Shareholders in Jet Airways have approved an agreed sale of a 24% stake in the airline to Etihad Airways. However, the Indian airline has deferred seeking shareholder approval for a new set of “Articles of Association” as it awaits regulatory clarity on the issue, reports Reuters.
LATAM Airlines Group has reported an operating income of US$114.2 million for first quarter 2013, a 149.8% increase compared to the US$45.7 million pro forma operating income in first quarter 2012. Operating margin reached 3.4%, an increase of 2.0 points compared to 1.4% in 2012. This result reflects a steady recovery in business operations as the group begins to realise the expected synergies from the merger between LAN and TAM.
Net income reached US$42.7 million for first quarter 2013, compared to a pro forma consolidated net income of US$83.7 million for the same period 2012, which represents a decrease of 48.9% mainly due to a foreign exchange gain of US$133.4 million recognized at TAM during the first quarter 2012.
TAM has maintained capacity discipline with a 9.2% reduction in ASKs during the first quarter 2013 as compared to the first quarter 2012. Traffic grew by 3.4%, with strong load factor improvements of 9.5 percentage points as compared to the first quarter 2012, reaching 77.7%. This led to a significant increase in revenue per ASK, as measured in Brazilian reais. Results in US dollars were affected by a 13% depreciation of the Brazilian currency during the quarter as compared to the first quarter 2012.
The group has reiterated its synergy target of between US$600 and US$700 million to be fully achieved by the fourth year after the merger (June 2016).
Total revenues in the first quarter 2013 reached US$3,409.0 million compared to pro forma revenues of US$3,360.2 million in first quarter 2012. The increase of 1.5% is a result of a 1.5% increase in passenger revenues and a 38.6% increase in other revenues, partially offset by a 3.2% decrease in cargo revenues. The slight increase in revenues reflects capacity reductions in the domestic Brazil passenger operations and a more challenging environment for international passenger operations, as well as weak market demand in the cargo business. Passenger and cargo revenues accounted for 84.2% and 13.5% of total revenues, respectively, in first quarter 2013.
During the first quarter 2013, LATAM received a total of five A320 family aircraft and one Boeing 767-300 passenger aircraft. The airline returned one A320-200 and sold two Airbus A318 aircraft.
Both runways were closed at Heathrow Airport this morning after a British Airways A319 made an emergency landing on the North runway after an engine failure thought to be caused by a bird strike. All passengers and crew were safely evacuated from the aircraft following the incident at about 09:00 BST. Witnesses stated seeing a black smoke trail from one of the engines.
The southern runway has since re-opened. The northern runway remains closed given that the BA A319 remains on it with chutes deployed.
Fuel costs have impacted AirAsia quarterly profits and the carrier reported its first drop in profit in five quarters. Net income fell 39% to 104.8 million ringgit ($35 million) in the three months ended March 31, while revenue climbed 11% to 1.30 billion ringgit.
Fuel costs rose 18% in the quarter to 523 million ringgit, while aircraft lease expense climbed 11% to 44.7 million ringgit. AirAsia also booked foreign exchange loss of 37.7 million ringgit, compared with a gain of 88 million ringgit a year earlier.
AirAsia carried more passengers during the period however. Passenger numbers rose by 7% to 5.2 million in the period, with average fares increasing by 2%.
Group Chief Executive Officer Tony Fernandes said the carrier has potential for “double digit” growth this year as AirAsia franchise expands.
The Indian Finance Ministry has questioned the rationale behind Air India’s plan to trim its 27,000-strong workforce by offering a voluntary retirement scheme (VRS). The scheme will cost Rs 1,200 crore, but the ministry has questioned whether it is necessary since 7,000 employees will retire from service over the next three years anyway, while 12,000 will be transferred to the ground handling and engineering subsidiaries, leaving 8,000 employees left at Air India over the next five years.
There is also the concern that rather than retain talented employees, they will migrate and the “deadwoods” would remain there till superannuation.
The Times of India has reported a rumour that Gulf carriers Qatar Airways and Air Arabia are keen to follow Etihad’s lead and invest in Indian airlines.
The newspaper reports that Qatar Airways is seeking investment in an existing Indian carrier such as SpiceJet and GoAir, while Kingfisher Airlines is attempting to encourage Qatar Airways to invest in the ailing airline. Air Arabia has also been mooted for an Indian investment.
However, Qatar Airways has already dismissed reports it is interested in investing in an Indian airline.
In an update on the progress of ‘Delivery and Future Direction’, the package of measures implemented by Flybe UK to return to growth, the airline states that the action it has taken so far will deliver £30m of cost savings in 2013/14 against the £25m target.
Flybe has also announced further initiatives under the turnaround plan. The first is an agreement to transfer its 25 pairs of arrival and departure slots at London Gatwick Airport to easyJet for a total consideration of £20m. The realisation of the value of these slots will help Flybe finance its return to profitability, says the airline. Completion is subject to Class 1 shareholder approval, expected in July 2013.
The second initiative comprises an agreement with Embraer for the deferral of 16 new E175 aircraft due for delivery during 2014 and 2015. The aircraft will now not be delivered until 2017 to 2019 and will lead to a reduction in pre-delivery payment commitments in winter 2013/14 of £20m.
Details of Phase 2 of Flybe’s turnaround plan is currently being implemented, targeting a further £12m of savings in 2013/14, and an annual run rate saving of £23m from 2014/15 onwards.
Head count at the airline has already reduced by 22% from 2,730 to 2,140, while Flybe has reached an agreement in principle with the British Airlines Pilots Association (BALPA), for up to a 5% reduction in salary in return for extra time off.
The turnaround plan is being financed without recourse to shareholders through:
New start up Thai airline, a subsidiary of Lion Air, is moving closer to launch as Thai Lion Air has begun recruiting pilots, cabin staff and ground staff
Thai Lion Air intends to start its operation strongly with the deployment of up to six single-aisle twin-jet Boeing 737-800s and by using Bangkok’s Don Mueang airport as its base.
San Francisco has approved a $4.1 billion capital improvement plan for San Francisco International Airport (SFO), which will fund terminal improvements, facility enhancements, and the creation of an on-site luxury hotel, pending environmental approval.
Capital improvement projects funded by the plan include renovations to concourse and security checkpoint areas in Terminal 3, a full renovation of Terminal 1, Boarding Area B, and the creation of a 400-room luxury hotel within the airport grounds, pending environmental approval.
United Airlines has ordered 40 E175 aircraft, with another 60 firm re-confirmable orders that are subject to regional subsidiary SkyWest being awarded capacity purchase agreements with major US airline partners.
Additionally, the agreement includes options for another 100 E175s, taking the total order potential up to 200 aircraft. This sale is in addition to the contract signed by United for 30 firm and 40 options for E175 jets earlier this year.
SkyWest plans to configure the E175s in a dual-class 76-seat layout, with the delivery of the first aircraft scheduled for the second quarter of 2014.
