Thursday, 1 December 2011
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In October, one of Iran Air’s 40 year-old Boeing 727s was filmed making an emergency landing at Tehran Mehrabad Airport. Banned from European Union (EU) airspace, the plane was on a return flight from Moscow when its front landing gear failed to deploy. After skidding to a halt on the runway, all 113 people on board were safely evacuated and the flag carrier vowed to repair its geriatric jet.
Sadly for Iranians, incidents such as this are hardly rare. More than 700 nationals have died in 13 crashes over the past six years, including 77 in January when another of Iran Air’s 727s crashed while trying to land in the north-western city of Urumiyeh...
Tuesday, 1 November 2011
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Four years after Saudi Arabia liberalised its aviation sector, Simon Stewart, chief executive of the only surviving private carrier, Nas Air, remains optimistic about the “vast potential” for air transport in the kingdom. Ask him about the progress to date, however, and the former army pilot pulls no punches. “Saudi aviation is pretty much structured as it was in the old legacy days,” he admits, and he doesn’t expect things to change overnight.
Low-cost carrier Nas Air was created in 2007 along with another private airline, Sama, to end the domestic monopoly of flag carrier Saudi Arabian Airlines. It was hoped the new license-holders would mimic the success of Jazeera Airways, which grew rapidly after the Kuwaiti aviation sector was liberalised in 2005...
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“An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen,” wrote the late US educator Laurence Peter. His words ring as true today as ever before, with the world’s brightest economic minds showing little aptitude for diagnosing – let alone remedying – the perfect storm of a European debt crisis, a stagnating US economy, and political upheaval across the Arab world.
And yet while meaningful forecasts elude the experts, the simplest of litmus tests is available to anyone by looking up, towards the skies, at the air transport sector – the lifeblood of the global economy...
Saturday, 1 October 2011
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In August, the Air Transport Rating Agency (ATRA) published a list of what it claimed are the ten safest airlines in the world. The Geneva-based company, which was founded earlier this year, said it arrived at the holistic safety rating through a combined analysis of 15 criteria, incorporating factors as disparate as financial results and average fleet age.
Some analysts were quick to cast doubt on its methodology, arguing that previous studies have found no correlation between accident rates and several of the criteria used. Others also noted the conspicuous absence of any Gulf carriers on its list, despite the fact that the region’s three largest airlines – Emirates, Etihad and Qatar Airways – have never recorded a fatal incident in their, admittedly brief, histories...
Tuesday, 13 September 2011
Cargolux finances three more 747-8Fs, sells one 747-400F
Cargolux has arranged Ex-Im backed funding for three of the four Boeing 747-8Fs due to be delivered in 2012, and the carrier will consider an operating lease structure for the remaining freighter, CFO David Arendt has told Aviation Exchange. The airline is the launch partner for the 747-8F and will sell one of its older 747-400Fs to Silk Way Airways later this month after receiving two of the three Dash-8s being delivered this year, he added.
The fourth aircraft, which arrives in February 2012, will be financed by PEFCO under an Ex-Im guarantee, Arendt confirmed. The fifth aircraft, delivering in April 2012, will be acquired by a joint venture comprising Cargolux and three equity co-investors – Crédit Agricole, DVB Bank and KfW-IPEX Bank – and will draw from Ex-Im backed debt provided by JP Morgan. The sixth, arriving in July 2012, looks set to be funded by an Ex-Im bond on the capital market, with Goldman Sachs and Crédit Agricole signing preliminary agreements.
Friday, 9 September 2011
ALC gives muted reaction to 737MAX amid renewed focus on order book
Air Lease Corporation this week conducted a major product review of the re-engined 737MAX with Boeing, ALC president John Plueger has told Aviation Exchange, with the lessor making no secret of its preference for a brand new single-aisle model. Plueger said ALC will remain "very engaged" with Boeing over the development of the 737MAX, but he acknowledged the manufacturer's need to plan for the "totality of their single and twin-aisle product line," including possible upgrades to the Boeing 777-300ER as well as the planned Boeing 787-10.
ALC was founded last year after industry veteran Steven Udvar-Házy retired as CEO of market leader ILFC to set up a competing lessor. Plueger came on board shortly afterwards, having served as acting CEO at ILFC following Udvar-Házy's departure, and under their joint stewardship ALC has rapidly grown its portfolio to a fleet of 65 aircraft, with forward orders for a further 234 jets by 2020.
Thursday, 1 September 2011
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After 18 years of political wrangling, the Kuwaiti parliament passed a privatisation law in May 2010 which proponents said would reinvigorate the country's bureaucratic, public-sector dominated economy. Cabinet ministers forced the legislation through after 28 of the emirate's 50 parliamentarians opposed it, with some arguing that the changes were tantamount to "the robbery of the wealth of Kuwait and a plan to destroy the country".
Top of the agenda was the long-awaited move to privatise Kuwait Airways, which has itself done little to preserve the emirate's wealth in recent times. The flag carrier posted losses in 20 of the last 21 years, haemorrhaging more than $3 billion including $556 million last year alone – a time when most airlines were rebounding from the global recession...
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Speaking at the Lowy Institute for International Policy in Sydney, James Hogan, chief executive of Abu Dhabi’s Etihad Airways, last month described aviation as "the absolute lifeblood of the United Arab Emirates’ future economic prospects". The growing geopolitical significance of Asia places the Gulf states at a "crossroads between the Old World and the New", he said, making diversification of their oil-centric economies key to continued prosperity.
For a country of just eight million, the UAE’s aviation footprint has already reached astounding proportions. Dubai International Airport became the third busiest international air traffic hub in the world during the first quarter of 2011, handling more than 12 million passengers, lagging behind only London Heathrow and Hong Kong...
Friday, 12 August 2011
Pegasus negotiating massive order to triple fleet size
Turkish low-cost carrier Pegasus Airlines is negotiating with Boeing and Airbus over an order totalling more than 100 aircraft, CFO Serhan Ulga has revealed to Aviation Exchange. The airline, which currently has a fleet of 39 mostly Boeing aircraft, hopes to reach an agreement by the end of the year. It has not yet decided whether to select one manufacturer or place a split order for jets.
"We are in the negotiation process for a big order with both manufacturers," Ulga told this news service. "We are seriously considering the best alternative. We'll go with whatever is the best economic equity value for our entire order."
Thursday, 11 August 2011
AerCap ramps up share repurchasing as acquisitions take a backseat
Dutch lessor AerCap is actively buying stock under its USD 50m share repurchase programme, as newly appointed CEO Aengus Kelly tightens the company's funding structure amid uncertainty in the global economy. Having reduced the average age of its 335-aircraft fleet to 5.4 years, the lessor is tempering asset acquisitions in order to focus on shareholder returns, Kelly told Aviation Exchange.
Proceeds from the sale of aircraft teardown subsidiary AeroTurbine, bought by ILFC earlier this month for USD 228m, have yet to be earmarked for specific transactions, but the windfall could be used for further share repurchases. "We are not here for growth for growth's sake. We are here to increase shareholder value," the CEO said. "When we look at an asset acquisition opportunity it has to be a better deal than buying back our own shares."
Monday, 1 August 2011
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EgyptAir is no longer in crisis mode. Having lost $140 million in the aftermath of Hosni Mubarak’s overthrow, the flag carrier is bouncing back with a two-phase summer programme which has restored capacity to above 2010 levels. Though its fortunes remain entwined with political events beyond his control, Hussein Massoud, chief executive of EgyptAir Holding Company, is tentatively steering the airline back onto the path of expansion.
“Immediately after the revolution we had a very hard time during February and March,” Massoud tells The Gulf. “There was no previous planning [for civil unrest], and you had a situation where, in just one day in February, we also had to fly home 9,000 Egyptians from Libya.”
The uncertainty that engulfed North Africa led to an immediate drying up of passenger demand. Footfall in Egypt’s airports fell by two thirds as tourists, business people and the country’s diaspora postponed their travel plans, opting to wait until the political situation became clearer. EgyptAir’s revenues plummeted by 80 per cent, and Massoud took the exceptional step of grounding one third of his fleet...
Friday, 22 July 2011
Virgin America tempers 2012/13 delivery schedule over fuel concerns
Virgin America will consider postponing up to 13 Airbus A320 deliveries previously slated for the latter half of 2012 and the first half of 2013, CEO David Cush has told this news service. The US low cost carrier, which has rapidly expanded its fleet to 39 jets since launching in 2007, is “still in a growth trajectory” and remains on-track to reach 111 aircraft by 2019, Cush said.
“We have significant flexibility on the size of our fleet over the next 24 months,” the CEO told Aviation Exchange. “We have not entered into agreements for aircraft that had been contemplated for the second half of 2012 [six jets] and first half of 2013 [seven jets] and, therefore, have the fleet size flexibility necessary to make adjustments.”
Thursday, 7 July 2011
Consolidation on the cards as Kenya Airways launches ten-year plan
Kenya Airways is open to the prospect of merging with "like-minded carriers" in order to deliver on its ambitious ten-year growth plan, CEO Titus Naikuni has told Aviation Exchange. The industry veteran, who was last month appointed to IATA's 31-strong board of governors, said that closer cooperation with partners is a logical next step as codeshare agreements had fuelled the airline's rapid expansion.
"Kenya Airways sees benefits in consolidation with like-minded carriers," he told this news service. "This should come progressively, perhaps through cooperation initially."
Friday, 1 July 2011
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If there’s one thing that haunts Gulf airlines as they continue their indomitable march along the path of expansion, it’s the ever-present suspicion that they – unlike rivals in Europe and beyond – somehow enjoy unfair competitive advantages at their home bases.
Accusations typically centre on supposed government subsidies and access to cheap fuel. Despite opening its accounts to auditors PwC, Dubai-based Emirates has never fully shed this reputation. But its latest attempt is the most comprehensive to date, ushering in the services of research firm Oxford Economics, an affiliate of Oxford University, to set the record straight once and for all.
The findings of the consultancy, whose clients include numerous governments and central banks, go beyond affirming the primacy of air connectivity in the Gulf. They conclude that Emirates' growth has its roots in operational efficiency, open competition, acute market awareness and benign geography...
Thursday, 30 June 2011
Santander, the only bank currently arranging Spanish Operating Leases (SOLs), has told Aviation Exchange it is pitching to potential clients in the Middle East and Asia as it witnesses growing demand for the tax leases. The structures, originally developed by Caja Madrid, allow lessees to receive tax benefits through accelerated depreciation and have previously only been closed in Latin America and Europe.
Spanish flag carrier Iberia secured the first ever aviation SOL in September 2005 after going on the hunt for alternatives to Japanese Operating Leases (JOLs). Caja Madrid provided 21% equity while RBS financed 79% debt, delivering savings of 6.5% through a reduced rental stream on two Airbus A340s.
The JOLs previously favoured by Iberia tended to deliver larger savings, but according to Gregorio Herrera, Santander Global Banking & Markets, Europe, there are several additional benefits entailed within SOL structures.
Tuesday, 7 June 2011
Full article on huffingtonpost.com
America's airlines are at it again. Barely a year after quashing European efforts to reform the transatlantic Open Skies treaty -- a lop-sided agreement which gives U.S. carriers unfettered access to Europe, while barring our airlines from operating domestic flights in the U.S. -- America is now bellyaching about EU efforts to curb global warming.
When Phase II of the EU's Emissions Trading Scheme (ETS) comes into force next year, it will at long last hold the aviation sector accountable for its CO2 emissions. The scheme has gradually been rolled out across Europe since 2005, allocating carbon permits to large companies and forcing them to purchase extra credits if they exceed their allowance. By attaching a financial incentive to energy efficiency, the ETS is estimated to have delivered annual emissions reductions of 2.5 to 5 percent since its launch...
Wednesday, 1 June 2011
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To most casual observers, the challenges faced by Etihad chief executive James Hogan during 2011 would appear quite exceptional. In the space of a few short months the Abu Dhabi-based carrier – still only seven years old – has been forced to contend with a dramatic oil price rise, civil unrest on its doorstep, and a combined tsunami-cum-nuclear crisis which sent shockwaves around the globe.
But for a man whose résumé includes breakneck expansion in the face of countless prior crises – including the SARS pandemic, the global financial crisis, and aviation-related terrorism, to name just three – the turbulence of the past few months is nothing out of the ordinary.
Hogan was drafted in to head up Etihad in 2006, having served prior senior management stints at Bahrain’s national carrier Gulf Air and the UK airline, bmi. With more than 35 years of industry experience to his name, the Australian native understands the cyclical nature of aviation better than most. His business model is the stuff of nightmares for Etihad’s legacy rivals...
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When FlyDubai began operations in June 2009, chief executive Ghaith al Ghaith said he was bringing a "low-cost alternative" to residents of the Middle East. His choice of words might seem clichéd to European travellers, who have long been accustomed to the cut-throat, no-frills model pioneered by Ryanair. But in the Gulf, low-cost air travel has always been a notoriously elusive creature.
Take Air Arabia, the region’s first low-cost carrier (LCC), which took to the skies in 2003. Despite being in the business of no-frills travel, its passengers can check in a bag weighing up to 30 kilos free of charge – generosity which is quite literally unheard of in western no-frills markets. In Europe, hapless travellers who turn up to the airport with the same piece of luggage face fees of up to EUR 250 ($350)...
Sunday, 1 May 2011
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In May 2003, shortly after coalition troops invaded Baghdad, the US Federal Reserve Bank of New York set up the Development Fund for Iraq (DFI). Its remit was to shield the country's vast oil revenue from compensation claims against the former regime, ring-fencing proceeds for reconstruction and development projects.
Under Chapter Seven of the UN Charter, five per cent of those petrodollars had to be siphoned off as war reparations, gradually reimbursing Kuwait for losses incurred during Saddam Hussein's brutal 1990-91 occupation. More than $30 billion in compensation has already been distributed to foreign claimants, but on 30 June 2011, the DFI mechanism will expire.
This looming transition spells uncertainty not only for the governments of Iraq and Kuwait - who must set aside their historic differences to strike a deal over the $20 billion outstanding - but it also ushers in a dangerous new phase in the decades-old dispute between their flag carriers...
Friday, 1 April 2011
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The International Air Transport Association (IATA), the airline industry’s main trade body, has never been shy about talking up the perils of an oil shock. Even in May 2005, when a barrel of Brent Crude set you back just $50, IATA was calling jet fuel "The Fifth Horseman of the Apocalypse".
But with Middle East unrest now pushing oil prices to double that level, the group's latest warning has touched a nerve with airline bosses. The last time crude passed the $100-mark the world was tumbling into its deepest recession for decades, and few industries hit the ground harder than civil aviation.
In 2009, as global financial markets began pulling themselves back from the abyss, air traffic was still falling at its fastest rate since records began. Cash-strapped holidaymakers were opting for staycations; business travellers were downgrading to Economy; and stunted economic activity was choking off demand for cargo. All told, the industry lost $9.4 billion...
Tuesday, 1 March 2011
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When the UAE’s ambassador to Canada says that negotiating new air links has been a “protracted and frustrating” process, he isn’t kidding. Half a decade of quarrelling reached boiling point last autumn in the form of a full-scale diplomatic crisis, with Canada’s military being booted off Emirati soil, and its citizens being hit by visa entry fees of up to C$1,000.
On the surface, the dispute hinges on UAE demands that two of its carriers – Emirates and Etihad – be allowed to increase flight frequencies to Toronto, as well as add new links to Calgary and Vancouver. But at stake is far more than the competitive threat such expansion poses to flag carrier Air Canada. The web of protectionism blocking a deal actually stretches beyond North America, spanning the Atlantic and ensconcing aviation’s former masters, the European legacy carriers....