Vol. 9 No. 44                                                            WE COVER THE WORLD                                                         Friday April 9, 2010

      Those widely reported merger talks between United Airlines and US Airways that would create the second-largest airline group in USA, bigger than KLM/Air France, reportedly have been underway since mid-February. Glenn Tilton, UAL and Doug Parker, US Airways, two major proponents of consolidation in the industry who apparently while not running their respective airlines have an unceasing urge to merge.
      But merger mania at this time is widespread.
      United is the third-largest U.S. airline by traffic, and UAL has the same rank by market value, at $3.17 billion, based on data compiled by Bloomberg.
      US Airways is No. 6 by traffic and No. 8 by market value, at $1.1 billion.
      If something happens between UAL and USAir (both have been down this road together before but were shot down by U.S. regulators) the wonder about where all of this leads other carriers doesn’t perplex our resident airline guru Aviation Dynamics President and ACN/FT Special Commentaries Editor Julius Maldutis PHD who told the MSNBC money honey Thursday, the big play here will actually be between UAL and Continental.
      “I think the whole thing is UAL/Continental Airlines—I don’t believe that UAL will buy into USAir, which is in deep financial trouble.”
      “Many mergers have not worked in the history of the industry.
      “Continental/United would work for a very fundamental reason—pilot group support, that I believe exists at those two carriers.
      “The reason the Delta /Northwest deal worked was because CEO Anderson had an agreement with the two labor unions.
      “We still need capacity to come out of the sky.
      “US Airways under some scenarios could very well disappear.
      “Remember it serves about 92% of the routes that UAL does, so if that company went away it would be very positive for United.
      “We need to also recall here in the USA, when three big legacy U.S. carriers Pan Am, Eastern and Braniff went out of business in rapid order during a period during the 1990’s the USA airline business turned very profitable.
      “Why have we had no profits for the past ten years except for maybe a couple of years?
      “Too many airlines.
      “For the investor right now is a great time to get back into airline stock because they are going to do very well over the next three to six months ahead, as with the economic recovery more passengers are coming back and airline fares are going up around 23%, plus fuel prices are remaining stable.”
Geoffrey

BA & IB Are Wed

     Meantime in Europe, British Airways and Iberia on Thursday signed a merger pact, that will see that combination as part of a holding company called International Consolidated Airlines Group with listings on London and Madrid exchanges.
     "This is an important step in the process towards creating one of the world's leading global airlines that will be better equipped to compete with other major airlines and participate in future industry consolidation," said Iberia Chairman and CEO Antonio Vazquez.
     Nice words but IB Iberia still has a get-out of jail clause if British Airways can't resolve its pension woes, a 800 pound gorilla deficit, valued at 3.7 billion pounds ($5.6 billion) bigger than British Airways' entire market capitalization of about 2.75 billion pounds.
     Plan (for now) is for IB and BA to retain their current operations and operate under individual brands.
     "The merged company will provide customers with a larger combined network. It will also have greater potential for further growth by optimizing the dual hubs of London and Madrid and providing continued investment in new products and services," said British Airways CEO Wee Willie Walsh.
     The hope (as we hear it) is that more airlines will join “the group” with AA at the top of that list—although U.S. firmly nixed increase of foreign ownership, as new open skies deal between U.S. & UK took hold recently.

Kinnear Takes Reins At Etihad

     Air Cargo News FlyingTypers learned that Roy Kinnear has been appointed Head of Cargo by the board of Abu Dhabi-based carrier Etihad Airways.
     Internal Etihad sources have confirmed today that the former Vice President Revenue Management will replace industry veteran Des Vertannes who stepped down from this position.
     We were thinking about the Jim Carey movie (Liar Liar) about a guy who couldn’t tell a lie after not ever being able to tell the truth, as word also came forward yesterday from several sources that Vertannes (right) will succeed Aleks Popovich (left) as IATA Head of Cargo.
     Back on March 12 as Air Cargo News FlyingTypers filed daily news and video reports from World Cargo Symposium in Vancouver, we asked both these guys point blank if Vertannes would succeed Popovich and both denied outright that any such action would take place and we duly reported their comments March 14.
     Stay tuned.
Geoffrey

 

     Deer Jet, the first domestic business aviation operator in China said it would take delivery of its first Airbus ACJ Corporate Jetliner in the second half of 2010 at a press briefing in Shanghai.
     Miss Zhao Hui, President Assistant of Deer Jet told Air Cargo News Flying Typers:
     “Deer Jet currently owns 23 business jets, but now with the addition of ACJ and Boeing Business Jet (the first has just arrived last month), our fleet will expand to at least 35 jets by the end of this year.”
     As the leading player of domestic China business aviation, Deer Jet enjoys a market share around 84 percent; while others include China Eastern Airlines, Air China and some emerging operators around North China’s Shenyang City make up the remainder of a growing market here.
     “Deer Jet has led the way together with the development of business aviation market in China during recent years.
     Deer Jet grew in 2008 by 21 percent and that number in 2009 was again up 32 percent despite the world recession.
     “What is changing in China’s market is not only the scale but the customer structure.
     “Ten years ago, most of our clients were international companies; while now, about 80 percent of our clients are domestic firms.

     “More and more Chinese billionaires are considering purchasing private jets due to their convenience compared to commercial flights.
     “The trend is growing, although we still face high import tariff and strict air control.
     “But things are changing for the better, as related officials including Civil Aviation Administration of China (CAAC) are making a greater effort to shorten the time to examine and approve business jet flights, making private flights easier than before.
     “We expect the number of private jets managed by Deer Jet will increase from today’s three to ten by the end of 2010,” said Miss Zhao.
     Also at the briefing, which is Airbus’s third stop in China to promote its ACJ following Beijing and Sanya in these two months, Francois Chazelle, vice president of executive and private aviation at Airbus Middle East, said that Airbus expects private jet sales to rebound in 2010 behind a fast-growing Chinese market.
     “We do see the market bouncing back, with the largest number of expressions of interests coming from China.
     “Airbus has already played a leading role in China’s business aviation market, but the market potential still is remarkable. And we expect a minimum market share of 50 percent in this country.”
     As the subsidiary of Hainan Airlines, China’s fourth largest airlines, Deer Jet currently operates a fleet composed of one Boeing Business Jet, one A319, three Gulfstream 550, two Gulfstream V, four Gulfstream IV, three Gulfstream 200, one Hawker 900XP, one Hawker 850XP, four Hawker 800XP, as well as one Hawker 850XP, one Gulfstream 200, and one Hawker 4000 under its management.
David

Big General Aviation Event At Friedrichshafen

     Out near where the great zeppelins once roosted, today AERO Friedrichshafen Europe's leading general aviation industry event took off April 8 and continues through April 11, 2010.
Even before it began, the international aviation trade show was reporting positive results with more than 450 exhibiting firms from 25 countries inside the exhibition halls and outside on the hardstand.
     The video takes a look at last year’s event and also offers a glimpse of things to come.

  

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