Star Alliance News

[Pieter C. 5]

Eeeeekkkkkkkkk

 

China Scurries To Contain Mice On United Flight

 

January 8, 2008

The United States, concerned about tainted imports from China, has exported its own batch of potentially harmful goods to Beijing in the form of mice on a flight from Washington, state media said on Tuesday.

 

Chinese inspectors found eight mice, dead and alive, on a United Airlines flight to Beijing after the airline reported the stowaways to local quarantine officials upon landing on Sunday afternoon, Xinhua news agency said.

 

The report prompted an "emergency team" to rush to the aircraft, Xinhua said, to "put rat poison and mouse traps at every possible corner on the aircraft, including the cockpit".

 

"Eight mice, dead and (alive), were found at last... hidden in pillows," the agency said.

 

The surviving mice were sent to labs for testing, it said.

 

The incident was reported in most newspapers on Tuesday, citing experts warning of dozens of fatal viruses that the mice could spread, and the risk of deadly accidents from them chewing through the plane's wiring and circuits.

 

"We are taking this matter seriously and have begun a full investigation with the authorities to determine how this happened and ensure it is resolved," United Airlines said in a statement.

 

"It would be inappropriate for us to comment further at this stage as the investigation is currently under way."

 

China has been rocked by a number of quality scandals involving food, toys and drugs in recent months, but has repeatedly accused foreign media of biased reporting, while making a point of naming foreign companies it claims have sub-standard product problems.

 

(Reuters)

 

[Pieter C. 5]

Thai Air Plans To Acquire 34 Planes

 

January 17, 2008

The board of Thai Airways International approved plans on Wednesday to lease or buy 34 Boeing and Airbus passenger planes as part of a 10 year plan to replace the airline's ageing fleet.

 

Details were still be worked out, but the national carrier planned to buy or lease 20 Airbus A321-200 aircraft and lease 14 Boeing 787s, president Apinan Sumanaseni told reporters.

 

The board approved a deposit of USD$3 million for the Airbus order, which could cost up to USD$1 billion if the airline decided to buy them, he said.

 

"We haven't decided whether to buy or lease the A321s. That depends on the new government," he said of the coalition administration still being negotiated after December's general election.

 

"For the 787s, we have to work on the details and propose it to the board again," he said, adding he expected delivery of the leased aircraft to begin in 2012.

 

Over the next 10 years, the airline wants to procure 65 aircraft worth THB400 billion baht (USD$12 billion) to upgrade its 91-plane fleet. It plans to decommission 47 aircraft more than 20 years old.

 

Thai Airways expected a "cabin factor" of 82 percent in December, and an average 80 percent in the January-March period, but that would drop to 76-77 percent in the April-May low season, Apinan said.

 

Higher fuel costs would drag its revenues down in the financial 2007/2008 year, although the airline had raised fuel surcharges to offset the higher costs, Apinan said.

 

"We plan to raise the fuel surcharge by April," he added.

 

(Reuters)

 

[Pieter C. 5]

Swiss Boosts Lufthansa Q1 Profit

 

April 25, 2008

Lufthansa's operating profit rose fivefold in the first three months of the year, boosted by airline Swiss and performance across its divisions, the carrier said on Thursday.

 

Operating profit increased to EUR188 million euros (USD$296.2 million) from EUR36 million a year earlier, Lufthansa said in a statement. This included EUR52 million from Swiss, which has been fully consolidated in its accounts since July.

 

First-quarter sales rose to EUR5.6 billion from EUR4.7 billion a year earlier. Net profit dropped to EUR57 million from EUR554 million a year ago, when Lufthansa gained EUR499 million from the sale of its stake in tourism joint venture Thomas Cook.

 

Lufthansa said on Thursday that it remained confident about its operating result for this year and that it still aimed to improve it from the EUR1.38 billion achieved last year.

 

"This continues to appear possible despite the fact that the worldwide economic conditions have worsened perceptibly," Lufthansa said in the statement.

 

"Precondition is, however, that the market environment does not weaken further and higher fuel prices can be compensated as in previous years."

 

(Reuters)

 

[Keith T 2]

Those using BMI diamond club should spend their miles NOW - before you get rolled into Miles and More which isn't nearly as good value.

 

http://afp.google.com/article/ALeqM5gP0E52...wcaxQ8vj833NWLw

 

Lufthansa decides to exercise option for BMI: finance director

 

 

FRANKFURT (AFP) — German airline Lufthansa has decided to exercise an option to take a majority stake in British carrier BMI, Lufthansa finance director Stephan Gemkow said on Friday.

 

"We have decided to exercise the corresponding options," he told a tele-conference following the release of Lufthansa quarterly results.

 

Lufthansa currently holds 30 percent percent minus one share of BMI and has the possibility of acquiring -- between December 2008 and June 2009 -- the 50 percent plus one share stake held by BMI chief Michael Bishop.

 

BMI appeals to Lufthansa because it controls several take-off and landing slots at London's Heathrow Airport, a key player in air traffic between Europe and the United States.

 

BMI's other principal shareholder, the Scandinavian carrier SAS, has a 20 percent stake, which it wants to sell.

 

Lufthansa shares in mid-day trade here were up 4.20 percent at 18.10 euros on a generall stronger market after the group posted a huge rise in operating profit owing to the successful integration of its subsidary Swiss.

 

"Their key number, operating income, was better than our estimate," said Citigroup analyst Andrew Light.

 

Late on Thursday, Lufthansa reported that operating earnings in the period from January to March had grown to 188 million euros (295 million dollars) from 36 million euros in the same period last year. Analysts had expected operating profit around 98 million euros.

 

"We had an excellent take-off into 2008," a statement quoted Lufthansa chairman Wolfgang Mayrhuber as saying.

 

"We are on the right course, we are standing out from the crowd," he added.

 

Lufthansa said that a "selective expansion of the route network and the successful integration of Swiss" contributed significantly to the results.

 

Lufthansa took Swiss under its wing in March 2005 to expand passenger traffic business amid consolidation of the European air travel sector.

 

Mayruber said at the time that the deal would generate one-off costs of 101 million euros but was also expected to generate annual synergies of 165 million euros from 2008.

 

 

[Pieter C. 5]

Darn......just started collecting miles on Bmi

 

Better collect for my Qmiles from now on when flying Bmi ?

[Ken M. 0]

Pieter,

 

A lot of Diamond Clubbers in the UK are not looking forward to the Luftwaffe getting their hands on BMI.

Jolly poor show old chap.

 

Regards,

Ken

 

[Keith T 2]

Pieter,

 

A lot of Diamond Clubbers in the UK are not looking forward to the Luftwaffe getting their hands on BMI.

Jolly poor show old chap.

 

Regards,

Ken

 

All the crazy diamond club promos have just started to make sense, as increasing the number of elite members and membership generally of BD DC (even if half of us spend our miles on other airlines like SQ ) would actually increase BD's valuation when the takeover occurs.

 

I'd make a politically incorrect reference to the world wars but I won't as there might be German-based members here.

Edited April 28, 2008 by Keith T

[Pieter C. 5]

All the crazy diamond club promos have just started to make sense, as increasing the number of elite members and membership generally of BD DC (even if half of us spend our miles on other airlines like SQ ) would actually increase BD's valuation when the takeover occurs.

 

The day after tomorrow, I'll be flying Bmi Baby and earn tripple miles !!! (900 i.s.o. 300 miles)...

 

United Will Pursue All Options To Ensure Future

 

April 28, 2008

The parent of United Airlines, which held unsuccessful merger talks with Continental Airlines, said it would pursue all options to ensure a sustainable future.

 

"Ensuring you have the right partner is everything," UAL said in a statement. "We will pursue all options to ensure a strong, sustainable future for our airline and will not shy away from the tough choices necessary to create value for our shareholders."

 

Earlier on Sunday, Continental said it had decided against merging with any other airline, but will explore alliances with other carriers.

 

Continental had called off talks with United due to the other carrier's weak financial condition, and "the increasing cost of oil increases the risk of doing an airline merger," a source briefed on the matter said.

 

(Reuters)

 

[Keith T 2]

The day after tomorrow, I'll be flying Bmi Baby and earn tripple miles !!! (900 i.s.o. 300 miles)...

 

How I got my SQ C flights for free with diamond club:

9000 miles sign up bonus

2500 miles for responding to a 6 question survey

SQ C NRT-SIN-MNL 11 125 miles + 63 quid under "cash and miles", with option of stopping over in SIN.

 

"Luckily" the direct flights on NH weren't available.

 

Edited April 28, 2008 by Keith T

[Pieter C. 5]

Will Lufty make a move, together with Air One, on the vacant Malpensa slots ?

 

Lufthansa To Boost Milan Malpensa Flights

 

April 28, 2008

Lufthansa plans to nearly double the number of weekly fights out of Milan's Malpensa Airport in an agreement that could help the northern Italian airport recover from cutbacks by Alitalia.

 

Lufthansa said on Monday it would station six new Embraer 195 regional jets at the airport at the beginning of next year, offering flights to new European destinations.

 

The flights will be operated by its subsidiary Air Dolomiti.

 

"Milan and the Lombardy region are among the strongest and most important regions in Europe and have a high passenger volume," Lufthansa said in a statement.

 

The number of Lufthansa flights out of Malpensa would rise to more than 300, it said.

 

Lufthansa also flies out of Linate, near Milan.

 

Malpensa airport operator SEA is looking for airlines to fill the gap being left by loss-making Alitalia, which decided to abandon Malpensa as a second hub and cut back 70 percent of its flights to cut costs and avoid bankruptcy.

 

The move, begun in March, provoked an outcry from regional politicians fearing job losses, and from business leaders fearing a loss of direct intercontinental flights.

 

It has also seen SEA file a lawsuit against Alitalia for EUR1.25 billion euros (USD$1.88 billion) in damages.

 

Air France-KLM had supported Alitalia's cutbacks until it dropped its offer to buy the Italian airline in the face of union opposition.

 

Sunday newspapers said a number of regional business leaders such as the chairman of Pirelli could be interested in taking part in an alternative bid for Alitalia, which is looking for a partner since Air France-KLM's withdrawal.

 

Air One, a small, domestic rival to Alitalia which has also expressed interest in such a bid, is increasing the number of flights out of Malpensa with the aim of eventually becoming the airport's main airline.

 

(Reuters)

 

Merger-mania, not only in the US, but, like I said in the other ST-thread, also in Europe:

 

Lufthansa Considers Buying Brussels Airlines

 

April 29, 2008

Lufthansa is considering buying Belgian operator Brussels Airlines, German newspaper Handelsblatt reported, citing unidentified people in the aviation industry.

 

Both companies have been negotiating for some time but were not able to value the Belgian company, the paper said in a pre-released article in Tuesday's edition.

 

Both airlines declined to comment, Handelsblatt said.

 

(Reuters)

 

 

[Pieter C. 5]

SAS Q1 Loss More Than Expected, Job Cuts Planned

 

April 29, 2008

Scandinavian airline SAS posted a larger first-quarter pretax loss than expected on Tuesday and said it would cut about 1,000 jobs, sending its shares lower.

 

The airline, half-owned by the governments of Sweden, Norway and Denmark, posted a pretax loss of SEK973 million Swedish kroner (USD$163 million). The firm lost SEK96 million in the year-earlier quarter.

 

SAS announced a "short-term action plan" that would have a 2008 "earnings effect" of SEK1.1 billion and would lead to the elimination of about 1,000 full-time positions. The group had a little more than 25,500 employees at the end of last year.

 

"This company is losing money and has been doing so for 10 years now," said an analyst who asked to not be named.

 

"They have to continue to cut costs. The reducing of jobs is not that surprising, considering they are going to operate fewer planes."

 

The airline said 44 percent of an existing SEK2.8 billion long-term plan had already been implemented. This was less than SAS had planned originally by the first quarter.

 

"The situation in the air-travel industry is serious. For this reason it is vital that we turn around the earnings trend," said SAS Chief Executive Mats Jansson in a statement.

 

SAS said it would cut capacity by 11 aircraft, or 5 percent, starting in the autumn of 2008 and had decided not to go ahead with a planned increase of one intercontinental aircraft.

 

The airline cited problems with its Dash 8 Q400 aircraft -- which it eliminated after a string of accidents last year -- for high costs in the quarter, but said most of these would be offset by compensation from supplier Bombardier .

 

SAS has estimated its Dash 8 problems would cost SEK400 million (USD$67 million) in the first quarter of 2008.

 

First-quarter group revenues, at SEK12.8 billion, were higher than SEK11.9 billion a year earlier.

 

SAS warned earlier this month that unit revenues in March would be down 10-15 percent after falling 5 percent in February and 2 percent in January.

 

Like many national carriers, SAS has struggled for years to meet the challenge from low-cost rivals, inefficient operations and -- more recently -- with record high prices for fuel.

 

It has cut billions from costs and sold non-core operations, but more remains to be done. It wants to focus operations on services in Northern Europe.

 

Last week Lufthansa said its first quarter fuel costs rose 42.4 percent. However, it managed to post a big rise on operating profit for the period and said prospects for the airline industry in general were bright.

 

(Reuters)

 

[Pieter C. 5]

United Pilots Leader Opposes US Airways Merger

 

April 29, 2008

A merger between United Airlines and US Airways would be "extremely negative," United's pilots' union chief said on Tuesday.

 

"While United has its own problems and issues... US Airways' problems run even deeper," said Steve Wallach, chairman of the Air Line Pilots Association (ALPA) chapter at United.

 

Wallach said in a statement reports of advanced merger discussions between United and US Airways on Monday have generated "enormous concern" among pilots at United.

 

They point to potential problems of combining work arrangements and seniority of union employees at both companies, if a merger were proposed. US Airways has failed to integrate pilots following its 2005 merger with America West Airlines.

 

(Reuters)

 

Lufthansa CEO Says Won't Rush To Buy More Rivals

 

April 29, 2008

Lufthansa will not rush into more takeovers given current economic uncertainty but will also not stand by and do nothing as the industry consolidates, the airline's head said.

 

"We want to be active, we will be active, but we will not let ourselves be drawn into something that will end up harming the company," Wolfgang Mayrhuber told the carrier's annual shareholder meeting in Cologne on Tuesday.

 

Lufthansa's name has frequently come up as a possible buyer of other European airlines following the purchase of rival Swiss, which was fully consolidated in its accounts last year.

 

The German airline had refrained from bidding for loss-making Italian carrier Alitalia because of too high financial risks, although it was continuing to monitor the situation with Spanish rival Iberia.

 

Talks were ongoing about a merger of Lufthansa's Germanwings budget carrier with domestic peer TUIfly.

 

Mayrhuber also confirmed that the airline had resolved to exercise its option to buy the majority of UK airline bmi in two stages in the next two years. The timing and price had already been agreed with bmi majority owner Michael Bishop and the money had been set aside for the transaction.

 

Mayrhuber added that he remained confident that the outlook for the aviation industry was "good" and confirmed that the airline still hoped to raise its operating result this year if possible.

 

But the uncertainty on financial markets, oil prices at record levels, the possible consolidation of air traffic in the United States and the "unbroken rapid expansion course of the Gulf carriers" would challenge the group.

 

"We have enough thrust for another ascent and we have the flexibility to slow down in case of downwash. The record-breaking year 2007 will not be a one-hit wonder," Mayrhuber said.

 

The chief executive also told shareholders on Tuesday that he planned to step down from the post he has held since 2003 when his contract runs out at the end of 2010. The Austrian manager would then be 63.

 

(Reuters)

 

[Keith T 2]

Wallach said in a statement reports of advanced merger discussions between United and US Airways on Monday have generated "enormous concern" among pilots at United.

 

I must say it's not only the pilots of UA who hold "enormous concern" about the merger. UA/*A pax don't want US either! The thought of enduring a flight on US Scareways is enough to make even the most jaded and cynical UA/AA/NW/DL/CO etc pax sick with fear.

Edited April 30, 2008 by Keith T

[Pieter C. 5]

I put the following story here, as my guess is: two friends (LX-SN) will be re-united

Also, Lufty is in the picture here...

 

Brussels Airlines In Talks To Enter Alliance

 

April 30, 2008

Belgium's Brussels Airlines said on Tuesday it was in talks with various partners to enter one of the world's main commercial airline alliances and keeping the door open for a possible stake sale to a new shareholder.

 

"A possible financial participation of a new shareholder could only be considered under the condition that the sustainable future, the identity and the autonomy of Brussels Airlines are guaranteed," the carrier said in a statement.

 

Reports in the Belgian and German press quoting industry sources said German airline Lufthansa was considering buying Brussels Airlines.

 

"As to the rumours that are currently circulating on the issue of consolidation in air traffic, the company will abstain from further comments," Brussels Airlines said.

 

(Reuters)

 

[Pieter C. 5]

United/US Air Merger Could Mean Major Capacity Cuts

 

May 4, 2008

If United Airlines parent UAL and US Airways Group merged, the pairing could result in massive cost savings for the new carrier as well as higher fares for the troubled industry.

 

But, in order for a merged airline to win those benefits through consolidation, the two carriers -- reported to be deep in merger talks -- would have to take on the painful tasks of closing hubs, grounding planes and slashing jobs where United and US Airway overlap.

 

"There's definitely the potential for it," said Stuart Klaskin at KKC Aviation Consulting. "What I question is whether those two airlines will have the political will to actually do that."

 

Industry experts say the prime benefits of consolidation come from reductions in capacity -- the number of seats for sale. Less capacity lets carriers charge more for tickets.

 

In the last two years, major carriers have removed capacity from less profitable domestic routes and bolstered lucrative international routes. The strategy has led to higher ticket prices and stronger airlines.

 

Fare increases, however, have not kept pace with rising fuel costs, which are directly linked to the price of oil. As a result, airlines posted big losses in the first quarter, and pressure is mounting on carriers to merge.

 

"Absent the removal of meaningful capacity reductions from the domestic airline industry, you don't get substantial consolidation benefits," Klaskin said. "That's the ugly, sad truth."

 

Klaskin said a United/US Airways merger could lead to a 25 percent reduction in their combined capacity. But he predicted capacity cuts closer to 10 percent.

 

Sources said last week that United and US Airways could reach a merger deal soon. An agreement would come on the heels of one announced last month by Delta Air Lines and Northwest Airlines, which are planning to form the world's largest airline, to be known by Delta's name.

 

The Delta deal features cost savings and revenue improvements amounting to about USD$1 billion a year. But the proposal currently offers no capacity reductions as the two airlines' operations have little overlap.

 

While Delta and Northwest may be depriving themselves of hefty cost savings, their pairing may have a relatively easy time winning approval from the US Justice Department, unions and travelers.

 

United and US Airways, on the other hand, could face higher antitrust hurdles resulting from the strong presence of both airlines on the East Coast, especially in Washington DC. They also would risk customer backlash if they cut service or raised fares in popular markets.

 

"The consumer won't like it. But the fact of the matter is the consumer won't like all these airlines going out of business either," said airline consultant Robert Mann.

 

Since March, four small airlines -- Aloha Airlines, Champion Air, ATA Airlines and Skybus Airlines -- have shut down amid increasingly hostile industry conditions.

 

Low-cost carrier Frontier Airlines, meanwhile, filed for bankruptcy protection but said it would continue flying during its reorganization.

 

Experts say the industry desperately needs consolidation, but the jury is still out on what mergers make the most sense.

 

Although UAL Chief Executive Glenn Tilton and US Airways CEO Doug Parker have long advocated consolidation, their airlines may be particularly unenticing merger partners.

 

United, which completed a massive bankruptcy reorganization in 2006, suffered the largest first-quarter loss of the major airlines this year. The carrier still faces ill will from its labor groups, which made steep sacrifices to save the carrier.

 

US Airways, itself the product of a 2005 merger of America West Airlines and the former US Airways, still operates with two separate labor forces. The integration of a third labor force would present further complications, although experts generally believe labor issues would not torpedo a merger with United.

 

"It's not the most attractive pairing, but any kind of consolidation is good for the industry," said Jim Corridore, analyst at Standard & Poors.

 

(Reuters)

 

Another target for Lufthansa now ?

 

Austrian Air's Saudi Stake Deal Dropped

 

May 4, 2008

A Saudi-Austrian investor has pulled out of a deal to buy a stake in Austrian Airlines, an Austrian magazine reported on Saturday.

 

The airline's main shareholder, state holding company OeIAG, had agreed terms in March for Sheikh Mohamed Bin Issa al Jaber to take a stake via a capital increase.

 

But Profil magazine, citing a lawyer's letter, said he had pulled out of the deal on April 30. The magazine said the stake would have been worth EUR150 million euros (USD$232 million).

 

Austrian Airlines has a market capitalization of around EUR350 million.

 

(Reuters)

 

[Pieter C. 5]

SURPRISING

 

Lufthansa, UniCredit Meet On Alitalia

 

May 5, 2008

Lufthansa and Italian bank UniCredit have met to discuss a possible role for the German airline in a bid for Italian flag carrier Alitalia, Il Messaggero reported on Monday.

 

Lufthansa wanted three conditions for a deal -- a clear idea of the struggling carrier's finances, a turnaround strategy and that a prospective consortium of Italian investors remove union obstacles, the newspaper said.

 

UniCredit Chief Executive Alessandro Profumo, through the bank's German unit Bayerische Hypo-und Vereinsbank, met Lufthansa executives in Munich in the last few days to feel out a possible agreement, Il Messaggero said. It did not cite sources for the story.

 

A Lufthansa spokesman had no comment. A UniCredit spokeswoman said the bank had had no contacts with Lufthansa over Alitalia.

 

The Italian government has been trying for more than a year to sell the state's 49.9 percent stake in Alitalia. A deal with Air France-KLM fell apart last month over union opposition.

 

Italian prime minister-elect Silvio Berlusconi has promised that a home-grown consortium to buy Alitalia would soon reveal itself. However, no one with concrete plans to rescue the airline has emerged.

 

Il Messaggero said Lufthansa wanted to be sure any role would leave its credit rating intact and would be interested in becoming an industrial partner in a restructured Alitalia.

 

(Reuters)

 

[Naim 6]

Singapore Airlines raises fuel surcharge

 

SINGAPORE: Singapore Airlines has increased its fuel surcharge by between US$5 (RM15.90) and US$20 per sector for tickets issued on or after May 12, 2008 as a result of sustained escalation in the price of jet fuel in recent months.

 

In a statement yesterday, the airline said the price of jet fuel had increased sharply in recent weeks, and was now over US$140 per barrel. The new fuel surcharge rates are applicable to Singapore Airlines and SilkAir flights.

 

“The adjustments will offer only partial relief of higher operating costs arising from increases in the price of jet fuel. Singapore Airlines will continue to monitor the price of jet fuel and keep the application of the fuel surcharge under active review,” it said.

 

On regional routes, the rate is raised to US$35 (from US$30) per sector for flights between Singapore and Asean countries.

 

The rate is raised to US$150 (from US$130) per sector for flights between Singapore and gateways in the United States and Canada on a single-sector basis. For all other flights, the fuel surcharge is raised to US$95 (from US$80) per sector.

 

Singapore Airlines said the new surcharges were subject to official approval in some markets and some local variations may apply where regulatory approvals dictated.

 

http://www.theedgedaily.com/cms/content.js...276a00-1fa39212

[jani 0]

MH will follow soon I guess. I remember IJ saying that they will not raise it before other airlines in the region do.

 

Its quite dramatic though, the sudden increase is crazy.

[Naim 6]

MH will follow soon I guess. I remember IJ saying that they will not raise it before other airlines in the region do.

 

Its quite dramatic though, the sudden increase is crazy.

 

It's inevitable, unless you have these in your own backyard.

 

 

[jani 0]

In Malaysia, all the oil belongs to the Government, so what can you do even if you have that in your backyard?

[Naim 6]

In Malaysia, all the oil belongs to the Government, so what can you do even if you have that in your backyard?

 

5% royalty should be enough. Never ever settle for 'wang ehsan', ok?

[Gavin Andrew David 6]

I wonder why must it be a ' surcharge ' . Its not going to disappear anytime soon right , why not just include it in the fare itself ..

[Rozhan 0]

I recall the 'surcharge', when it first appeared, was supposed to be abolished once fuel prices go down. That was what airlines (and perhaps everyone else, except oil companies) had hoped for. But since the increase in fuel prices, it has not gone down to pre-surcharge levels but up and up and up (with the occasional slight downwards, but up again weeks later). Some airline like CX and SQ did reduce the surcharge when the prices went down a bit, but shot up again thereafter.

 

 

[Pieter C. 5]

United Pilots Say US Air Merger Should Be Last Resort

 

May 8, 2008

The union representing pilots at United Airlines said on Wednesday a merger with US Airways should be a last resort.

 

The Air Line Pilots Association said in a statement it had "serious concerns" that a merger would not yield the financial benefits some industry experts predict.

 

United and US Airways are in advanced merger discussions, according to sources with knowledge of the matter, although neither carrier has confirmed the talks.

 

Many airline experts believe consolidation is the best way to stabilize an industry battered by high fuel costs and low-fare competition.

 

But the pilots' union said that "the highly-touted financial benefits to be derived from such a merger are unlikely to be achieved because these benefits are based on assumptions that have no basis in reality."

 

The union said the financial benefits of a merger are dubious, given the labor unrest at US Airways, which merged with America West in 2005 and has yet to integrate its labor groups.

 

Further, a deal is unlikely to receive approval from the US Justice Department, the union said.

 

(Reuters)

 

Air Canada's First-Quarter Loss Deepens

 

May 8, 2008

Air Canada posted a deep first-quarter net loss on Thursday as more than CAD$200 million (USD$198 million) in one-time charges masked better than expected operating results in the face of high fuel prices.

 

The charges included a CAD$125 million provision for an investigation by the European Commission, US Department of Justice and the Canadian Competition Bureau into alleged anti-competitive cargo pricing by a number of airlines.

 

Air Canada had said it would eventually put the provision on its books as risks of costs became greater.

 

It said it plans several initiatives to help withstand rising fuel costs as oil surged above USD$120 a barrel. They include parking older, fuel-guzzling jets and scrapping marginal routes.

 

That follows such other measures as boosting fares and charging customers for checking more than one bag.

 

"We will continue to assess the market's ability to continue to absorb higher fares and pass on, as much as possible, the higher commodity costs," Chief Executive Montie Brewer said. "To date, our markets have been absorbing these increases, and our advanced bookings remain strong."

 

That and its fleet renewal have allowed it to maintain strong yields amid its own view that the US market is descending into a "mild" recession.

 

In the first quarter, Air Canada had a net loss of CAD$288 million, compared with a year-earlier loss of CAD$34 million.

 

Besides the investigation provision, the charges also included CAD$89 million in foreign exchange losses.

 

Operating revenue for the quarter was CAD$2.73 billion, up 7.5 percent from the same time last year.

 

"The (operating results) look very strong," said independent airline consultant Rick Erickson. "Going forward, the second quarter won't have the one-time hits. It's hard to say what the value of fuel is going to do... but they've got the efficiencies of all of their new aircraft."

 

Air Canada's A-series shares rose 15 Canadian cents, or nearly 2 percent, to CAD$8.20 on the Toronto Stock Exchange. They have fallen by a third this year, despite a strong Canadian market that has also buoyed rival WestJet Airlines.

 

The airline's yield, or revenues per passenger mile, rose 2.2 percent and non-fuel expenses fell 4.8 cents. Overall costs were flat as the fuel bill rose by CAD$130 million.

 

Brewer said the airline's addition of fuel-efficient Boeing 777 and Embraer aircraft played a big part in keeping costs in check.

 

Air Canada plans to park four of its older Boeing 767-200 jets. It will also suspend service to Rome and Osaka.

 

It now expects its capacity to increase in 2008 by 1 to 2.5 percent, down 1.5 percentage points from its previous outlook.

 

Meanwhile, Brewer said Boeing's projected delay in delivering its 787 aircraft complicates its fleet planning. He expects to receive its first one in 2012 rather than 2010.

 

Air Canada plans to seek compensation for the delay from Boeing, although Brewer did not provide a figure.

 

Air Canada's parent, ACE Aviation Holdings, is scheduled to report its results on Friday.

 

(Reuters)

 

Austrian Airlines May Take On Partner

 

May 9, 2008

Austrian Airlines, which is struggling to complete a deal with a key investor, could also consider working with a strategic partner, its chief executive said in an interview on Friday.

 

Alfred Oetsch, who has previously said the troubled airline did not need to work with a rival, told ORF radio: "The environment has changed dramatically."

 

In a deal announced in March, Saudi-Austrian investor Sheikh Mohamed Bin Issa al Jaber was to take a 20 percent stake in the airline via a capital increase at 7.10 euros per share, substantially higher than the current market value, for about EUR150 million (USD$230 million).

 

However, al Jaber has threatened to pull out after the airline posted a first-quarter EBIT loss of EUR50.1 million (USD$76.80 million) in April, much worse than expected, sending the shares sliding.

 

Talks with al Jaber go on, but Oetsch said it was possible to take on both a major investor and a strategic partner.

 

"If because of the environment and the current high fuel price, which will probably remain, it is not certain that we can be sustainably profitable even in crisis times, then we have to reconsider, also taking account of Austrian interests and the brand," Oetsch said.

 

He did not say who the airline might work with, but some market players have mentioned Lufthansa and Emirates.

 

Oetsch also dismissed calls for his resignation from shareholders at this week's annual meeting as irrelevant.

 

(Reuters)

 

[Ryan Soh 3]

http://www.singaporeair.com/saa/en_UK/docs...leaseFY0708.pdf

 

Here is the link to the press release. Since no one else posted it, i thought I might as welll do it.

 

Discuss away...

 

Cheers

Ryan