Air Transportation

Lufthansa tries to wriggle out of BMI put option – report

25 Jan 2005

Were the German airline to do that by selling its stake in BMI, it could restart merger talks between Virgin and BMI. But it's not clear that Lufthansa really needs to sell; nor that it is in BMI's interests to exercise the option.

Amadeus turned down higher offer

13 Jan 2005

The travel reservations firm shunned a bid from Citigroup Venture Capital even though it was 9% higher than the E4.4bn price it accepted. Why it chose the lower offer is not clear. But it sets a poor precedent for the private equity boom many believe is coming in Spain.

LBO bubble inflates Amadeus bid battle

5 Jan 2005

The private equity boom has pushed up sellers price expectations for the global travel reservations firm to almost E5bn. Does this mean a private equity house is about to get burnt? Possibly, although at least one of the bidders has a plausible strategy.

MyTravel agrees restructuring with bondholders

20 Dec 2004

Both sides have decided that it's in their interests to come to a compromise rather than engage in further litigation. That's understandable. Yet it is a fudge that leaves the legal status of subordinated debt unclear.

France slashes stake in Air France

9 Dec 2004

Investors should welcome the deal, so the shares ought not to be hit too hard by the sale of such a large slab of stock. The French government will reduce its stake in the airline by more than half, if Air France staff accept pay cuts in return for shares.

Deutsche uses M&A to fund a bought deal

1 Dec 2004

The investment bank has made a loss on its placing of TUI shares on behalf of WestLB. But that may not be a problem. By arranging a strategic buyer for a similarsized tranche of TUI stock, it ought to have made a turn.

MyTravel ruling removes bondholder nuisance value

25 Nov 2004

In approving the travel group's contested debt swap, the judge has preserved value and contributed to more efficient capital markets. The ruling sets a precedent for valuing UK subordinated debt. If there is no economic recovery value, there is no nuisance value either.

Easyjet faces growing low-cost competition

23 Nov 2004

Overinvestment in the sector has bred overcapacity, which in turn has sapped profitability. Every day, the European low cost carrier boom looks more like the hightech boom that preceded it.

MyTravel bondholders get unorthodox threat

4 Nov 2004

The group will try to transfer its assets, but not all of its liabilities, to a shell company if the bondholders don t write down debts. Both sides may be playing hardball. But this controversial tactic would certainly set a dangerous precedent.

Investors bet on E4bn Amadeus takeover

4 Nov 2004

Shares in the global travel bookings firm have surged by almost a third since it sent out information to potential private equity bidders. That suggests it is a done deal. It isn t. Apart from the risks particular to this deal, there are the usual generic ones, including price.

Ryanair surprises with upbeat outlook

2 Nov 2004

The share price of the nofrills carrier has surged. But that doesn t mean the outlook for the sector is any better. The coming winter will still be one of discontent for the industry with Ryanair revelling in the misery of its rivals.

What is Icelandair up to with Easyjet?

25 Oct 2004

Speculation is rife that the country s flag carrier could launch a full bid for the UK budget carrier. It s not clear whether it could afford to. And even if it could, Stelios looks an unlikely seller. But it is a wakeup call for management.

US airlines suffer from government interference

20 Oct 2004

Operating in bankruptcy, expensive pensions and high subsidies it sounds almost like Europe. But the US government is causing the trouble. The economics are not that complicated. Supply should be cut to match demand. The US government could help keep planes on the ground.

Airbus provocation looks gratuitous

15 Oct 2004

The European aircraft maker is asking for more subsidies smack in the middle of the biggest transatlantic trade war ever. Airbus boss may take pleasure in tweaking rival Boeing s tail. But this isn t the best way to cool tempers.

High oil price has silver lining for European airlines

7 Oct 2004

A sustained $40plus oil price will squeeze the flag carriers hard. But it should make them think twice about expanding in a crowded market. For the likes of Easyjet and Ryanair, soaring oil prices reinforce barriers to entry and should weed out competitors.

Alitalia reaches deal to split itself in two

24 Sep 2004

This looks like a case of sneakily injecting state aid into Alitalia. The EU should be on guard. A deal with the unions has cleared the way for the airline to split its flight and ground service units, leaving its debts with the latter.

Two down, one to go for Alitalia

16 Sep 2004

After beating its pilots and ground staff into submission, the Italian airline has only to reach an agreement with its flight attendants. That wins Alitalia some breathing space. But come Easter, the airline will be staring another liquidity crunch in the face.

US Airways shouldn’t come back from the brink

14 Sep 2004

Its departure would help the industry to consolidate. The subsidies Washington dished out postSeptember 11 have delayed this process. US Airways may try to reinvent itself as a budget carrier. But it is better to leave that to the professionals and let it disappear.

BA cashes in on £438m Qantas stake

8 Sep 2004

The sale makes sense. There was little point in having that much capital tied up in an Australian airline. That doesn't mean the UK airline will now go on a spending spree. BA is much better off cutting its debt mountain and fixing its business.

Air France-KLM profit doubles

2 Sep 2004

That's no small feat, considering the oil price. But it is probably more to do with KLM s own cost cutting efforts than any real synergies. With average fares still falling and more capacity coming through, it is hard to see shares continuing to outshine peers.