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Qantas Gets Second Airbus A380

 

December 16, 2008

Australian carrier Qantas Airways has taken delivery of its second Airbus A380 superjumbo plane, allowing it to boost flights between Australian cities and Los Angeles, Qantas said on Tuesday.

 

Qantas is scheduled to take delivery of a third A380 on December 27, with a further four in 2009. The third plane will fly Sydney to London routes.

 

Qantas expects to have a fleet of 20 of the aircraft in service by the end of 2013.

 

Airbus has been hit by cost overruns on the A380 and delivery delays, but recently signed a 51-plane order from Abu Dhabi's Etihad Airways that included six A380s.

 

The plane maker, paid on delivery, aims to deliver 12 A380s in 2008. As of October 2008, it had delivered nine A380 aircraft, according to its web site.

 

(Reuters)

 

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Iberia Nov Passenger Numbers, Load Factor Slip

 

December 15, 2008

Spain's flagship airline Iberia said on Monday that its total number of passengers fell 10.6 percent to 3.9 million in November compared with a year earlier.

 

In November, the airline's passenger load factor was 77.1 percent, 2.5 percentage points less than a year earlier. The company has also cut its capacity by 7.7 percent from a year ago.

 

Iberia has focused on lucrative long-haul flights, particularly to Latin America and the United States, adding 10 new destinations in the US since November 26.

 

However, in November its long-haul passenger tally, which represents 64.5 percent of passenger numbers, fell 8.7 percent.

 

Iberia said its business in North America was the most badly affected by the current economic crisis, with demand down 20.7 percent.

 

(Reuters)

 

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QF/BA talks have collapsed:

http://business.timesonline.co.uk/tol/busi...icle5363067.ece

 

Merger talks between British Airways and Qantas have collasped with neither side able to agree over key terms.

 

The airline companies have announced that after detailed discussions, they could not come to agreement over the merger terms.

 

A successful merger has been looking increasingly unlikely, with many in the industry claiming it would bring little benefit to either airline.

 

They already work together through the oneworld alliance and regulators allow them to fix prices and codeshare on the kangaroo route through a joint service agreement that has enabled BA to reduce its Australian flights to twice daily to Sydney.

 

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Qantas, British Airways Call Off Merger Talks

 

December 18, 2008

Australia's Qantas Airways and British Airways have called off talks for a USD$6.4 billion merger that analysts said could have helped transform an industry grappling with falling demand and volatile fuel prices.

 

Qantas and BA announced the end of talks in a three-paragraph statement issued to the Australian and London stock markets on Thursday, saying they could not agree on key terms for a deal.

 

"Despite the potential longer-term benefits for Qantas and BA, the airlines have not been able to come to an agreement over the key terms of the merger, at this time," Qantas said.

 

Qantas chief executive Alan Joyce had warned last week that the merger faced major hurdles and would only go ahead if Qantas could secure major revenue and cost benefits. He also lamented the fact the talks had been leaked and forced out into the open.

 

A marriage of Qantas and BA faced several big challenges, not least the ownership split of the combined business, which was proposed to be formed through a dual-listed merger whereby the two firms would have kept their existing listings but be managed as one.

 

BA added on Thursday it would not agree to Qantas owning more than 50 percent of the merged entity, though Qantas is the larger firm by market value. Qantas is worth about USD$3.3 billion and BA about USD$3.1 billion, based on latest exchange rates and share prices.

 

"The leak created an expectation about the merger ratio that could not be delivered considering the relative value of the airlines," a BA spokeswoman said. Asked if Qantas wanted more than 50 percent of the combined entity, she added: "Yes."

 

Under Australian law, Qantas must remain majority-owned by Australian investors and its head office, stock market listing and major facilities must remain in its home country.

 

Other hurdles included BA's USD$2.2 billion in pension-fund liabilities and also BA's separate merger talks with Spain's Iberia.

 

Qantas had ruled out a three-way merger with BA and Iberia, though this would have created the world's biggest airline.

 

BA said on Thursday the Iberia talks continued.

 

Qantas shares rose 7.5 percent in heavy trade ahead of the announcement, which came after the Australian market had closed.

 

BA shares opened lower in London.

 

Aviation analysts had said a Qantas-BA merger would lead to other big marriages in the airline industry, which has been cutting capacity this year as fuel prices rallied to record highs in July. Fuel prices have tumbled since then, but so has demand for air travel, keeping alive the forces of consolidation.

 

Lufthansa last week signed a deal to buy Austrian Airlines, a move that will make it Europe's biggest airline. Lufthansa is also vying with Air France KLM to secure a tie-up with bankrupt Alitalia.

 

Some analysts had doubted a Qantas-BA deal would take off.

 

"It was always going to be a difficult marriage and clearly there are a lot of pressures from outside the relationship that are being applied -- not least from Iberia and also within Qantas's institutional base," said Ian Thomas, analyst at aviation consulting firm CAPA Consulting.

 

"There were questions being asked about how much value it was going to bring to the organization and whether they would be better off pursuing an Asian partner as opposed to a European one," added Thomas.

 

Qantas and BA remain code-sharing partners in the Oneworld alliance.

 

(Reuters)

 

BA/Qantas merger talks fizzle

 

Friday December 19, 2008

As expected, merger talks between Qantas and British Airways ended without any agreement just two weeks after the oneworld partners formally confirmed their discussions of a tie-up via a dual-listed company structure.

 

"Despite the potential longer-term benefits for Qantas and BA, the airlines have not been able to come to an agreement over the key terms of the merger at this time," the carriers said in a statement, adding that they will continue to work on their joint business between the UK and Australia.

 

The Australian government had expressed serious reservations, saying that an agreement could mean a de facto takeover of Qantas by BA that it would not support. In addition, Iberia Chairman and CEO Fernando Conte voiced concern, arguing that BA's ambitions were "too complex" and that it would be "more reasonable" and "more rational" for it to focus on intra-continental consolidation.

 

According to Melbourne's Herald Sun, the deal fell apart after senior QF managers determined that most of the potential synergies already were in place through oneworld.

 

However the British press painted a different picture, suggesting that it was BA that walked away from the deal, possibly back into the arms of Iberia. Merger talks between BA and IB are continuing.

 

 

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Iberia Lets Flyers Cancel Flights After Delays

 

December 17, 2008

Spanish airline Iberia said on Wednesday it would allow customers flying over the Christmas period to cancel or change their tickets after days of flight delays and cancellations during a dispute with pilots.

 

The Spanish flag carrier said customers with any kind of fare, flying between December 15 and January 6, would be allowed to cancel, change and re-issue tickets.

 

Pilots were sticking strictly to their scheduled work hours because Iberia had not employed sufficient staff over the Christmas period, this had led to delays and cancellations, a source at pilots union SEPLA said.

 

Thirteen of its 900 or so flights scheduled for Wednesday were cancelled, a spokesman for the airline said, taking to 116 the total number of flights cancelled since last Friday when negotiations over pilots' terms and conditions broke down.

 

An Iberia spokeswoman said the pilots' case did not stand up because their work load had in fact decreased in recent months.

 

"What has changed in the last three months to now? There has been practically no change, there are actually less flights."

 

Union representatives met Iberia management again on Wednesday, but the result of the meeting was not known.

 

The flexible ticket plan does not cover Iberia flights operated by other companies as they are unaffected by the dispute.

 

Passengers have until January 11 to change the ticket or ask for a refund. New tickets are valid until June 30.

 

(Reuters)

 

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LAN Enters Ecuador Domestic Flight Market

 

December 18, 2008

Chile's dominant airline LAN was granted a two-year concession to operate domestic flights in Ecuador, a senior aviation official said on Thursday.

 

The airline's Ecuadorean unit will be allowed to fly local routes to major cities such as Guayaquil, Quito and Cuenca. The company will also operate flights to major tourist destination the Galapagos islands.

 

"The concession is for two years," Guillermo Bernal, head of the national aviation council said. "We want healthy competition in the local industry."

 

Bernal said he didn't know how much the company plans to invest in the Andean country, but added that LAN had expected its participation would boost the nation's air traffic by more than 20 percent. The South American airline has said is reviewing its investment plans due to the global economy slowdown.

 

Ecuador's busiest route between the cities of Quito and Guayaquil registered more than half a million passengers in 2006, according to aviation authority data.

 

Local carriers opposed LAN's application to operate domestic flights, arguing unfair competition with the major airline, one of the region's largest carriers.

 

(Reuters)

 

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Malev Delays EGM To Resolve Financing

 

December 19, 2008

Hungarian airline Malev suspended an extraordinary shareholders' meeting on Friday which was meant to resolve the capital problems of the company, Malev said in a statement.

 

It said the meeting would be reconvened within 30 days but declined comment on local press reports which said Russia's Aeroflot might acquire a stake in the company. :blink:

 

Business daily Napi Gazdasag said on Friday Malev had significant debts and that the shareholder meeting may discuss a potential change in ownership.

 

Malev, which Hungary sold last year to AirBridge, a firm part-owned by Russian businessman Boris Abramovich, said the meeting, to be held within 30 days, would provide a solution for the situation of the struggling company.

 

"Malev, similarly to other players in the aviation industry, has faced numerous difficulties this year, such as the huge rise in the price of jet fuel in the first half of the year, the intensifying global recession in the second half, and the strike of Budapest Airport workers from December 10," it said.

 

"Despite all these (factors) the airline is operating and the shareholder meeting... which will continue in 30 days, will resolve the capital situation of Malev," the firm added.

 

Malev said the strike at the airport operator had forced it to cancel around 96 flights departing from Budapest, causing losses of several hundreds million forints.

 

In September, Malev said it expected to post an operating loss this year after jet fuel costs surged.

 

Earlier this year, Malev signed a financing deal with a Russian bank for a loan of EUR30 million euros to help maintain its liquidity position.

 

"The main problem for our company is not its outstanding debts, which are not unusually high considering the industry... It is primarily the method of resolving the capital situation which needs to be decided," the company said.

 

Malev said earlier this year it would lay off 400 staff, or around 21 percent of its active work force, and halted long-haul flights to Toronto, New York and Bangkok.

 

On Friday it said its work force had been cut by 250.

 

(Reuters)

 

Bad news from Imran's favorite "Mollew"... :pardon:

 

 

Nigeria Threatens To Ground British Airway Flights

 

December 21, 2008

Nigeria's government has threatened to ground British Airways flights between London and Lagos within a week if the carrier does not abide by its approved flight schedule, the aviation ministry said.

 

New Aviation Minister Babatunde Omotoba, who was sworn in earlier this week, warned the British carrier that its operations will be halted in Nigeria's commercial capital Lagos from Friday if its flights from London continued to land later than 6 pm (1700 GMT).

 

"(Omotoba) has directed British Airways to revert to their original approved flight schedules or have their operations shut down," said Adeyemi Nelson, the ministry's spokesman.

 

"All international flights should arrive in Nigeria at the latest 6 pm for the comfort and safety of air travellers."

 

Travel from the international airport to Victoria Island, the city's financial area, can take up to four hours depending on the traffic and armed robberies are common, especially during the evening.

 

Lagos, a city of 14 million people, is eager to improve its crime-ridden image, a major disincentive to investors in Africa's most populous nation.

 

Nigeria is essentially a cash economy and there is often a crime wave in the build-up to Christmas, when traders and customers carry large sums of money.

 

But the attacks are usually opportunistic, carried out by gunmen who pose as policemen at fake road blocks or by criminals who steal at gunpoint from drivers trapped in traffic jams.

 

(Reuters)

 

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BA Orders New Fleet For London City Routes

 

December 22, 2008

British Airways has ordered 11 Embraer aircraft to replace the current short-haul CityFlyer fleet operating out of London's City airport, the airline said on Monday.

 

The order includes options for three more aircraft and the whole deal is worth GBP376 million pounds (USD561.7 million) at current list prices, British Airways said.

 

CityFlyer will take delivery of the first aircraft from September 2009 and the more fuel-efficient jets will operate on routes from London City Airport to Scotland, Ireland and Europe.

 

"This significant investment in new aircraft further demonstrates British Airways' commitment to services into and out of London City for our customers," said Peter Simpson, managing director of BA CityFlyer.

 

(Reuters)

 

Learned they are E170 & E190 aircraft... :pardon:

 

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British Airways To Reschedule Lagos Flights

 

December 21, 2008

British Airways said on Sunday it will reschedule its flights to arrive earlier in Lagos beginning January 1, after Nigeria's aviation ministry threatened to ground its operations there.

 

New Aviation Minister Babatunde Omotoba earlier this week warned the British carrier that its operations would be halted in Lagos from Friday if its flights from London continued to land later than 6 pm (1700 GMT).

 

"British Airways will be rescheduling the arrival of BA 75 from London to 1755 from 2105 from the 1st of January 2009. This is in response to concerns from its valued Nigerian customers on the late arrival time into Lagos," the company said in a statement.

 

BA said January 1 was the earliest it could make these changes, which will affect around 6,000 passengers.

 

Travel from the international airport to Victoria Island, the city's financial district, can take up to four hours depending on the traffic and armed robberies are common, especially during the evening.

 

Lagos, a city of 14 million people, is eager to improve its crime-ridden image, a major disincentive to investors in Africa's most populous nation.

 

(Reuters)

 

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BA Orders New Fleet For London City Routes

 

BA orders 11 E-jets for CityFlyer

 

Tuesday December 23, 2008

British Airways placed a firm order for six E-170s and five E-190SRs, plus options on a further three 190SRs, for its wholly owned BA CityFlyer regional subsidiary.

 

The firm aircraft are worth $376.5 million at list prices "based on January 2008 economic conditions," and the deal could reach $489 million if all options are confirmed, Embraer said.

 

The E-jets will operate out of London City and replace CityFlyer's current fleet of 10 Avro RJ100s and two RJ85s. The first 76-seat 170 is scheduled for delivery in the second semester of 2009. The 190SR will seat up to 98. Both types will feature a single-class layout.

 

"Having the combination of the Embraer 170s and 190SRs in the same fleet will give us greater flexibility, enabling us to match capacity with demand on routes within our existing and future network," CityFlyer MD Peter Simpson said. The airline signed up for the Embraer Pool Flight Hour Program for 10 years.

 

 

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Iberia Hires Consultancy To Probe BA Pension Hole

 

December 29, 2008

Iberia said on Monday it had hired HR consultants Mercer to review British Airways' pension fund, helping the Spanish carrier weigh up the impact of the deficit-laden scheme on their proposed merger.

 

BA said in September that trustees at its biggest pension scheme had calculated its deficit on March 31 at a wider-than-expected GBP1.5 billion pounds (USD$2.65 billion).

 

"We have commissioned a study from Mercer on BA's pension fund, the results of which are expected at the end of January," a spokeswoman for Iberia said, confirming a report published on Monday in Britain's Daily Telegraph.

 

The newspaper said merger negotiations were being complicated by the fact that the next 3-year actuarial valuation of the BA scheme would not begin until BA's financial year ends on March 31.

 

Iberia and its biggest shareholder, savings bank Caja Madrid, have both said they are keen for the merger to go ahead but that the size of the pension deficit would be a factor in determining the way the transaction was structured.

 

A Mercer spokesman declined to comment.

 

(Reuters)

 

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Finnair CEO Jukka Hienonen told the daily Iltalehti that he is hoping a 9% reduction in the carrier's route network will allow it to remain stable during the current market downturn but that a worst-case scenario could result in its cutting up to one-third of its approximately 100 routes.

Several hundred employees already have been laid off and another 300 will be downgraded to part-time status in the first few months of this year.

Finnair plans to take delivery of five A330-200s and two E-190s in 2009 but continues to search for more than €400 million ($550.1 million) in required financing, Hienonen said.

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Cathay Pacific Warns Of Disappointing 2008 Earnings

 

January 7, 2009

Cathay Pacific Airways, Hong Kong's dominant airline, said on Wednesday 2008 earnings will be disappointing due to weak revenue and losses on fuel hedging -- its second profit warning in about two months.

 

The airline said it expects to lose HKD$7.6 billion (USD$974 million) on fuel hedging, worse than the HKD$2.8 billion in estimated losses it revealed in November, when the airline also warned of potentially disappointing results.

 

Cathay said revenue has continued to weaken since November, with first and business-class traffic falling significantly and softness in the air cargo market from Hong Kong and mainland China.

 

It said the increase in unrealised mark-to-market fuel hedging losses was caused by the slide in oil prices in the final two months of the year.

 

(Reuters)

 

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Iberia Suing Pilots Union Over Action

 

January 9, 2009

Spanish airline Iberia said on Friday it is suing the pilots union SEPLA and its bosses for more than EUR13 million euros (USD$17.78 million) in damages for delays and cancellations to flights since December.

 

It said that between December 4 and December 31 it had been forced to cancel nearly 500 flights and flight punctuality had fallen to 40 percent because of pilots operating what Iberia called an illegal work-to-rule action.

 

Iberia is claiming December costs including: damage to its reputation; having to contract 152 flights with other operators; and putting passengers with delayed flights up in hotels.

 

"The company will verify at the moment of trial what additional damage is being caused by the work-to-rule after December 31," Iberia said in a statement.

 

SEPLA blames Iberia's management for the delays and cancellations to flights. SEPLA said there is a shortage of pilots and poor planning.

 

They maintain that pilots are within their rights to work strictly in accordance with their contracts while a new collective agreement is being negotiated.

 

The two sides met again for talks on Friday, but no news of a breakthrough was forthcoming.

 

(Reuters)

 

---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

 

Malev Hungarian Airlines will be taken over by Russia's state-owned Vneshekonombank owing to the "previous owner's weak management and the global financial crisis," Russian First Deputy Prime Minister Viktor Zubkov said at a Budapest news conference.

Aeroflot will be Malev's "strategic partner."

Malev's owner, the AirBridge consortium comprising Russian investor Boris Abramovich (of the defunct AiRUnion alliance) and two Hungarians, failed to fulfill certain obligations over the past two years, executives said, leading Hungarian Finance Minister Janos Veres to tell reporters, "The steps taken since the privatization have not been adequate to ensure the future of the airline."

Malev has a €30 million ($38.9 million) loan from Vneshekonombank.

A shareholders meeting was scheduled for today following the recent recall of Abramovich as Malev chairman.

It was unclear how Malev will ensure that an EU investor will hold a majority stake.

 

This will probably mean MA will leave OW and head for ST ?

Wonder how OK will react, if MA will join their 'backyard'... :blink:

 

 

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AMR, UAL Losses Widen, Tough Times Ahead

 

January 21, 2009

Two of the largest US airlines, American Airlines and United Airlines, on Wednesday posted wider quarterly losses and warned that the economic slowdown in 2008 would likely continue this year, causing larger-than-expected job and route cuts.

 

UAL, parent of United Airlines, said it would cut 1,000 salaried and management positions from its payrolls this year, while AMR, parent of American Airlines, said it would trim capacity more than expected.

 

American and United are the first two major carriers to report their fourth-quarter earnings, and their statements muddied the outlook for the entire industry as it grapples with volatile fuel prices and the potential for sagging travel demand.

 

"It's going to be weak, no doubt about it," said Ray Neidl, analyst at Calyon Securities. "The question is can the airlines, with capacity cuts, keep up with the decrease in demand in a weak economy?"

 

AMR shares fell more than 21 percent to USD$8.24 on the New York Stock Exchange. UAL shares shed more than 7 percent to USD$10.70 on Nasdaq.

 

The airline industry, including AMR and UAL, slashed capacity last year to offset their high fuel bills and bolster fares as the economic recession eroded travel budgets.

 

A 75 percent decline in oil prices in the second half of 2008 greatly eased the fuel price burden for airlines. But it also lessened the value of airline fuel hedges, creating a new problem for the embattled industry.

 

AMR said its quarterly net loss widened as the price it paid for fuel rose 8 percent in the quarter from a year before.

 

The company said its fourth-quarter net loss was USD$340 million, compared with USD$69 million a year earlier.

 

Excluding one-time items, AMR said it lost USD$214 million.

 

Special items included a USD$23 million charge related to aircraft groundings and capacity cuts as well as a non-cash pension settlement charge of USD$103 million.

 

The airline industry, including AMR, made hefty capacity cuts in the fourth quarter of 2008 to offset volatile fuel prices and to bolster fares as demand sagged in a weak economy.

 

The company said it expects its mainline capacity to decrease more than 8.5 percent in the first quarter amid economic uncertainty. AMR said its 2009 mainline capacity will decline by more than one percentage point beyond a previous forecast provided in October.

 

"We intend to continue managing our business -- from capacity and fleet planning to balance sheet repair, fuel hedging and revenue initiatives -- conservatively and with discipline," AMR chief executive Gerard Arpey said in a statement.

 

AMR reported revenue of USD$5.47 billion, down 3.8 percent. The company said it ended the quarter with USD$3.6 billion in cash and short-tern investments.

 

AMR said the company now expects to receive 29 Boeing 737-800 aircraft in 2009 as a result of Boeing's delivery delays, compared with 36 expected previously.

 

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

 

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

 

UAL reported a USD$370 million cash loss on fuel hedges that settled in the quarter, due to the recent fall in fuel prices. The company also suffered non-cash, net mark-to-market losses on its fuel hedges of USD$566 million.

 

The company, which cut about 7,000 jobs in 2008, said it would cut another 1,000 salaried and management positions in 2009.

 

UAL said its revenue was USD$4.55 billion in the quarter, down 9.6 percent. The company said it ended the quarter with an unrestricted cash balance of USD$2 billion.

 

(Reuters)

 

 

LAN Cargo To Pay USD$88 Mln Fine For Price Fixing

 

January 22, 2009

The cargo unit of Chile's dominant airline LAN said on Wednesday it agreed to pay a USD$88 million fine as part of a price-fixing investigation led by the US Department of Justice.

 

Under the plea agreement, it would pay the fine over the course of five years, which "should therefore not significantly affect the company's cash position," LAN Cargo said in a statement.

 

"The company already had established a USD$75 million reserve in anticipation of a financial penalty. The reserve amounts were offset against the companys results for 2007 and for the company's third quarter 2008," the statement said.

 

"This investigation has exclusively focused on the air freight business and does not in any way involve LAN Airlines passenger operations," it added, saying the Department of Justice investigation into LAN Cargo related to the period between February 2003 and February 2006.

 

LAN Cargo said air freight company Aerolinhas Brasileiras, in which it has an ownership stake, had also reached a plea agreement for a fine of USD$21 million to be paid over a five year period.

 

It said it understood the investigation involved more than 30 international airlines and that eight other airlines had already agreed to pay fines worth USD$1.275 billion between them.

 

LAN's cargo network covers about 75 destinations worldwide. LAN Cargo has operations in Chile, Brazil and Mexico and was also given the green light to set up an affiliate in Colombia.

 

Parent LAN has affiliates in Ecuador, Peru and Argentina. It accounts for more than half of Chile's international passenger traffic and nearly three-quarters of its domestic traffic.

 

(Reuters)

 

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Iberia Reaches Pre-Agreement With Pilot Union

 

January 23, 2009

Spain's flagship airline Iberia and pilots' union Sepla have reached a preliminary agreement to end a dispute which has brought chaos to domestic airports.

 

In a statement released late on Thursday, Iberia said if the accord is ratified by the pilots' assembly it would lead to a new collective agreement valid for the 2005-2009 period.

 

Iberia has accused pilots of operating under what it said were illegal work-to-rule conditions during the busy December holiday period leading to the cancellation of 500 flights, a 40 percent fall in flight punctuality and leaving thousands of passengers stranded.

 

Sepla meanwhile blamed Iberia's management for the delays and cancellations which it said were caused by a shortage of pilots and poor planning.

 

(Reuters)

 

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Finnair Says Pilots Plan 5 Days Of Strikes

 

January 23, 2009

Finnair said on Friday its pilots had threatened to ground flights on five days in February to strengthen their demands in pay talks with the company.

 

Finnair said the pilots union has initiated an overtime ban, which could lead to cancellations of flights as soon as January 24.

 

"In addition, the pilots have given notification of their intention to carry out strikes that will halt Finnair flights almost completely," Finnair said, adding the strikes were scheduled for February 11, 13, 16, 18 and 20.

 

(Reuters)

 

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BA Chief Casts Doubt On Iberia Merger

 

January 24, 2009

The proposed merger between British Airways and Iberia appeared threatened on Saturday when the UK airline's chief executive Willie Walsh was quoted as saying the current market valuations were unacceptable, according to the Financial Times.

 

The markets closed on Friday with the Spanish carrier's market value exceeding that of BA's for the first time since merger talks began last July, the FT said.

 

BA's relative valuation has been hit by a combination of a fall in its share price and the sharp decline of the pound against the euro.

 

"The present valuation was unacceptable," Walsh was quoted as saying during a visit to India. "Our shareholders would not accept it."

 

He went on to warn that he did not feel under any pressure to do a deal to create the third-largest European aviation group and he was prepared to walk away "if it made sense."

 

When the merger talks began, the respective market capitalisations indicated a share exchange ratio of 65 percent for BA and 35 percent for Iberia, the FT said.

 

This had fallen to only 49.6 percent for BA on Friday and 50.4 percent for Iberia.

 

(Reuters)

 

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British Airways Warns Of Full-Year Operating Loss

 

January 26, 2009

British Airways warned a weak economy and the pound's decline would see it fall into the red in 2008-09, sending its shares down 8.5 percent on Monday.

 

The British carrier said it would make an operating loss of GBP150 million pounds (USD$207 million) in the year to end-March, compared to a guidance repeated earlier this month for a small operating profit.

 

The carrier, in merger talks with Spain's Iberia, forecast a third-quarter operating loss of GBP50 million.

 

"Further economic weakness in January and the outlook for February and March combined with the fall in sterling, are impacting our outlook for the year," BA said in a statement.

 

The airline said its revenue guidance for the full year remained unchanged but it now expected non-fuel costs to rise 8 percent this year versus previous guidance for a 5 percent increase as foreign exchange rates take their toll.

 

BA shares closed at 133.8 pence, a nine-week closing low and versus a 3.9 percent rise in the FTSE 100 index.

 

Rival Air France-KLM issued a profit warning last week, but low-cost easyJet saw its shares rally last Thursday after saying it would manage to stay in the black.

 

Societe Generale analyst Jonathan Wober said the BA warning was on profit whereas Air France had suffered on revenues.

 

"I was expecting a (BA) warning on revenues at some point, but this is on costs -- I wasn't expecting that. The question mark over the industry is the level of demand, and that's the revenue side of the equation," he said.

 

BA highlighted the impact on costs of the fall in sterling, which hit a 23 year low against the dollar on Friday and has been trading near all time lows against the euro.

 

IBERIA NOW BIGGER

 

A BA spokesman said the carrier's talks with Iberia were still on-going despite the profit warning, but BA's latest share price fall has further skewed valuations of the two carriers.

 

At the time the talks were announced last July analysts had been expecting BA to make up around two-thirds of the combined entity, but the share performance of the pair since then has seen Iberia become larger in terms of market capitalisation.

 

"British Airways value is now below that of Iberia, making a deal much harder to agree and then sell to its shareholders," Wober said.

 

BA chief executive Willie Walsh told reporters in India over the weekend that Iberia's share price was overvalued and BA shareholders were unlikely to agree a merger based on current market values.

 

BA's current value is around EUT1.5 billion (USD$2.0 billion), while Iberia is worth around EUR1.8 billion. The Spanish company declined to comment.

 

(Reuters)

 

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S&P May Cut British Airways Into Junk Territory

 

January 28, 2009

Standard & Poor's said on Tuesday it may cut British Airways' credit rating into junk territory after the British carrier warned a weak economy and the pound's decline would see it fall into the red in 2008-09.

 

S&P said it may cut BA's corporate credit rating from "BBB-minus," the lowest investment grade, and its senior unsecured debt from "BB-plus," one step below investment grade.

 

"BA's financial profile is likely to come under increased pressure from the challenging trading environment and a subsequent slowdown in passenger traffic growth," S&P said in a statement.

 

"In addition, foreign exchange differences will not only affect operating revenues, they will also have a significant negative impact on the group's debt levels," the rating agency said.

 

British Airways on Monday said it would make an operating loss of GBP150 million pounds (USD$207 million) in the year to end-March, compared to a guidance repeated earlier this month for a small operating profit.

 

(Reuters)

 

 

LAN earns $335.7 million profit in 2008

 

Wednesday January 28, 2009

LAN Airlines managed to keep expense and revenue growth in line in 2008 and reported a full-year profit of $335.7 million, up 8.9% from the $308.3 million earned in 2007.

 

The company credited its "solid and flexible business model and the leadership position it has established in the markets in which it operates" for its ability to produce positive results "despite the various elements that constantly affect the airline industry." It plans to continue its growth this year, increasing ASKs 10%. It will take delivery of four passenger aircraft and two 777 freighters in 2009.

 

LAN reported revenue of $4.53 billion last year, up 28.6% year-over-year. Expenses climbed 28.5% to $4 billion on a 53.1% increase in fuel costs and operating income surged 29.7% to $536.2 million.

 

The airline group flew 26.95 billion RPKs, up 12.3%, against an 11.5% rise in ASKs to 35.18 billion. Load factor was up 0.6 point to 76.6%. Yield climbed 15.9% to 10.6 cents and unit revenue grew 16.7% to 8.1 cents. It ended 2008 with 50 A320 family aircraft, 26 767-300ERs, five A340-300s and nine 767-300Fs.

 

In the fourth quarter, LAN earned $117.1 million, up 16.1% from a $100.8 million profit in the final quarter of 2007. Operating income soared 76.2% to $232.3 million. It lost $24.5 million on its fuel hedges and an additional $4.6 million on foreign exchange fluctuations.

 

 

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Iberia Estimates 2008 Net Profit Down 90 Percent

 

January 28, 2009

Iberia estimated 2008 net profit dived 90 percent to EUR32 million euros (USD$42.3 million) last year as it struggled to hand on an increase in fuel prices and suffered worsening demand as the year wore on.

 

However in a presentation outlining its 2009-2011 strategic objectives, Europe's fifth biggest airline by value said initiatives planned during the period would add EUR450 million to core earnings (EBIT) compared to where it would otherwise have been.

 

Iberia said it aimed to bring core earnings (EBIT) in its transport business, which excludes its smaller maintenance and handling divisions, back towards 2007 levels when it made EUR267 million.

 

The carrier forecast operating revenues for next year would fall 1.3 percent to EUR5.45 billion, while costs would rise by 5.5 percent to EUR5.5 billion. A major factor in that rise were fuel costs which jumped 46 percent to EUR1.67 billion.

 

The carrier, which is in exclusive merger talks with British Airways, said it would cut total capacity by 1.7 percent this year, all of it on short and medium haul routes, but during 2010 it would up supply 2.9 percent and in 2011 by 5.6 percent -- almost all of it on long haul routes.

 

The carrier said it was targeting a margin on earnings before interest, tax and aircraft rentals of 15-17 percent in the plan's period.

 

Finance Director Enrique Dupuy told analysts Iberia had met its main objectives in the 2006-2008 director plan though it had yet to achieve some of its staff cost and productivity targets.

 

(Reuters)

 

 

British Airways-Iberia Merger Talks On The Rocks

 

January 29, 2009

 

British Airways and Spanish partner Iberia may walk away from merger talks, or seriously delay a deal, because of ever-widening disagreements over what the two carriers are worth.

 

British Airways had expected to call the shots when the long-term partners announced merger plans last July, but since then its tumbling share price, a ballooning pension deficit and a profit warning this week have put Iberia in the driving seat.

 

BA shares have lost nearly 45 percent since the pair unveiled the exclusive merger talks, while Iberia has risen about 11 percent. Add in the pound's drop against the euro and Iberia has emerged the larger in terms of market capitalisation -- EUR1.75 billion euros (USD$2.32 billion) against BA's GBP1.57 billion pounds (USD$2.24 billion).

 

That is a radical turnaround for the Heathrow-based airline, which expected to take around 65 percent of the new airline.

 

BA chief executive Willie Walsh told newspapers last week that BA shareholders would not accept the current market cap-based split and Exane BNP Paribas analyst Nick van den Brul said even a 50-50 division is likely to be a deal-breaker for BA, which outscores Iberia on other measures.

 

"At the moment it doesn't look very likely to go ahead. A one-to-one share ratio would be too much for BA shareholders to stomach," said van den Brul, who does not expect any deal for another year until BA's share price rebounds.

 

According to BNP Paribas estimates, BA has an enterprise value of GBP6.1 billion versus Iberia's GBP3.6 billion, mainly thanks to owning a greater proportion of its 245 aircraft than Iberia does of its 198-strong fleet.

 

Analysts are also forecasting BA will rake in GBP9 billion (EUR9.64 billion) of revenue in the year to March according to ThomsonReuters estimates, versus EUR5.45 billion estimated by Iberia at an analyst presentation on Wednesday.

 

PENSIONS TIME BOMB

 

Just as BA shareholders are likely to be backing away from a merger while its shares are in the doldrums, so Iberia is moving more cautiously because of BA's pensions liabilities.

 

Iberia Chairman Fernando Conte confirmed to analysts on Wednesday that talks were focused on valuations -- including the impact of BA's pension gap -- but he also struck a positive note by stressing "substantial revenue and cost synergies".

 

The Madrid-based carrier has hired independent pension experts Mercer to study the health of BA's retiree scheme -- a report to be delivered within weeks -- ahead of a full actuarial valuation from BA pension trustees due out in late summer.

 

Both are almost guaranteed to calculate a far bigger deficit than the GBP1.5 billion hole in its main scheme identified by trustees as of March 31 last year.

 

"Not only will pension assets have fallen since March as markets have dropped, but the higher corporate bond yields in recent months mean that many companies pension liabilities appear smaller in their accounts than might be the case in reality," said Jerome Melcer, a partner at pensions consultants Lane Clark & Peacock.

 

Andy Scott, principal of pensions consultant Punter Southall, said falling interest rates also would have sapped asset growth which would not have been compensated by falling inflation.

 

"Falling markets and a reduction in interest rates is highly likely to have had a greater effect," he said.

 

BA's total pension liabilities -- GBP13.55 billion in March 2008 -- are of such a scale that relatively small changes in actuarial assumptions, such as another year on assumed life expectancy, could increase liabilities by hundreds of millions of pounds.

 

Until the size of the deficit is known -- and Mercer is happy that trustees have no exceptional powers to demand cash from the business -- Iberia will sit tight, experts say.

 

"I don't see anything happening before the pension deficit is known," said van den Brul. "Directors would wish to know the maximum extent of the liabilities before proceeding".

 

BA Chairman Martin Broughton said in September that a merger should be finalised by March this year, but in recent comments CEO Walsh has notably declined to give a timescale.

 

BA PLAYING LONG GAME

 

BA's profit warning has not made the prospects for a successful merger any better. It said the weakening economy and plummeting pound would see it drop into the red for the full year -- with little sign of a positive upside.

 

Meanwhile although Iberia said on Wednesday that estimated 2008 net profit fell 90 percent, it would remain in the black and had initiatives planned for 2009-2011 to add EUR450 million to core earnings.

 

However Douglas McNeill, transport analyst at broker Blue Oar, said there was time for events to swing back in BA's favour.

 

"Market caps are an important element of the mix, and are not developing in a way that smoothes the path to a merger. But Iberia has indicated the timing of an eventual deal would be some months away yet, and BA is likely to have a better year next year than this."

 

The market appears to believe the merger is in trouble.

 

Significantly BA's profit warning last week pulled Iberia's shares down as the market discounted the chance of BA investors backing a merger while BA shares continued to sink.

 

(Reuters)

 

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JAL conducts 747-300 camelina oil test flight

 

Monday February 2, 2009

Japan Airlines Friday conducted the latest biofuel test flight, operating a 747-300 partially powered by fuel derived primarily from the camelina plant.

 

The 90-min. flight from Tokyo Haneda followed recent biofuel demonstration flights conducted by Air New Zealand and Continental Airlines. A 50/50 blend of traditional jet fuel and camelina-based biofuel powered one of the aircraft's four Pratt & Whitney JT9Ds. It was the first biofuel test flight using Pratt engines.

 

Keiji Kobayashi, who piloted the 747, said, "There was no difference at all in the performance of the engine powered by the biofuel blend and the other three engines." Camelina made up 84% of the biofuel, which also contained jatropha oil (under 16%) and algae oil (under 1%).

 

Honeywell subsidiary UOP converted the plant-based crude oil to biofuel and then blended it with jet fuel. Sustainable Oils provided the camelina oil while Terasol Energy and Sapphire Energy sourced the jatropha oil and algae oil respectively.

 

 

Oneworld Future Hangs On Upcoming Airline Agreements

 

February 2, 2009

 

Bosses of airlines in the Oneworld alliance will celebrate its 10th birthday on Tuesday knowing the future of the 10-carrier grouping may hang on the fate of two agreements which could fly or fail within months.

 

Already the smallest of the three global airline alliances, analysts say Oneworld is being left behind on trans-Atlantic competition by the 18-member Star Alliance and by the Air France-Delta led Skyteam.

 

The biggest members from both those rival alliances have stretched their advantage over Oneworld by winning US antitrust immunity on North Atlantic routes -- allowing them to coordinate prices and schedules.

 

That means if a third attempt by Oneworld members British Airways, American Airlines and Iberia to gain similar approval is rebuffed in the next few months, smaller alliance partners could defect to rivals, analysts say.

 

"If BA-AA doesn't get antitrust immunity that would present a huge difficulty for Oneworld," said one London-based analyst who asked not to be named.

 

"It puts the alliance at a significant disadvantage. The airlines may cling to each other, but the temptation to look for other options elsewhere would be there."

 

Previous efforts foundered on a US condition that they relinquish slots at London's Heathrow Airport. But analysts say this time around the EU-US Open Skies pact, a trade in airport slots and the dominant position of their bigger rivals should mean it is offered better terms.

 

Tuesday's meeting will also gather the CEOs of Qantas, Cathay Pacific, Japan Airlines, Finnair, Malev, Royal Jordanian, Chile's Lan and will welcome Mexicana as a new member.

 

Alliance airlines now account for some 70 percent of global traffic since they began in the early 1990s as a tool for carriers to offer more routes, but also to compensate for regulatory hurdles that still block many cross-border and cross-regional mergers and acquisitions.

 

BA-IBERIA THREAT

 

Analysts say a second threat to the alliance would be the collapse of merger talks between BA and Iberia. That could tempt Lufthansa to make a bid for the Spanish carrier to fill a Latin America-sized hole in its network, and switch Iberia to the Star Alliance.

 

"If both (antitrust and the merger) fail then it poses the question whether the airline industry is going to fold down to two alliances rather than three," RBS airlines analyst Andrew Lobbenberg said.

 

But even if Lufthansa did not bid for Iberia, a failure to merge with BA could destroy the two airlines' current deal to share UK-Spain routes and prompt the Spanish carrier to consider defecting.

 

Iberia Chairman Fernando Conte said last Thursday it was committed to becoming a core member of Oneworld, but said it had analysed joining both Skyteam and Star Alliance.

 

"If we move from Oneworld probably they would be in a worse position than we would be in, so it's pretty important for Oneworld to keep its main core partners," he added.

 

Negotiations between Iberia and BA are snagged on how to value the two carriers -- an issue complicated by BA's large pensions deficit.

 

"Overall the BA-AA transAtlantic agreement is probably more important for Oneworld than a BA-Iberia deal, but of course Iberia is one of its two main European members. If they leave it becomes a bit thin on the ground, especially with the Latin American strength Iberia brings," said the analyst in London.

 

Oneworld spokesman Michael Blunt said Tuesday's meeting -- one of the three Oneworld CEOs hold every year -- would focus on initiatives to strengthen the alliance which has generated USD$5 billion of revenue in cross-alliance products such as its Oneworld explorer ticket in the last 10 years.

 

"It really is losing critical mass compared with its competitors," said Lobbenberg. "But ultimately the issue is whether they can build bilateral relationships and those are hanging on regulatory decisions or between the partners."

 

(Reuters)

 

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Cant find it posted already but since last week they decided this strike is not going to be there, however the Finnair pilots refuse to do any overtime work, as result from that now and then a flight might be cancelled.

 

 

Finnair Says Pilots Plan 5 Days Of Strikes

 

January 23, 2009

Finnair said on Friday its pilots had threatened to ground flights on five days in February to strengthen their demands in pay talks with the company.

 

Finnair said the pilots union has initiated an overtime ban, which could lead to cancellations of flights as soon as January 24.

 

"In addition, the pilots have given notification of their intention to carry out strikes that will halt Finnair flights almost completely," Finnair said, adding the strikes were scheduled for February 11, 13, 16, 18 and 20.

 

(Reuters)

 

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American Airlines Has No Plans To Cut More Capacity

 

February 3, 2009

American Airlines said it was holding off from any further capacity cuts despite "disappointing" forward bookings, easing months of gloom in a sector hit by weak traffic and the economic downturn.

 

"Our advance bookings are down from where they were this time last year despite the capacity cuts, so that's disappointing, but not at this point so alarming that we are cutting more capacity," chief executive Gerard Arpey said.

 

"But we are clearly watching carefully," he told journalists at a meeting of the oneworld airline alliance in Madrid.

 

American Airlines' parent AMR last month posted wider quarterly losses and warned that the economic slowdown in 2008 would likely continue this year, causing larger-than-expected job and route cuts.

 

Arpey's comments came as Lufthansa, a leading member of the rival Star Alliance, delivered a surprise increase in its profit forecast, lifting sector shares.

 

It raised its forecast for full-year 2008 operating profit, becoming the second European airline (after Ryanair) in as many days to say it could defy the tough industry environment.

 

Looking ahead, however, Lufthansa said it anticipated higher than usual risks as demand remained weak.

 

Lufthansa shares rose more than 5 percent.

 

By contrast, Japan Airlines (JAL) said in Madrid it was considering cutting 10 percent of international capacity and 2-3 percent from domestic flights in the coming fiscal year to adjust to weaker demand.

 

American's Arpey said he was optimistic the US carrier would receive anti-trust immunity in the US for its alliance with British Airways and Iberia as soon as the early summer.

 

(Reuters)

 

 

Japan Airlines May Cut Int'l Capacity 10 Percent

 

February 3, 2009

Japan Airlines (JAL) said it was considering cutting 10 percent of international capacity and 2-3 percent from domestic flights to adjust to weaker demand.

 

"For the capacity, we may cut almost 10 percent for the next fiscal year. For domestic routes we may also cut back, but very nominally, maybe 2 percent maybe 3 percent," JAL Vice President Tetsuya Takenaka said at a oneworld alliance meeting.

 

The airline has seen the sharpest drop in demand on international routes and in its premium classes -- business and first -- which it said was down by almost 20 percent.

 

"The (long haul) economy class is also declining but due to high position of the Japanese yen, holiday makers are spending more, so the decline has been around 15 percent," Takenaka said.

 

The airline's domestic routes have been stronger, with a 4 percent decline in demand in the last year, he said.

 

In December, JAL said it might slash its capital spending budget for the three years to March 2011 by nearly a quarter due to falling demand for international flights.

 

Asia's largest carrier also said in December it was reviewing its business plan and considering scaling back on new aircraft purchases.

 

Takenaka however said JAL had no plans to cancel the delivery of two Boeing 777s and nine 767s which it ordered after Boeing ran behind on the production of its 787 Dreamliner, nor cancel 787 orders.

 

"We have no plans to cancel the 787. We are patiently waiting", he said.

 

Takenaka declined to give any earnings' forecasts for the next fiscal year and said the company would announce its predictions when it reports quarterly results on February 6.

 

On fuel hedging, Takenanka said the airline had cut its hedging levels for the next fiscal year compared to this fiscal year which ends in April.

 

"We are hedged almost 80 percent for the remaining of this year. We have already hedged 65 percent for the next fiscal year," he said.

 

(Reuters)

 

Qantas Open To Merger Opportunities In Asia

 

February 3, 2009

 

Qantas' chief executive Alan Joyce said the airline was open to merger opportunities in Asia, but was not in any active talks.

 

"We are always looking at opportunities in Asia and the region," Joyce said at a meeting of the oneworld airline alliance in Madrid.

 

"We are not actively involved in dialogue with anybody at this stage," he said.

 

In December, Qantas and British Airways called off talks for a USD$6.4 billion merger after failing to agree terms as the sector grapples with falling demand and volatile fuel prices.

 

Joyce said the Australian carrier had not seen any further fall in long-haul demand since the sharp drop it registered last September and October.

 

"We saw the international business for Qantas take a hit because of a fall in premium traffic," Joyce said. "Since then we haven't seen any further deterioration, but we keep monitoring the volatile environment."

 

"We have plans, if things improve, to grow in the market again, but we also have plans, if things get worse, to take further action if need be," he added.

 

(Reuters)

 

BA, Iberia Say Merger Talks Going Well

 

February 3, 2009

 

Merger talks between British Airways and Spain's Iberia are going well, the two sides said, hinting that news of a possible deal could arrive next month.

 

"I am an optimist. I believe we are going to try to find the route so that this deal happens," Iberia Chairman Fernando Conte told journalists on the sidelines of a oneworld alliance meeting in Madrid.

 

"February is going to be a very important month but March is going to be a month in which we will be able to give news."

 

British Airways Commercial Director Robert Boyle said talks had been complicated by the volatile exchange rates and stock markets but was also positive on the chances of a deal.

 

"Discussions are progressing well, but deals are never done until they are done," he said.

 

"Current financial conditions, with very volatile stock markets and exchange rates does make it a particularly challenging time to conclude that negotiation."

 

He was standing in at the meeting of oneworld CEOs for BA chief Willie Walsh, who was forced to stay in the UK to deal with the chaos created by heavy snow across England.

 

Conte said the two sides were trying to value the respective businesses using a variety of methods.

 

"Elements of the market, not only right now, but historic. There are elements of discounted cash flow from business plans that we have put in place together. And also we have the views of analysts".

 

PENSION REPORT BACK

 

Conte said the Iberia board had already received a report it commissioned from pensions experts Mercer on the deficit in BA's retiree scheme and that it contained no great surprises.

 

The deficit is almost certain to have ballooned from the GBP1.5 billion pound (USD$2.16 billion) hole in BA's main scheme identified by trustees as of March 31 last year, complicating discussions on what the two are worth.

 

"There has been no surprise (from the Mercer report) but it was a study that was necessary to do," said Conte, surrounded by journalists. "We have a lot of information already, and now the important thing is to proceed with discussions."

 

Iberia's market capitalisation has risen above British Airways' in recent weeks because of the weakened pound and a drop in BA's share price following a profit warning. BA had expected to comprise around 65 percent of the combined airline when merger talks were announced last July.

 

Despite now having a bigger market capitalisation than BA, when asked if the division of the new company would be somewhere between the 66:33 split and 1:1 division, Conte said: "probably, yes".

 

He added that "without doubt" the exchange rates were an element that had to be taken into account when valuing the two.

 

(Reuters)

 

Cathay Says SARS Worse Than Current Crisis

 

February 3, 2009

Cathay Pacific chief executive Tony Tyler said the impact of SARS on the airline was worse than the global economic crisis.

 

But Tyler added that the impact of the economic crisis would last much longer than that of SARS.

 

"SARS was worse in that passenger levels collapsed. But equally, we knew it wasn't going to last forever," Tyler said during a conference in Madrid. "We now have lower yields and lower prices and that's helping a lot maintaining the overall financial positions."

 

(Reuters)

 

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Russia’s S7 Airlines to join oneworld alliance

26 May 2009

 

 

Russia’s leading domestic airline, S7 Airlines, is to join one world®, the world’s leading quality airline alliance.

 

After being unanimously elected on board by the grouping’s existing ten member airlines, which include some of the best and biggest names in the industry, S7 will become part of one world, offering the alliance’s full range of services, benefits and fares, during 2010.

 

As a first step, its network will be added from 1 June to the Global Explorer round-the-world fare offered by all one world member airlines and selected carriers that are not part of the alliance.

British Airways will support S7 through its 18-month alliance implementation programme, as its one world sponsor.

 

Its addition to oneworld will link one of the most extensive networks covering Russia and the Commonwealth of Independent States, with one world’s unrivalled global network, as the only alliance including airlines based on every continent.

 

S7 serves 72 destinations worldwide – 38 of them in Russia. It will add 54 cities to the one world map – 35 of them in Russia. It will bring eight countries onto the alliance’s network - Armenia, Azerbaijan, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan and Uzbekistan.

 

This will expand one world’s network to nearly 750 destinations in almost 150 countries, served by a combined fleet of 2,300 aircraft operating almost 8,500 flights a day, carrying more than 330 million passengers a year.

S7 is Russia’s leading airline in terms of domestic passenger carryings, customer service quality and innovation. It is majority privately owned.

 

It is the first carrier in Russia to convert to an all Western-built Airbus and Boeing fleet and the first to adopt full electronic ticketing and on-line reservations and sales. It holds the internationally recognised IOSA (International Air Transport Association Operational Safety Audit) certification, renewed in October 2008.

 

It offers two-class in-flight product to international standards on all departures – Business Class and Economy.

 

Its fleet, decorated in a distinctive bright green livery, includes 26 Airbus A320 family types, seven Airbus A310 and two Boeing 767s, with an average age of nine years.

 

S7 carried 6 million passengers in 2008, with a bigger share of the domestic Russian air travel market than any other airline. Including its international network, it is Russia’s second biggest carrier.

 

S7’s main hub Moscow Domodedovo - the capital’s most modern airport - is served also by oneworld members American Airlines, British Airways, Iberia, Japan Airlines and Royal Jordanian. Its secondary hubs are Novosibirsk and Irkutsk. Its international destinations include one world hubs Madrid and Bangkok.

 

Besides Moscow Domodedovo, one world’s existing members currently serve three other destinations in Russia – Moscow Sheremetyevo, St Petersburg and Yekaterinburg.

 

In the months ahead, S7 will adapt key internal processes into line with one world requirements, link its IT systems to those of its one world partners and carry out an extensive employee training and communications programmes to ensure that S7 employees worldwide are ready to provide one world’s customer services and benefits from day one.

 

An exact date will be confirmed for it to join during 2010, once all its pre-joining requirements are sufficiently progressed.

 

Willie Walsh, Chief Executive of British Airways, S7’s oneworld sponsor, said: “S7 is a perfect fit for oneworld. It has a strong focus on customer service and safety and its network will be able to integrate effectively with the existing one world network. one world’s priority is the quality rather than quantity of member airlines, which is why British Airways is delighted to be developing our relationship with S7 further by acting as its sponsor into the alliance.”

 

oneworld Managing Partner John McCulloch added: “S7 fills one of oneworld’s few remaining membership ‘white spaces’ with a carrier that matches our alliance’s demanding quality requirements. It will expand one world’s presence substantially in Russia and the Commonwealth of Independent States, while enabling S7 to offer its customers a truly global network on quality partners. We are delighted to welcome them to the one world alliance.”

 

S7 Chief Executive Vladimir Obyedkov said: “S7 Airlines is delighted to be joining the world’s leading quality global airline alliance. Becoming part of one world is one of the most significant steps in S7’s history. It will enable us to offer our customers a truly global network served by partners who include some of the best known and most admired airlines in the world, while our frequent flyers will have more opportunities to earn and redeem mileage rewards and enjoy all their other benefits. It will also strengthen us financially, through revenues from passengers transferring to our network from our one world partners and the cost reduction opportunities the alliance offers.”

 

Pictures

 

A selection of print quality images of S7 and its logo can be downloaded from www.oneworld.com/ow/news-and-information/gallery/list?categoryID=4&subCategoryID=11

 

A selection of print quality images and logos for one world and its existing member airlines can be downloaded from www.oneworld.com/ow/news-and-information/corporate-image-gallery

 

More about S7 Airlines

 

S7 is one the most progressive airlines in Russia giving passengers new standards of service, supported by the use of latest technology. Tracing its origins back to 1957, it changed its brand name from Sibir Airlines three years ago with a radical rebranding to make it stand out from its competitors as customer-friendly, quality, modern carrier – winning the annual national award “People’s mark / Brand No 1 in Russia”.

 

The airline generated profits of US$108 million (operating) and US$3 million (net) in 2008 on revenues of US$1.7 billion. S7 employs 3,354 staff and uses SITA as its main IT platform.

 

It has bilateral sales links already with all one world partners serving its Moscow Domodedovo hub - American Airlines, British Airways, Iberia, Japan Airlines and Royal Jordanian.

 

Its biggest shareholder is Natalia Fileva, with a 64 per cent holding. Other private investors own a further 11 per cent stake with the remaining 25 per cent state-owned.

 

Its charter subsidiary Globus will not be covered by the one world agreement.

 

S7’s English-language website is www.s7.ru/en/index.html. It also has websites in Russian and German.

 

About oneworld

one world brings together some of the best and biggest names in the airline business - American Airlines, British Airways, Cathay Pacific, Finnair, Iberia, Japan Airlines, LAN, Malév Hungarian Airlines, Qantas and Royal Jordanian, and around 20 affiliates including American Eagle, Dragonair, LAN Argentina, LAN Ecuador and LAN Peru. Mexicana and its affiliate Click Mexicana will join the alliance in 2009.

 

The alliance enables its members to offer their customers more services and benefits than any airline can provide on its own. These include a broader route network, opportunities to earn and redeem frequent flyer miles and points across the combined one world network and more airport lounges. one world also offers more alliance fares than any of its competitors.

 

oneworld was voted the World's Leading Airline Alliance for the sixth year running in the latest (2008) World Travel Awards. It is the only winner of this award since it was introduced in 2003.

 

About Global Explorer

 

Besides the networks of all existing one world member airlines and member elect Mexicana, the Global Explorer round-the-world fare also includes a number of airlines with no other one world links – Aer Lingus, Air Pacific, Alaska Airlines and its Horizon Airlines sister, and Gulf Air. Flights carrying the Qantas code but operated by Air Niugini, Air Tahiti Nui, Air Vanuatu, Air Vietnam, Aircalin and South African Airways are included too.

 

It offers simple, flexible, and great value round-the-world travel for trips of up to one year long. Four versions are available, covering differing lengths of journeys. For more details, see www.oneworld.com/ow/air-travel-options/round-the-world-fares/global-explorer

 

It is one of two round-the-world fares offered by oneworld. Its other round-the-world fare is one world Explorer. This includes travel on the alliance’s existing member airlines and affiliates only. Uniquely, prices are based on the number of continents visited, rather than on the distance flown. It is the only round-the-world fare that can be bought on-line.

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