Brexit advocates: heed the tale of Herb Kelleher 6 May 2016 The co-founder of U.S. budget airline Southwest took the glamour out of air travel. But the increased connectivity has had unexpected benefits - like more scientific breakthroughs, a new study shows. Those who seek a British exit from the EU may be giving up more than they know.
Top Chinese travel agent makes an odd diversion 22 Apr 2016 Ctrip is buying a $463 mln stake in China Eastern Airlines, and could yet buy more. Investors in China’s largest web travel agency probably did not expect to own a minority stake in a state carrier. But this may be the only way Ctrip can avoid a damaging boycott by big airlines.
China’s airline food bid is low on flavour 11 Apr 2016 HNA Group wants to gobble up Swiss airline caterer Gategroup for 1.7 bln Swiss francs including debt. Despite a 33 pct premium, the price is best described as bland, and the timing looks a bit opportunistic. Shareholders ought to wait for something more appetising.
Wanted: candidates for Europe’s worst CEO job 6 Apr 2016 Air France-KLM’s boss Alexandre de Juniac has vacated an unenviable managerial position. Europe’s weakest legacy carrier is hobbled by high costs, mighty unions and a wayward state shareholder. His successor will need fluent French, modest pay expectations, and little ambition.
Alaska Air pays through nosecone for U.S. Virgin 4 Apr 2016 The carrier is securing coveted airport slots in its $2.6 bln deal for Richard Branson’s stateside flier. Cost savings are slim, however, leaving an expected sales uplift to justify the 87 pct premium. It’s a risky bet that the airline industry’s destructive ways have changed.
Brussels blasts send European unity two steps back 22 Mar 2016 A recent Turkish deal over migration showed the EU can solve problems collectively, if imperfectly. Yet new attacks will inflame misgivings over security and free movement. As Britons mull whether to stay or go, the risk is that questions of prosperity and fairness get sidelined.
United Airlines board dogfight could be win-win 8 Mar 2016 Two hedge funds are gunning to get six new directors appointed, including a retired Continental boss. It’s a headache for CEO Oscar Munoz as he returns from sick leave. Despite heated rhetoric, though, a compromise on a revamped board should suit both sides better than a battle.
IAG ready to rise above investor scepticism 26 Feb 2016 The British Airways owner’s profitability is ascending into the sphere of top low-cost rivals like easyJet, its 2016 guidance suggests. Yet shareholders still treat the group as an ailing legacy carrier. If CEO Willie Walsh continues to cut costs, he can break through the clouds.
Air France euphoria is over the top 18 Feb 2016 The French carrier has reported positive full-year earnings after four years of losses. Yet the improvement is owed partly to a lower fuel bill. Costs under Air France’s control remain bloated and returns still barely meet its cost of capital.
HNA’s $6 bln Ingram bid has weird Chinese logic 18 Feb 2016 There’s no clear rationale for the conglomerate to buy a U.S. electronics distributor and leave its management and business untouched. But like other recent outbound Chinese deals, the acquisition gives HNA diversification, political capital, and a hedge against the sliding yuan.
Boeing nosedive reflects fear of wider turbulence 11 Feb 2016 The $78 bln aerospace giant’s shares plunged as much as 12 pct on news of an SEC investigation into its airliner accounting. It looks like an overreaction, but jangly nerves are understandable. After a record run of aircraft deliveries, 2016 is off to a bumpy start.
Magic formula fuels Ryanair’s ascent 1 Feb 2016 The lure of cheap flights has proved a match for Europeans’ fear of terrorism. The Irish carrier lowered prices after attacks in Paris, attracted 20 pct more passengers in the latest quarter than a year earlier, and even expanded its margins. High-cost rivals can’t keep up.
United’s pesky investors chart risky flight path 27 Jan 2016 Altimeter Capital and another fund are pressuring the No. 2 U.S. airline, whose stock has sagged amid the CEO’s health problems and lower traffic at its Houston hub. Cheap oil creates room for share-lifting payouts, but United could use the cushion when future turbulence strikes.
Matching Boeing margins is Airbus final frontier 12 Jan 2016 Fortunes are turning in the epic rivalry between the two airline manufacturers. Europe’s Airbus is winning more orders, has higher shareholder returns and trades at a 20 pct valuation premium. Closing the profitability gap with U.S. Boeing is its biggest remaining challenge.
BAE deal beats Rolls-Royce nationalisation 14 Dec 2015 The British government has concerns about the aero-engine maker that also handles some nuclear submarine work for the UK. In extremis, nationalisation is a possibility. A better scenario is that defence contractor BAE steps in. It might dust off deal ideas in any event.
EasyJet’s brio bodes ill for Lufthansa, Air France 17 Nov 2015 On the back of an 18 pct jump in pre-tax profit in 2015, the UK budget carrier is ordering more planes to step up growth and expand into new routes. The confidence is merited. High-cost legacy carriers are too bogged down by labour unrest to fight more nimble low-cost rivals.
Rolls-Royce can emerge from turbulence intact 12 Nov 2015 Cutting next year’s pre-tax profit estimates by a third will intensify calls for a break-up of the UK engine maker. But that would neither solve Rolls’ problems, which mostly stem from past strategic errors and cheap oil– nor would it make much sense at the current share price.
Airbus success hides growing flagship problem 30 Oct 2015 Europe’s aerospace group is getting many things right, as a 12 pct third-quarter growth in operating profit shows. But demand for its ageing long-distance A380 model has peaked. The flagship jet is overdue a $2 bln or so upgrade. Airbus can afford it, but is losing crucial time.
Europe’s stricken airlines cursed with good luck 29 Oct 2015 Lufthansa and Air France-KLM reported boosts from lower oil prices and strong summer demand. The uplift is probably temporary. But try telling that to restive pilots who may push back even harder on essential cost cuts. There’s little respite for the carriers’ horrible returns.
United board flies into risk-management failure 19 Oct 2015 The U.S. airline’s directors have been buffeted by the turbulence caused by new CEO Oscar Munoz’s illness. Apple’s handling of Steve Jobs’ terminal cancer remains a far worse example. But Goldman Sachs and JPMorgan show it’s possible to both inform investors and respect privacy.