Star Alliance News

[Pieter C. 5]

United Loss Widens On Volatile Fuel Prices

 

January 21, 2009

United Airlines parent UAL on Wednesday said its quarterly net loss widened on erosion in the value of its fuel hedges as oil prices dropped.

 

The company said its net loss amounted to USD$1.3 billion, compared with USD$53 million a year earlier.

 

The airline industry, battered severely last year by high fuel costs, cut capacity in the fourth quarter to offset that bill and to gain pricing power as economic woes eroded travel demand.

 

UAL said its revenue was USD$4.55 billion in the quarter, down 9.6 percent.

 

The company said it ended the quarter with an unrestricted cash balance of USD$2 billion.

 

(Reuters)

 

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Thai Air, Hurt By Airport Trouble, Seeks USD$974 Mln

 

January 21, 2009

Thai Airways said on Wednesday it was seeking nearly USD$1 billion in funding after the closure of airports by political protests last year added to problems caused by the global economic slowdown.

 

Thailand's national carrier said in a statement it was looking for up to THB34 billion baht (USD$974 million) in loans from financial institutions -- THB19 billion for working capital and THB15 billion for refinancing short-term loans.

 

"We need the funds as soon as possible," a Thai Airways official said without giving details.

 

The problems pushed the airline's shares to a record low of 6.35 baht on Tuesday but they rallied 1.6 percent to 6.50 baht in early trade on Wednesday, with investors heartened by reports the government would help state enterprises find loans to solve cash flow problems.

 

The airline is majority owned by the government.

 

The shares have fallen more than 12 percent over the past week due to concerns about the company's health.

 

"Every airline around the world is facing some difficulty but Thai has particular difficulties because of the political situation right now and the fact the airport was shut down," said Nicholas Ionides, Asia Editor of Flight International magazine.

 

"It also doesn't help that their management is in a bit of turmoil right now," he added.

 

Acting President Narongsak Sangapong said on Monday the airline was looking for THB19 billion in loans from state-owned banks after being hit by the week-long closures of Suvarnabhumi and Don Muang airports by protesters late last year.

 

Local newspapers quoted the transport minister as saying the airline's board would need to be replaced if it couldn't improve the management of the carrier.

 

The previous president resigned at the start of the month. Media reported that was because of disagreements with the board plus health problems.

 

The airline completed a bond sale worth THB5 billion baht on Tuesday, issued to a few institutional investors to support its cash flow, its statement said. The THB34 billion it is seeking is on top of that.

 

"We may need less funds if passenger traffic is back to normal faster than expected," it said.

 

Analysts have downgraded the airline recently, citing the weak outlook for tourism due to the global downturn and the impact of the political unrest in Thailand.

 

The airline is in the process of drafting a restructuring plan, which could be put to the board in February.

 

Earlier this month, Thai Air said it had agreed with Airbus to postpone payments for six A330 aircraft, and it subsequently said it would try to delay delivery of the A330s, scheduled for later this year.

 

(Reuters)

 

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SAS Lends To Cash-Strapped Estonian Air

 

January 21, 2009

Scandinavian airline SAS has lent Estonian Air funds to help it meet operating costs, the company said on Wednesday, with media in the Baltic state putting the sum at EUR2 million euros (USD$2.58 million).

 

SAS, itself loss making and carrying out a savings plan, owns 49 percent of Estonian Air and wants to buy the 34 percent owned by the state, but Estonia's government has so far declined to sell.

 

"Estonian Air has received financing from SAS, but unfortunately we cannot comment on the details of this agreement," Andrus Aljas, chief executive of Estonian Air was quoted as saying.

 

Estonian media quoted a source at the Economy Ministry as saying the loan was worth around EUR2 million and was to help cover operating costs, as the company had used its own reserves for the purchase of three new Bombardier aircraft, which are due for delivery in the coming months.

 

The third owner of the airline is Estonian-based investment bank Cresco, with a 17 percent holding.

 

SAS also owns 47.2 percent of Latvian airline airBaltic, but last year said it would sell this holding to airBaltic's management as the government did not want to fully privatise it.

 

(Reuters)

 

[Pieter C. 5]

Bird Matter, Feather Found On NY Crash Jet

 

January 22, 2009

The missing engine from an ill-fated US Airways jet that ditched in New York's Hudson River was found on Wednesday as new evidence, including a feather found on a wing, backed the early theory that birds caused the near disaster, officials said.

 

The left engine was discovered in 50 feet of water near the spot where the crippled Airbus A320 glided to a splashdown moments after takeoff from LaGuardia Airport last Thursday, the National Transportation Safety Board (NTSB) said in a statement.

 

All 155 passengers and crew aboard Flight 1549 heading to Charlotte, North Carolina, survived.

 

Crews hope to recover the engine on Thursday.

 

Investigators completed an initial examination of the right engine, which did not separate from the wing, and found evidence consistent with crew reports that the plane struck a flock of birds, immediately disabling both engines at a height of more than 3,000 feet.

 

Investigators said engine components were damaged, some severely, and suspected bird matter was found inside the engine, on the wings and the fuselage.

 

A feather was also found on a wing, officials said.

 

The suspected bird material was sent to the Agriculture Department for DNA analysis. The feather was sent to scientists at the Smithsonian Institution for identification.

 

(Reuters)

 

[Pieter C. 5]

Lufthansa Cabin Crew Strike Has Limited Impact

 

January 23, 2009

Lufthansa has cancelled only two flights out of its main Frankfurt hub amid a three-hour warning strike by flight attendants, a company spokesman said on Friday.

 

Trade union UFO had called on crew members on Thursday to stake a walkout from 0515 GMT until 0815 GMT on Friday to push for better wages.

 

"The impact is definitely limited. But it is to be expected that we cancel the occasional flight in the next couple of hours," the spokesman for Lufthansa said.

 

UFO warned earlier this month it could launch warning strikes after a third round of wage talks for a total of 16,000 flight attendants failed. The union is calling for a wage and benefits rise of 15 percent for 12 months.

 

Lufthansa has increased its offer to a rise of up to 10 percent, from 9.1 percent. The package includes better work conditions and profit sharing.

 

The German airline called on UFO at the time to return to the negotiating table and face up to "economic realities".

 

Last July, Lufthansa's passenger numbers were hurt as strikes by ground staff and cabin crew as well as walkouts by regional pilots forced the carrier to cut flights.

 

The wage agreement that ended that walkout adds about EUR100 million euros (USD$130 million) to costs every year, the company has said.

 

In addition, airlines have been hard hit by the escalating financial crisis, with passenger numbers dwindling. Lufthansa in October cut its 2008 operating profit goal to EUR1.1 billion, from a previous estimate of about EUR1.38 billion.

 

(Reuters)

 

Wow, I wish I got a 10% wage increase !!!

 

[Pieter C. 5]

EU To Investigate Lufthansa, Brussels Air Deal

 

January 26, 2009

"At a time of consolidation in the European airline sector, the Commission must make sure that consumers will continue to have a competitive choice of airline services." -- EU Competition Commissioner Neelie Kroes.

European antitrust authorities on Monday launched an investigation into Lufthansa's proposed takeover of smaller Belgian rival Brussels Airlines because of competition concerns.

 

The European Commission said the deal would create a monopoly between Brussels and Frankfurt, Hamburg and Munich and substantially reduce competition from Brussels to Berlin.

 

It would also impede competition between Belgium and Switzerland.

 

The acquisition, announced in September 2008, is worth up to EUR250 million euros (USD$328 million) and will allow Lufthansa to expand its network and add premium passengers.

 

The German carrier plans to buy a 45 percent stake in the Belgian airline for EUR65 million, with an option to buy the rest from 2011. The total price would depend on performance-related factors and initially on 2010 results.

 

"At a time of consolidation in the European airline sector, the Commission must make sure that consumers will continue to have a competitive choice of airline services both as regards fares and routes," EU Competition Commissioner Neelie Kroes said in a statement.

 

The Commission said it had until June 10 to make a final decision on the deal.

 

Lufthansa said it would analyse the Commission's decision and that it expected the executive body to approve the takeover.

 

"We expect the process to continue rapidly and that the relevant approvals will be granted," said a Lufthansa spokesman.

 

European airlines have stepped up the pace of alliances and mergers as they battle a global economic downturn even as fuel prices are retreating from record highs.

 

Lufthansa last month signed a deal to acquire loss-making Austrian Airlines, making it the biggest airline in Europe. It is vying with Air France and British Airways to be European industry leader.

 

Brussels Airlines would bring a prime location where the European Union and NATO are based, logistics experience and a wide network, including many flights to and from Africa.

 

Brussels Airlines carried 5.8 million passengers in 2007, compared with 63 million for Lufthansa.

 

(Reuters)

 

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Singapore Airlines Increases Flights To Gulf

 

January 26, 2009

Singapore Airlines is increasing flights to the Gulf Arab region to tap growing demand despite the global downturn, its regional head said on Monday.

 

Earlier this month, the Straits Times newspaper quoted an airline circular issued to travel agents as saying Singapore Airlines would reduce the numbers of flights to China, India, Australia, London and Zurich in response to falling passenger numbers.

 

Meow-Seng Lim, the airline's Gulf general manager, said the flag carrier expected to boost its passenger load factor due to a surge in tourism to and from the Gulf because of lower fuel costs.

 

The airline is launching flights to Kuwait in March and is increasing its weekly flights to Abu Dhabi to seven from three, he said. The airline operates 21 flights to Dubai per week.

 

"With the expansion, we will be operating 38 flights a week to the Gulf, of which 28 are to the United Arab Emirates alone. We are seeing growth in demand due to the growing trade links between the Gulf countries and the Far East," Lim told reporters.

 

(Reuters)

 

 

[Pieter C. 5]

Lufthansa Faces More Disruptions From Token Strike

 

January 28, 2009

Lufthansa faces more disruptions in Germany after cabin crew union UFO announced on Tuesday that it would stage a six-hour token strike on Wednesday morning, adding to last week's walkout.

 

The union said flight attendants would stop working from 6 am until noon local time at airports in Frankfurt and Berlin to press demands for higher pay.

 

A Lufthansa spokesman said on Tuesday that the carrier expected delays and cancellation, but was unable to forecast the extent of the disruptions.

 

He described the union's planned strike as "completely unnecessary and disproportionate."

 

The company will try to keep any inconvenience to passengers to a minimum, particularly with regard to long-distance flights, he added.

 

During the planned walkout, 100 flights are scheduled to depart from Frankfurt and 20 flights from Berlin.

 

Lufthansa already had to cancel 44 flights on Friday after UFO called on flight attendants to stage a three-hour warning strike, affecting several hundred passengers who had booked seats on domestic and European flights.

 

UFO is pushing for a 15 percent increase in wages for its 16,000 members. Lufthansa had lifted its offer to a raise of up to 10 percent from 9.1 percent. The package also includes better work conditions and profit sharing.

 

(Reuters)

 

[Pieter C. 5]

Lufthansa Sees Malpensa As Possible Hub

 

January 29, 2009

Lufthansa could make Milan's Malpensa Airport part of its hub network in the longer term as it bulks up its presence in Italy, board member Karl Ulrich Garnadt said on Wednesday.

 

"Malpensa is the right choice for us for our build up in Italy. The possibility is there to develop the airport as a hub," Garnadt said at a presentation of Lufthansa's new Italian unit.

 

Lufthansa had been touted as a possible candidate to tie up with Italy's Alitalia but lost out to Air France-KLM.

 

Garnadt said the group is considering further network expansion in Italy and did not rule out operating a connection between Milan's Malpensa and Rome's Fiumicino airport.

 

The lucrative route between the country's business capital, Milan, and political capital Rome is dominated by Alitalia, which operates these flights from Milan's Linate Airport -- nearer the city centre than Malpensa.

 

Garnadt said Lufthansa might reconsider an appeal to European Union antitrust authorities over the Linate-Rome connection.

 

The EU antitrust had previously rejected an appeal about this connection, but that was before Italian airline Air One joined former flagship carrier Alitalia in its alliance with Air France-KLM.

 

"We are investigating all the options available," he said, adding Lufthansa Italia was for business clients.

 

"Obviously if they gave us the Linate-Rome landing rights we would start tomorrow," he said.

 

Garnadt ruled out Lufthansa taking an equity stake in Milan airports' operator Sea.

 

Lufthansa, which already operates flights at Malpensa together with its Air Dolomiti unit, will launch Lufthansa Italia's first flight on February 2 and by the end of March will have eight destinations and 126 flights a week.

 

Garnadt said the group could be interested in the slots at Malpensa that Alitalia has relinquished.

 

"Alitalia has reduced its capacity at Malpensa and has no intention to change its offer at the airport. This automatically releases slots," Garnadt said.

 

He said Lufthansa will invite its Star Alliance partners to fly into Malpensa "as a gateway into Italy".

 

(Reuters)

 

 

Lufthansa Italia launches 'small' but flexible

 

Thursday January 29, 2009

Lufthansa Italia took to the skies yesterday with a panoramic flight over the Alps that followed a ceremony christening of its first two A319s.

 

The aircraft were named "Milano" and "Varese," breaking with LH's tradition of naming planes after German cities and marking a new phase in its aggressive expansion strategy, which now includes the first establishment of a carrier outside its home market.

 

Lufthansa Passenger Airlines Executive VP-Services and Human Resources Karl Ulrich Garnadt said Milan Malpensa-based LH Italia is a "clear sign of our commitment to the Italian market."

 

The A319s were painted in LH Italia livery and refurbished with 138 seats across two classes. Scheduled service will start Feb. 2 with thrice-daily flights from MXP to Paris Charles de Gaulle and Barcelona. Two more aircraft will arrive March 2, supporting twice-daily flights to Brussels, Budapest, Madrid and a daily service to Bucharest. London Heathrow (four-times-daily) and Lisbon (daily) will be added at the end of March when another two A319s join the fleet. Five aircraft are ex-Germanwings and one will come from the LH mainline.

 

In the summer, LH Italia will operate some 120 weekly flights out of MXP in addition to the 140 operated by Lufthansa. Alitalia will operate 70 short-haul flights to/from the airport. "We start small but are evaluating other options," Garnadt said. The opening of a maintenance base and further expansion of LSG Sky Chefs are being assessed, as are additional routes.

 

"Malpensa has all the facilities to do transfer functions, so yes, theoretically, it could become a hub. But we start as a point-to-point operator," Garnadt said. The carrier also will offer feeder capacity to Star Alliance partners, he noted.

 

Once LH Italia receives its own Air Operators Certificate, it will employ some 300 people. Garnadt acknowledged to ATWOnline that LH is seeking an Italian AOC in large part to secure traffic rights to non-EU destinations like Eastern Europe or countries that do not have open skies agreements with the EU.

 

 

[Pieter C. 5]

Austrian Airlines CEO Resigns

 

January 29, 2009

Alfred Oetsch, the chief executive of Austrian Airlines has resigned, the carrier said late on Thursday.

 

Chief Operations Officer Peter Malanik and Chief Commercial Officer Andreas Bierwirth will take over Oetsch's duties on the management board from January 31. A spokeswoman for the airline said it was not yet clear whether this was in a short- or long-term capacity.

 

"This step is designed to enable a new beginning at the company, including at the level of management," Oetsch, 55, said in a statement.

 

Lufthansa signed a deal to purchase money-losing Austrian Airlines last month.

 

"I am glad that the privatisation has now moved into its final stages with Lufthansa, the best possible partner for the Austrian Airlines Group," Oetsch, who took the helm of the airline just less than three years ago, said.

 

(Reuters)

 

[Pieter C. 5]

All Nippon In Red On Fewer Passengers

 

January 30, 2009

All Nippon Airways, Japan's second-biggest airline, said its business will fall into the red for the first time in six years as the global recession has triggered a sharp fall in passenger demand.

 

ANA now expects a group net loss of JPY9 billion yen (USD$100.4 million) for the business year to March 31 instead of a previously projected profit of JPY17 billion. It had a JPY64.1 billion profit the previous year.

 

ANA, which competes with bigger rival Japan Airlines, cut its group operating profit forecast to JPY8 billion from JPY55 billion.

 

ANA's big earnings revision highlights a trend among major airlines around the world struggling for survival as the recession hits passengers' travel budgets.

 

ANA executive vice president of finance Tomohiro Hidema said the company's business conditions worsened towards the end of 2008 amid a severe drop in passengers on routes to Europe and North America, in addition to an already depressed China leisure market.

 

"Given the likelihood of the situation worsening in the foreseeable future, we are faced with an operating environment vastly different from the recent past, one that offers challenges of a much harsher nature," Hidema said in a statement.

 

Jet fuel prices, which hit a record high earlier this business year, and a steep rise in the yen also hurt its financial health, Hidema said.

 

(Reuters)

 

 

SAS Sells Spanair For 1 Euro, Takes Big Charge

 

January 30, 2009

 

Scandinavian airline SAS has struck a deal to sell most of its money-losing Spanair unit to a Spanish consortium for one euro, leaving it with a SEK2.2 billion kroner (USD$266 million) charge in the fourth quarter.

 

SAS, which has been struggling in recent years to turn itself around and become more profitable, had abandoned an earlier effort to sell Spanair in June of last year after it was unable to secure a deal on acceptable terms.

 

SAS said it sold 80.1 percent of Spanair to a public-private consortium from the Spanish region of Catalonia but the Scandinavian firm will still be responsible for Spanair debts following the deal.

 

"In summary, the financial effects from Spanair's 2008 result and this transaction on the SAS Group in 2008 will be a negative effect of SEK4.895 billion reported as discontinued operations in the 2008 financial statements," SAS said.

 

Of that total, SEK2.72 billion was booked in the first three quarters of last year while SEK2.18 billion will be accounted for in the fourth-quarter results.

 

The fourth-quarter charge consists of a SEK712 million capital loss, SEK907 million for one-off restructuring costs and an additional SEK560 million for Spanair losses in the quarter.

 

The consortium groups Catalana d'Iniciatives -- a private equity group including some of Spain's biggest banks and builders -- with regional tourist authorities, a Barcelona exhibition centre and businessmen in local tourism.

 

SAS, half-owned by Sweden, Norway and Denmark, will own the remaining 19.9 percent of the Barcelona-based airline and retain Spanair's debt, which SAS said last March was around EUR260 million euros (USD$334 million).

 

UNPRECEDENTED CONDITIONS

 

SAS will also continue to manage the firm on an operational basis, Iniciatives said.

 

"Due to unprecedented market conditions, the transaction will have a significant negative impact on the Q4 earnings of the SAS Group," said SAS chief executive Mats Jansson in a statement.

 

Iniciatives Empresarials Aeronautiques said the new Spanair would boost capital to raise EUR100 million and would launch a three-year plan to swing the airline back into profit.

 

Spanair lost SEK515 million (USD$62.35 million) in the first half of 2008.

 

"Following the transaction, EUR99 million of existing interest bearing indebtedness to SAS will remain outstanding and be amortized in line with Spanair's future cash flow generation," SAS said.

 

"In addition SAS will convert EUR20 million of existing loans to Spanair into equity in Spanair, and repay Spanair's external loans of EUR18 million."

 

SAS said it will continue to lease 18 aircraft to Spanair on market terms and remain as guarantor of EUR36 million for some operational undertakings of Spanair for a limited period.

 

SAS put the carrier up for sale in 2007 but potential buyers shied away from a purchase, deterred by high fuel costs, falling demand and overcapacity in the Spanish market.

 

Two months after SAS abandoned its attempt to sell Spanair, one of the airline's planes crashed on takeoff from Madrid, resulting in more than 150 deaths.

 

(Reuters)

 

[Pieter C. 5]

Austrian Air Unveils EUR425 Mln Cost Cuts

 

January 30, 2009

Financially strapped Austrian Airlines unveiled on Friday a EUR425 million euro (USD$555.9 million) cost-cutting initiative to be implemented by 2012 to withstand a projected fall in passenger volume.

 

Some EUR225 million in cost reductions will be implemented this year and a further EUR200 million by 2012, said the money-losing airline, which is to be taken over by Germany's Lufthansa in a deal signed last month.

 

Austrian said it would cut capacity about 10 percent compared with 2008 to achieve savings of EUR115 million. Flights to Mumbai, Burgas and Baia Mare would be dropped by the end of March.

 

A further EUR110 million in savings this year would be achieved from implementation of more flexible working hours, temporary deferral of salary and pension payments, and a requirement to take accumulated staff leave.

 

Through these savings, Austrian Airlines intends to attain a margin on earnings before interest and tax of around 6-7 percent, which would provide a basis for future growth, the company added.

 

On Thursday evening the troubled airline disclosed that chief executive Alfred Oetsch had resigned. His duties on the management board will be assumed by Chief Operations Officer Peter Malanik and Chief Commercial Officer Andreas Bierwirth.

 

Oetsch said his departure was "designed to enable a new beginning at the company, including at the level of management".

 

(Reuters)

 

[Pieter C. 5]

Lufthansa Defies Bleak Market, Ups 2008 Target

 

February 3, 2009

Lufthansa raised its forecast for full-year 2008 operating profit, becoming the second European airline in as many days to say it could defy the tough market environment.

 

The company's shares reversed earlier losses and closed up 7.8 percent at 10.125 euros, while the German blue-chip DAX index was up 2.4 percent.

 

The German carrier said it would post a full-year operating profit of around EUR1.3 billion euros (USD$1.7 billion), compared with its previous expectation of EUR1.1 billion, thanks to a stronger-than-expected fourth quarter.

 

Irish low-cost carrier Ryanair on Monday raised its own full-year outlook to a profit from an earlier expected loss due to lower fuel costs, and forecast a further substantial profit next year as travellers trade down in the recession.

 

The latter trend boosts no-frills airlines like Ryanair but hurts others such as Scandinavia's SAS, long viewed as a possible takeover target, which launched a rights issue and another cost-cutting programme.

 

Airlines and airport operators have been hit by fallout from the financial crisis as companies spend less on business travel and consumers tighten their purse strings.

 

In addition, many carriers bet on rising fuel prices in 2008 and were taken by surprise when crude oil fell from an all-time high of over USD$145 per barrel to around USD$40. Airlines commonly hedge their exposure to fuel months in advance.

 

BEATING ASSUMPTIONS

 

Lufthansa, which had to cancel dozens of flights last month due to cabin crew strikes, said lower fuel prices and favourable valuation effects were offsetting a slowdown in demand.

 

It is due to report 2008 results on March 11.

 

"Lufthansa was able to beat market assumptions and outperformed main competitors with already reduced profit targets like Air France-KLM and British Airways," said DZ Bank analyst Robert Czerwensky in a note.

 

Air France-KLM and British Airways, Lufthansa's main rivals in Europe, have both issued profit warnings in the past two weeks.

 

And despite its raised outlook, Lufthansa said its outlook was more risky than usual as the market suffers low overall demand.

 

German airlines' association BDF earlier said it cut its full-year 2009 outlook for passenger numbers to a drop of 5 percent from 3 percent following a sharp slump in January.

 

Airport operator Fraport has estimated its main Frankfurt airport, Germany's biggest, served around 6 percent fewer passengers in January than in the year-earlier period.

 

Nonetheless, the German market is still attracting investors and NetJets, a plane-sharing company owned by investor Warren Buffet's Berkshire Hathaway, agreed to buy German airport Frankfurt Egelsbach for an undisclosed sum.

 

The airport, located about 17 kilometres south of Germany's financial capital, caters to small jets, helicopters and twin-engine planes.

 

(Reuters)

 

[Aiman 0]

3D animation US Airways 1549 ditching

 

*Nice scenery backdrop view*

 

US Airways 1549 Full Flight Simulator

Edited April 3, 2009 by Aiman

[Li Ren 2]

Thanks you Aiman for sharing and tribute to Captain Chesley Sullenberger for successfully landed the plane

[Pieter C. 5]

Austrian Airlines Group yesterday confirmed that its Tyrolean Airways subsidiary, which operates under the Austrian Arrows brand, will reduce its fleet from the current 55 aircraft to 41 over the next year . A spokesperson said that AAG will phase out 50-seat CRJs, which no longer are economical due to the decline in business demand, especially to Eastern Europe. All 10 CRJs and four of 14 Dash 8-300s will be removed. "This will affect a total of 400 fulltime employees. Up to 280 are from Tyrolean," the spokesperson said. AAG will operate those routes with larger aircraft like Q400s or 737NGs in order to improve seat-mile costs. It will add one new Q400 this year and three more next spring. It has two unconverted options. Seven 737-800s from Lauda Air likely will be integrated into the mainline fleet to fill the capacity gap. Lauda mainly operates on leisure routes and could slash its charter operation by 50% or more to satisfy the European Commission investigation into AAG's planned acquisition by Lufthansa.

 

"We are holding to our strategy of being a network carrier with a focus on the markets in Central and Eastern Europe. However, we must respond to the massive changes in the market. These changes are structural. We anticipate that demand for the high-price business travel segment will remain weak in the coming years. We must adjust our fleet structure to this development," Austrian Executive Board Members Peter Malanik and Andreas Bierwirth said in a statement.

 

Meanwhile, Austrian Cargo signed a marketing agreement with Shenzhen-based Jade Cargo International, in which Lufthansa Cargo holds 25%. Jade will operate twice-weekly Incheon-Shanghai-Vienna-Frankfurt-Incheon 747-400ERF flights. Jade Executive VP-Sales & Marketing Reto Hunziker said the carrier wants "to develop Vienna into a 'sub-hub' in our network" and plans to "connect other points in China" with VIE this year.

[Pieter C. 5]

Air Dolomiti moves toward larger aircraft to lower costs

 

Thursday July 9, 2009

 

Air Dolomiti, the Verona-based regional that is 100% owned by Lufthansa and mainly operates feeder flights from northern Italy to LH's hub in Munich, is planning to introduce larger aircraft with lower seat-mile costs.

 

EN carried 3% fewer passengers year-over-year in the first half and CEO Michael Kraus said it is looking for cost savings, "especially when our yields are coming down." But he told ATWOnline that it is difficult to "reduce costs when you have already a very lean operation." The solution, he said, is using larger aircraft. EN will replace five ATR 42-500s this summer with 66-seat ATR 72s to operate its main routes.

 

The airline is evaluating keeping some of the smaller ATRs for launching services to new markets. "There are a total of 45 airports in Italy for a country with 59 million people," Kraus explained. For some of these airports, jets are too big. "We see some potential [in the Italian domestic regional market]," he said, adding that up to 15% of EN's business is operated on "our own risk, like new routes from Rimini. This keeps us fresh. We learn how the markets are. We try to find opportunities."

 

He praised the performance of five new 116-seat E-195s, which he said deliver 20% lower unit costs compared to the BAe146-300s they replaced. "The jets are performing better than we expected," he said. He does not, however, favor other types of E-Jets such as smaller E-170s. "It is better to invest in higher capacity," he noted. "You see it on seat-mile costs. Our benchmark is to compete with the cost bases of carriers like Easyjet." EN's fleet comprises the five E-195s, six ATR 42-500s and eight ATR 72s.

[Pieter C. 5]

OUCH !!!

 

EC: Lufthansa's latest AAG takeover proposal 'worse'; approval by July 31 unlikely

 

Monday July 13, 2009

The European Commission said Friday that Lufthansa's latest offer regarding its planned takeover of Austrian Airlines Group contains insufficient concessions, making it unlikely the EC can grant antitrust clearance for the deal by the end of this month.

 

The Commission on July 1 extended the deadline of its investigation into the proposed merger by at least 14 days and up to a maximum of 90 days, but AAG had expressed confidence that approval could be given and the transaction closed by July 31. However, Jonathan Todd, a spokesperson for the EC on competition issues, told reporters in Brussels that LH had presented an offer "worse than what was offered before."

 

He added that it would be "impossible" for the EC to render its decision by July 31 unless LH came forward immediately with new "information," adding that a "miracle" would be needed to enable an expeditious antitrust ruling. "It's very difficult to understand why they are adopting this approach if they genuinely want a rapid decision from the Commission," he said.

 

An LH source said that the carrier would not be improving its offer, insisting that it had moved "eight meters toward the EU and the EU [now has] just to move one meter" in LH's direction.

 

AAG Executive Board member Peter Malanik told Austrian Broadcasting ORF that the company "is surprised about the news from Brussels" but remains confident that the deal will be completed. He conceded that finalizing the transaction by July 31 may not be possible.

[Pieter C. 5]

EU Awaits Lufthansa's AUA Offer Details

 

July 20, 2009

Lufthansa has yet to provide details of fresh antitrust concessions to sooth EU regulatory concerns over its plan to buy Austrian Airlines (AUA), the European Commission said on Monday.

 

Lufthansa had submitted a new proposal to the Commission, which regulates competition in the 27 country European Union, on Thursday as it moves towards a self-imposed July 31 deadline to seal the deal.

 

"I can confirm the Commission has had technical discussions with Lufthansa over the weekend, and is still awaiting clarification from Lufthansa concerning its offer of 16 July," Commission spokesman Jonathan Todd told a daily briefing.

 

He added later that the Commission had no plan to decide this week on whether to clear the proposed takeover.

 

He told the briefing that Competition Commissioner Neelie Kroes had offered to meet Lufthansa chief executive Wolfgang Mayrhuber in Brussels on Monday and was still waiting for a reply.

 

"As of today, midday, he still has not indicated his intention in this regard," Todd said.

 

Lufthansa has taken a tough line with the Commission and the Austrian government, offering new concessions only after Austrian Airlines approved plans for another savings programme.

 

(Reuters)

 

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Lufthansa Hangs Tough To Make Acquisitions Pay

 

July 20, 2009

Lufthansa could turn an airline sector slump to its advantage by negotiating lower prices and more cost cuts out of acquisitions it agreed last year that threaten to hurt its shares.

 

The German flagship carrier could pay close to EUR1 billion euros (USD$1.4 billion) to buy airlines including Brussels Airlines, Austrian Airlines (AUA) and a majority stake in UK carrier bmi.

 

The deals were remarkable especially as the airline's rivals were noticeably abstemious, but analysts say that Lufthansa is playing a tactical game well and also has the financial strength to make the deals pay longer term.

 

"Lufthansa's acquisition strategy currently definitely has more momentum than that of its peers. It can pull that off because it has greater financial power," said Commerzbank analyst Frank Skodzik.

 

"Lufthansa's negotiations tactics are a smart move. At bmi, it significantly reduced the purchase price, saving shareholder money, and at AUA it is making sure that the acquisition economically makes sense," said Skodzik.

 

Rival Air France-KLM's only major deal in 2008 was the acquisition of a stake in bankrupt Alitalia, worth around EUR322 million, while British Airways was most frugal, having failed so far in its pursuit of Iberia.

 

Worry about its deal making has contributed to taking a third off Lufthansa shares over the past year but investors still appear more sanguine about the airline than its rivals.

 

Over the past year, Lufthansa has traded at up to 16.9 times its 12 month forward earnings, compared with highs of only 10.4 and 12.4 for Air France-KLM and British Airways, respectively.

 

CRANKING UP THE PRESSURE

 

The German airline has been playing hardball with the sellers and regulators, and announced a EUR1 billion savings programme, sending a signal that its financial means are limited and it could back out of deals if necessary.

 

Lufthansa earlier this year became embroiled in a legal row with Sir Michael Bishop, putting pressure on him to lower the cost of its acquisition of his 50 percent plus one share stake in bmi, a decade after the terms of the deal had been agreed.

 

Last month, Lufthansa agreed to pay GBP48 million for the stake and an additional GBP175 million to Bishop to cancel his bmi options. Bishop had earlier sought to enforce a claim of EUR400 million as per the 1999 agreement.

 

The acquisition of a majority stake in bmi, which one analyst last month called a "disaster" because it just adds a loss-making airline to Lufthansa's portfolio, will nevertheless gain it lucrative slots at London's Heathrow airport that will help it compete with British Airways there.

 

Analysts have estimated that the Heathrow slots alone could be worth EUR2 billion.

 

And while Lufthansa has agreed to more concessions to allay the EU Commission's competition concerns as it nears an end-July deadline for AUA, it did so only after AUA approved a third cost-cutting programme to slim down ahead of the buy.

 

"I still think Lufthansa wants AUA, and if the first offer was weak it was to scare -- to pressure AUA into cutting more jobs, and to strengthen its hand against the EU," said UniCredit analyst Katherina Kastenberger.

 

ACQUISITIVE IN TOUGH TIMES

 

Lufthansa's next possible target could be Polish airline LOT, which will soon be privatised, some industry watchers have said, though no concrete talks seem to have emerged so far. Such a deal could help further expand Lufthansa's eastern European network.

 

But market conditions continue to be tough, and Lufthansa cannot relax in its efforts to make the acquisitions already agreed to pay off for shareholders.

 

It isn't easy: since mid-January, oil prices have doubled to USD$65 a barrel, while demand for air travel has failed to recover. Industry body IATA has said it expected that the world's airlines could lose USD$9 billion this year.

 

British Airways last week unveiled a USD$1 billion fundraising aimed at securing its future, including USD$540 million in bank loans that had been earmarked for a pension fund as a safety net against the airline going bust.

 

AUA lost EUR429 million last year and has piled up more than EUR1 billion in debt, or more than five times its equity. It only survived this spring due to a EUR200 million lifeline by the Austrian government, two-thirds of which it has used up.

 

"The Austrian deal would probably destroy value for shareholders at this point," said LBBW analyst Per-Ola Hellgren.

 

But analysts said that while Lufthansa sees only EUR80 million of potential synergies from the deal, it will pay off in the long run as it gives access to growth regions in eastern Europe such as Krasnodar, Kosice and Odessa.

 

(Reuters)

 

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Lufthansa, EU Fail To Reach Deal On AUA

 

July 20, 2009

The EU Commission said on Monday it would continue discussions with Lufthansa regarding the German airline's takeover of Austrian Airlines.

 

The EU statement came after a meeting between chief executive Wolfgang Mayrhuber and EU Competition Commissioner Neelie Kroes.

 

Lufthansa is seeking EU approval of its planned purchase of AUA and is approaching a self-imposed July 31 deadline to agree terms.

 

The EU Commission said earlier Lufthansa had yet to provide details of new antitrust concessions to sooth EU regulatory concerns over its plan to buy AUA.

 

Lufthansa has taken a tough line with the Commission and the Austrian government, offering new concessions only after Austrian Airlines approved plans for a third savings programme.

 

(Reuters)

[Pieter C. 5]

SAS August Traffic Falls 17.1 Percent

 

September 7, 2009

 

Scandinavian airline SAS said on Monday that August passenger traffic, measured as the number of passenger kilometres, slid 17.1 percent from a year ago.

 

SAS said its yield in July -- the most recent month for which data are available -- was down 3.2 percent, meaning it made less money for each passenger kilometre flown.

 

The change in yield in August would likely be "more negative", SAS said.

 

As the airline cut capacity, it managed to fly with fuller planes than a year earlier, raising its passenger load factor 3.1 points to 76.1 percent.

 

"The rising load factor is at the expense of the yield, which continues to decline due to too much overcapacity in the market and intense competition from low-cost carriers," said Lars Heindorff at ABG Sundal Collier.

 

"We do not believe that the situation with too much capacity in the market will be solved in the near future," he added.

 

"The yield pressure in combination with the weak demand adds further challenges to the industry and requires actions in order to mitigate the negative revenue impact," SAS said in a statement.

 

SAS, which announced plans in August to save an extra SEK2 billion kronor and to cut another 1,000 to 1,500 jobs, said it had started negotiations with unions on cost reductions.

 

Airlines have been hit hard by the global recession and high fuel prices. SAS, which has an old fleet and higher costs than many of its rivals, was already struggling before the financial crisis to compete with cheaper carriers and overcapacity.

 

"The market continues to be unpredictable and the uncertainty regarding the timing of the recovery is considerable," it said.

 

(Reuters)

[Pieter C. 5]

Lufthansa's bmi Attracts Twelve Suitors

 

September 9, 2009

 

British airline bmi, majority owned by Lufthansa, has so far attracted interest from 12 potential buyers, a German newspaper reported citing company sources.

 

The 12 rivals were interested in either taking over the whole airline or its subsidiaries bmi Baby or bmi Regional, Frankfurter Allgemeine Zeitung said in a preview of an article for its Thursday edition.

 

British Airways and Virgin Atlantic were among the potential buyers, the paper said.

 

Lufthansa declined to comment.

 

The Sunday Times reported that British Airways was considering a possible bid for bmi and talks between BA and Lufthansa had already taken place.

 

Lufthansa said earlier this year it was considering various options for bmi, which controls 11 percent of lucrative take-off and landing slots at Britain's Heathrow airport. Options ranged from continuing the carrier's operations to selling the company.

 

(Reuters)

[Pieter C. 5]

Bad news for tri-holer lovers !!!

 

Lufthansa Cargo Could Ground Planes For Good

 

September 18, 2009

 

Lufthansa could permanently ground several of its 19 MD-11 cargo planes, German daily Handelsblatt reported, citing unnamed sources.

 

Lufthansa Cargo earlier this year decided to ground two of its planes until October 2010 and temporarily stop using two further planes in response to a drop in demand.

 

Air cargo companies have been buffeted by spending curbs by businesses amid the global economic crisis. Industry body IATA has said it expects global airlines to lose USD$11 billion this year on weak passenger and cargo demand.

 

Handelsblatt also cited Lufthansa Cargo's chief executive Carsten Spohr as saying the German flagship carrier's unit was not considering shutting down its own fleet altogether.

 

"I don't want to imagine that Lufthansa Cargo's own fleet goes to zero," he was cited as saying.

 

Lufthansa has forecast a full-year operating loss for its cargo business and has said it could also post a loss in its passenger airlines if it cannot cut costs fast enough.

 

The airline said in an employee newsletter it was shutting down the fleet of about 45 planes seating 50 passenger each operated by regional carriers CityLine and Eurowings faster than planned as costs per seat sold were higher than on other planes.

 

(Reuters)

 

CRJ's ???

[Pieter C. 5]

Engine Fails On Singapore A380, Flight Turns Back

 

September 27, 2009

 

An Singapore Airlines Airbus A380 was forced to turn round mid-flight and head back to Paris on Sunday after one of its four engines failed, the head of the airline's French operations said.

 

The double-decker A380 took off from Paris at 12.30 pm (1030 GMT) with 444 passengers aboard and was headed for Singapore, but had to turn round after 2 hours 45 minutes because of the engine problem, airline director Jerry Seah said.

 

The plane landed safely back in France at 5.45 pm (1545 GMT) and the passengers were sent to hotels as the airline tried to lay on an alternative flight for them.

 

Seah said he believed it was the first time the plane had suffered such a problem since it had started operating the Singapore-Paris route earlier this year.

 

The giant jet is designed to continue flying with only three engines, but came back to Paris as a safety precaution.

 

The engines on the Singapore A380s are built by Britain's Rolls Royce.

 

(Reuters)

 

RR-engines again...

[Pieter C. 5]

Another interested airline in Bmi...

 

Flybe confirms bmi interest, denies it has joined BA in bid

 

Tuesday September 29, 2009

 

Flybe is interested in acquiring parts of bmi and officially confirmed its interest to Lufthansa "quite awhile ago," Chairman and CEO Jim French said.

 

Lufthansa said earlier this month that it had received interest from 12 potential buyers for the sale of bmi, in which it holds an 80% stake. "The bigger issue is, from what we understand, that the bmi losses are much higher than previously reported," French told this website, adding, "Some parts of the [bmi] business fit in very well in our network, but we are a very low risk company so any kind of deal will require a very detailed due diligence." Bmi's losses will amount to £150-£170 million on revenue of around £1 billion this year, according to some media reports.

 

Europe's largest independent regional, which was presented with ATW's Regional Airline of the Year Award for 2009, is not solely interested in bmi regional but also in some parts of the mainline operations at London Heathrow, French said. However, he dismissed reports in the Sunday Times that a potential purchase of bmi's LHR operation or part of it would be done through some form of partnership with British Airways, which also has indicated interest in buying bmi but might not get regulatory clearance for the acquisition owing to its large presence at LHR.

 

"There is no arrangement whatsoever with BA," French stressed, noting that BA's 15% shareholding in Flybe is totally unrelated to the matter and BA has no seat on the board. But he added that Flybe has made its interest known "to all parties, including Virgin Atlantic, Lufthansa as well as BA. . .indicating we would be open to some kind of agreement with one of them." Virgin Atlantic is considering its own bid for bmi and insiders have indicated to this website they believe BA would participate in the bidding process mainly to run up the price to its archrival.

 

Separately, French said he was thrilled about the agreement with the new Olympic Air to wet-lease nine of Flybe's Q400s for a period of 12-18 months. The successor to Olympic Airways will buy two of nine aircraft and also take over some delivery positions Flybe holds with Bombardier. "This is a great deal," he commented. "It helps us bridge the recession and it helps Olympic to get started."

[Pieter C. 5]

Turkish Airlines began operating 777-300ERs on its daily Istanbul Ataturk-New York JFK service Monday, replacing a mix of A330s/A340s previously used on the route. It said the switch will enable it to carry at least 40 additional passengers per flight and boost cargo capacity up to 18 tons per flight.

[Pieter C. 5]

Lufthansa Buys Remaining bmi Shares From SAS

 

October 1, 2009

 

Lufthansa has agreed to buy the 20 percent of bmi it does not yet own from Scandinavia's SAS, boosting its holding in the British carrier to 100 percent.

 

Germany's flagship carrier had previously said it was in talks to buy the stake and had said it aimed to come to an agreement with SAS by the end of this year.

 

Lufthansa said on Thursday it agreed to pay about GBP19 million pounds (USD$30.6 million) for the stake, plus another GBP19 million to cancel a 1999 shareholder agreement relating to bmi.

 

If Lufthansa decides to sell bmi, as a whole or in parts, it will pay a further unspecified sum to SAS within the next two years, Lufthansa said.

 

It has said it is considering all options for bmi, ranging from keeping the company to a complete sale. Media reports have said that bmi has attracted the interest of 12 potential buyers.

 

British Airways' CEO Willie Walsh confirmed in a newspaper interview this month that he would be interested in bmi if Lufthansa decided to sell the carrier.

 

Bmi, which traces its roots to a 1938 flight school for Royal Air Force pilots, carried 10 million passengers in 2008, generating revenues of GBP1.04 billion (USD$1.7 billion). It posted a full-year loss of almost GBP100 million.

 

(Reuters)

[Pieter C. 5]

SAS Makes SEK420 Mln Capital Gain From bmi Sale

 

October 1, 2009

 

Scandinavian airline SAS said on Thursday it had agreed to sell its 20 percent stake in British-based airline bmi with a capital gain of around SEK420 million Swedish kronor (USD$60 million).

 

SAS, half-owned by Sweden, Norway and Denmark, said in a statement it had agreed to sell the stake to MGBP in which Lufthansa holds a 35 percent stake.

 

(Reuters)

[Pieter C. 5]

Singapore Air Sees Q3 Yields Remaining Negative

 

October 6, 2009

 

Singapore Airlines said on Tuesday that its yields improved in the quarter ended September, but would remain negative to the end of the year as the sector struggles in the economic downturn.

 

"The trends are moving in the right direction. We hope it will hold, but it's hard to tell," Chew Choon Seng, chief executive of the world's biggest airline by market value, told reporters on the sidelines of an aviation conference in Hong Kong.

 

The airline saw no need to further reduce its capacity as its load factor improved, he said.

 

"Our load factors have been very strong," said Chew.

 

The load factor of Singapore Airlines, 55 percent owned by state investor Temasek, rose to 80 percent in September, he said. This surpassed 68.2 percent recorded in August and 69.7 percent in July.

 

In the longer term, recovery would depend on macroeconomic conditions, said Chew.

 

"Unemployment in the United States is still 10 percent, which is very high," he said.

 

On Monday, Cathay Pacific chief executive Tony Tyler said the airline last week posted its best weekly passenger load factor for 2009, but remained uncertain whether the improvement represented a structural improvement or merely reflected seasonal factors.

 

(Reuters)

 

Air New Zealand Says Demand Recovering

 

October 6, 2009

 

Air New Zealand has started to see recovery in demand, but passenger yields will only recover by the end of 2010, its CEO said on Tuesday.

 

The airline sees no capacity cuts on the horizon, chief executive Rob Fyfe said on the sidelines of an aviation conference in Hong Kong.

 

Air New Zealand said in late August that there were signs that demand for travel was stabilising, but the environment remained turbulent as it reported a 90 percent fall in profit.

 

(Reuters)