Skyteam news

[Pieter C. 5]

Italy To Respond To EU On Alitalia Within 10 Days

 

April 25, 2008

Italy's outgoing government said on Thursday it would provide information within 10 working days to the European Commission over an emergency loan for ailing airline Alitalia, denounced by European rivals as state aid.

 

Italy plans to give Alitalia a EUR300 million (USD$473 million) loan to keep it flying until a new buyer is found after Air France-KLM pulled out of a takeover deal this week.

 

(Reuters)

 

[Keith T 2]

Mods - I've no idea whether to place this in *A or Skyteam threads as it crosses 2 alliances. So your call.

 

edit - or even oneworld!

 

http://www.nytimes.com/2008/04/28/business...&ei=5087%0A

 

Continental Airlines said Sunday that it had abandoned merger talks with United Airlines and was planning to remain an independent carrier, a blow to lengthy efforts by United to find a merger partner.

 

Continental’s decision, announced by the airline Sunday afternoon, will change the complex game of musical chairs that the airline industry is playing after the merger announcement last week by Delta Air Lines and Northwest Airlines.

 

Continental’s move was a stunning development for United’s parent, UAL, which had been negotiating in expectation of reaching a deal by late this week. As recently as Friday, it looked as though Continental, based in Houston, and United, based outside Chicago, were on the way to reaching a merger agreement.

 

Continental decided to drop the discussions after UAL announced worse-than-expected earnings, which sent shares falling last week. On Tuesday, United said it lost $537 million during the first quarter, on sharply higher costs for jet fuel. The airline, which spent more than three years under bankruptcy protection earlier this decade, said it would cut flights and eliminate a further 1,000 jobs.

 

Directors at Continental, who met Sunday afternoon, feared that a merger with United could put their company in peril. Continental, which had been expected to take management responsibilities in a deal with United, survived two bankruptcy filings of its own in the 1980s and 1990s, and has been considered one of the industry’s best-run carriers.

 

With the United-Continental deal scrapped, a new set of pairings is likely to take place. UAL is expected to push to reach a deal with US Airways, with which it had also been discussing a merger, people involved in the talks said.

 

In a statement, United's chief executive, Glenn F. Tilton, said on Sunday night: "Consolidation is under way. Ensuring you have the right partner is everything. We will pursue all options to ensure a strong, sustainable future for our airline and will not shy away from the touch choices necessary to create value for our shareholders and benefit our employees and customers."

 

Meanwhile, Continental is expected to press ahead with preliminary talks to create a three-way alliance — short of a full merger — with American Airlines and British Airways.

 

In a letter to Continental employees, Lawrence W. Kellner, the airline’s chief executive, and Jeffery A. Smisek, its president, wrote: “The board very carefully considered all the risks and benefits of a merger with another airline, and determined that the risks of a merger at this time outweigh the potential rewards, as compared to Continental’s prospects on a stand-alone basis.”

 

They said they worried a deal would put company’s operational and financial strengths “at risk.” They also hinted at forming a new alliance, saying, “We are considering alternatives to SkyTeam” — an alliance with Delta and Northwest — “as we carefully evaluate which major global alliance will be best for Continental over the long term.”

 

The executives did not mention American or British Airways.

 

The two sides had agreed on several issues in their talks. Mr. Kellner would have run the combined company, while United’s chief executive, Mr. Tilton, would have stepped away from day-to-day operations.

 

Mr. Tilton had advocated strongly for industry consolidation, saying it was the only solution to help the struggling airlines become consistently profitable. US Airways’ chief executive, W. Douglas Parker, has also pushed for consolidation, making an unsuccessful hostile bid last year for Delta before it emerged from bankruptcy protection.

 

Mr. Kellner, in his letter, at least seemed sympathetic to the industry’s plight, telling employees, “Every U.S. carrier, including Continental, is under enormous pressure from record high fuel prices, a slowing U.S. economy and a weak dollar.”

 

United’s stock closed at $21.43 on Monday. That evening, Delta and Northwest announced their merger plans. On Tuesday, United’s shares closed below $14. They ended the week at $15.21, off 29 percent for the week.

 

On Tuesday, United’s chief financial officer, Frederic F. Brace, said repeatedly that the airline was in compliance with the covenants of its bank agreements. But, Mr. Brace added, “With the recent spike in fuel prices and the softening economy the trajectory of our covenant coverage is downward.”

 

Because of steps the airline was taking to cut costs, he said, “it’s really very difficult to predict whether we will have an issue or not.”

 

On Wednesday, after the sharp drop in its stock, United issued a statement saying that it was in compliance with the terms of deals governing its credit arrangements with banks, including JPMorgan Chase, Citibank and Credit Suisse.

 

Analysts said the situation created doubt about United’s health, an issue that has hovered around United since it emerged from bankruptcy protection in early 2006. That concern was a reason talks between Delta and United, which took place while Delta was under bankruptcy protection earlier this decade, never gained traction.

 

Meanwhile, Continental’s next steps are far from clear. Although it planned to pursue discussions with American about joining its alliance with British Airways, the corporate cultures of Continental and American differ significantly. American, as the nation’s biggest airline until the Delta-Northwest deal is completed, is likely to want to dictate the terms under which the much-smaller Continental comes on board.

 

At the same time, Continental’s membership in the SkyTeam alliance could offer much greater reach than a deal with American and British Airways. The new Delta will be bigger than American, and other members in SkyTeam include KLM and Air France, which have a broader base than American and British Airways across Europe and the rest of the world.

 

Meanwhile, in a further sign of the industry's problems, Eos Airlines, a business-class carrier, said Sunday that it had filed bankrupcy protection and ceased flying. Eos said it filed for Chapter 11 protection in New York on Saturday. Eos offered business class flights between New York's JFK Airport and Stanstead Airport in London. It was the latest in a series of small airlines to file for bankruptcy protection in the last few weeks.

 

Eos made its final flights from London to New York on Sunday, and canceled flights in the opposite direction. It began flying in 2005.

 

Apologies to ST fans - but OW please!!

 

I think the competition regulators might be concerned at a AA/CO alliance though - they'd almost eliminate competition in the NYC and Texan markets.

[Pieter C. 5]

Mods - I've no idea whether to place this in *A or Skyteam threads as it crosses 2 alliances. So your call.

 

edit - or even oneworld!

 

CO calls if off, and being a ST-member, I merge it here

 

Continental Not Merging With United

 

April 28, 2008

Continental Airlines has called off talks with United Airlines because of United's weak financial condition and a feeling that a merger would risk its own financial health, a source briefed on the matter said.

 

The source also said Continental is in "advanced talks" with British Airways and American Airlines about a potential alliance, with plans to seek antitrust immunity.

 

Continental's decision comes after Delta Air Lines and Northwest Airlines said nearly two weeks ago they planned to merge and become the world's largest airline, seeking to counter rising fuel prices, a weak economy and growing competition from European carriers as trade barriers fall on trans-Atlantic travel.

 

Continental said on Sunday in a letter to its employees it has chosen not to merge with any other airline but will continue to consider an alliance with other carriers.

 

"We have significant cultural, operational and financial strengths compared to the rest of the industry, and we want to protect and enhance those strengths -- which we believe would be placed at risk in a merger with another carrier in today's environment," Chief Executive Larry Kellner and Vice President Jeff Smisek said in the letter.

 

Continental's decision comes a few days after United's shares dropped more than 40 percent in one day when it posted a loss of USD$537 million in the first quarter.

 

One source familiar with the matter said the development came as a surprise to United, which had been negotiating in expectation of reaching a deal by late this week.

 

After racking up USD$35 billion in losses and finally emerging from a 5 year slump in 2006, US airlines are hoping mergers could give them greater market power to reduce flights and raise fares.

 

The airlines also face a renewed sense of urgency to cut costs as jet fuel prices have more than doubled since the start of last year.

 

Continental, which has said it would prefer to remain independent unless the competitive landscape changes, had laid most of the groundwork for a merger with United, sources had said.

 

Under terms that were being negotiated, Continental's Kellner would have been CEO of the combined company and Smisek would have been president, sources said. United CEO Glenn Tilton was to get a seat on the board of the combined company.

 

But talks broke off this weekend, with Continental now focusing on an alliance with BA and American.

 

Airline alliances allow partners to streamline costs while sharing revenues. Without antitrust immunity, the data and revenue shared on the routes would normally be considered collusive.

 

American and British Airways have tried twice, without success, to win immunity from the government for their transatlantic alliance.

 

Regulators have long been concerned that stronger ties between American and BA would jeopardize competition at London's Heathrow Airport for other US carriers.

 

But air travel restrictions have eased under a US-European Union "Open Skies" agreement that took effect in March, creating new opportunities for transatlantic air services.

 

Earlier this month, the US Department of Transportation granted tentative antitrust immunity to the SkyTeam alliance involving Delta, Northwest, Air France-KLM and Alitalia.

 

Continental, which has a marketing alliance with SkyTeam but was not part of the group that received antitrust immunity, will review its participation in that alliance.

 

American Airlines is part of the 10 member oneworld alliance, which includes BA, Cathay Pacific, Finnair, Iberia and Japan Airlines. But Continental's talks, for now, would focus on grouping with only BA and American.

 

This paves the way for a deal between United Airlines and US Airways, which have had serious merger talks of their own, according to sources briefed on the matter.

 

UAL's market value stands at USD$1.8 billion, while US Airways is valued at USD$657 million, one of the lowest among major carriers.

 

A United-US Airways deal foundered in 2001 on antitrust concerns. But consolidation proponents say the industry and the two carriers have changed dramatically.

 

Both have restructured hubs and routes during long periods in bankruptcy, and United has reduced domestic capacity to focus more on international routes.

 

Analysts have said a United-US Airways merger would not be very complex as wages at the two carriers are closely aligned and their fleets mesh well. The two are also part of the same global marketing alliance.

 

(Reuters)

 

 

[Keith T 2]

The Reuters story seems more confident about the tie up with BA/AA, whereas the NYT one makes it sound like mere speculation.

[Pieter C. 5]

Keith,

 

For sure, something is gonna happen in the US in the foreseeable future !!!

 

and.....more consolidations in Europe too: it's the only way to beat the ever-rising fuel costs.

[Pieter C. 5]

Berlusconi Threatens To Re-Nationalize Alitalia

 

April 29, 2008

Italian prime minister-elect Silvio Berlusconi threatened on Tuesday to re-nationalize Alitalia if the European Commission continued to "whine" about a government loan to keep the ailing airline afloat.

 

The European Commission is examining the EUR300 million euro (USD$467 million) loan to see whether it breaks European rules barring further state aid to the airline, prompting Berlusconi to criticize the EU for creating rather than solving problems.

 

The tycoon said a bid by a group of Italian businessmen remained the first choice for saving the carrier, but that the state or its railways could buy the 50.1 percent of Alitalia that it does not already own if needed.

 

"If they continue whining, we could take a decision in which Alitalia could be bought by the state, by the state railways," Berlusconi said. "It's a threat, not a decision."

 

EU Transport Commissioner Jacques Barrot said at the weekend that the EU was not trying to create problems but simply trying to enforce the rules, failing which the courts would.

 

Berlusconi has promoted the prospect of an Italian consortium for Alitalia with vigour since the collapse of its sale to Air France-KLM earlier this month, but so far no big names have emerged with concrete plans to save the airline.

 

The chairman of Italian company Pirelli said on Tuesday he was willing to invest a "chip" of a few million euros in Alitalia if there was a clear and transparent plan to relaunch the airline, saying Milan's Malpensa Airport should not be shut.

 

An Intesa Sanpaolo executive said the bank was still waiting for "someone to come up with ideas" before making a move.

 

Berlusconi told his party's members of parliament on Monday that more businesses than needed were ready to participate in the consortium, one of those present at the briefing said.

 

A Rome-based law firm that says it represents the proposed consortium is expected to meet Alitalia's nine unions on Wednesday, a union official said.

 

(Reuters)

 

[Pieter C. 5]

Korean Air Q1 Swings To Loss On Fuel, Currency

 

April 30, 2008

Korean Air announced a swing to a larger-than-expected quarterly net loss on Wednesday, pressured by higher fuel costs and a softer won currency.

 

Korean Air faces unfriendly skies this year due to ever-rising fuel prices and a slowing global economy, although the company can partially soften the impact with surcharges.

 

The company is also struggling against intensified competition from budget carriers, especially Chinese airlines, analysts say.

 

"Jet fuel is too expensive to be cushioned only by surcharges. Manufacturers are also less and less eager to use air cargo amid higher oil prices," said Kang Kwangsook, an analyst at CJ Investment & Securities.

 

Since January, South Korea has allowed Korean Air to more than double its fuel surcharges for international flights.

 

To cope with record high oil prices Korean Air is also seeking to raise fuel surcharges and air fares, which a company official said both need government approvals.

 

But Korean Air could be fighting a losing battle to swing back into the black, analysts say, as a weaker won may boost fuel costs even further.

 

The won's value against the dollar at the end of the first quarter was 5 percent lower than a year earlier and 5.5 percent lower than the end of the fourth quarter.

 

A softer won also bolsters the costs of servicing foreign currency-dominated debts; Korean Air had USD$4.9 billion in dollar debt and JPY430 million yen (USD$4.13 million) in yen debt as of the end of the first quarter. The debt mainly relates to aircraft purchasing and leasing.

 

The weaker currency may also impact demand for overseas trips as South Korean travellers tighten their belts.

 

Korean Air, the world's largest air cargo carrier, reported a KRW325.5 billion won (USD$324.3 million) net loss, in the first quarter ended on March 31.

 

That compared with a KRW130.8 billion profit a year ago and a revised KRW35.3 billion loss in the fourth quarter of 2007.

 

January-March operating profit stood at KRW19.6 billion.

 

That was far below a KRW151.4 billion profit a year earlier and a KRW128.6 billion profit in the last quarter of 2007.

 

Korean Air used 1.3 percent more fuel in the first quarter from a year earlier, while fuel costs, the company's single-biggest cost item making up 30 percent of its operating expenses, jumped 49 percent.

 

(Reuters)

 

[mohd sukri abd hamid 0]

We're talking about 'buying' IB, not joining ST, Seth, or do you want AF-KL buy MH (if that would be possible) ?

 

 

 

 

Think they 'need' IB for their vast South- and Central American network

 

 

im love to see AF-KLM buy MH..will be amazing to be bigger company

 

im love to see AF-KLM buy MH..will be amazing to be bigger company

 

[Guest MarcosMD11]

im love to see AF-KLM buy MH..will be amazing to be bigger company

 

I know AF-KLM had interest in IB, I see quicker BA taking IB over because of Oneworld alliance.

 

The combination of AF-KLM take MH is amazing lovely, only the French still not 100% partner of MH , they still let MH wait to enter SkyTeam.

I know KLM love to merger or take partner MH over, then AF-KLM have strong position in South East Asia.

 

 

Also possible CZ to merger with MH.

 

 

 

 

[Pieter C. 5]

I know KLM love to merger or take partner MH over, then AF-KLM have strong position in South East Asia.

 

Rumours are, though, AF is buying stock into Vietnam Airlines soon

So, will they become the ST-partner for S-E Asia ?

 

On another ST-topic:

 

Kenya Airways To Add Routes, Increase Frequencies

 

May 1, 2008

Kenya Airways said it will launch new routes in Africa and increase flight frequencies to current destinations.

 

It will launch a service to the Madagascar capital Antananarivo and boost flights to west and central Africa, Dubai and Guangzhou. African routes are a key source of business for the airline.

 

Kenya Airways suspended flights to Paris in February as travelers stayed away following electoral violence that wracked Kenya after a disputed poll in December. It plans to resume flights in June.

 

The Antananarivo flights will increase passenger numbers to the Paris route, said one analyst who asked not to named.

 

The airline currently flies to 30 destinations mostly in Africa, the Far East and Europe.

 

Kenya Airways said it spends about KES20 billion shillings (USD$322.2 million) of its KES60 billion turnover on fuel. The carrier, partially held by Air France-KLM, said it has hedged 50 percent of its fuel needs and was evaluating routes, frequencies and equipment utilization to check fuel costs.

 

"Ultimately, we may need to look at our pricing structure and see how to recover some of our fuel costs," the statement said.

 

(Reuters)

 

Due to tesnsion-ties inspections on KLM 747-400's, KQ will operate the daily KL flights to/from NBO (wetlease)...

 

 

[Pieter C. 5]

If they cannot get the money one way, they will try the other way !!!

 

Alitalia Seeks Damages From Milan Airport Operator

 

May 1, 2008

Alitalia filed a counter-claim for damages against Milan's airport operator SEA on Wednesday, raising the stakes in a bitter battle over the ailing carrier's sharp cutback in flights from Italy's financial hub.

 

The Italian national carrier charged SEA with not investing enough at Malpensa Airport near Milan and damaging Alitalia's sale prospects by suing it over the flight cuts.

 

SEA said its lawyers would examine Alitalia's claim, but a first glance showed "serious errors in reconstruction of facts."

 

Alitalia said the damages it was seeking were "not far" from the EUR1.2 billion euros sought by SEA in its lawsuit filed in February, when the carrier was trying to seal a doomed takeover by Air France-KLM.

 

That deal ultimately fell apart over union opposition, but the French carrier had also wanted the lawsuit by SEA withdrawn as a precondition for completing the takeover.

 

Alitalia's decision to cut flights out of Malpensa by 70 percent stemmed from a restructuring plan it drew up last year to reduce losses, which caused an outcry from Milan politicians and officials worried about job losses in the area.

 

Milan has since struck a deal with Germany's Lufthansa, which will nearly double the number of weekly flights from Malpensa, while Alitalia is still searching for a buyer.

 

The carrier is expected to survive over the next couple of months thanks to a EUR300 million emergency loan from the government, but its long-term future remains unclear.

 

The airline on Wednesday reported the short-term liquidity available remained stable at EUR180 million and that net debt shrank 1 percent due to proceeds from the sale of its stake in Air France-KLM.

 

Italian Prime Minister-elect Silvio Berlusconi has promised a home-grown consortium to buy the carrier will soon reveal itself, but so far no-one with concrete plans to rescue the airline has emerged despite constant speculation on the matter.

 

Italy also faces the threat of being taken to court over the loan, with the European Commission warning it has doubts on whether the lending falls outside rules barring further state aid to Alitalia.

 

The European Commission may decide that the loan is illegal even if it is provided under market conditions unless a bidder for the ailing carrier emerges, an EU source said.

 

The Commission source, who declined to be named, said the loan might not make "rational" sense if there were no buyer to assure that the airline had a future.

 

Berlusconi has so far responded to the EU's doubts on the loan by threatening to nationalize Alitalia and has told the Commission to stop creating problems.

 

Separately, Intesa Sanpaolo chief executive Corrado Passera reiterated that the bank was not in talks or a consortium at the moment, but would step forward if a plan to relaunch the airline was found.

 

(Reuters)

 

[Pieter C. 5]

UniCredit Denies Alitalia Talks With Lufthansa

 

May 5, 2008

Italian bank UniCredit on Monday denied a report that it had held talks with Lufthansa over a possible role for the German airline in a bid for Alitalia.

 

Il Messaggero daily said 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.

 

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 sound out a possible agreement, the daily said without citing sources.

 

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 to sell the state's 49.9 percent stake in Alitalia for more than a year. A sale to Air France-KLM -- considered its best shot at avoiding bankruptcy -- fell apart last month over union opposition.

 

Alitalia on Monday said it had received the EUR300 million euro emergency loan the outgoing Italian government agreed to grant it last month in a desperate bid to stave off bankruptcy at the airline. The loan must be repaid by year-end.

 

But the European Commission has expressed doubts about whether the loan falls within rules prohibiting further state aid to the carrier. Commission spokesman Michele Cercone said he had no comment on Alitalia receiving the loan.

 

Italian prime minister-elect Silvio Berlusconi has been promising for several weeks 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.

 

Small Italian airline Air One, which has had a sales and technical partnership with Lufthansa since 2000, made a failed bid last year for Alitalia.

 

The German carrier's close ties with Air One has prompted frequent speculation in the Italian press that it could emerge as a partner in a new takeover bid for Alitalia.

 

(Reuters)

 

[Pieter C. 5]

Air France KLM April Traffic Rises

 

May 7, 2008

Air France KLM on Wednesday reported April passenger traffic up 2.6 percent with the load factor slipping 2.3 percentage points to 80 percent.

 

Cargo traffic rose 3.5 percent and the load factor rose 0.2 points to 67.6 percent, the Franco-Dutch airline group said in a statement.

 

(Reuters)

 

[Pieter C. 5]

US Senate Aviation Chair Not Against Delta Merger

 

May 8, 2008

The chairman of the committee overseeing aviation affairs in the US Senate said on Wednesday he would not oppose the proposed merger of Delta Air Lines and Northwest Airlines.

 

Democrat John Rockefeller of West Virginia told the chief executives of both airlines at the conclusion of a hearing on the deal that he was not inclined to challenge the merger agreement.

 

"I'm not against a merger. I want very strong scrutiny by the Department of Justice and others with great detail, but I'm not convinced here that anyone is operating out of ill faith," Rockefeller said.

 

But he said the "stakes were enormous" and the aviation system was not working well for everyone. Rockefeller said he does not want to "go back to that day," but he would not "discount entirely" the prospect of re-regulating airlines, especially if service to small and medium-sized communities deteriorates severely.

 

Congress deregulated the airlines in the late 1970s, but still taxes the industry, imposes fees for airport improvement and security, and oversees safety.

 

Although Congress cannot block a merger, lawmakers can apply pressure to regulators and use the bully pulpit and other political levers to disrupt the timing of a deal or influence public sentiment. Outright congressional support, while not crucial, can help the two clear regulatory hurdles.

 

A leading voice in Congress, Rockefeller's support -- or his non-opposition -- as chairman of the Commerce Committee's aviation panel sends an important signal to other lawmakers.

 

Other key lawmakers in the Senate and the House of Representatives have put up little or no resistance to the proposal.

 

But senators at the hearing sought assurances from Delta's Richard Anderson and his counterpart at Northwest, Douglas Steenland, that the merged carrier would not reduce jobs or service to their communities.

 

The pair said there are no immediate plans to shrink the airline, but they could not predict how the company would look in the future if financial losses due to high fuel prices or a weaker economy continue.

 

"There are variables outside our control that could change the dynamic," Steenland said.

 

In April, Delta proposed an all-stock buyout of Northwest to create the world's largest airline. The industry is losing money and facing a bleak outlook due to fuel costs that pressed further into record territory on Wednesday.

 

"The combination of Delta and Northwest creates a company with a more resilient business model that can withstand volatile fuel prices more effectively than either could on a stand-alone basis," Steenland said.

 

Ray Neidl, an industry analyst with Calyon Securities, told lawmakers there are "major doubts" the industry can remain viable with fuel costs rising deeper into unchartered territory.

 

"Through consolidation, the industry will be in a better position to rationalize capacity, further cut costs and enhance revenues," Neidl said.

 

Unions, still stung by bankruptcies at Northwest and Delta between 2005-07, expressed skepticism with management and Wall Street. Flight attendants, baggage handlers and other workers are worried consolidation will lead to job cuts and reduced wages and benefits.

 

"I'm not so sure that we should rush headlong into supporting this call for greater consolidation without taking a very serious pause," said Patricia Friend, president of the Association of Flight Attendants.

 

The AFA represents attendants at Northwest and is trying to organize those workers at Delta, where pilots and a handful of other employees are unionized.

 

Friend accused Delta of "anti-union tactics" in the organization drive.

 

"Delta executives have not been shy about their efforts to prevent the employees from forming unions," Friend said.

 

Anderson said the company treated its employees well and has never had a strike. He said Delta would "respect" the organizing process, which is overseen by federal mediators.

 

(Reuters)

 

[Pieter C. 5]

Alitalia Posts Q1, Warns On Future

 

May 13, 2008

Ailing Italian carrier Alitalia on Tuesday reported its first-quarter loss widened and said it could not sustain the impact of high oil prices and uncertainty over its fate for much longer.

 

The airline, which the Italian government has unsuccessfully tried to sell for more than a year, reported an operating loss of EUR161 million euros (USD$248.9 million), wider than the EUR113 million it lost in the period a year earlier.

 

Alitalia said it urgently needed a capital increase to inject money into its coffers.

 

The airline also said it appreciated a request from a close aide to Italian Prime Minister Silvio Berlusconi seeking confidential information to help a proposed consortium to buy the carrier. But it said it would wait for proof of interest from the group before divulging any data.

 

(Reuters)

 

[Pieter C. 5]

Delta Pilots OK Modified Contract

 

May 15, 2008

Delta Air Lines said on Wednesday the Air Line Pilots Association (ALPA) has informed the company that Delta pilots have approved a modification to their current contract.

 

Delta said the agreement marks an important step toward its proposed merger with Northwest Airlines.

 

Delta agreed to buy Northwest in an all-stock deal on April 14.

 

"The agreement facilitates the realization of revenue synergies from the combination of Delta and Northwest Airlines, once the merger is completed," said Delta in a statement.

 

Lee Moak, chairman of the Delta chapter of ALPA, told members in a letter on Wednesday the union looked forward to working with Northwest pilots on a "new joint agreement providing immediate parity in rates of pay" and on a rapid completion of a "fair and equitable integrated seniority list."

 

Pilots at Northwest opposed the merger when it was announced.

 

Also on Wednesday, an influential lawmaker on aviation affairs said Delta's proposal to buy Northwest is likely to be approved by the US government.

 

Representative John Mica, a Florida Republican and former chairman of the House of Representatives aviation subcommittee, told a hearing on the merger proposal the deal did not appear anti-competitive.

 

(Reuters)

 

[Pieter C. 5]

Alitalia Denies Having Trouble Paying Staff Wages

 

May 19, 2008

Alitalia denied it was having difficulty paying its staff as the troubled airline waits to see if any new investors can save it from bankruptcy.

 

Comments on television by Antonello Soro, a centre-left deputy, that Italy's flagship carrier was having trouble paying salaries were "totally groundless," the company said in a statement on Monday.

 

Silvio Berlusconi's government could name a new chief for Alitalia this week to replace former chairman Maurizio Prato, who resigned last month after the airline's sale to Air France-KLM collapsed, union sources said on Friday.

 

Prato's replacement will hold both the chairman and the chief executive titles at the state-controlled airline, which is close to bankruptcy and has been unable to find a buyer despite being on the block for more than a year.

 

Alessandro Benetton on Monday reiterated that his family would look positively on an Italian proposal to save the company, if one emerged.

 

"We would look very favorably at an Italian project, you absolutely need a partner from the sector who has the technical and operating competence," he said on the margins of a conference in Milan.

 

"If other Italians grouped around this, we would certainly give it a good look," he added.

 

(Reuters)

 

[Pieter C. 5]

Too Early For Talk About Alitalia Numbers

 

May 20, 2008

A rescue plan for ailing carrier Alitalia calls for investment of EUR1.4 billion euros (USD$2.18 billion), an Italian newspaper said on Tuesday, but the adviser drafting it said it was too early to talk about numbers.

 

Il Messaggero reported a plan to rescue the airline drawn up by Prime Minister Silvio Berlusconi's adviser Bruno Ermolli envisaged the creation of a new company with at least EUR1.4 billion worth of capital.

 

Roberto Colaninno, chief executive of scooter maker Piaggio, might contribute with an investment of around EUR200 million, asking in return for the role of chairman of the new company, the paper said.

 

Ermolli, who has been working for months to stitch together a rescue plan, told reporters a "full report" had been made to Berlusconi.

 

"But it is still too soon to talk about numbers," he said on the margins of a conference on Milan's 2015 Exposition.

 

The state-controlled airline is close to bankruptcy. It has been unable to find a buyer despite being up for sale for more than a year.

 

(Reuters)

 

[Pieter C. 5]

Italy Converts Alitalia Loan To Win Auditor Blessing

 

May 21, 2008

The Italian government has agreed to convert a EUR300 million euro (USD$473 million) emergency loan to Alitalia into an asset on the ailing carrier's books, in a surprise move to win auditor approval for the airline's precarious finances.

 

Economy Minister Giulio Tremonti said the new government had adopted the move at a cabinet meeting in Naples, but called it a temporary measure. Alitalia has said it urgently needs a capital increase to keep flying.

 

"It's a temporary measure so that the internal auditors don't bring up questions," Tremonti told reporters.

 

Alitalia's finances have deteriorated sharply in recent months as passenger bookings fall, debt rises and costs spiral higher on the back of rising oil prices.

 

The airline, which is flying dangerously close to bankruptcy after a planned sale to Air France-KLM fell apart, reported a wider quarterly loss last week and Italian media say auditor Deloitte & Touche may not sign off on its 2007 accounts.

 

The airline's board met on Wednesday and Alitalia said in a statement it had named an interim human resources head ahead of Monday's board meeting to approve the full-year accounts.

 

The accounting move by the government is likely to invite further scrutiny from the European Commission, which is already looking into whether the EUR300 million emergency loan violated EU rules barring further state aid.

 

A European Commission spokesman declined to comment. Tremonti said he would notify the Commission on the government move on Wednesday itself, calling it a "manageable procedure".

 

The EU transport commissioner is in charge of overseeing Italy's attempts to rescue Alitalia, and the job was given to Antonio Tajani, a close ally of Prime Minister Silvio Berlusconi, earlier this month.

 

Berlusconi has promised to find a consortium of Italian businessmen to rescue Alitalia, but such a group has yet to emerge.

 

(Reuters)

 

[jani 0]

Over on a.net they have a long discussion on Skyteam and everyone is asking "Why isn't MH yet part of it?"

 

 

http://www.airliners.net/aviation-forums/g...ain/3995473/#19

[Mohd Azizul Ramli 2]

Rumours are, though, AF is buying stock into Vietnam Airlines soon.

So, will they become the ST-partner for S-E Asia ?

I have indicated this earlier in this thread and in a few other threads somewhere, that VN is the darling of AF.

 

If this plan materialised, with VN, CZ and CI all in SkyTeam, we can conclude that MH is just not destined to be part of this alliance. MH then need to convince OW very hardly to appoint them back (after the turning down fiasco a decade ago).

[Pieter C. 5]

Korean Air To Cut Flights To Cope With Rising Oil

 

May 26, 2008

Korean Air said on Monday it plans to cut some passenger flights from June to mid-July to cope with surging jet fuel prices.

 

Korean Air, the world's number 1 cargo carrier, said it also plans to adjust routes based on demand and earnings and may hedge its fuel costs.

 

"We will reduce slack routes and flights which are expected to slow down," a company official said asking not to be identified.

 

Korean Air will cut flights on 12 routes, suspend five routes and change planes on four routes.

 

The plans come as fuel prices hit a record high on Monday. Prices have jumped 57 percent so far this year.

 

Korean Air swung to a larger-than-expected quarterly net loss in the first quarter, hit by higher fuel costs.

 

In the first three months of the year, the company used 1.3 percent more fuel from a year ago while fuel costs, its single-biggest cost item making up 30 percent of its operating expenses, jumped 49 percent.

 

(Reuters)

 

Italian Court Orders New Tender For Volare

 

May 27, 2008

Italy's top administrative court ordered on Tuesday a new tender be held for Volare within 15 days, dismissing Alitalia's contested purchase of the bankrupt budget airline two years ago.

 

The court called on Volare's special administrator to organize another tender even though Alitalia won the first one in March 2006.

 

The ruling favors an appeal filed by Alitalia's domestic rival Air One, which had also wanted to buy Volare.

 

In a previous ruling, the court had annulled the 2006 tender, saying it did not follow the correct procedures.

 

Alitalia's purchase of Volare had marked its expansion into the low-cost market. It had offered EUR38 million euros for Volare, which collapsed two years earlier under the weight of heavy debts and losses.

 

(Reuters)

 

 

Gov't Decree On Alitalia Loan Effective This Week

 

May 27, 2008

A government decree converting a EUR300 million euro (USD$473 million) emergency loan to Alitalia into an asset on the ailing carrier's books will come into effect this week, the economy minister said on Tuesday.

 

The move, which the government has said is temporary, is designed to win auditor blessing for the airline's precarious finances.

 

Alitalia's board was meeting on Tuesday to approve its 2007 accounts, but it may want to see the decree published in the Official Gazette before doing so.

 

The airline's finances have deteriorated sharply in recent months as passenger bookings have fallen, debt has risen and costs have spiraled higher on the back of soaring oil prices.

 

The board had already adjourned its meeting from Monday to Tuesday as it waited for the government to follow through on its pledge to turn the emergency loan into an asset.

 

Italian legislation usually comes into force the day after being published in the Official Gazette, unless specified otherwise.

 

Tuesday's edition of the Gazette did not mention the decree.

 

Economy Minister Giulio Tremonti had earlier said it would be published by Wednesday.

 

The text of the decree states that the loan will be used to avoid Alitalia's capital falling under the legal minimum, which would effectively force the airline to declare bankruptcy.

 

It says that a capital increase will have to be launched to allow the repayment of the loan after the government's 49.9 percent stake in Alitalia has been sold.

 

The airline, flying close to financial collapse after a planned sale to Air France-KLM fell through, reported a pretax loss of EUR215 million for the first quarter, compared with a loss of EUR152 million in the year-earlier period.

 

Italian media have said auditor Deloitte & Touche might not sign off on the airline's 2007 accounts due to concerns about the accounting for some items and about whether the loan could be treated as part of Alitalia's capital.

 

Further weighing on Alitalia's finances is an expected EUR97 million write-down of the value of its aging fleet.

 

The accounting move by the government is likely to invite further scrutiny from the European Commission, which is already looking into whether the EUR300 million emergency loan violated EU rules barring further state aid.

 

Prime Minister Silvio Berlusconi, who took office this month after winning an April general election, has promised to find a consortium of Italian businessmen to rescue Alitalia, but such a group has yet to emerge.

 

(Reuters)

 

Italian Court Orders New Tender For Volare

 

May 27, 2008

Italy's top administrative court ordered on Tuesday a new tender be held for Volare within 15 days, dismissing Alitalia's contested purchase of the bankrupt budget airline two years ago.

 

The court called on Volare's special administrator to organize another tender even though Alitalia won the first one in March 2006.

 

The ruling favors an appeal filed by Alitalia's domestic rival Air One, which had also wanted to buy Volare.

 

In a previous ruling, the court had annulled the 2006 tender, saying it did not follow the correct procedures.

 

Alitalia's purchase of Volare had marked its expansion into the low-cost market. It had offered EUR38 million euros for Volare, which collapsed two years earlier under the weight of heavy debts and losses.

 

(Reuters)

 

[Mohd Azizul Ramli 2]

Korean Air will cut flights on 12 routes, suspend five routes and change planes on four routes.

What are the effected 12-5-4 routes?

[Pieter C. 5]

Alitalia Posts 2007 Loss, Waits For Government

 

May 28, 2008

Ailing Italian airline Alitalia said on Tuesday it posted a 2007 loss of EUR495 million euros and repeated it needed a new capital quickly to keep flying.

 

Alitalia said in a statement the loss was narrower than a EUR627 million loss in the year-earlier period, when a EUR197 million write-down on its fleet dragged down the results. But it was still wider than a pre-tax loss of EUR363.9 million for 2007 announced in February.

 

Alitalia's finances have been deteriorating rapidly, leaving in doubt whether it can avoid bankruptcy after a planned takeover by Air France-KLM fell apart.

 

The company earlier on Tuesday won a badly-needed lifeline from the government, which converted a EUR300 million (USD$473 million) emergency loan to the carrier into an asset on its books. The decree will come into effect by Thursday, Economy Minister Giulio Tremonti said on Tuesday.

 

The move, which the government has said is temporary, was designed to win the approval of auditors for the airline's precarious finances.

 

Alitalia's board, which met for a second consecutive day on Tuesday to approve its 2007 accounts, said the loan had improved the airline's liquidity, but it needed new capital very quickly. It said it was waiting for the controlling shareholder -- the government -- to indicate the way forward.

 

Since the collapse of the Air France-KLM's deal earlier this year, the airline's accounts have worsened as passenger bookings fall, debt rises and costs spiral higher on the back of rising oil prices.

 

The board had already adjourned its meeting from Monday to Tuesday as it waited for the government to follow up on its pledge to turn the emergency loan into an asset.

 

Italian legislation usually comes into force the day after being published in the Official Gazette. Tuesday's edition of the Gazette did not mention the decree.

 

The text of the decree states the loan would be used to keep Alitalia from falling under the legal capital minimum, which would effectively force the airline to declare bankruptcy.

 

It says a capital increase will have to be launched to allow the repayment of the loan after the government's 49.9 percent stake in Alitalia has been sold.

 

Italian media have said auditor Deloitte & Touche had been reluctant to sign off on Alitalia's 2007 accounts due to concerns about the accounting of some items and about whether the loan could be treated as part of Alitalia's capital.

 

Further weighing on Alitalia's 2007 accounts was a new EUR97 million write-down of the value of its fleet.

 

The accounting move by the government is likely to invite further scrutiny from the European Commission, which is already looking into whether the EUR300 million emergency loan violated EU rules barring further state aid.

 

Prime Minister Silvio Berlusconi, who took office this month after winning a general election in April, has promised to find a consortium of Italian businessmen to rescue Alitalia, but such a group has yet to emerge.

 

(Reuters)

 

Italian Government Hopeful Alitalia Won't Fail

 

May 28, 2008

Italian Prime Minister Silvio Berlusconi will make good on a pledge to find an Italian buyer for Alitalia to help it avoid bankruptcy, a senior government official said on Wednesday.

 

"We're waiting confidently. If Berlusconi says that there is a buyer, I believe him," said Roberto Castelli, undersecretary in charge of transport at the Infrastructure Ministry.

 

Alitalia on Tuesday reported a 2007 loss of EUR495 million euros (USD$778.3 million) and reiterated it needed fresh capital quickly to keep flying.

 

The government on Wednesday officially converted a EUR300 million emergency loan to the carrier into an asset on its books, providing it with a lifeline.

 

The government has said the move is temporary. It is designed to win the approval of auditors for the airline's precarious finances.

 

(Reuters)

 

Lawyer Sues Delta For Ruining Family Vacation

 

May 28, 2008

A New York lawyer is suing Delta Air Lines for USD$1 million, saying his family vacation turned into a nightmare after they were stranded in an airport for days and treated disdainfully by airline employees.

 

Richard Roth, who filed the lawsuit on behalf of himself and his mother, said he planned the Christmas 2007 trip to Buenos Aires to celebrate his mother's 80th birthday. She had grown up in the city, but had not returned in years, he said.

 

Instead, Roth said he, his wife, two teenage children and mother spent three days in airports, went days without their luggage, were treated rudely by airline employees and were forced to spend USD$21,000 on unused hotel rooms in Argentina, replacement clothes, and other costs.

 

"Through its gross negligence, malfeasance and absolute incompetence, Mr. Roth holds Delta responsible for ruining his vacation," said the lawsuit, filed in New York state court.

 

Delta Air Lines had no immediate comment.

 

Roth said that he has been in touch with Delta about getting reimbursed, but was repeatedly rebuffed. He said on Wednesday filing the suit was a last resort.

 

After the initial flight from New York was delayed by more than two hours, the family was not allowed to board their connecting flight in Atlanta, Roth said.

 

A Delta employee "literally walked away chuckling that he had left them stranded," he said.

 

After waiting in the airport for hours, Roth was told the next available flight would depart more than two weeks later.

 

He then booked a flight through a different airline and arrived in Argentina three days later than planned. The family was not reunited with their luggage for more than five days.

 

"Suffice it to say, Mr. Roth's elderly mother was a mess. And she has been suffering ever since. The kids are all upset. And it was Christmas Eve. Mr. Roth had spent one-half of his vacation in Buenos Aires chasing Delta and its incompetent representatives," the lawsuit said.

 

(Reuters)

 

[Pieter C. 5]

Mesa Air Wins Injunction In Legal Fight With Delta

 

May 29, 2008

Mesa Air said on Thursday it won a preliminary injunction in federal court in Atlanta preventing Delta Air Lines from terminating a contract with Mesa's subsidiary, Freedom Air.

 

Mesa had said it might be forced to file for bankruptcy protection if it lost its legal fight with Delta and Mesa's shares jumped about 50 percent to 75 cents in afternoon trading.

 

Mesa, which provides regional flights for major airlines, has been in dispute with Delta since March, when Delta told Mesa it planned to terminate their partnership, accusing Mesa of failing to complete a specified number of flights.

 

Mesa denied that allegation and in April sued Delta, saying the airline had breached their agreement.

 

"We are hopeful this issue can be fully resolved soon," said Mesa Air Chief Executive Jonathan Ornstein in a statement on Thursday.

 

A spokeswoman for Delta said: "We are disappointed in the judge's ruling -- we intend to appeal his ruling."

 

(Reuters)

 

Kenya Airways Profit Falls On Election Crisis

 

May 30, 2008

Kenya Airways said on Friday its 2007-08 annual profit after tax fell to 3.9 billion Kenya shillings (USD$62.9 million) from 4.1 billion due mainly to the impact of the east African nation's post-election crisis.

 

"The events post-election had a negative impact on our revenue, especially between January to March," Titus Naikuni, the chief executive, told an investor briefing.

 

Violence after the disputed December re-election of President Mwai Kibaki killed 1,300 people, displaced 300,000 others, and hurt key economic sectors such as tourism.

 

The airline's stock fell to a low of 45.50 shillings by the end of February from 63.50 shillings on the last day of trade before the December 27 election.

 

A power-sharing deal between Kibaki and his rivals in late February has restored calm to east Africa's largest economy.

 

The stock was trading at 50.00 shillings on Friday after the results' announcement, up from 44.75 shillings on Thursday's close.

 

Earnings per share fell to 11.93 shillings from 12.93 shillings while the board proposed an unchanged dividend of 1.75 shillings per share.

 

Naikuni said other factors impacting profits included the loss of a Boeing 737-800 which crashed in Cameroon last year, higher fuel prices and a stronger Kenya shilling.

 

One of Africa's few profitable carriers, the airline expects delivery of three new 737-800s from Boeing this year as well as a new Embraer E170 jet in September.

 

But the delivery of nine Boeing 787 "Dreamliners" originally due for delivery in 2010 to 2012 has been delayed by about two years, Naikuni said.

 

However, he predicted quick recovery for the airline, which is one of the continent's leading carriers.

 

"In 2008 we are concentrating on people development, and improving internal systems," Naikuni said. He said the firm was training its own pilots and had hired a team from Lufthansa to assist in getting internal systems up to date.

 

The airline currently flies to 30 destinations mostly in Africa, the Far East and Europe.

 

In April, it announced it would launch new routes in Africa and increase its frequencies to others.

 

The carrier is 26 percent held by Air France-KLM, and is listed on three east African bourses.

 

(Reuters)