CarVal acquires stake in Aergo

Dino D'Amore
By Dino D'Amore October 2, 2014 19:41

CarVal acquires stake in Aergo

CarVal Investors has purchased a majority share in Aergo Capital to use the same as a leasing platform going forward. Aergo will become a CarVal platform with Fred Browne  remaining although co-owner Denis O’Brien will leave the company.

As Boeing ups the production of the 737 to 52 per month, the Middle East impresses with very strong capacity growth matched by demand.

IATA announced yesterday that global passenger traffic results for August show revenue passenger kilometers (RPKs) increased 5.9% year on year continuing a slow upward trend from a 5.4% increase for July year on year. August capacity rose 5.5% but load factors held at 83.9%, which is a 0.3 percentage point rise year on year for August.

Impressively International passenger traffic rose 6.7% in August directly in line with a 6.7% capacity increase, which held load factors at 84.2%. Asia Pacific airlines saw passenger traffic increase 5.8% year on year for August on the back of a 7.0% capacity increase, which pushed load factors down 0.9 percentage points year on year to 81.0%. In North America airlines saw passenger traffic rise 3.2% for August year on year, capacity was up 5.0%, which pushed load factors down 1.5 percentage points to 86.6%. European carriers saw international traffic climb 6.8% in August year on year. Capacity was up 6.0% pushing load factor was 86.9% which is 0.6 percentage points up year on year.

Meanwhile Middle East airlines saw a huge 11.7% increase in passenger traffic as capacity rose 10.3%. Interestingly the Middle East airlines were able to absorb this capacity growth with a 1.0 percentage point increase to 83.0%. Latin American airlines on the other hand have had a rough time of it lately, but even so traffic for August 2014 was up 8.2% on a capacity increase of 6.4%, which increased load factor by 1.4% year on year to 82.2%. African airlines saw demand rise by 7.5% as capacity increased 5.9%, which improved load factors by 1.1 percentage points to 75.0%. African figures need to show three or four months of solid gains before comment can be made on any improvements in the region although, given the Ebola crisis, these figures will be looked upon by many as being most reasonable indeed.

Domestic demand saw a 4.5% increase in August 2014 year on year with Russia and India seeing the greatest growth, the former confounding many experts with a 10.1% year on year increase in demand. India saw demand increase 7.4% year on year. Both countries have seen airlines selling tickets cheap which has stimulated passenger demand and as such it is too early to laud these figures as a sign of better things to come. Russia had load factors of 85.2% during the period but India only managed to fill 75.3% of seats which considering the fare reductions still points to huge overcapacity in the domestic market. Overall domestic capacity rose 3.4% and load factor increased 0.9 percentage points to 83.4%.

Meanwhile, our editorial from yesterday concerning the so-called Double Irish taxation regime has stirred heated debate (arguably provoking debate is our primary aim for this news service). Indeed access to DTA benefits is the big story but that is not what we were talking about yesterday. Interestingly since yesterday’s news, we now have written confirmation that at least four major aviation companies with a huge combined footprint are in fact using the loophole to their advantage and are taking an interest in what is going on with the EC.

The most interesting speculative story on the matter of taxation within the EU at this time revolves around Ireland, the Netherlands and Belgium being in talks to allow aviation leasing companies to move within those tax jurisdictions following heavy lobbying. As such if the tax regime of one jurisdiction is changed, a company can simply move to another one, that leaves the company structure above any one country’s tax regime. This news services has not been able to confirm these reports at this time but they have been backed up by a number of trusted sources close to informal talks. If true, this sort of agreement could well benefit some companies operating in those jurisdictions in the future, although how to regulate such a system is something that boggles the mind. Even so our ear is to the ground on the matter. Please do contact us to add your voice to this debate – all replies will be kept strictly confidential!

Dino D'Amore
By Dino D'Amore October 2, 2014 19:41