Skyteam news

[Pieter C. 5]

The saga continues

 

Alitalia Hopes Revived As Union Set To Back Bailout

 

September 25, 2008

Italy's biggest union looked set to back a sweetened investor rescue of Alitalia on Thursday, spurring hopes the bailout will be salvaged before the bankrupt airline loses its license to fly.

 

Pilot and flight assistant unions that had bitterly opposed the deal also signaled a possible change in stance by convening a meeting of their members citing "new and interesting facts".

 

Unions gathered to hold talks at the prime minister's office on Thursday morning, hours before Alitalia's bankruptcy commissioner must present a rescue plan to aviation authorities or have its operating license revoked.

 

The Cgil union -- Italy's biggest -- is set to back the sale of Alitalia assets to Italian investor group CAI after it agreed to concessions on salaries and jobs after a flurry of meetings on Wednesday, a source close to the talks and Italian media said.

 

CIGL boss Guglielmo Epifani also said Wednesday that the talks might be revived.

 

CAI withdrew its offer for Alitalia assets last week after Cgil and unions representing pilots and flight assistants cried foul over the deal. The investor group has not formally returned to the fray, but is expected to do so if unions get on board.

 

Hopes the pilot and flight staff unions could also be persuaded to change their mind rose after they held talks with Prime Minister Silvio Berlusconi's senior aide late on Wednesday.

 

Top officials from two major pilot unions -- who were quick to attack CAI's rescue plan last week -- declined to comment after the late-night talks, calling it a "delicate moment".

 

Four unions representing pilots and flight staff have convened a meeting of their members for Thursday afternoon, the head of the Avia flight assistants union Antonio Divietri told reporters.

 

He said indications that an industrial partner will likely arrive soon "changed the situation", in an indirect reference to reports that Air France-KLM was in talks to join the CAI consortium with up to a 25 percent stake.

 

Major Italian newspapers such as Corriere della Sera and La Repubblica ran banner front-page headlines saying "Alitalia: the deal is near", with the former declaring that "a deal has never been closer".

 

However, the attempted sale of Alitalia, which has sputtered on for 19 months, has made a mockery of previous promises that a deal to settle the airline's fate is around the corner.

 

An initial auction to sell the carrier failed when all bidders pulled out, while a subsequent takeover by Air France-KLM fell apart due to union opposition.

 

This time, Alitalia risks having its flights grounded next week if it is unable to present a rescue plan or declare it has enough funds for the next three months -- which the bankruptcy commissioner has already said is a luxury it does not have.

 

(Reuters)

 

 

Korean Air Extends Flight Cuts On Fuel Prices, Currency

 

September 25, 2008

Korean Air said on Thursday it would roll previously announced flight cuts into the usually high-demand winter season, citing high fuel prices and the weaker won currency.

 

"Reflecting the challenging industry circumstances, Korean Air continues to maintain the reduced number of frequencies on 12 routes... Some routes to Europe will also be merged," the company said in a statement.

 

The suspension of the Incheon-Las Vegas route will be maintained during the winter season, which starts late October. It increased flight frequency for six routes where demand is high during the winter vacation season, such as the one to Cebu, in the Philippines, the company added.

 

Airlines worldwide are facing a massive hit to earnings from higher fuel costs and weakening demand for travel.

 

In the April-June quarter, Korean Air reported its first quarterly operating loss in five years with the softer won also weighing on fuel bills and foreign currency debt costs.

 

(Reuters)

 

Korean Air Restarts Flights To Israel

 

September 25, 2008

Korean Air on Thursday launched flights from Seoul to Tel Aviv after a 10 year absence, a move Israel's Tourism Ministry believes will double the amount of visitors from South Korea over the next few years.

 

Korean Air, South Korea's largest carrier, will fly weekly between Seoul and Tel Aviv.

 

The renewal of Korean Air flights to Israel is part of the Tourism Ministry's Open Skies policy and the removal of obstacles hindering incoming tourism.

 

"It is hoped that these flights, which will significantly increase the number of direct flights from East Asia and tourists from Korea, will pave the way for other Asian airlines to operate flights to Israel," the ministry said in a statement.

 

It added that most tourists from the Far East currently come from Korea, which has a large Christian population.

 

Tourism Minister Ruhama Avraham-Balili said that some 90,000 tourists came to Israel in the first eight months of the year, a 25 percent increase over the same period in 2007.

 

"Research shows that, within a decade, tourism from East Asia will represent a quarter of the world's outgoing tourism traffic," she said.

 

"This, in addition to the expected US economic crisis, obligates Israel to develop markets in the Far East to the Israeli tourism product in order to gain a significant share of this vast potential market."

 

(Reuters)

 

[Pieter C. 5]

Union Backing Resurrects Alitalia Bailout

 

September 25, 2008

Four major unions including Italy's biggest threw their support behind an investor bailout of flag carrier Alitalia, breathing life into a deal that seemed all but dead and averting the risk of grounded flights for now.

 

The deal brokered by the government on Thursday between the unions and the CAI investor group was enough to prevent Italy's civil aviation authority ENAC from revoking Alitalia's provisional license to fly.

 

"There's been a step forward and therefore the provisional license is not at risk," said ENAC chief Vito Riggio.

 

The developments were the first breakthrough in a flurry of talks over the past week to salvage the takeover after CAI dropped its offer because of union opposition and left Alitalia with the prospect of winding up after 60 years of flying.

 

CAI has now agreed it will keep its bid valid until October 15, bankruptcy commissioner Augusto Fantozzi told a news conference after talks with unions at the prime minister's office.

 

"A social and economic tragedy for the entire country has been averted," said Luigi Angeletti of the Uil union, which backed the rescue along with Cisl, Ugl and Cgil, the last being Italy's biggest and which had so far rejected the plan.

 

Suffering from high fuel prices and economic downturn which have hit the airline sector globally, Alitalia has been on the brink of collapse for years as political interference and union unrest bled it of cash and caused it to pile up debt.

 

An Alitalia rescue would be a political triumph for Prime Minister Silvio Berlusconi, who made an election vow to save the flag airline and keep it Italian. His senior aide and key ministers presided over talks on Thursday.

 

Italian Employment Minister Maurizio Sacconi said CAI's takeover offer had not been sweetened to appease unions, though they said CAI had made "clarifications" on salary levels and profit distribution among workers to satisfy them.

 

The deal must still win the backing of pilot and flight assistant unions which had bitterly opposed it, but they too signaled a possible change in stance by convening a meeting of their members citing "new and interesting facts".

 

Earlier reports said Air France-KLM was in talks to join the CAI consortium with up to a 25 percent stake.

 

The Franco-Dutch carrier -- expected to hold a board meeting on Thursday at which the developments at Alitalia could be discussed -- has in the past said it is willing to take a minority stake if Alitalia can return to profit.

 

Italy's government and the other unions expressed hope the pilots and flight staff would also get on board with the deal on Thursday, with talks expected to continue into the night.

 

But one of the pilots' unions -- the Unione Piloti -- said it still objected to the deal in its present form.

 

Observers say that not all of the pilots' unions would need to agree to the plan in order for it go forward, especially considering that future partner Air One has pilots that could fly Alitalia planes.

 

For all the optimism and celebratory mood that prevailed over Alitalia's fate, its attempted sale over the past 19 months has made a mockery of previous declarations that a deal to settle the airline's fate is around the corner.

 

An initial auction to sell the carrier failed when all bidders pulled out, while a subsequent takeover by Air France-KLM fell apart this year due to union opposition.

 

This time, Alitalia risked having its flights grounded next week if it was unable to present a rescue plan or declare it has enough funds for the next three months -- which the bankruptcy commissioner had already said is a luxury it does not have.

 

(Reuters)

 

 

 

Northwest Shareholders Approve Delta Merger

 

September 25, 2008

Northwest Airlines shareholders approved the carrier's proposed acquisition by Delta Air Lines, a merger that would create the world's largest carrier by traffic.

 

Northwest said on Thursday that 98 percent of shares voted were in support for the deal, which won the approval of roughly three-quarters of shareholders entitled to vote.

 

Plans call for Delta shareholders to vote in a separate meeting later on Thursday. The deal still needs regulatory approval, which is likely to come this year.

 

The new airline would be called Delta and have its headquarters in Atlanta.

 

Delta and Northwest announced their merger plans in April as the price of jet fuel headed toward a record high.

 

The two carriers hope the combination of their complementary operations will produce cost savings and revenues to offset the fuel burden.

 

"The USD$2 billion in annual synergies achievable through this merger are something neither carrier could have achieved as a stand-alone carrier," Northwest Airlines CEO Doug Steenland said on Thursday.

 

"The combined carrier will have a stronger balance sheet and best-in-class liquidity, which will put the airline in a position of financial stability," Steenland added.

 

The airline industry is in rapid downsizing mode, with carriers cutting flights on less-profitable routes and eliminating staff.

 

Earlier this week, Delta and Northwest said the Federal Aviation Administration had accepted their plan for a single operating certificate.

 

(Reuters)

 

 

New Air France-KLM CEO As Top Roles Are Split

 

September 25, 2008

Air France-KLM said on Thursday it was splitting the chairman and chief executive roles and Jean-Cyril Spinetta would hand day-to-day running of the world's biggest airline by revenues to his deputy.

 

Pierre-Henri Gourgeon, currently deputy CEO, will become chief executive of both the Air France network and the merged Air France-KLM airline group from January 1, it said.

 

Spinetta, who had combined the chairman and CEO roles since leading Air France into a merger with KLM in 2004, will remain as chairman.

 

"After eleven years as chief executive of Air France, and then Air France-KLM, I felt it necessary to propose an internal solution that would guarantee continuity of governance, in view of the difficult economic climate facing us", Spinetta said in a statement.

 

Air France and Dutch carrier KLM merged under a common holding company but maintained separate networks and fleets.

 

One of the main challenges that will face Gourgeon in the coming year is airline industry consolidation, along with high oil prices.

 

Spinetta told French magazine Nouvel Observateur in an interview on Thursday that Europe's airline industry would have a "profoundly different landscape" by the end of 2009.

 

KLM chief Leo van Wijk will remain group deputy chairman.

 

Air France-KLM announced the moves following a board meeting that also coincided with a last-minute attempt in Italy to rescue failing carrier Alitalia.

 

A group of Italian investors earlier reactivated a bid for Alitalia that leaves room for a potential minority stake by Air France-KLM or Lufthansa, following a last-ditch union deal.

 

Air France bid for the whole of Alitalia earlier this year but withdrew the offer due to union opposition.

 

(Reuters)

 

[Ken M. 0]

KLM Cityhopper Fokker 70/100 Replacement - Embraer E-190

 

Nice photo of the 1st frame here :-

 

http://www.luchtvaartnieuws.nl/pictures/embraer/e190_klm.asp

 

Pieter, do you know the aircraft delivery route back to AMS?

I would love to see it on approach to runway 23 at GLA.

 

Might even try and fly from EDI to AMS and check out the new E-190 for myself.

Shame GLA won't see them.

 

Still like the old Fokkers though.

 

[Pieter C. 5]

KLM Cityhopper Fokker 70/100 Replacement - Embraer E-190

 

Nice photo of the 1st frame here :-

 

http://www.luchtvaartnieuws.nl/pictures/embraer/e190_klm.asp

 

Pieter, do you know the aircraft delivery route back to AMS?

 

Glad you like it, Ken; the blue rings at the engine-nacelles are protection-covers and will be removed before delivery

Here's the planned delivery-schedule of PH-EZA (all times in UTC):

08nov08 - SJK-REC 1200-1500

09nov08 - REC-TFS 1100-1650

10nov08 - TFS-AMS 1030-1505 + arrival ceremony Hangar 2 @ SPL between 1505-1700

11nov08 - PDM-program

12nov08 - @ SPL for catering/handling and cabin-crew training

13nov08 - AMS-XCR for cockpit-crew training

14nov08 - XCR-AMS after training

15nov08 - see 12nov08

16nov08 - see 12nov08

17nov08 - 1st commercial flights to MUC-EDI-ZRH !!! (KL1281/1282)

[Ken M. 0]

Pieter - thanks for the delivery flight details.

 

Do you know if KLC E-190 will have IFE fitted as I've seen other airlines E-190 cabin interior photos with seatback IFE units!!!

I know they are short-haul metal but it would be nice to have a Holland Herald alternative.

 

Cabin layout 2-2 throughout, no. of seats, seat pitch?

 

Shame the Fokker 100's are being replaced as they are so quiet and quite comfortable to fly in however their reliability these days is not the best.

 

[Pieter C. 5]

Do you know if KLC E-190 will have IFE fitted as I've seen other airlines E-190 cabin interior photos with seatback IFE units!!!

Cabin layout 2-2 throughout, no. of seats, seat pitch?

Shame the Fokker 100's are being replaced as they are so quiet and quite comfortable to fly in however their reliability these days is not the best.

 

Ken,

 

- No IFE installed in KLC seats

- Cabin layout indeed 2-2, total seats 100, so will have rows 1-12 and 14-26 (no row 13)...pitch: I was told 33 inches.

- Tell me about the F100 problems: you've probably seen the Blueline 100, AirExpress 100 or WDL 146 recently on 'our' flights to EDI ?

 

[James Gota 0]

Just to start a topic about Aitalia that will last until the death I just felt like doing this. At least MWingers will follow AZ till the death

 

Please post anything about Aitalia's news

[Pieter C. 5]

No need to start a seperate topic, as most AZ news has been placed at the SkyTeam thread here....so, now it's merged

[Pieter C. 5]

Since James seems to be an Alitalia-supporter, here are the latest updates about this airline:

 

Alitalia Investor Deal Nears Total Union Support

September 29, 2008

 

The remaining Alitalia unions yet to back an Italian investor bailout of the carrier looked set to add their blessing to the deal on Monday, in what would clear a major hurdle for the airline's relaunch.

 

The CAI consortium of Italian investors had already won the backing of Alitalia's major unions last week in a sudden reversal of fortunes for the carrier, which appeared destined for liquidation after the group withdrew its offer.

 

CAI now needs approval from just two unions representing flight assistants and ground staff to wrap up the talks and focus on the hunt for a foreign partner as part of plans to relaunch the carrier by the start of November.

 

The Avia and Sdl unions, who were set to begin talks at the prime minster's office at 1030, appeared to be inching towards a deal, Italian media reports and a union source said.

 

"There are no definitive results from the consultations but what has emerged is an indication to move ahead with the negotiations," said one union official, who requested anonymity.

 

Alitalia would still need a foreign partner to compete over the long-term, and the deal could also face scrutiny from European regulators over whether it restricts competition and benefitted from government aid.

 

The airline's assets must also be valued and domestic rival Air One's assets acquired by CAI before Italy's national carrier can be reborn.

 

Both Air France-KLM and Lufthansa have shown interest in a relaunched Alitalia, as the airline sector consolidates amid crippling oil prices.

 

(Reuters)

 

Alitalia Investor Board Meeting Thursday

September 30, 2008

 

Business consortium CAI will hold a board meeting on Thursday to discuss its planned bailout of Alitalia, after clinching a deal with the airline's unions on job and wage cuts, a source close to the bailout said.

 

The source, who spoke on condition of anonymity, said the board may meet again next week to vote on a capital increase to finance the rescue effort expected to top EUR1 billion euros (USD$1.43 billion).

 

Alitalia, Italy's largest airline, sought bankruptcy protection in August after buckling under the weight of crippling oil prices, massive debt and soaring losses.

 

Prime Minister Silvio Berlusconi, who returned to power in May vowing to rescue the airline, had appealed to Italian investors to bail out the carrier.

 

CAI -- a group of 16 wealthy Italian entrepreneurs and businesses -- now aims to find a foreign partner for Alitalia and press ahead with a plan to relaunch it as smaller, leaner carrier by early November.

 

(Reuters)

 

Air France-KLM CEO Meets Alitalia Investor Group

October 1, 2008

 

Air France-KLM's chief executive met the head of an investor group buying Alitalia on Wednesday to express his "strong interest" in taking a stake and agreed to a major concession in talks, sources familiar with the talks said.

 

Air France-KLM and Lufthansa, whose CEO was in Rome last week to meet Alitalia's unions and Italian officials, are jostling to buy a minority stake in Alitalia in a bid to grab a foothold in the lucrative Italian market.

 

British Airways is not planning to invest, a spokeswoman said, although a source familiar with the company said it may pursue a commercial partnership with the carrier if its rescue proves a success.

 

"BA might be interested in some sort of strategic commercial relationship," the source said, adding that an alliance was a possibility.

 

Air France-KLM CEO Jean-Cyril Spinetta, who in an earlier attempt to buy Alitalia proposed ditching the Italian carrier's twin-hub strategy, agreed to support the CAI consortium's decisions on hubs and the network as long as they were profitable, a source close to the talks said.

 

"Air France-KLM has given its willingness to support CAI's choices on hubs and network as long as the efficiency and profitability of the project is guaranteed," the source said.

 

Air France-KLM's insistence on a single hub for Alitalia based in Rome had alienated unions and politicians in Milan who lobbied against an alliance with the French fearing job cuts.

 

Air France-KLM's then deal to buy Alitalia fell apart over resistance from unions and Silvio Berlusconi, who was then the opposition leader campaigning to become prime minister.

 

The meeting at the French embassy in Rome came as the commissioner overseeing Alitalia's bankruptcy confirmed that CAI's offer was the only bid received by a September 30 deadline for all of Alitalia.

 

The commissioner, Augusto Fantozzi, received other expressions of interest for specific parts of Alitalia's operations, the airline said in a statement without naming the offers.

 

(Reuters)

 

Lufthansa Noses Ahead In Alitalia Talks

October 2, 2008

 

Lobbying by Italian unions and politicians is tipping the scales towards Lufthansa and hobbling Air France-KLM in a Franco-German battle for a slice of Alitalia airline, which narrowly escaped liquidation last week.

 

Air France-KLM has long been touted as Alitalia's logical partner thanks to existing commercial tie-ups. It agreed a takeover this year that later collapsed amid acrimony over the price and plans to downgrade the Milan hub and focus on Rome.

 

But the odds have moved in the German airline's favor as its strategy of maintaining multiple hubs strikes a useful political chord in a country peppered with regional rivalries.

 

"Lufthansa's model of small and dispersed hubs seems to be closer to the format the Italians would instinctively prefer," said a source close to the discussions.

 

Leading the hunt for a foreign partner is Roberto Colaninno, head of the CAI consortium that offered to buy the profitable parts of Alitalia once its bad assets are removed by the state.

 

Air France-KLM and Lufthansa have both shown interest, with Colaninno going so far as to say the two are "battling" for a minority stake.

 

British Airways has ruled out buying shares in Alitalia, but a source close to the company said it could be interested in a commercial deal.

 

The winning bidder will likely get a stake of up to 20 percent in a relaunched Alitalia and a foothold in the lucrative Italian market. Italy has stressed a foreign airline will not be allowed more than a minority stake in Alitalia.

 

After weeks of suspense, Alitalia was kept flying last week after pilots and cabin crew backed down over their opposition to CAI's rescue offer, but Italy's powerful unions could still disrupt a deal with a foreign airline.

 

Major unions such as Cisl and Cgil say they prefer Lufthansa because of its multi-hub strategy that could allow Alitalia to maintain a strong base in Milan, where it had begun cutting back its presence in line with then suitor Air France-KLM's plans.

 

Italian Prime Minister Silvio Berlusconi has also declared Lufthansa his preferred pick after calling Air France-KLM's earlier failed deal, orchestrated by his predecessor Romano Prodi, "humiliating".

 

"Air France-KLM have declared their hand and what they wanted to pay, which was not very much," said Doug McVitie, who runs Arran Aerospace consulting group.

 

"If Berlusconi is able to dictate things, he'll keep it out of Air France-KLM's hands because he didn't take very kindly to their treatment of buying Alitalia on the cheap."

 

Sensing the mood, Air France-KLM CEO Jean-Cyril Spinetta flew to Rome on Wednesday and made a key concession by agreeing to back the CAI consortium's decisions on hubs and the network if they were profitable, sources familiar with the matter said.

 

Airlines arrange their networks in a hub-and-spoke model to scoop up the most passengers for lucrative longer routes.

 

Despite having closer ties with Air France-KLM under the Skyteam alliance, Alitalia's network could fit well with either of the two carriers, said Douglas McNeill, airline analyst with investment bank Blue Oar Securities.

 

"The real prize that Alitalia can offer is access to the northern Italian market, and that is equidistant to both Paris and Frankfurt," said McNeill.

 

But with Lufthansa leading a shakeup of the European airline sector -- it has agreed to buy Brussels Airlines and is in talks to buy Scandinavian SAS -- others say Alitalia would gain from allying with a key player rather than waiting to see where it is left in the aftermath.

 

"Air France-KLM can pick up one or two more small airlines but that's it; the real restructuring will centre around northern Europe and that's being led by Lufthansa," McVitie said.

 

Lufthansa, in turn, may be betting an alliance with Alitalia will help find passengers to fill the 15 Airbus A380 superjumbo aircraft it has ordered and prevent a rival like Air France-KLM from making inroads into the Italian market, he said.

 

"It's almost like a negative worth -- 'We want it because we don't want our competitors to have it,'" McVitie said. "In these markets, there are no airlines that can grow internally. You can only grow by buying other airlines."

 

Still, Alitalia remains a tough sell given its history of union strife and failed restructuring efforts and Italy will be lucky to get either one of the two rivals to strike an alliance, said Robert Cullemore, a consultant with Aviation Economics.

 

Competition from rivals like Austrian and Olympic Airlines, which are also hunting for buyers weakens Italy's hand further.

 

"The Italians are shopping Alitalia in a buyer's market, and they'll have to take whatever they can get," said Cullemore.

 

(Reuters)

 

British Airways Mulls Alitalia Cooperation

October 9, 2008

 

British Airways is considering cooperation with Alitalia, BA chief executive Willie Walsh told German newspaper Frankfurter Allgemeine Zeitung.

 

"A partnership with Alitalia is certainly possible, if the CAI investor group restructuring really succeeds," the CEO told the paper in an interview published on Thursday.

 

CAI plans to merge the most viable parts of Alitalia with rival Air One and is currently looking for a partner abroad.

 

British Airways is also interested in buying a stake in its UK rival bmi, even though it is part-owned by competitor Lufthansa, Walsh added.

 

"We are observing the development of bmi very carefully and we are interested in any acquisition that strengthens our position at Heathrow," the CEO said.

 

Lufthansa holds 30 percent in bmi together with the option to lift its holding in the airline.

 

Asked about Austrian Airlines, Walsh said that the company is a "better strategic fit for Lufthansa."

 

(Reuters)

 

Italy Notifies EU On Alitalia Rescue Plan

October 15, 2008

 

Italy notified European Union competition authorities on Tuesday about its plan to rescue Alitalia by selling assets of the struggling air carrier.

 

"The notification was made to obtain legal certainty," the European Commission, which monitors whether decisions by EU members are in line with the bloc's competition and state aid rules, said in a statement.

 

"The European Commission will assess the content of this notification in accordance with the normal procedures in order to verify its compatibility with community rules in matters of state aid," it added.

 

(Reuters)

 

BA Chief Meets Alitalia Investor Group

October 15, 2008

 

The chief executive of British Airways met the head of an Italian investor group buying Alitalia on Wednesday to explore a possible alliance between the two airlines, a source close to the talks said.

 

The source said a new round of meetings with BA, Air France-KLM and Lufthansa -- the three foreign airlines identified as possible partners for the reborn Alitalia -- will take place starting from next week.

 

"Each meeting will run for several days and we will start with Air France," the source said.

 

BA chief executive Willie Walsh told a German newspaper last week that a partnership with Alitalia was possible if Italian investment consortium CAI's restructuring plan for the airline succeeded.

 

CAI -- lead by Piaggio Chairman Roberto Colaninno -- plans to merge the profitable parts of Alitalia with domestic rival Air One and is looking for a partner abroad.

 

On Monday, Italian newspaper Il Messaggero reported that Lufthansa was the front-runner to take a 20 percent stake in Alitalia and that the deal could be closed by the end of the month.

 

Air France-KLM has also expressed a "strong interest" in taking a stake, sources familiar with the talks said after a meeting between the Franco-Dutch airline's chief executive, Jean-Cyril Spinetta, and CAI earlier this month.

 

At the time a BA spokeswoman said the British airline was not planning to invest directly in Alitalia.

 

(Reuters)

 

as you all can see: the saga has not yet ended

 

 

 

 

 

 

 

[Pieter C. 5]

Now that the price is well below 70 USD per barrel, let's see how much profit NW will make

 

Northwest Profitable With Oil At USD$100 - CEO

 

October 1, 2008

Northwest Airlines, which is set to be acquired by Delta Air Lines, can be profitable with oil at USD$100 per barrel, Doug Steenland, the company's chief executive, said on Wednesday.

 

Despite the turmoil in credit markets, Steenland said he was confident the merged airline would have sufficient liquidity to manage its operations well into the future, noting that the airline would have USD$6 billion in cash on closing.

 

"Our bookings have been keeping pace with our anticipation," Steenland said at a news conference in Tokyo.

 

"But obviously we are concerned and mindful of whether we will see impacts coming from challenges in financial markets and contractions of credit over months ahead."

 

Crude oil was trading at about USD$101 on Wednesday, well off the record high above USD$147 reached in July.

 

Northwest is in the process of being acquired by Delta to form the world's largest carrier. Regulatory approval for the deal, which has been approved by shareholders, is expected by the end of the year.

 

The new airline -- the world's largest by traffic -- is to be called Delta and have its headquarters in Atlanta.

 

(Reuters)

 

bye-bye NW in other words

 

[Pieter C. 5]

Air France Parties As Merger End-Game Nears

 

October 9, 2008

Banks are collapsing, economic storm clouds are gathering yet the cabaret is in full swing and the joint is really jumping. The Great Depression? No, a lavish 75th birthday bash thrown by Air France in Paris on Tuesday.

 

Europe's largest airline, and the world's largest by revenues following its merger with KLM four years ago, put on a stylish and self-confident 1930s spectacle befitting one of the few certain survivors of a shake-out in European airlines.

 

Dotted with politicians and air hostesses in vintage uniforms, the party at the vast glass-domed Grand Palais exhibition hall would have cost a fortune had Air France-KLM not persuaded its suppliers to stump up the bulk of its cost.

 

But there could have been no clearer contrast to the global financial crisis after a week in which it was safer for investors to put money in an airline than a bank, and which in turn could speed up the end-game in airline consolidation.

 

After months of pressure from high oil prices, shrinking credit and now fears of recession, Europe's airline industry is increasingly polarized between the haves and have-nots among both traditional legacy carriers and low-cost airlines.

 

Air France-KLM, Germany's Lufthansa and British Airways are all hovering over the map of Europe, with Alitalia, Austrian Airlines and SAS in talks to be bought and France and Germany seen likely to divide most of the spoils.

 

"The crisis definitely will speed things up. Not everyone can be bought. Those that can't be bought may not survive," a top European airline board member said.

 

SLOW NEGOTIATIONS

 

Air France-KLM is competing with Lufthansa to link up with Italy's flag carrier Alitalia, whose bad assets have been purged by the Italian government in a bailout that few would have suspected as a taste of things to come in banking.

 

Talks continued behind the party scenes on Tuesday as the chairman of a group of Italian investors ready to lead the airline rescue, Rocco Sabelli, visited Paris for talks with Air France-KLM before heading off to Lufthansa and BA.

 

Air France-KLM and Lufthansa are both ready to take stakes of up to around 20 percent in the CAI investor group, while BA says it is interested only in a commercial partnership.

 

But despite reports of a frenzied auction, the battle for Alitalia is still at the phoney-war stage because Italy has yet to decide to agree how much weight to give the hubs Rome and Milan, according to officials on both sides of the negotiations.

 

"We haven't seen a business plan or industrial proposal. There are no negotiations. Things have to be sorted out on the Italian side first," said a senior airline official.

 

The problem is complicated by disagreements over the future of Milan's Linate airport, close to the city, which runs the profitable Rome-Milan shuttle but also draws some European flights away from the Italian business capital's other airport, Malpensa.

 

The dilemma for Air France-KLM is that while its strongest support comes from Rome, it makes some sense to place a hub in Milan, tapping a rich business market. The airline is at best neutral as long as the long-standing Linate issue is cleared up.

 

"You have to bring medium-haul flights into the same airport as long-haul ones or it's not a hub," one senior official said.

 

None of the people involved in the negotiations agreed to be named because of the politically sensitive nature of the talks.

 

Air France-KLM backed a Rome hub proposed by Alitalia's old management when it agreed to buy the whole airline earlier this year. That deal collapsed and the French have signalled more flexibility as Lufthansa lines up support in Italy's north and Italian Prime Minister Silvio Berlusconi leans towards Germany.

 

Written off by rivals a few weeks ago when its coffers were empty and its fleet nearly out of fuel, Alitalia's return from the dead provides a tempting opportunity for its larger rivals.

 

Air France-KLM, Lufthansa and BA each want to capture a new flow of passengers onto their own networks or global alliances.

 

"It's attractive since Italy is the fourth biggest market (in Europe). There is a good business market in the North and a destination market in the South. You pick up people from Milan and you take people to Rome," the European board member said.

 

"Depending on how much Alitalia still controls its market and how much loyalty it commands through its frequent flyer scheme, then it's worth paying a bit to get access to that."

 

(Reuters)

 

[Pieter C. 5]

Aeroflot Sees 2008 Net Shrinking

 

October 14, 2008

Russia's flag carrier Aeroflot expects its net profit to fall more than 70 percent and business traffic to shrink in 2008 due to the financial crisis, the company's chief financial officer said on Tuesday.

 

"We will get around USD$85 million in net profits in 2008," Mikhail Poluboyarinov told reporters.

 

In September, Aeroflot's chief executive Valery Okulov said that the company's net profit may halve in 2008 to USD$150 million - USD$170 million because of record fuel costs.

 

The financial crisis is now likely to further eat away at the company's profits, Poluboyarinov said.

 

"We forecast that (air traffic) will shrink. It can't do anything but shrink as corporate clients cut back the number of business trips," he said, adding that the airline has not yet felt traffic flows ebbing.

 

He declined to give a specific forecast for declining demand, saying this would only be possible in about one month.

 

In 2007, the company posted net profit of USD$313.4 million, up 21.4 percent from the previous year.

 

But results posted on Tuesday for the first half of 2008 showed net profit of USD$72.2 million, down 55 percent from the same period of 2007.

 

First-half revenues meanwhile rose by 28.4 percent to USD$2.14 billion, while earning before interest, taxation, depreciation and amortization (EBITDA) fell by 34 percent to USD$216 million.

 

The profits were degraded by Aeroflot's operational costs, which rose by 42 percent to USD$2 billion in the first six months of this year as record oil prices drove up fuel costs.

 

(Reuters)

 

[Pieter C. 5]

Alitalia Commissioner Says It Has Liquidity

 

October 20, 2008

Alitalia has enough liquidity to operate until the start of December, the Italian airline's bankruptcy commissioner told trade unions on Monday, according to a union source present at the meeting.

 

The commissioner, Augusto Fantozzi, also told the unions that he hoped to wrap up the sale of Alitalia assets to the CAI investor group by mid-November, the source said.

 

CAI plans to merge the profitable parts of Alitalia with domestic rival Air One. It is looking for a partner abroad.

 

Alitalia's net debt at the end of August stood at EUR1.219 billion euros (USD$1.64 billion), up from EUR1.159 billion at the end of July, the company said in a statement.

 

At the end of August the airline had liquidity of EUR267 million, down from EUR338 million at the end of July.

 

(Reuters)

 

[Pieter C. 5]

Alitalia September Passenger Numbers Down 28 Percent

 

October 22, 2008

Passenger numbers at Alitalia were down 28 percent in September year-on-year, as the Italian airline teetered on the brink of bankruptcy, data from the Association of European Airlines revealed on Wednesday.

 

Alitalia is operating under a bankruptcy commissioner who has said the airline has enough liquidity to operate until the start of December, according to union sources.

 

The commissioner, Augusto Fantozzi, is in charge of selling Alitalia assets to CAI, a group of Italian investors.

 

Alitalia's passenger numbers have suffered from uncertainty about the airline's future and unpredictable strikes.

 

(Reuters)

 

Air France KLM CEO Warns Of Tough Times Ahead

 

October 22, 2008

Air France KLM Chairman and CEO Jean-Cyril Spinetta has warned trade unions that the airline might see zero growth in capacity over the next two years, the company said on Wednesday.

 

A company spokeswoman said Spinetta had met a works council to discuss the possible impact on the air travel sector and Air France KLM from the financial crisis.

 

"He evoked the possibility of zero growth in capacity for the company in 2009 and 2010," she said.

 

Air France KLM added that Spinetta had also told unions that he could not give any firm guarantees over job numbers, given the tough market conditions.

 

"The chairman highlighted that the company remained determined to keep jobs whenever possible, even if the uncertainty about the global economic situation meant there could be no absolute guarantee about this," said the spokeswoman.

 

Air France KLM said it was in good shape to handle the financial crisis since it was in a "financially healthy position" and had strong market share.

 

Air France KLM was responding to an article due to appear in Thursday's edition of France's main business newspaper Les Echos, which said the company was forecasting three years without growth and a three percent drop in headcount.

 

Air France KLM shares closed down 5.2 percent at 13.61 euros on Wednesday, in line with the broader market, giving the company a market capitalization of around EUR4.1 billion euros (USD$5.3 billion).

 

The French government has a 16 percent stake in the company.

 

(Reuters)

 

Air France-KLM Shares Down On Capacity Freeze

 

October 23, 2008

Shares in Air France-KLM fell by 4.5 percent on Thursday after it gave a bleak outlook and appeared to cut back its capacity plans due to the financial crisis.

 

Chairman and chief executive Jean-Cyril Spinetta told unions on Wednesday that Europe's largest airline might see "zero growth in capacity in 2009 and 2010", a spokeswoman said after details of the briefing were reported by a French newspaper.

 

Many airlines have been cutting capacity due to high fuel prices and a drop in business traffic especially due to the economic slowdown.

 

Air France-KLM had forecast a 2 percent rise in capacity in both the winter season 2008 and summer season 2009 when reporting its fiscal first-quarter results in August.

 

On September 10, it said it expected a 1.7 percent growth in winter capacity, measured in available seat-kilometres.

 

This included a 1.5 percent drop in the short and medium-haul network and a 2.6 percent gain on long-haul routes.

 

Air France -- the French part of the Franco-Dutch group -- has said it is canceling flights in slack periods in order to keep capacity on its own network stable compared to last year.

 

On September 15, Spinetta reaffirmed Air France-KLM's target of operating income around EUR1 billion (USD$1.28 billion) in the year to end-March 2009.

 

Air France-KLM starts a two-day closed investor seminar on Thursday, with the main strategy and financial updates scheduled for Friday.

 

On Wednesday, Spinetta told unions that he could not give any firm guarantees over job numbers, given the tough market conditions, the airline spokeswoman said.

 

Les Echos newspaper said in its Thursday edition that the group was forecasting three years without growth and a three percent drop in headcount.

 

It said early October bookings showed a 10 percent drop in business traffic on North American and Asian routes.

 

(Reuters)

 

No wonder, KLM will stop operating to HYD, eff 01feb09 !!!

 

 

Hedging fuel can be good, but also bad when prices go down

 

Northwest Posts Net Loss On Hedging Charge

 

October 22, 2008

Northwest Airlines posted a third-quarter net loss on Wednesday due to a write down of the value of its fuel hedges as the price of oil dropped from a record high.

 

Northwest, which is merging with Delta Air Lines, linked the profit to gains in revenue on each seat flown.

 

The unit revenue gains were attributed to capacity cuts that have propped up fares despite an economic downturn.

 

"The fact that Northwest is able to report an adjusted quarterly net profit in a very challenging fuel environment is a testament to our strong unit revenue growth, capacity discipline and continuing focus on cost control," chief executive Doug Steenland said in a statement.

 

Northwest is just the latest major airline to write down the value of its fuel hedges. It reported a non-cash charge of USD$410 million.

 

The airline industry has been battered this year by high jet fuel prices that rose alongside crude oil, which hit a record in July. Prices have since dropped, causing some airline fuel-hedge portfolios to lose value.

 

To combat high fuel bills, Northwest and Delta are merging. The deal will create the world's largest airline by traffic, with more than USD$35 billion in annual revenue.

 

Further offsetting fuel costs, Northwest and rival airlines are rapidly downsizing. Northwest said in June that it would cut its mainline capacity -- the number of seats for sale -- by between 8.5 and 9.5 percent in the fourth quarter.

 

Still, some industry leaders have expressed concern that a weak economy could take a toll on airline bookings.

 

"The question remains what will happen to consumer demand over the next year," said Basili Alukos, Morningstar equity analyst. "If consumers cut back on flying and businesses trim travel expenses by using no-frills flying... Northwest could stumble upon hard times."

 

Northwest said its third-quarter net loss was USD$317 million, compared with a year-earlier profit of USD$244 million.

 

Excluding the non-cash charge of USD$410 million, Northwest posted a profit of USD$93 million.

 

The company ended the quarter with USD$3.4 billion in unrestricted liquidity.

 

Northwest said third-quarter operating revenue was USD$3.80 billion, up 12.4 percent. It domestic passenger unit revenue increased by 10.7 percent.

 

(Reuters)

 

EU To OK Alitalia Plan, But Loan Illegal

 

October 23, 2008

The European Commission will approve an Italian investor group's takeover plan for struggling airline Alitalia but not a EUR300 million euro (USD$386 million) state loan, la Repubblica newspaper said on Thursday.

 

The Commission is expected to approve in mid-November the proposal submitted by the CAI consortium but impose some conditions, the newspaper said, citing people close to the situation.

 

Among the conditions are the creation of an independent trustee who will be chosen in consultation with the Italian government. The trustee will have to report periodically to the European Union on the privatization, the paper said.

 

The bloc also requires Augusto Fantozzi, the state-appointed commissioner of Alitalia, to sell the carrier at market price.

 

The Commission wants the new company, made up of profitable assets sold to CAI, to remain separate from the old Alitalia, which will group the remaining operations and be run by the Italian government, the paper said.

 

The Commission will also say that the EUR300 million bridge loan the Italian government awarded Alitalia this year was not permissible since it is adjudged to be illegal state aid, la Repubblica said.

 

(Reuters)

 

[Pieter C. 5]

Air France-KLM In Profit Warning, To Cut Costs

 

October 24, 2008

Air France-KLM succumbed to the global financial crisis with a profit warning on Friday, sending shares in Europe's largest airline group down almost 10 percent.

 

The Franco-Dutch carrier said it would be "very difficult" to reach its target of EUR1 billion euros in operating profit for the current financial year, but it would remain "comfortably" in the black as long as the crisis did not deepen.

 

It announced an immediate new cost-saving plan and said it would reduce its planned investments by an unspecified sum.

 

"Given the current economic climate, the group indicates that it will find it very difficult to reach its target of EUR1 billion in operating profit for the current financial year," Air France-KLM said in a statement.

 

"Nonetheless, this item should remain comfortably in positive territory if current market conditions do not deteriorate further."

 

The lowered outlook came at the start of yet another anxious day on financial markets as European stocks ignored a slight rebound on Wall Street and stocks fell on a slew of bad results.

 

Air France-KLM is currently the world's largest airline by revenues. Its financial year runs from April to March.

 

Senior officials from the airline were briefing institutional investors at a pre-planned event on Friday.

 

Global passenger traffic fell sharply in September as the economic storm gathered pace. Many airlines are cutting capacity to try to protect prices on seats they sell, cushioning yields.

 

Air France-KLM's warning is a further sign that shaky yields in the sector are wiping out gains from a drop in the oil price.

 

Long-haul premium traffic has been particularly hit by the economic slowdown and British Airways said earlier this month that its full-year revenue forecasts carried some risk.

 

Air France-KLM confirmed it was again trimming its targeted band of capacity growth for the upcoming winter and summer seasons, but clawed back estimates given earlier in the week.

 

It said it would offer between 1 and 2 percent more seats in both the winter 2008 and summer 2009 seasons and then tailor its capacity to market requirements in subsequent years.

 

Following a media report of a bleak forecast given to unions, a spokeswoman said on Wednesday that Chairman and Chief Executive Jean-Cyril Spinetta had told union representatives that there may be "zero growth in capacity in 2009 and 2010".

 

Air France-KLM has already cut its capacity growth plans from an original target of 4 percent.

 

It forecast a 2 percent rise in capacity in the winter season 2008 and summer season 2009 when it reported its fiscal first quarter results in August.

 

On September 10, it said it expected 1.7 percent growth in winter capacity, measured in available seat-kilometres.

 

(Reuters)

 

Ugly Duckling No More, Rescued Alitalia Turns Heads

 

October 24, 2008

Alitalia, the strike-prone Italian airline that nearly went bust last month, has become the unlikely object of a deepening Franco-German tussle for an alliance even as its government rescue runs into fresh snags.

 

An investor group buying Alitalia's profitable assets is busy meeting executives of one-time suitor Air France-KLM this week and Lufthansa the next, as their battle for a small stake to grab a toehold in the lucrative Italian market intensifies.

 

British Airways, which until recently emphatically denied any interest in Alitalia, is also eyeing a commercial alliance, though it denies interest in buying a stake.

 

Mocked as the airline no one wanted as it lurched from two failed auctions toward a bankruptcy filing, Alitalia has seen its fortunes recover somewhat after a government-backed bailout that promises to leave it debt-free and privately-owned.

 

"Alitalia's greatest quality right now is its 'X factor' -- no one knows what this airline is capable of now," said Doug McVitie of Arran Aerospace consultancy.

 

"It's like the beauty of an unwrapped Christmas present -- it could be empty and broken for all you know, given this is Alitalia, but there is an element that it could play a greater strategic role in the sector."

 

Alitalia passenger traffic fell 28 percent in September as its near demise generated frenzied local newspaper attention.

 

Italian media have perhaps optimistically painted the suitors as desperate to strike a deal, reporting Lufthansa had set up a "secret" meeting to lobby Alitalia unions on Wednesday as Italian investor consortium CAI met Air France-KLM across town.

 

Union officials denied any such meeting with Lufthansa.

 

Analysts have said Lufthansa has the edge in talks after winning the open support of Italy's government and unions, though CAI has been at pains to deny favoritism. But a senior Air France-KLM official said, "We have not had our last word."

 

"At the moment it is too soon to say who will strike the deal, which will probably happen only after the new Alitalia is launched," said another source close to the talks.

 

Both airlines want a piece of the carrier to cement their position in Italy's booming travel market, and prevent Alitalia -- one of several European carriers in play in a fast-consolidating sector -- from being snapped up by the other.

 

"It's a question of making sure that Alitalia doesn't fall into the hands of your competitors, so while it may not have great value in itself, it has strategic value," McVitie said.

 

All the enthusiasm over linking up with Alitalia may yet be premature as its investor bailout runs into delays and new snags despite overcoming the main hurdle of union opposition.

 

Under the rescue plan, CAI will buy Alitalia's best assets and merge them with those of smaller rival Air One to relaunch it as a smaller carrier. Air France-KLM or Lufthansa would give industrial backing and a 20 to 25 percent stake.

 

The relaunch was initially set for early November, but will be delayed since CAI has yet to formally present an offer for Alitalia's assets. Its preliminary offer is valid until October 31.

 

Alitalia's bankruptcy commissioner Augusto Fantozzi has said he hopes the deal can be concluded in mid-November -- just two weeks before its cash coffers run dry. Any further delays will force Alitalia to seek a new loan to keep going, he said.

 

Fantozzi himself is waiting for an independent adviser to value Alitalia assets, a source close to the commissioner said.

 

CAI meanwhile is still waiting for necessary regulatory approvals before presenting its offer, said an executive of Intesa Sanpaolo, which is one of the group's 16 investors.

 

CAI is also being held up because it is seeking a new flying license for the relaunched carrier so it can protect itself from any EU objections to the rescue by claiming it has no links to Alitalia in its present form, a source close to the matter said.

 

There are also reports of disagreements within CAI investors, with one member -- Pirelli Chairman Marco Tronchetti Provera -- saying he hoped the deal will close soon to avoid the risk of "irregular, non-business-like management."

 

After reluctantly agreeing to back the CAI plan to avert a liquidation of Alitalia, its troublesome unions have begun to grumble again as they finalize a contract with the group.

 

One pilots union has demanded a separate type of contract than that proposed, while others are suggesting the Italian state buy a stake in the reshaped Alitalia given government injections of cash are the order of the day amid the global financial crisis.

 

"This story is turning into one without an end in sight and with increasingly uncertain outlines," said Fabrizio Tomaselli of the SDL union, one of Alitalia's nine unions.

 

Italian newspaper la Repubblica meanwhile reported on Thursday that the European Commission would approve CAI's takeover plan, but not a EUR300 million euros (USD$385.7 million) Italian state loan.

 

(Reuters)

 

[Y. J. Foo 0]

Justice Department approves Delta-Northwest combo

 

By JOSHUA FREED – 5 hours ago

 

MINNEAPOLIS (AP) — Antitrust regulators signed off on the Delta-Northwest combination on Wednesday, rejecting worries that their plan to become the world's largest airline threatens consumers.

 

The two airlines hope to close the deal by the end of this year.

 

Delta also cleared its final hurdle by settling a federal lawsuit filed in San Francisco by 28 air travelers who were seeking to block the combination, according to Joseph Alioto, a lawyer for the plaintiffs. An electronic docket entry in the case, dated Tuesday and posted Wednesday, said the Nov. 5 trial was canceled.

 

Alioto declined to release terms of the settlement, which he said was worked out on Friday and finalized over the last few days.

 

"We are not the government," Alioto said Wednesday. "The agreement is what the plaintiffs wanted."

 

AP

 

Delta cleared to buy Northwest, may spur other deals

Wed Oct 29, 2008 6:11pm EDT

 

By Diane Bartz and John Crawley

 

WASHINGTON (Reuters) - Delta Air Lines (DAL.N: Quote, Profile, Research, Stock Buzz) was cleared on Wednesday to buy Northwest Airlines Inc (NWA.N: Quote, Profile, Research, Stock Buzz) in a $2.6 billion deal that will create the world's biggest airline and could spur further consolidation in the industry.

 

The U.S. Justice Department ended a six-month antitrust investigation by concluding the merger would likely be good for consumers and was unlikely to curb industry competition.

 

"The proposed merger between Delta and Northwest is likely to produce substantial and credible efficiencies," the department said in a statement.

 

Delta and Northwest have said they expect the deal to yield up to $2 billion annually in cost savings and increased revenue.

 

The new, larger Delta will be an international powerhouse with unparalleled scheduling and pricing strength, which may send other airlines into each other's arms.

 

"The remarkable progress being made by Delta/Northwest may well trigger another round of consolidation," said Joe Schwieterman, transportation expert at DePaul University.

 

UAL Corp's (UAUA.O: Quote, Profile, Research, Stock Buzz) United Airlines and Continental Airlines (CAL.N: Quote, Profile, Research, Stock Buzz) said in June they would link their networks worldwide. That deal achieves many of the same results as a merger.

 

AMR Corp's (AMR.N: Quote, Profile, Research, Stock Buzz) American Airlines, British Airways Plc (BAY.L: Quote, Profile, Research, Stock Buzz) and Spain's Iberia (IBLA.MC: Quote, Profile, Research, Stock Buzz) said in August they had agreed to a transatlantic partnership designed to make the carriers more competitive in the global market.

 

Doug Parker, chief executive of US Airways Group (LCC.N: Quote, Profile, Research, Stock Buzz) and a long-time proponent of consolidation, said last week that he still believes consolidation is right for the airline industry. US Airways failed last year in its bid for Delta.

 

Officials at Delta and Northwest said they will close the deal soon but have not set a date. The companies, anticipating approval, began planning over the summer to integrate their operations.

 

The new airline will retain the Delta brand and be headquartered in Atlanta, where Delta is based. Delta chief executive Richard Anderson will head the new company.

 

Delta's strength is in the South while Northwest operations are based in the northern cities of Minneapolis and Detroit.

 

Shareholders of both companies in September approved the plan for Delta to acquire its smaller rival in an all-stock deal in which Northwest shareholders are to get 1.25 Delta shares for each Northwest share they own.

 

Delta shares closed down 2.1 percent at $7.99 on Wednesday on the New York Stock Exchange, while Northwest finished 0.6 percent higher at $9.90.

 

Government approval of the deal comes as airline finances begin to improve with fuel prices falling sharply off record highs. But carriers are now cutting back service to save money as travel demand softens due to economic weakness.

 

Northwest posted a $317 million third quarter loss due to writedowns on its fuel hedging. Without the adjustment, the company earned $93 million and beat Wall Street share price estimates. Delta's third quarter loss was $50 million.

 

Justice Department approval removes the last major regulatory hurdle to the merger although Minnesota Attorney General Lori Swanson urged the state's airport and finance authorities to require Northwest pay $230 million if it moved its corporate headquarters or hub out of Minnesota, or made significant job cuts.

 

"The taxpayers of Minnesota made a great sacrifice to the airline in order that it survive its financial crisis in the early 1990s. This sacrifice was controversial at the time and was certainly not intended to benefit the good citizens of Atlanta, Georgia," Swanson said.

 

(Additional reporting by Randall Mikkelsen and Kyle Peterson in Chicago; Editing by Tim Dobbyn)

 

Reuters

[Pieter C. 5]

Delta Buys Northwest To Create Biggest Airline

 

October 30, 2008

Delta Air Lines swallowed rival Northwest Airlines on Wednesday in a USD$2.6 billion merger that created the world's biggest airline by passenger traffic and prompted new speculation about further industry consolidation.

 

The all-stock transaction, the first domestic airline combination in three years, closed after clearing its biggest and last regulatory hurdle earlier in the day -- US Justice Department antitrust review.

 

Justice officials cited the likelihood of "substantial and credible efficiencies" without harming consumers or competition.

 

Government approval was expected. Industry vigorously made the case to regulators earlier this year, when airline finances were rockier than they are now, that consolidation was an important tool for remaining viable with fuel prices high and the economy worsening.

 

"The airline industry faces a very difficult economic environment around the world and this merger gives Delta increased flexibility to adapt to the economic challenges ahead," said Richard Anderson, the Delta chief executive who will head the combined entity.

 

The new, larger Delta will be an international powerhouse with unparalleled scheduling and pricing strength with service to 375 cities worldwide, experts said. The company estimates a combined USD$2 billion in cost savings and revenue enhancements annually.

 

An ambitious plan is to link the long-established strength of Northwest in Asia with Delta's expanding overseas network, and leverage benefits from the transatlantic SkyTeam alliance that includes Air France/KLM.

 

"There are global corporations but no global airlines. The race to become the first truly global airline has an incredible reward to it," said consultant Darryl Jenkins. "The revenue potential is something that we have not seen yet. That's the synergy that will make this very lucrative."

 

Jenkins and other experts said the deal's potential may re-ignite merger fever, which burned this year until fuel prices started their dramatic rise this summer to record heights and prompted sharp airline cost cutting.

 

Doug Parker, chief executive of US Airways and a long-time proponent of consolidation, said last week that he still believes mergers are right for the industry. US Airways failed last year in its bid for Delta.

 

Calyon Securities analyst Ray Neidl said that economic wild cards could impede consolidation. A credit crunch and fuel price volatility must diminish before airlines can explore mergers, he said.

 

"Down the road, there will be more consolidation or attempts," Neidl said.

 

Northwest's history dates to 1926 and its common stock first traded in 1941. But the company now operates as a wholly owned subsidiary of Delta until the two fully integrate their operations. That process is expected to take up to two years and cost up to USD$600 million.

 

Integration can be tricky. For instance, US Airways has yet to fully combine its work force after merging with America West in 2005.

 

Delta said customers should continue to check-in and do business directly with the airline operating their flights just as they did before the merger.

 

For the time being, the carriers will maintain separate web sites as well as two reservation systems and loyalty programs.

 

The new company will retain the Delta brand and be headquartered in Atlanta, where Delta is based. The new Delta begins operations with 75,000 employees.

 

In the coming days, Delta will distribute an equity stake to substantially all US-based employees with international employees participating through cash payments in lieu of stock. The pilots' unions of both airlines have agreed to a unified contract but still must negotiate a seniority arrangement, a detail that almost derailed merger prospects earlier this year.

 

The new Delta has said no front line employees will be involuntarily laid off as a result of the merger and that no hubs will be closed. The old Delta's strength was in the South while Northwest operations are based in the northern cities of Minneapolis and Detroit.

 

As approved by shareholders at both companies earlier this year, Northwest stockholders will receive 1.25 Delta shares for each Northwest share they own. Based on Delta's closing stock price on Wednesday, this exchange ratio is the equivalent of USD$9.99 per Northwest common share.

 

Government approval of the deal comes as airline finances begin to improve with fuel prices falling sharply off record highs. But carriers are now cutting back service to save money as travel demand softens due to economic weakness.

 

Northwest posted a USD$317 million third-quarter loss due to write-downs on its fuel hedging. Without the adjustment, the company earned USD$93 million and beat analyst share price estimates. Delta's third-quarter loss was USD$50 million.

 

(Reuters)

 

Alitalia Buyers In Standoff With Unions

 

October 30, 2008

An Italian investor group planning to buy Alitalia has walked away from key talks with unions, creating a standoff ahead of a Friday deadline for it to bid for the bankrupt carrier's assets, local media reported on Thursday.

 

The overnight talks collapsed after investors in the CAI consortium refused to grant concessions to unions on contract terms, according to ANSA and AGI news agencies, citing unnamed sources.

 

It was not immediately clear whether the talks were broken off entirely or just suspended, but ANSA said CAI told unions its contract offer was non-negotiable.

 

The group, which was formed after Italian Prime Minister Silvio Berlusconi urged Italian businessmen to save Alitalia from liquidation, plans to buy the carrier's profitable assets and merge them with those of smaller rival Air One to relaunch the airline.

 

CAI on Tuesday agreed to make a binding offer for Alitalia's best assets but conditioned its bid on clinching a union agreement.

 

It also said any bid will also be considered "suspended" until the European Union declares Alitalia's bailout did not violate EU rules on state aid and antitrust measures.

 

The Commission has in the past said a EUR300 million euro loan the Italian government granted to the airline in May might have broken EU rules that ban states from bailing out their airlines.

 

If its probe into the matter finds Italy at fault, Alitalia would be forced to pay the money back -- a liability CAI wants to ensure it does not have to take on. The Commission has said it is likely to conclude its probe in November.

 

Alitalia's bankruptcy commissioner has said the airline may be forced to seek a new loan to keep going if the deal with CAI is not wrapped up by mid-November, since its cash reserves are expected to last only until the start of December.

 

(Reuters)

 

Kenya Airways H1 Hit By Oil Price, Political Crisis

 

October 30, 2008

Kenya Airways reported on Thursday a 63 percent drop in pre-tax profit for the six months ended September 2008 to KES1.05 billion shillings (USD$13.1 million) from KES2.8 billion in the first half last year.

 

The company, one of Africa's leading carriers, blamed the fall on a combination of a strong local currency during the period, high prices of oil, and the effects of Kenya's post-election crisis in January and February.

 

"We have remained profitable, despite the circumstances," chief executive Titus Naikuni told investors.

 

(Reuters)

 

[Pieter C. 5]

Alitalia Buyers Worried By Union Deadlock

 

October 30, 2008

The head of the Italian investor group planning to buy Alitalia said on Thursday he was "greatly" concerned by the deadlock in talks with unions and called on them to respect the agreements reached with the government.

 

"A positive outcome from the talks is an essential condition to going ahead with the project," said a statement issued by the group.

 

"(Group head) Roberto Colaninno is greatly concerned about the situation stemming from the break down in talks," it added.

 

The investor group, known as CAI, walked away from key talks with unions late on Wednesday, creating a standoff ahead of a Friday deadline for it to bid for the bankrupt carrier's assets.

 

(Reuters)

 

[Pieter C. 5]

Spanish Jet Overshoots Runway, Stops Feet From Sea

 

October 31, 2008

A Spanish jet overshot the runway and stopped metres from the sea as it landed in the Canary Islands on Friday but no one was hurt, Spanish airports operator AENA said.

 

Pictures showed the Air Europa plane, EC-HJQ which had flown from Glasgow with 74 passengers on board, with its nose close to the airport's perimeter fence just metres from the Atlantic Ocean.

 

The AENA spokeswoman said it was not known why the Boeing 737 came to a stop so late as it landed at Lanzarote, one of Spain's Canary Islands, at 0730 GMT.

 

The airport was closed for three hours after the incident.

 

In August a Spanair jet destined for Gran Canaria in the same archipelago crashed on takeoff at Madrid's Barajas Airport, killing 154 people.

 

(Reuters)

 

Alitalia Buyer Will Not Present Offer

 

October 31, 2008

A group of Italian investors planning to buy Italian airline Alitalia will not meet a Friday deadline to make an offer after failing to reach a deal with the carrier's pilot and flight staff unions, a source close to the talks said.

 

The CAI group's decision not to present a binding offer marks the second time it has pulled back from making a bid, threatening the future of the cash-strapped carrier, due to union resistance.

 

With no other bidders in the fray and Alitalia's cash reserves expected to last only another month, the CAI's decision to pull back from making an offer at the last minute could also be a bargaining tactic to get the remaining unions on board with its plans.

 

The unions do support CAI's takeover of Alitalia in principle, but talks over the detailed terms of new work contracts collapsed this week amid mutual accusations of inflexibility. CAI has stressed that union backing is a pre-requisite for making a binding offer.

 

Talks mediated by a senior aide to Prime Minister Silvio Berlusconi on Friday managed to get only four out of nine unions on board with a compromise on the new work contracts.

 

Alitalia's three biggest unions - Cisl, Cgil and Uil -- and the Ugl union, signed up to a compromise under which a senior aide would intervene to sort out remaining problems between the two sides, a union source said.

 

But the remaining five unions -- mainly representing flight assistants and pilots -- refused the deal, they said.

 

Berlusconi's aide Gianni Letta warned unions that the only alternative for Alitalia was liquidation -- a familiar threat that nearly came to pass last month when unions opposed CAI's initial deal.

 

"We're close to the abyss, there's no more room for talks. The alternative is bankruptcy. At midnight, Alitalia will no longer exist," Letta said at the meeting, according to a union source who was present.

 

Fearing further delays, Alitalia's bankruptcy commissioner has warned the airline will be forced to seek new funds if a deal is not wrapped up by mid-November.

 

Last-minute talks, delays and missed deadlines litter Alitalia's nearly two-year takeover saga.

 

Keeping Alitalia alive was one of the main election planks on which Berlusconi ran for office in April, and his government has since rewritten bankruptcy law to pave the way for a bailout by the CAI consortium.

 

(Reuters)

 

[Keith T 2]

Uzbekistan Airways to join SkyTeam

 

http://www.boarding.no/art.asp?id=33453

 

The first stage of negotiations between Uzbekistan Airways and SkyTeam Airline Alliance was held in Tashkent. The main purpose of the meeting is the entry of Uzbekistan Airways into the global airline alliance.

Edited November 2, 2008 by Keith T

[Pieter C. 5]

Uzbekistan Airways to join SkyTeam

 

http://www.boarding.no/art.asp?id=33453

 

Holy Smokes !!!

This is interesting and totally out of the blue for me...

Could create a nice 'link' between EU and Asia (KUL?)

[Pieter C. 5]

Alitalia Buyers Confident Of December Relaunch

 

November 3, 2008

Investors bidding for Italian airline Alitalia are confident they can relaunch it by December 1 even though its pilots and flight attendants still reject the deal.

 

The group, Compagnia Aerea Italiana (CAI), submitted a binding offer on Friday after a week of hard bargaining with the airline's myriad unions.

 

Although it did not win over the pilots and flight attendants, it did secure the support of four unions which carry most of the clout.

 

CAI chief executive Rocco Sabelli said he hoped those who were still holding out would eventually change their minds.

 

"I am convinced that in the end we will embark on this adventure of relaunching Alitalia with them," he told the La Repubblica newspaper on Sunday. "By the first of December we can take off."

 

CAI's offer ended months of national angst over the future of Alitalia, which risked being grounded in coming weeks for lack of funds.

 

Its pilots and flight attendants had accepted the idea of the takeover, but they rejected the final offer because of the terms and conditions of new contracts.

 

One of their union leaders scoffed at the idea that the new Alitalia could fly without them. "They will put planes in flight with the baggage handlers? I wish them luck," Massimo Notaro of Unione Piloti told the Corriere della Sera newspaper on Saturday.

 

Regardless of the position of the five recalcitrant unions, CAI Chairman Roberto Colaninno said his group would call each of their members to offer them a job at the new airline.

 

"We will hire flight personnel using a roll call," he said in an interview published in Sunday's Il Sole 24 Ore newspaper. "We will not surrender ourselves to... blackmail."

 

Neither Sabelli nor Colaninno would divulge their offer price for the best assets of Alitalia, but they plan to raise EUR1.1 billion euros to pay for the purchase and relaunch. Il Sole 24 Ore said CAI was offering around EUR350 million.

 

Before it can go ahead with its plans, CAI first needs to get approval from Alitalia's bankruptcy commissioner and a decision is expected in the next two weeks.

 

CAI also wants to wait for the European Commission to decide whether a EUR300 million loan given to Alitalia by the Italian government broke EU rules banning state aid. In the case that it is seen as illegal, CAI does not want to assume the liability.

 

Italian newspapers said on Sunday that EU Transport Commissioner Antonio Tajani had proposed relegating the loan to the part of the airline that CAI did not want.

 

CAI is also on the verge of a deal with Air One, a smaller Italian carrier with which it will merge the new airline. The final touch will be finding a foreign partner, the most favoured candidates being Air France-KLM and Lufthansa. CAI is expected to announce its choice by mid-November.

 

(Reuters)

 

[Pieter C. 5]

Delta Introduces USD$15 Checked Bag Fee

 

November 6, 2008

Delta Air Lines, which completed the takeover of rival Northwest Airlines last week, said on Wednesday it will introduce a USD$15 fee to check a first bag for customers flying in the United States.

 

However, Delta will cut other fees as it aligns its policies with those of Northwest.

 

Effective immediately, for travel on or after December 5, customers flying in the United States will be charged USD$15 for a first checked bag and USD$25 for a second when traveling domestically, consistent with Northwest policies.

 

However, customers who purchased Delta tickets on or before November 5 and who are traveling on or after December 5 will be charged USD$50 for a second bag, but can check their first bag for free, in line with Delta's previous policy.

 

Customers flying in first or business class can check up to three bags weighing up to 70 pounds free of charge.

 

Delta has eliminated fuel surcharges of USD$25 to USD$100 for frequent travelers introduced earlier this year by both airlines in response to high fuel costs.

 

(Reuters)

 

[Pieter C. 5]

Alitalia Pilots, Cabin Crew To Strike

 

November 7, 2008

Five unions representing Alitalia's pilots and flight assistants said they would strike for one day on November 25 in protest at a takeover of the ailing airline by an Italian investor group.

 

They also asked for an urgent meeting with the CAI group of businessmen who have made the bid.

 

The unions have rejected new contracts offered by CAI, refusing to join other key employee groups that have backed the takeover deal.

 

CAI has decided to press ahead with its bid anyway, offering to pay EUR375 million euros for the bankrupt carrier's assets and take on debt worth EUR675 million.

 

The consortium of Italian businessmen was the only group bidding in Alitalia's third attempt at a sale and made a binding offer for the assets last week.

 

The five unions which have rejected the offer complain that the new job contracts discriminate against mothers with small children or employees with handicapped family members. CAI denies the accusations and has said it will approach pilots and flight staff directly to offer them a job.

 

The takeover offer is subject to approval by Alitalia's bankruptcy commissioner, who hopes to wrap up the sale by mid-November, since the airline's cash reserves are expected to last only a few more weeks.

 

Once the deal with CAI is sealed, the next step will be to bring in a foreign airline to help run Alitalia together with the fleet of domestic rival Air One.

 

Air France-KLM and Lufthansa are in contention for an initial stake of up to 20 percent in the controlling group.

 

The deal is still contingent on winning approval from European regulators. CAI is particularly anxious to be left immune from any EU counter-measures against Italy over a state bridging loan for Alitalia that was later written off.

 

(Reuters)

 

[Pieter C. 5]

Air France Wants Back Into Austrian Air Sale

 

November 7, 2008

Air France-KLM has signaled it wants to get back into the bidding race for Austrian Airlines, but has not made an offer, a source in the state holding company said on Friday.

 

Holding company OeIAG, which is organizing the sale, is examining whether this is possible, the source said. Air France failed to submit a binding bid for the stake by the October 24 deadline.

 

"We got a letter about it yesterday from Air France," the source said. The letter did not contain an offer but said Air France wanted to get back into the privatization talks.

 

Austrian media have said Air France's change of heart might be because it did not know from the terms of the tender that some relief for the carrier's debt was a possibility.

 

OeIAG is offering a 42 percent stake in Austrian. It is considering bids from Lufthansa and Russia's S7.

 

Lufthansa has demanded Austria assumes up to EUR500 million euros (USD$637 million) of Austrian's EUR900 million debt pile, and the sale process had to be extended last week to hammer out the details.

 

Lufthansa's bid, under which it would pay only a nominal amount for OeIAG's stake but would make a buyout offer to other shareholders, expires early December, according to a source close to the process.

 

(Reuters)

 

 

Alitalia Protests Cancel Nearly 100 Flights

 

November 10, 2008

Protests by Alitalia employees opposed to the carrier's takeover by Italian businessmen forced the cancellation of at least 95 flights on Monday, and some workers threatened an immediate 24 hour strike.

 

Alitalia's pilots and cabin crew are objecting to new work contracts proposed by the Compagnia Aerea Italiana (CAI) group, which plans to buy the airline's profitable parts for EUR375 million euros (USD$483.6 million) in a bid to relaunch it.

 

CAI, which has the backing of four major Alitalia unions, is pressing ahead with the deal despite resistance from pilots and cabin crew and plans to approach them directly to offer jobs.

 

But that has only pushed the employees -- long used to having their demands met by threatening strikes to paralyse Italy's national airline -- on to the offensive.

 

Alitalia's pilots have already called for 15 one-day strikes through to May in protest at the deal. At an impromptu meeting at Rome's Fiumicino Airport, about 300 workers decided to launch a 24-hour strike starting at 1700 GMT on Monday.

 

The five pilot and cabin crew unions opposing the CAI deal distanced themselves from the unexpected Monday strike, which prompted the authorities to demand workers stay on the job under rules ensuring the continuity of essential public services.

 

A group of employees that had formed a committee to fight the deal even proposed bringing the airline's activities to a standstill, but the proposal was not embraced by everyone.

 

All that came after an already difficult day for travel in Italy, where a previously scheduled one-day transport strike brought train, bus and tram service to a halt on Monday.

 

Angry Alitalia employees protesting the deal then blocked the main entrance for flight staff at Rome's Fiumicino airport on Monday, canceling about 95 flights and delaying others. Several flights were also cancelled in Milan.

 

"It is an intense and particularly difficult day. We are trying to guarantee the right of people to demonstrate in a calm and tranquil manner and working to ensure the flights take off," Fiumicino's director Vitaliano Turra said.

 

Italy's civil aviation agency said it opened an investigation into the delays and cancellations and the government hit back against the protests, saying it would not succumb to such pressure.

 

"No union demonstration, least of all one conducted by a minority that is non-representative, can hold a country hostage," Employment Minister Maurizio Sacconi said.

 

"The sudden paralysis of airports, railway stations, streets and highways is an illegal act that must only be removed and fined."

 

(Reuters)