Air Transportation

Kuala Lumpur can give up Malaysia Airlines

21 March 2019

The flag carrier has been losing cash for years. Now Premier Mahathir Mohamad is asking if it should fly at all. State-meddling has hampered a turnaround and there’s too much local capacity. Folding the airline would show that his government is ready to rein in the state.

Airbus can only nibble at Boeing’s 737 lunch

18 March 2019

Logically, the U.S. aerospace giant’s problems with the ill-fated MAX 8 should benefit its arch European rival. But chock-full order books and production mean Airbus will struggle to take up the slack. If the MAX 8 faces long-term problems, it could just mean fewer planes.

Pricier fuel forces Lufthansa onto leaner path

14 March 2019

The German carrier will have to fork out an extra 650 mln euros on fuel this year. With revenue barely growing, CEO Carsten Spohr will have to squeeze other costs, including staff, to maintain altitude. A leaner Lufthansa will add to the pressure on industry laggard Air France.

Boeing investors fear worst from 737 tragedy

11 March 2019

The aerospace giant’s shares lost over $25 bln in value after the second crash of its newest model in six months. That overstates the likely financial impact even if U.S. regulators copy China and ground the plane. The real threat is creating an opening for a Chinese competitor.

Dutch activism could ground Air France recovery

27 February 2019

The Hague has snapped up 12 percent of the carrier to counter the influence of the French government and protect Dutch jobs. More state meddling may undermine new boss Ben Smith’s cost-cutting plan, and exacerbate tensions with French unions, raising the risk of more strikes.

Storms won’t keep Qantas from higher flight path

21 February 2019

Australia's flag carrier said fuel costs pulled first-half earnings down by nearly a fifth to $559 mln. Domestic business proved resilient, though; its fleet and balance sheet are in good shape too. Choppy weather lies ahead, but Qantas looks sturdier than higher-valued rivals.

Ryanair CEO’s 100 mln euro bonus is within reach

15 February 2019

That’s how much Michael O’Leary stands to gain if he doubles the budget airline’s net profit or share price by 2024. Falling fares and strikes make the target look a stretch. But if Ryanair hits its 200 mln passenger goal while keeping costs down, the sky’s the limit for rewards.

Jumbo reality check frees Airbus to fly higher

14 February 2019

The European aerospace group will stop making A380s in 2021. Passengers who love the spacious cabins will regret the decision more than the airlines that fly the gas-guzzling behemoth. A focus on nimbler, greener two-engine jets will help narrow Airbus’ valuation gap with Boeing.

New-look Ryanair follows familiar flight path

4 February 2019

The budget airline will split into four units overseen by CEO Michael O’Leary. The changes, including a replacement for Chairman David Bonderman, look encouraging. But given that O’Leary will remain in charge and large-scale acquisitions are unlikely, they are mostly cosmetic.

IAG is surprise first loser in airline fuel casino

24 January 2019

The BA owner is set to sell its stake in Norwegian Air. When IAG bought in last April, higher oil prices made it plausible that its unhedged smaller rival would become vulnerable to a takeover. As it happens, a sharp fall in crude values means the egg is instead on its own face.

Ryanair will weather fare squeeze

18 January 2019

The low-cost carrier expects to make less post-tax profit this financial year than previously anticipated as CEO Michael O’Leary cuts fares to attract customers. That’s tough as he is having to pay staff more. But passenger numbers are growing fast enough for his bet to pay off.

Virgin takes low-risk punt to lift its UK flights

11 January 2019

Richard Branson’s airline is part of a group buying loss-making Flybe for a token 2 mln pounds. The domestic operator’s turboprops could funnel more people onto Virgin’s long-haul flights. Joining up with infrastructure firm Stobart and private equity firm Cyrus spreads the risk.

IAG tests EU appetite for destruction

9 January 2019

The parent of British Airways and Spain’s Iberia may fall foul of European ownership rules if the UK leaves without a deal, according to the FT. That could force it to sell Iberia. IAG’s best hope is that European states have little to gain from unwinding airline consolidation.

Budget air guru was passenger more than pilot

4 January 2019

Herb Kelleher’s Southwest Airlines took the romance out of flying, and undercut the industry’s luxury pricing with cheap, direct flights. Budget travelers owe him thanks, but they owe more to the influence of plunging airplane-manufacturing costs and rising passenger demand.

Hapless oil bets will drive airline M&A

4 January 2019

Air operators are divided into two camps on fuel prices. Ryanair and Lufthansa are prepared for a hike after locking in hedges. Smaller carriers are hoping for a fall. If their bet goes wrong, they could be gobbled up.

Airlines’ nosedive hints at wider turbulence ahead

3 January 2019

Delta sent sector stocks plunging by warning of slightly slower revenue growth even as it affirmed earnings guidance. With high fixed costs, the industry is vulnerable to any slowdown. Investors’ outsized reaction suggests fear about the economy has the upper hand over greed.

Drones prove disruptive capacity – in a bad way

20 December 2018

Rogue devices forced London's Gatwick airport to close, grounding flights and stranding thousands of passengers the week before Christmas. Even known risks with new technology - already highlighted by UK aviation authorities - can be hard to manage.

Thomas Cook epitomises Brexit cliff-edge risk

27 November 2018

The UK travel operator gave a second profit warning in two months. Foreign bookings hit by a hot summer aren’t the issue. Rising leverage, a suspended dividend and an outlook that depends on strong consumer demand are – and will stay bad until Britain’s EU exit is clarified.

EasyJet valuation is heading for lower altitudes

20 November 2018

The budget airline carried a record number of passengers in 2018. That will be hard to replicate since rivals are finally resolving their problems. Stiffer competition and higher costs will weigh on revenue. The premium at which the company is trading over most peers will shrink.

India could clear flight for Singapore Airlines

14 November 2018

The $8 bln carrier posted dismal quarterly earnings, weighed down by fuel costs. But opportunity may be knocking, as indebted rival Jet Airways comes into play. A deal by Singapore’s influential Indian partner Tata would bring newfound clout in a promising growth market.