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United Vows to Ground More Aircraft– Across the Atlantic, British Airways Looks to do the Same June 4, 2008

Posted by Andrew in Airbus, Boeing, British Airways, Commercial Aviation, Qantas, Ryanair, United, United Airlines.
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United Airlines announced its intent today to ground one hundred of its least efficient aircraft and slash over one thousand jobs as it works to combat the high price of jet fuel. Across the Atlantic, British Airways dispelled any notion that they were immune to the same market forces dogging their American counterparts. Citing high oil prices, British Airways CEO Willie Walsh said: ‘It doesn’t make sense with oil at $130 a barrel to operate flights that have not made a contribution to our cash situation. We have a healthy balance sheet. But we can’t afford to be complacent.’

While British Airways is framing their decision as proactive, the situation at United Airlines is more dire. United is slashing mainline domestic capacity by seventeen percent, and even cutting international operations, traditionally its most profitable segment, by four to five percent. Such measures include laying off an additional one thousand employees, dismantling United’s all coach offshot TED, and even mothballing Boeing 747 aircraft. Ultimately, United Airlines seeks to reduce its fleet size by twenty percent,  and will slash the size of its workforce to reflect the size of its diminished fleet.

Meanwhile, the rhetoric coming from British Airways chief Willie Walsh  is cautionary– for now. But the carrier is evaluating each route on a “route by route basis”, and contemplating grounding aircraft after the busy summer season– on the heels of recent similar announcements from  competitors Qantas and Ryanair. Further cost savings will be accrued as British Airways alters its method of repainting its aircraft. The carrier plans to entirely strip planes of their former paint jobs when they are brought in for refurbishment, a costly process, but one capable of knocking off as much as eight hundred pounds of weight.

US airlines are experiencing a time of downsizing akin to the aftermath of September 11, 2001. However, their troubles are hardly isolated to North America, and with high oil prices worldwide becoming the norm, and not an exception, worldwide airlines are taking a closer look at the efficiency of their aircraft and profitability of individual routes.

Sources: Chicago Tribune, UK Airport News.

Irish Ryanair Announces Surprise Bid for Aer Lingus October 5, 2006

Posted by Andrew in Aer Lingus, British Airways, Commercial Aviation, Ryanair.
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For the past few weeks, the difficulties at Airbus have dominated commercial aviation news. Ryanair, known for its cheaps fares and no-frills policies, shocked the world airline industry this morning by announcing a takeover of Irish flag carrier Aer Lingus. This move marks the first time a low-cost carrier has sought to takeover a competitor with trans-Atlantic operations. Aer Lingus’ board rejected the offer, claiming that the $1.9 billion offer “undervalued the group’s business and long-term growth potential.” Ryanair CEO Michael O’Leary visited European news outlets this morning, praising the possible fusion of the two airlines as ” a unique opportunity to form one strong airline group for Ireland and for European consumers.” Initially, if the hostile takeover occurs, he said that the two carriers would maintain seperate entities under a common parent. A few commercial aviation analysts have noted the deal would tranform “Ryanair, with a market value of 6.7 billion euros and cash resources to fund the purchase of some 2 billion euros, from being a pure “no-frills” carrier investment to one with network carrier exposure.” The combination of Aer Lingus and Ryanair would benefit Aer Lingus’ international operations tremendously. Aer Lingus would gain instant access to 50 million passengers, most of whom funnel through Dublin, a major hub for both Aer Lingus and Ryanair. British Airways and other European carriers are the most affected by the proposed Irish synergy, as Aer Lingus will likely be converted into a more capable international competitor with the extra passenger feed. On news of the announcement, the Irish government, a twenty-eight percent shareholder in Aer Lingus, said that it would not sell its shares. Even though O’Leary has a history of criticizing the Irish government and Aer Lingus, O’Leary conceded that he would be content with having the government as a minority shareholder. Before approval, the deal must be investigated by the European Union. Industry insiders don’t expect any government interference, however.

Source: Reuters