ANA To Buy AirAsia Out Of Japanese Budget JV

ANA will buy AirAsia out of a Japanese budget airline joint venture for JPY¥2.45 billion (USD$25.11 million), the Malaysian low-cost carrier said, dissolving a loss-making alliance after less than two years.

The venture, based at Tokyo’s Narita airport, has failed to win over Japanese passengers since it was set up in August 2011. ANA, which owns 67 percent of the venture, has blamed the poor performance of AirAsia Japan on ineffective marketing and a non user friendly booking website.

Differences in opinion on issues ranging from cost management to where the business should be based contributed to the breakup, AirAsia said in a statement on Tuesday.

The split comes at a time when AirAsia is planning to expand overseas. The pullout from the venture, however, is consistent with AirAsia’s past decisions to drop loss-making routes.

“I remain positive on the Japanese market and believe there is tremendous opportunity for a low-cost carrier to succeed,” AirAsia Group chief executive Tony Fernandes said in the statement.

“We have not given up on the dream of changing air travel in Japan and look forward to returning to the market,” he added.

AirAsia Japan has been reporting losses since it began operations with flights to five local destinations and two in South Korea.

The venture cut ANA’s operating profit by about JPY¥3.5 billion in the year ended March, ANA’s senior vice president Shinzo Shimizu said on Tuesday.

“We judged it would be better to operate the carrier as a wholly owned unit,” Shimizu said at a press conference in Tokyo.

OPTIONS

ANA has another budget joint venture Peach based at Osaka’s Kansai airport.

Local rival Japan Airlines operates Jetstar Japan, a joint venture with Qantas Airways that has bases in both Narita and Kansai.

Shimizu said ANA will decide in July how to operate the former AirAsia venture and will choose a name for the unit.

A possible merger with Peach was one option being considered, he added.

The unit will use the AirAsia livery until November.

(Reuters)

Bankia Sells IAG Stake For EUR€675 Million

Spain has lost its direct influence in airline group IAG in the midst of its controversial restructuring, after lender Bankia sold its stake in the airline company for EUR€675 million (USD$877 million).

Bankia, bailed out to the tune of EUR€24 billion by the state last year, sold the 12 percent stake on Thursday as part of a recovery plan agreed with the government and the European Union.

International Airlines Group (IAG) was formed in 2011 by the merger of British Airways and Spain’s Iberia.

Losses at the Spanish airline, however, have led IAG to launch a restructuring at Iberia, which includes thousands of lay-offs and sparked strike action earlier this year, in a country where more than a quarter of the workforce are jobless.

“A forced sale like this one tends to have dangerous implications. The (Spanish) government should be able to have a say in its only national airline, which has a major role in the economy,” said Jose Maria Marin, a professor at the state-run National University of Distance Education (UNED).

As a result of the stake sale, the Spanish government – through Bankia – will lose a seat on IAG’s board. However, certain safeguards for Iberia’s business that were put in place at the time of the merger – such as the routes it can fly – remain in place until 2016.

“Spain’s influence in IAG is reducing,” said Cantor Fitzgerald analyst Robin Byde. “Iberia now accounts for around 26 percent of IAG’s capacity… maybe those who said the merger was more of a BA takeover were right.”

The buyers of Bankia’s stake are unknown, though financial sources told Reuters news agency that book-runner Merrill Lynch had sold the 224 million shares to a wide range of investors.

Bankia and IAG said in statements only that the shares had been placed with “institutional investors”.

Last year IAG chief executive Willie Walsh said there was no strategic value in having Bankia as a shareholder and that the group was open to another airline taking Bankia’s stake, though analysts doubted a rival would step in.

There had been speculation Qatar Airways may be interested in the stake but both Walsh and Qatar Air CEO Akbar Al Bakar dismissed the possibility.

MORE TO COME

Iberia has become unprofitable in all markets, including long haul, and its problems are critical, IAG said last week. The Spanish airline reported an operating loss of EUR€202 million in the first quarter.

Staff staged two five-day walkouts in February and March but halted industrial action after IAG reduced the number of lay-offs at the Spanish flag carrier to 3,141.

(Reuters)

AirAsia X Launches USD$370 Million IPO

Malaysian long-haul budget carrier AirAsia X launched an initial public offering on Monday with a value of up to USD$370 million, seeking funds for its fleet expansion as it targets buoyant travel demand in Asia-Pacific and looks to fend off regional rivals.

The carrier, which competes with Singapore Airlines’ Scoot and Qantas Airways’ Jetstar, has said it plans to add 13 Airbus A330 wide-bodied planes this year and next to take its fleet to 23 aircraft by 2014.

The expansion comes as passenger traffic in the Asia-Pacific region more than doubled between 1998 and 2012, putting air travel activity in the region on par with North America, according to figures from research firm Strategic Airport Planning, which were cited in AirAsia X’s preliminary IPO prospectus.

“The focus in on the sweet-spot flights of 4 to 8, or possibly 9 hours,” Tony Fernandes, AirAsia X’s founder, told reporters at the IPO launch. He added that AirAsia X plans to strengthen its position in its key markets in Australia and East Asia.

The company plans to use 33.3 percent of the proceeds to repay bank loans, with another 32.6 percent set for capital expenditure and 29.7 percent as general working capital.

AirAsia X’s chief executive, Azran Osman Rani, said the carrier’s expansion would come through more flights on existing routes as well as from new routes within some countries where it already operates.

The deal is scheduled to be priced on June 24, with the stock market debut set for July 10.

(Reuters)

Birmingham Airport unveils plan to take 70 million passengers in bold test to Heathrow’s air supremacy

Birmingham Airport is making a bid to become as big as London’s Heathrow and potentially the busiest aviation hub in the world. An audacious land-grab to overtake Heathrow – which currently handles 70 million passengers a year, more than any other airport in the world – is being made by a coalition of Midlands councils and business leaders.

The runway extension due to be completed next year will give Birmingham a capacity of 27 million, which is more than a third runway at Heathrow could deliver in a decade. The longer-term vision for a “UK Central” international hub airport at Birmingham would see it overtake Heathrow as Britain’s biggest, able to handle as many as 70 million passengers a year and linked into the proposed HS2 fast rail network. When HS2 is completed, the capital’s main interchange station in West London would be just 31 minutes away from Birmingham.

Paul Kehoe, the chief executive of Birmingham Airport, claims the UK’s long-haul traffic cannot continue to be routed through one airport in West London. Mr Kehoe said: “In 20 years’ time, British air travel will double. We believe that the best option is to create a network of long-haul national airports, each supporting the comparative economic advantages of that region to boost trade, foreign investment and tourism.”

Such a plan could be undermined by the reluctance of major airlines to commit to long-haul routes starting and ending outside the London area. British Airways said last year: “British Airways does not believe that regional airports can ever be an alternative to provision of effective hub airport capacity serving London and the South East.” Virgin has also implied that it is not convinced by Birmingham as an alternative, saying Heathrow and Gatwick are “full at peak times because passengers want to fly from those airports”.

Alongside a larger Birmingham airport, the coalition’s project includes plans to expand capacity at Manchester and Edinburgh airports, which would help ease over-crowding at Heathrow and other airports in the South East. According to Birmingham’s analysis, better use of the six largest regional airports could add 116 million passengers to airport capacity by 2050.

independent.co.uk

Aer Lingus among biggest carriers in new £2.5bn Heathrow Terminal 2

Aer Lingus will be one of the biggest operators at Heathrow’s new Terminal 2 when the £2.5bn (€2.9bn) facility opens next year.

The terminal is due to open to the public next June, with construction being completed this November.

It will also mean an end to the tortuous circumnavigation currently required by Irish passengers at Heathrow’s existing Terminal 1. That terminal will be demolished in 2016 and rebuilt.

Terminal 2 is being built to handle about 20 million passengers a year. An extension will provide capacity for another 10 million.

Aer Lingus will move flights to Terminal 2 on July 9 next year, according to Heathrow’s schedule. It will be the ninth airline to commence operations from the new facility. United, Air Canada and Air China are among the first. A total of 26 airlines are planning to use it.

It’s estimated that Aer Lingus will account for about 10pc of the capacity usage at the new terminal, with the Lufthansa group and United among the biggest users. Aer Lingus will also fit out a new lounge, while check-in for Virgin’s domestic ‘Little Red’ service that Aer Lingus leases aircraft and crew to, will be based beside the Irish carrier’s desks.

Irish Independent

Vueling To Pass Iberia In Five Years

Spanish airline Vueling will be bigger than loss-making flag carrier Iberia within three to five years, IAG chief executive Willie Walsh was quoted on Wednesday as saying.

International Airlines Group, the parent company of British Airways and Iberia, took control of the latter’s low cost domestic competitor Vueling in April. It is in the process of laying off thousands of workers at Iberia, which has suffered because of a recession in Spain that has left 27 percent of the workforce out of work.

“In short and medium-haul routes it will definitely be in five years and possibly even before, in three years,” newspaper Expansion quoted Walsh as saying.

According to figures from Spain’s airport authority Aena, Vueling carried 5.7 million passengers in the first fourth months of the year, while Iberia and Iberia Express combined carried 5.6 million.

IATA Raises Airline Industry Profit Forecast

Global airlines should post an industry profit of USD$12.7 billion this year, an increase from a previous USD$10.6 billion forecast, as lower oil prices and belt-tightening offset difficult economic conditions, industry group IATA said on Monday.

However, the International Air Transport Association said margins remained weak amid Europe’s ongoing debt crisis.

“The day-to-day challenges of keeping revenues ahead of costs remain monumental,” IATA director general Tony Tyler said at a meeting of more than 200 airlines in Cape Town.

“On average, airlines will earn about USD$4 for every passenger, which is less than the cost of a sandwich in most places,” he told Reuters Television.

Addressing reporters later, Tyler said record passenger numbers and growth in “ancillary” revenues were the two key reasons driving improved profitability.

Airlines are expected to fill 80.3 percent of seats and transport an unprecedented 3.13 billion passengers in 2013, up from 79.2 percent and 2.98 billion respectively last year, as operational changes and better capacity management filter through.

Tyler said ancillary revenues would rise to USD$36 billion, or 5 percent of total turnover, as airlines unbundle more services from base fares and charge for additional services such as meals, extra baggage and seats.

“These are significant factors that are driving performance,” Tyler said.

(Reuters)