Air Transportation

IAG picks good time to ride Norwegian jet stream

12 April 2018

The owner of British Airways may bid for budget carrier Norwegian Air Shuttle. The target’s plan to disrupt transatlantic travel is taking off, but its finances are stretched, and rival bidders may struggle to match an offer from IAG. Investors shouldn’t bet on too big a premium.

Cerberus Alitalia carve-up would not fly with Rome

11 April 2018

The private equity firm is reported to be plotting a three-headed bid for the Italian airline. It would see easyJet take short-haul routes and Air France-KLM long ones, while Cerberus puts up the cash. But a breakup plan will not pass muster with a new nationalist government.

GKN owners should stick with the devil they know

23 March 2018

The UK engineer’s shareholders must choose whether to accept Melrose Industries’ $11 bln hostile cash-and-share bid. The buyer has a record for turnarounds, while GKN has missed targets. But Melrose’s plans are vague and riskier. GKN deserves the benefit of the doubt.

Mile-high stake swap could feed Air India bid

20 March 2018

Jet Airways may be interested in the soon-to-be privatised national carrier. However, Naresh Goyal’s airline would need serious financial help to make an offer fly. Abu Dhabi’s Etihad may need to make room for a new large strategic investor.

Lufthansa’s next challenge will be domestic

15 March 2018

The German airline is reaping the rewards of a 2014 plan to take on no-frills giants like Ryanair. Barring an unexpected rise in oil prices, Chief Executive Carsten Spohr’s next challenge will be to fight off cut-price competitors when they try to encroach on his home turf.

Cathay Pacific is on a better flight path

14 March 2018

Fares remain under pressure and oil prices lofty but the airline is carrying more cargo and, separately, collecting more income through its stake in Air China. The result is a profitable second half. Unwinding fuel hedges and tackling costs should help it fly higher.

Macquarie Infrastructure slips on $2 bln banana

22 February 2018

That’s how much the power-to-airport-services group’s stock plunged after the loss of fuel-oil contracts led it to slash the dividend and put assets up for sale. Getting caught out by a shifting U.S. energy mix is embarrassing. Having too much leverage compounds the damage.

Viewsroom: Volatility puts investors to the test

15 February 2018

Higher wages, inflation fears and the prospect of faster than expected rate hikes are posing challenges market players haven’t seen for years. Comcast may spike Walt Disney’s potion to acquire Rupert Murdoch’s entertainment assets. Plus, Singapore’s airshow has everyone buzzing.

Airbus’s sunnier skies still contain clouds

15 February 2018

Shares in the aerospace giant jumped by one-tenth on Thursday following an 8 percent rise in operating profit, higher than analysts expected. But its operating margin still lags those of U.S. rival Boeing. Closing the gap could be complicated by a fresh stateside corruption probe.

Boeing in-sourcing idea fires on two engines

8 February 2018

Even as it negotiates with Embraer, the $207 bln company is in talks to buy parts supplier Woodward, the WSJ reports. With a seven-year backlog of plane orders, Boeing could raise profitability by bringing more work in-house. Plus, it could throw sand in rival Airbus’s engines.

Ryanair buyback can only cushion so much turbulence

5 February 2018

The no-frills airline boosted earnings in the three months to December but faces a squeeze from pilot salary demands and still-low fares. A 750 mln euro share buyback will smooth the bumps for investors. But it cannot offset the transition to a lower-growth, higher-cost future.

United puts airlines’ stability into tailspin

25 January 2018

CEO Oscar Munoz plans to put more planes in the skies, sparking fears of a price war and wiping billions off United’s and rivals’ market values. Industry profitability has already lost some altitude. A return to rampant competition will make that worse – especially for Munoz.

EasyJet’s life is about to become harder

23 January 2017

Rivals’ misery helped boost the budget airline’s revenue in the last three months of 2017. New boss Johan Lundgren is optimistic passenger numbers will grow but may run out of beginners’ luck. Rising fuel costs and a fightback by Ryanair make rosy promises difficult to deliver.

HNA’s hard job: put the M&A machine into reverse

12 January 2018

The acquisitive Chinese group has been buffeted by regulatory setbacks and signs of financial stress. Now trade in two key listed units in China is halted, suggesting a corporate reshuffle could be looming. HNA will find shrinking back to health tougher than breakneck growth.

Ryanair pilots are key to regaining European crown

11 January 2018

Lufthansa overtook the Irish carrier to become Europe’s largest airline in 2017. Though acquisitions boosted the German group, Ryanair’s target of 200 mln passengers by 2024 depends on steady expansion. Unless it can win over irate pilots, its growth prospects will be grounded.

Ryanair investors faintly see higher-cost future

18 December 2017

They have knocked over 2 bln euros off the budget airline’s market value since it caved in and recognised unions on Friday, averting a Christmas strike. That’s more than the extra staff outlays may be worth. If easyJet is a guide, though, Ryanair’s expenses will rise further.

Twin tailwinds help Ryanair weather pilot crisis

31 October 2017

The 20 bln euro no-frills airline will meet its full-year profit goal despite a rostering mess that cost it thousands of flights. Passenger numbers were up 11 pct in the six months to September. Ryanair’s fare cuts helped, but it also got lucky with rivals’ bankruptcies.

Wanderlust, not shopping, drives China tourism 2.0

9 October 2017

More people spent China's "Golden Week" holiday on Thai beaches than in Hong Kong malls. As Chinese tourists eschew shopping for sight-seeing, offshore luxury retailers could lose custom. But as the travelling middle class spreads out, there are bound to be more winners.

Xi Jinping can’t get Chinese planes to run on time

29 September 2017

As millions of Chinese people set forth to travel during the "Golden Week" holiday starting Sunday, many could spend more time in the departure lounge than on the beach. Their airports are the world's most delayed, but instead of reforming airspace, Beijing prefers fiddling data.

Etihad’s airlines fail, but odd CDO remains aloft

17 August 2017

Air Berlin and Alitalia are insolvent. Their debt is probably worthless, except for an unusual collateralised debt obligation that part-owner Etihad used to fund them. It is trading at a price that suggests Etihad might bail it out. Fuzzy guarantees often end badly.