Aviation Week-survivability of airlines in tough environment

[yeadrian 0]

Aviation Week

NEWS For Immediate Release

 

European, Asian Giants Dominate AVIATION WEEK Airline Rankings

Top-Performing Companies study measures survivability in tough environment

NEW YORK, NY - August 11, 2008 - AVIATION WEEK's latest Top-Performing Companies (TPC) report focuses on the global airline industry, revealing which carriers are in the best shape to prevail against the daunting economic challenges they face.

TPC project manager Michael Lowry used proprietary formulas to rank airlines in three categories. The metrics have been significantly revised this year to place more emphasis on survivability, reflecting the headaches airlines face through soaring fuel costs and faltering demand. The TPC feature is highlighted in this week's issue of Aviation Week & Space Technology. Articles written by Adrian Schofield and James Ott explain the rankings and identify underlying industry trends.

The TPC study shows that the best of the Asia-Pacific and European airlines are head and shoulders above their peers among the major legacy carriers, with Singapore Airlines again at the top of the list and Malaysia Airlines improving the most. The U.S. majors, meanwhile, are entrenched in the bottom half of the table. "The gap between the Asian and European top performers and the U.S. airlines has only grown larger over the past year," the article says. Other ranking categories cover low-cost and regional airlines, and the major cargo carriers.

In addition, Lowry has put together a list of five U.S. airlines that are at the greatest risk of filing for Chapter 11 bankruptcy protection over the next two years. The article also explains what airline actions can reduce bankruptcy risk.

The best-performing airlines in each category feature strong liquidity, good financial health, cost discipline and a focus on efficiency.

 

Top Ten Major Legacy Airlines:

1. Singapore Airlines

2. Malaysian Airline System Berhad

3. Iberia Líneas Aéreas de España S.A.

4. Aer Lingus Group PLC

5. Deutsche Lufthansa AG

6. Qantas Airways Ltd.

7. Finnair Oyj

8. Cathay Pacific Airways Ltd.

9. British Airways PLC

10. AIR FRANCE KLM Group

 

Top Ten Low-Cost/Regional Airlines:

1. Ryanair Holdings plc

2. easyJet plc

3. Allegiant Travel Company

4. Hainan Airlines Co. Ltd.

5. Southwest Airlines Co.

6. Transat A.T. Inc.

7. AirAsia Berhad

8. Copa Holdings, S.A.

9. WestJet Airlines Ltd.

10. Norwegian Air Shuttle ASA

 

The United Parcel Service, Inc. was the highest ranked freight carrier.

 

 

Meanwhile on Star Bizweek.

 

MAS flies to the top

 

MALAYSIA Airlines is the biggest gainer after industry magazine Aviation Week tweaked the focus of its annual survey of publicly traded airlines to emphasise the ability to weather the hard times. In the latest Top-Performing Companies (TPC) report, MAS vaulted from 17th to second place. With a total score of 87.8, the national carrier is sandwiched between Singapore Airlines (SIA) (93.3) and Iberia Airlines (80.2). “(MAS) has turned out to be the biggest surprise in this year’s report,” the weekly says in a recent analysis of the study.

The airline earned the No.2 spot by making sound decisions on route streamlining and dramatically improving its revenue management, adds the magazine.

 

Financial fitness is a significant criterion for this year’s TPC rankings. The scores represent the composite of five performance categories: liquidity (30% contribution to total score), fuel cost management (20%), financial health (20%), earnings performance (20%) and asset utilisation (10%).Aviation Week points out that most airlines are under “extreme financial pressure” as economies falter. “A siege mentality is beginning to take hold, with traffic demand starting to slide and airlines in most regions slashing capacity,” it says.

 

The magazine quotes Christian Torrego, senior manager of PricewaterhouseCoopers Advisory France, as saying, “The industry will go on, but only after a deep transformation and a new focus on efficiency.” The TPC study offers clues as to who the winners and losers will be as this transformation unfolds, says Aviation Week.

 

(Torrego is a member of the four-man TPC council of airline advisers who helped Aviation Week analyse the results of this year’s study.)

 

One noteworthy trend is the continued strong showing of Asia-Pacific carriers at the top of the rankings. Four of the first eight in the major airlines category are from the Asia-Pacific region. Apart from SIA (leading the pack for the fourth year in a row) and MAS, the others from this part of the world are Qantas and Cathay Pacific.

 

According to Aviation Week, the TPC advisory panel agrees that these airlines are among the best situated to weather the latest slump. The study also shows that the gap between the Asian and European top performers and the US airlines has only grown larger over the past year.

The magazine says the TPC airline formula has been revamped this year to place more emphasis on the airlines’ ability to survive.Liquidity is the factor that really sets the highest-ranked airlines apart, ACA Associates managing director George Hamlin is quoted as saying.

 

“There’s a stark difference (in liquidity) when you get below the top 10,” he adds. ACA Associates is a consulting and financial advisory firm that specialises in the commercial aviation industry, and Hamlin is also on the TPC council of advisers. While it is true that the Asian carriers enjoy some advantages unique to their markets, the TPC analysts also point out that these airlines boast organisational strengths that stem from good management rather than geographical location.

 

The inherent advantages are, says Raymond Neidl of Calyon Securities, are long-distance routes with very little competition.Hamlin adds that these airlines operate in a region where economies are still robust, and low-cost competitors have been a relatively recent arrival compared with the US and Europe. Lower labour costs help as well.

 

Aviation Week says another factor that must be considered is state ownership. Many airlines in this region have significant levels of government investment, which are not factored into the rankings, although state ownership can be an advantage. However, the TPC analysts agree that in the case of SIA and MAS, they are “so commercially successful that any government safety net is probably of little consequence”.

 

Remember - MH has been bailed out once before !

Edited November 22, 2008 by yeadrian

[mohd sukri abd hamid 0]

very good mh...you are the best airlines

[jani 0]

This is quite old news, isn't it?

[yeadrian 0]

It's a bit of old news. It was in The Star (A Malaysian daily) yesterday.

The rest of the articles are also interesting, who are the rest of the top performers, in LCC segment and also Cargo as well, How they are rated - rated on what points, MH's response and so on...

 

 

This is quite old news, isn't it?

 

[Mohd Azizul Ramli 2]

There was a thread about this earlier. http://www.malaysianwings.com/forum/index....showtopic=10050

[Pieter C. 5]

Yeah, people tend to forget to SEARCH first before posting a new topic

[yeadrian 0]

There was a thread about this earlier. http://www.malaysianwings.com/forum/index....showtopic=10050

 

 

Yeah, people tend to forget to SEARCH first before posting a new topic

 

 

oops ! sorry! my bad!

this "people - me" overlooked...