Interview: Simon Stewart, Nas Air CEO

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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...

Flying into the unknown

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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...

Wing and a prayer

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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...

Interview: David Arendt, Cargolux CFO

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.

Interview: John Plueger, Air Lease Corporation President

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.

Kuwait Airways flies the nest

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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...

UAE aviation: taking off

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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...

Interview: Serhan Ulga, Pegasus CFO

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."

Interview: Aengus Kelly, AerCap CEO

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."

Interview: Hussein Massoud, EgyptAir CEO

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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...