Archive for the ‘Uncategorized’ Category

Virgin contacts regulators over BA Heathrow slots

Tuesday, September 27th, 2011

Virgin Atlantic owner, Sir Richard Branson, has said that he will consult with regulators about British Airways’ decision to purchase six landing and take-off slots from troubled BMI at Heathrow. BA is already holds more slots than any other airline at the London hub by far. According to a statement made by Virgin, Sir Richard is concerned that BA is looking to strip the key assets from BMI which will result in unattractive leftovers being put up for sale.

The Virgin boss has been interested in BMI for about a decade and the airline said its interest had been renewed after owners Lufthansa recently announced that they were looking for a way of disposing of the British carrier.

Virgin said it had not entered into the bidding for the six Heathrow slots because it understood that they were being leased, not sold. BA has since announced that it has purchased the slots.

The European Commission and the Office of Fair Trading will now be asked by Virgin Atlantic to become involved in the matter. A spokesman for Lufthansa said the German flag carrier was still examining a range of possibilities for the disposal of BMI. He added that the sale of the slots to British Airways had not affected the value of the carrier because they were not part of its core activities.

Lufthansa has declined to say whether it is in negotiations with any airlines over selling further slots at Heathrow. BMI has been a loss maker since Lufthansa took control in 2009.

Easyjet increases year end profit forecast

Monday, September 26th, 2011

Budget carrier easyJet has said that an increase in demand from business travellers has helped it to reassess its profits forecast. The airline said it now expected annual profits of between £240 and £250 million. Easyjet’s previous prediction, which was made in July, was for profits totalling between £200 and £230 million.

The airline has also said that it will be paying out a special dividend to its shareholders. In a statement the airline said that commercial performance was robust across the whole of the network, particularly on routes between cities which were popular with business travellers or customers flying off on a mini-break.

Shares in the airline have leapt seven per cent after it said that it would be adding 35 pence a share to its annual nine pence a share dividend. Earlier this year analysts were predicting that easyJet would make a profit of £179 million. However, if the recent guidance proves to be true then the airline is looking at a 40 per cent increase on that figure.

Earlier in the year, easyJet said that it was introducing a new strategy to tap into the lucrative corporate sector. In July, the carrier said that the number of business travellers choosing to fly with easyJet was up by around 20 per cent.

Although the carrier has said that it is continuing to perform well it is likely to see its fuel bill for 2012 become around £220 million higher than it was this year.

BA expands presence at Heathrow with BMI slots

Friday, September 23rd, 2011

British Airways has done a deal with BMI for an undisclosed amount to acquire six of the troubled airline’s valuable landing- and take-off slots at Heathrow Airport. The agreement means that IAG, parent of the UK flag carrier, now commands 45 per cent of the capacity at the London hub. In a short statement, BA said that by the end of next month it would be expanding both its short- and long-haul operations using the new slots.

By agreeing to part with what is its most valuable asset, BMI has indicated that owner Lufthansa is looking to break up the British-based airline rather than try and find a buyer. Since being forced to take control of BMI in the middle of 2009, Lufthansa has tried to restructure it but has continued to incur heavy losses.

According to Echelon Research & Advisory analyst, Chris Logan, BMI is a loss maker without a strong brand so it makes sense for Lufthansa to try and dispose of its Heathrow slots. Since 2009, BMI has recorded operating losses of some 223 million euros.

A British Airways spokeswoman said that the airline was still looking to expand its capacity at Heathrow, one of the busiest airports in the world. Three years ago, the value of having slots at the London hub was illustrated when US carrier Continental Airlines finalised a deal to buy four pairs for $209 million.

According to Stefanie Stotz, a Lufthansa spokeswoman, BMI’s current flight schedule will be unaffected by the deal with BA.

Heathrow failing to take advantage of emerging markets

Thursday, September 22nd, 2011

A new report commissioned by the company which operates Heathrow suggests that the airport is falling behind other European hubs when it comes to connecting directly with cities across the emerging markets. According to chief executive of BAA, Colin Matthews, the annual cost to the UK for its lack of direct connections already stands at £1.2 billion.

He said that as the world economy continued to shift, Britain should be working towards forging better links. As he sees it, if the country continues as it is, the UK could become an island cut off from the most important markets on the planet.

The analysis was undertaken by Frontier Economics. The results suggest that over a decade lost business could cost as much as £14 billion. The study claims that 21 destinations in the emerging markets, including Jakarta, Guangzhou and Manila, are already being served from other airports around Europe on a daily basis which are not directly served by London’s main airport.

The report also says that Frankfurt and Charles de Gaulle are flying 1,000 more services to China’s three biggest cities every year than Heathrow was managing. The findings have been disputed by Heathrow expansion opposition Hacan Clearskies. Chairman John Stewart said Heathrow currently has more services flying to the world’s most important business destinations than Frankfurt and Paris Charles de Gaulle combined.

Increasing capacity by adding a third runway at Heathrow has been ruled out by the government. Mayor of London Boris Johnson’s idea for a Thames Estuary hub has also been dismissed.

British Airways rolls out new ad campaign

Wednesday, September 21st, 2011

British Airways is hoping to put the troubles of the last few years behind it by launching a new ad campaign. The airline has used members of staff to illustrate its virtues and show that the long-running dispute between the carrier and its cabin crew is well and truly over.

A television commercial will air in Britain and America before it is shown in other key markets. It will first appear on BA’s Facebook page. The accompanying press campaign has been designed to show how experienced and how skilled BA employees are. A picture of a baby wrapped in a BA jacket shows that staff are trained to deal with all sorts of emergencies including the birth of a child.

Another illustrates how the airline is capable of carrying precious cargo with a picture of a donor heart. Commitment to customer service is stated in the carrier’s motto which is: To Fly. To Serve. The words appear on crew uniforms, the hats of pilots and on the airline’s coat of arms.

According to BA’s chief executive, Keith Williams, the new campaign shows that the airline is confidently looking towards the future. The last decade has been difficult for the airline industry because of strikes, natural disasters, political upheavals and a global financial meltdown.

BA’s head of brand engagement, Abigail Comber, said the new campaign had been put together to show viewers, staff and customers that there is still a great deal to be proud about when it comes to the British Airways brand.

British Airways seeks Boeing 747 replacement

Tuesday, September 20th, 2011

British Airways is to look to planemakers Boeing and Airbus for replacements for its fleet of 747 jumbos. The flag carrier has 55 of the older aircraft, the largest number of any airline on the planet. According to Alexander Grant, fleet manager for BA, the carrier will be comparing the merits of the wide-body Airbus A350-1000, the Boeing 787-10 and the Boeing 777-9X.

Talking at a conference being held by the International Society of Transport Aircraft Trading, Mr Grant said that all of the aircraft would be entering into a competition before the end of 2011 so that BA could best assess how to meet the challenges of the future.

Philip Allport, a spokesman for British Airways, said that the carrier currently has five 747s in storage while 50 are in active service. He added that some of those planes would be displaced after BA took delivery of 12 Airbus A380s starting in two year’s time. There are also 24 787-8s and 787-9s on order, although specific delivery dates are yet to be confirmed.

BA’s parent company, International Airlines Group, has ordered eight Airbus A330s in a deal which at list price is worth $1.8 billion. The planes are intended for Iberia, IAG’s Spanish offshoot. Willie Walsh, chief executive of the airline, said that economies of scale will be achieved through further orders.

British Airways’ fleet of 747-400s are capable of carrying 345 passengers in a configuration which accommodates four classes. It is hoped that the new 787-10 will begin to fly commercially by 2016.

Emirates expected to continue rapid expansion

Monday, September 19th, 2011

According to airline industry experts, Emirates Airlines is likely to operate more wide-body aircraft than any of its competitors by 2015. Emirates is already the largest carrier on the planet in terms of international traffic. A report by Boston Consulting Group predicts that the Middle Eastern behemoth will continue to expand over the next few years by between 9 and 12 per cent annually.

Over the past half-decade, Emirates has tripled its revenues and passenger capacity. It has improved yields, load factors and aircraft utilisation and has added 32 new destinations. The carrier’s fleet of 157 planes currently contains the largest number of Airbus A380 superjumbos in the world.

Today, Emirates flies to 114 destinations within 67 countries around the globe. Although it has experienced a drop in cash margins to 23 per cent from 28 per cent over the last five years, Boston Consulting is still convinced that the airline is outperforming its international rivals.

Other Middle Eastern carriers are expected to follow Emirates performance with solid growth over the coming half-decade. Boston Consulting said in its report that over the coming 20 years airlines throughout the region will triple passenger capacity. The airlines in the region are able to capitalise on the fact that it is a vital hub for many long-haul journeys. The carriers are also able to enjoy the cost advantages of the region that other carriers are not.

Analysts have predicted that over the five years to 2015, an additional 45 million passengers will join those flying in and out of the Middle East.

UK pilots have holiday pay claims supported in Europe

Friday, September 16th, 2011

A long-running battle over holiday pay between British Airways and its pilots could be at an end after a European court rules in favour of the employees. The European Court of Justice ruled that pilots’ holiday pay should be in line with total pay packages, including allowances, and not just basic pay.

Calculations made by the British Airline Pilots’ Association showed that airlines faced having to pay a £50 million bill. The union said this would take into account six years worth of back-pay and could mean £20 million going to the pilots and some £30 million being paid to other airline staff.

The decision will now be reviewed by the UK Supreme Court, but union members are confident that it will agree with the European ruling. General secretary at Balpa, Jim McAuslan, said the victory was not just a cause for celebration for around 3,000 pilots at BA, but for all UK airline pilots.

A union spokesman said that BA could turn up at the Supreme Court with new information which could have an affect on the ruling in Europe, but added that most pilots remained confident that the decision would not be overturned.

Mr McAuslan said the fight had lasted six years, but that the decision was finally in favour of the workers. He added that Balpa would now be seeking similar pay deals for every airline in the country. A British Airways spokesperson said the flag-carrier would await the Supreme Court’s decision and that the ECJ had only been looking at the technical aspects of the issue.

Avis no longer interested in Dollar Thrifty

Thursday, September 15th, 2011

American car rental giant Avis has decided to pull out of the race to acquire budget rival Dollar Thrifty. According to the company it has withdrawn its $1.6 billion bid because the market conditions are unfavourable at the present time. Hertz Global is now the favourite to take over the firm.

Industry consultant, Neil Abrams, said Avis had also become frustrated by the process of trying to obtain antitrust approval from the authorities. Recent consolidation of the car hire business in the US means that there are only four major companies: Avis, Hertz, Dollar and Enterprise. Regulators are concerned that further consolidation will have a negative impact on the consumer.

Hertz and Avis have been keen to get their hands on the leisure market which Dollar successfully penetrates. Both of the larger firms are more geared to corporate customers. Dollar currently controls around 13 per cent of the US airport rental market relying on customers looking for a cheap deal rather than the latest model. Hertz is still to comment on the decision by Avis to withdraw its bid but has said it is continuing to seek approval from the Federal Trade Commission for a take over.

Earlier in the year Avis declared that it was to acquire its European counterpart. The company is currently seeking financing for the £636 million deal which is possibly another reason why it has pulled out of the race for Dollar.

Mr Abrams said that although the global economy remained shaky, the demand for rental vehicles was remarkably robust.

Virgin Atlantic declares interest in BMI deal

Wednesday, September 14th, 2011

As German flag carrier Lufthansa looks at ways of disposing of BMI, Emirates confirms that it is not interested in acquiring the loss maker. A spokesman for the Middle Eastern giant said that although Emirates is looking to continue expanding, it is not currently looking to do so by purchasing another carrier. Etihad, also rumoured to be interested in the British airline, has said it will not comment on speculation.

Earlier in the week, British Airways said it would be interested in talking to Lufthansa about taking over BMI’s landing and take-off slots at Heathrow. However, because BA currently owns 44 per cent of the capacity at the London hub, there could be some monopoly issues.

Virgin Atlantic has also said it might be interested in a tie-up with BMI.  A deal could help Virgin as it competes with British Airways on transatlantic routes. The British flag-carrier recently tightened up its relationship with American Airlines.

Although it is yet to comment, Air France is also reportedly interested in BMI. Lufthansa has been trying to turn the carrier’s fortunes around by concentrating on flying services on the oil routes. This includes flights out of Heathrow to Russia, The Middle East and Scotland. Unfortunately for BMI the social and political problems in the Middle East have impacted on its earnings.

For the first half of this year, BMI made losses of 120 million euros. The first six months of 2010 saw the carrier lose 93 million euros. Lufthansa has said that any improvement at the moment looked unlikely.