service, Connexion, was an engineering marvel that overcame tremendous technical problems. But the programme was killed by a simple problem. Most passengers prefer lowtech pursuits like sleeping.

Terrorism threat a red herring for BAA’s £12bn financing

17 Aug 2006

The financing for Ferrovial s takeover of BAA isn t in jeopardy despite losses from flight cancellations. The real hurdle will be convincing existing bondholders to migrate their bonds into the new financing structure.

European private jet market takes off

10 Aug 2006

Warren Buffet s Netjets and Jetbird are buying lots of airplanes. There are good reasons for growth, including increased hassle at airports. But will they make any money? The omens aren t good. And with the capacity piling in, it s going to get even tougher.

Airlines will bounce back – again

10 Aug 2006

Flights to the UK have been cancelled. Hand luggage, even mobiles, have been banned. Airline shares have suffered. Carriers typically rebound fast from such scares. High oil prices have hardly hurt either. But sectoral pressures are rising.

Pernod loses to Bacardi in Havana rum wars

9 Aug 2006

PernodRicard may have right on its side. But Bacardi has considerable political clout. Winning back the brand will be tough. The French drinks giant wasn't allowed to renew its claim on the Havana Club brand in the US.

US discount airlines better poised to handle economic turbulence

7 Aug 2006

Legacy airlines are back in favour. Their stock prices have recently soared while those of the discount carriers have remained grounded. But the relative performance could change as the economy slows and the true strength of the nofrills airlines reemerges.

Halliburton stock looks cheap

27 Jul 2006

The $33bn US oil services giant last week scuttled IPO plans for its beleaguered construction group, KBR, citing weak demand. Spinning off KBR could help Halliburton shed its image problems and free KBR to transform its business. There's 25% upside to be had.

Central banks fear instability more than inflation

27 Jul 2006

If Bernanke, Trichet and Co. were most worried about inflation, they d be squeezing harder. Growth is strong and prices are rising. But higher rates could threaten financial stability in a world that is risky and highly geared. No one wants another LTCM.

Airbus valuation still a mystery

12 Jul 2006

Why did Rothschild value the aircraft maker 35% below market guesses? Popular theories focus on Airbus cash advances and currency hedging. But neither seems fair. The worry is that Airbus faces deeper problems.

Europe goes green on aviation taxes

7 Jul 2006

International treaties have defeated past attempts to tax airlines. The EU may have found a way round. But don t expect airlines to give up without a fight.

Eads shareholder pact should be scrapped

22 Jun 2006

The shareholder pact that controls Eads is an anomaly that serves nobody s interests. The French government is right to demand reform. But the reform that s needed is not the sort France has in mind. The key is greater shareholder democracy not more French influence.