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Thursday October 29, 2009

Air Canada on Tuesday closed its previously announced equity offering, raising net proceeds of C$249 million ($233.3 million) and hinting that the airline, which appeared to be teetering on the edge of bankruptcy last spring, is righting itself financially under new President and CEO Calin Rovinescu. The offering comprised the sale of 160,500 units composed of one Class B voting share or one Class A variable voting share and one-half of one share purchase warrant.

Rovinescu, who spoke to ATWOnline during Tuesday's Star Alliance ceremonies for Continental Airlines at Newark, said his "No. 1 task" since taking over from Montie Brewer in the spring has been to insure the stabilization of the company (ATWOnline, April 1). "That was more important than anything else," he said. He appears to have succeeded. In July, AC reached agreement with lenders and stakeholders leading to C$1 billion in additional liquidity and successfully lobbied the Ottawa government to have Canada's pension regulations changed, offering a bit of breathing room on its pension liabilities. It also reached new 21-month labor agreements with its five major unions (ATWOnline, July 17).

"I'm very proud of what we have managed to achieve. . .With those pieces in place we think we have a stable environment to ride out the downturn," Rovinescu told this website. He added, however, that AC is "not going to sit on our hands" until the market improves but is moving forward with targeted expansion, with new services next year to Brussels, Athens and Barcelona. On Nov. 30 it will launch daily Montreal-Houston Intercontinental service, a route made viable by CO's entry into Star. It will follow this with winter seasonal nonstop flights from Calgary to Maui and Honolulu.

Rovinescu also said AC has managed to maintain a 55%-57% share of the domestic market in the face of Calgary-based WestJet's steady encroachment. The domestic business generates less than 40% of AC's passenger revenue, with the remainder split pretty evenly between transborder and intercontinental services, he said. Delivery-wise, AC is well-positioned in the current down market, with no new aircraft planned until July 2013, when the first of its 37 787s is set to deliver.

by Perry Flint

Royal Jordanian reported a JOD25.5 million ($35.7 million) profit through the first nine months of 2009, reversed from a JOD3.8 million loss in the year-ago period, implying third-quarter earnings of approximately JOD17.8 million (ATWOnline, July 30). It posted a profit of some JOD200,000 in the third quarter of 2008. Operating revenue through the nine-month period fell 16% year-over-year to JOD449 million, but fuel costs plunged 50% and "operational costs" dropped 20% on a 4% cut in capacity. Passenger numbers were down 3%, RJ said, load factor declined 8 points to 67% and yield fell 14% to JOD185.

Australian Competition and Consumer Commission yesterday launched legal proceedings against Thai Airways, alleging that the carrier engaged in price-fixing on cargo carriage over a five-year period. Thai is the 11th airline targeted by ACCC in its ongoing investigation of antitrust irregularities in air cargo pricing. Six have paid penalties totaling A$41 million ($37.6 million) and four cases are pending (ATWOnline, Sept. 4). ACCC said in a statement that between 2001 and 2006, Thai "entered into arrangements or understandings with other international air cargo carriers in specific countries that had the purpose or effect of fixing the price of fuel surcharges and security surcharges that were applied to air cargo carried by [Thai] and other airlines," specifically on shipments originating in Singapore, Indonesia and Hong Kong. It added that Thai also reached inappropriate deals for a domestic "crisis surcharge." Thai said it "has consistently maintained its corporate policy to comply with the laws of the countries where it operates." A hearing was set for Nov. 26 in Sydney.

Kingfisher Airlines suffered a INR4.19 billion ($88.8 million) loss in the fiscal second quarter ended Sept. 30, a 13.3% improvement from the INR4.83 billion deficit suffered in the year-ago period, according to a filing with the Bombay Stock Exchange cited by numerous press reports from India. Revenue dropped 13.7% to INR11.42 billion

Singapore Airlines CEO Chew Choon Seng believes the traffic downturn largely has bottomed out. Speaking to ATWOnline at this week's Star Alliance event in Newark, Chew cited "signs. . .that market demand has stabilized," adding that SIA has observed that some corporations are easing their travel policies. But he noted that "all of us have lost two years of growth" and "the fact of the matter is that the G20 countries are not out of the woods yet." Discussing the collapse in airfreight, which has hit Asia/Pacific airlines particularly hard, he said it is too soon to say whether it portends a structural or cyclical change in that segment of the business. SIA has parked only one of its 13 747-400Fs, while some others are "doing useful charter work carrying F1 race cars," he said, smiling. SIA has no plans to add any freighters.

by Perry Flint

Saudi Arabian Airlines took delivery of its first A320 purchased directly from Airbus, the manufacturer announced. It ordered 22 A320s in December 2007 but already had taken delivery of a leased aircraft this month (ATWOnline, Nov. 13, 2007). Saudi's A320s will be powered by CFM56-5B engines and will seat 112-132 passengers. It eventually will operate 50 of the type (including 28 on lease).

Continental Airlines yesterday signed codeshare agreements with two more Star Alliance members, ANA and Asiana Airlines. CO officially joined Star Tuesday and inked codesharing pacts with United Airlines, Lufthansa, Air Canada and bmi (ATWOnline, Oct. 28). It said yesterday that it will start codesharing with Asiana in December and with ANA next year. Asiana President and COO Young Doo Yoon told ATWOnline at the Star event in Newark that in the first phase of the agreement Asiana and CO will codeshare on transpacific flights, with the OZ code going on Continental flights from Tokyo Narita to Newark and Houston while the CO code will go on Asiana flights to Seoul Incheon from Los Angeles, Seattle and San Francisco.

Yoon also said the passenger and cargo markets are picking up "and we hope it will continue." The weak South Korean won is boosting traffic from Japanese tourists, who enjoy a stronger yen for shopping, but transpacific traffic remains weak and the carrier is not yet seeing any significant benefit from South Korea's participation in the visa waiver program. "China is still slow," he stated. Asiana is hoping to launch service to Beijing from Seoul Gimpo but this has to be approved by both governments.

Hawaiian Airlines flew 647.5 million RPMs in September, an 8.1% increase over the year-ago month. Capacity rose 3.1% to 772.5 million ASMs, lifting load factor 3.8 points to 83.8%.

Frontier Airlines flew 709.4 million RPMs in September, down 0.4% year-over-year. Capacity slipped 0.2% to 858.2 million ASMs and load factor was 0.1 point lower at 82.7%.

Allegiant Air flew 264.7 million scheduled RPMs in September, a 59.6% increase year-over-year. Capacity rose 63.2% to 294.7 million ASMs and load factor fell 2 points to 89.8%.

SkyWest Airlines and Atlantic Southeast Airlines flew 1.42 billion RPMs in September, a 9.8% increase year-over-year. Capacity was up 6.9% to 1.8 billion ASMs, lifting load factor 2.1 points to 78.6%.

Republic Airways Holdings airlines flew 927.7 million RPMs in September, up 10.7% year-over-year, against a 10.2% lift in capacity to 1.26 billion ASMs. Load factor rose 0.3 point to 73.6%.

Airline Services Components of London Gatwick will provide A320 wheel and brake support to Avianova under a cost-per-landing agreement.

Lufthansa Systems will provide its myIDTravel staff e-ticketing solution to JetBlue Airways under a five-year deal.