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US Airways Drops Delta Bid January 31, 2007

Posted by Andrew in Commercial Aviation, Delta, US Airways.
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When US Airways announced an offer to takeover Delta, the move left many in the industry scratching their heads. After increasing the buyout price several times to no avail, US Airways today conceded defeat . US Airways CEO Doug Parker vented his frustration to the media, quipping that the Delta creditors knew “exactly what they needed to do”, but concluded that because the Delta creditor’s committee was not being responsive to the deal and impending deadline, his company was “not willing to pursue this transaction anymore.” In an attempt to shift the focus away from the failed deal, he emphasized his airline’s need to move forward on its own. The mood at Atlanta based Delta took on a more celebratory tone on the news of the retraction of the US Airways bid. Delta’s CEO gleefully commented to the press: “this is a proud day for the thousands of Delta people, customers, communities, civic leaders and others who stood up for our standalone plan and said, emphatically, ‘Keep Delta My Delta.”

Sources: USATODAY, Yahoo Financial News

UPS Airbus A380 Cancellation Imminent January 19, 2007

Posted by Andrew in Commercial Aviation.
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According to French business daily paper Les Echos, United Parcel Services (UPS) plans to cancel its order for Airbus A380 aircraft as early as next week. An Airbus representative would neither confirm or deny the rumor, only stating that Airbus “had no information at the time.” Such a cancellation would mirror the moves of the A380 freighter program’s other clients, cargo carrier Fedex and airplane leasing company ILFC, both of whom have cancelled their orders in the recent months. Fedex elected to purchase Boeing 777 freighter aircraft instead. Some analysts believe that UPS may simply renegotiate the deal with Airbus, electing to purchase the recently launched A330 freighter variant instead of the much larger A380 aircraft. Despite reliable reports, doubt remains on both the future of the UPS deal and the A380 freighter. UPS spokesman Mark Giuffre commented on the rumors, saying that they “were still evaluating all [their] options.” If United Parcel Service does cancel its A380 order, it will be the death blow to the freighter version of Airbus’ flagship aircraft.

Sources: Atlanta Business Chronicle, Flight Global

Airbus Wins Indian Orders for A330 Freighter January 16, 2007

Posted by Andrew in Airbus, Boeing.
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India’s Flyington Freighters announced yesterday that it would purchase six A330 freighter aircraft from Airbus at a deal valued at near one billion dollars. The deal lends credibility to the recently launched A330F, the latest freighter offering from Airbus. In a press release, Airbus noted that Flyington Freighters signed a deal with Boeing last year for freighters as well. That deal may be in jeopardy, as a Flyington representative would only confirm that the deal is in place for the moment. Delivery from both airplane manufacturers is scheduled to begin in 2009. Flyington Freighters expects to begin flying within a few months, launching with leased aircraft. So far, according to list prices, the freight carrier has signed orders valued at around two billion dollars. Boeing and Airbus are targeting India, trying to “make up for slack demand for aircraft from traditional carriers in the United States and parts of Europe.”

Source: Reuters

Lufthansa to Launch Boeing 747-800i December 5, 2006

Posted by Andrew in Airbus, Boeing, Lufthansa.
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According to unnamed sources, German flag-carrier Lufthansa Airlines agreed in principle to purchase twenty Boeing 747-800 passenger aircraft. Sources close to both parties say that a formal announcement may come as early as tommorrow. Purportedly the deal has a list value of $5 billion, and Lufthansa could take options for twenty more of the aircraft. Lufthansa, a launch customer for the Airbus A380, will likely use the 747-800i as a replacement for its large, aging 747 fleet. Due to delays in the Airbus A380 program, Lufthansa is anticipated to take delivery of its first 747-800 only a few months after Airbus delivers the first A380 to Lufthansa. This order, once formally confirmed by Lufthansa, will be the first for the passenger variant of the 747-800. Analysts expect other carriers to follow suit now that Lufthansa has tested the waters.

Source: Reuters and WSJ

US Airways Submits $8 Billion Bid for Delta November 15, 2006

Posted by Andrew in Delta, US Airways.
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Citing an aspiration to become the premier trans-Atlantic carrier, Phoenix-based US Airways submitted an $8 billion bid today for Delta Airlines. US Airways, led by CEO Doug Parker, is still in the midst of completing the merger that united US Airways and America West. Industry analysts have “been expecting a wave of consolidation and said successful completion of a US Air-Delta deal could jump-start the process.” US Airways offered to purchase Delta after merger talks fell through. Doug Parker cited the need for speed, claiming that “if we wait for Delta to emerge from bankruptcy, it will be too late to maximize all the synergies.” The combined company would employ 82,000 employees, and according to US Airways estimates, a merger would yield $1.65 billion in annual savings. If the bid goes through, Delta’s name reportedly will be retained, as it has greater brand recognition. Despite the news, Delta CEO maintained that his company would seek to emerge from bankruptcy in early 2007 as a stand-alone carrier. At least one analysts believes that the bid is a hostile takeover, as the Delta CEO has voiced his displeasure with the deal. Ultimately, the deal hinges on the shareholders, who have been offered “$4 billion in cash and 78.5 million shares of US Airways stock, with an aggregate value of around $8 billion based on Tuesday’s closing stock price.” When questioned about the possibility of legacy carrier United Airlines making a competing bid for Delta, UAL CEO Glenn Tilton said that his company had approached Delta about a merger, but was rebuffed. Even so, Calyon Securities Ray Neidl believes that “the big concern is government regulators, if they give the green light. And if they do, it will probably set off a series of potential M&A activity in the industry.” This merger poses some major operational challanges that leave some industry analysts perplexed. Delta operates an all Boeing fleet, while US Airways is moving towards an entirely Airbus fleet. Furthermore, the proposed airline would have west coast hubs in Phoenix, Salt Lake City, Las Vegas, and Los Angeles. How will the carrier reconcile these differences? Even so, some believe that a United merger would be more logical, as the two carriers share comparable fleets and route structures that complement each other. US Airway’s bid is likely the catalyst of a round of consolidation in the North American market, as legacy carriers seek to become more efficient and battle their low-cost carrier competition.

Source: Reuters

UPS: No Time Pressure for Airbus A380 Decision November 8, 2006

Posted by Andrew in Airbus, Fedex, UPS.
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United Parcel Service (UPS) issued a statement this morning declaring that it was in no rush to make a decision on its A380 order with Airbus. There is speculation that UPS may follow Fedex’s suit, as the Airbus A380 is seen by some analysts as an oddball aircraft in the freight company’s fleet. If UPS cancels, Airbus would likely be forced to cancel the freighter variant of the A380, which currently only has two customers. Citing “enough other planes scheduled for delivery over the next two years to cover its immediate needs,” UPS for the time dispelled any speculation of a cancellation. The freight carrier neither confirmed or negated the possibility of a cancellation in the future, but delayed a decision until a detailed analysis is made by the company. UPS has on order ten Airbus A380 aircraft, with options for an additional ten to be delivered in the next decade.

Source: Reuters

Fedex Cancels Airbus A380 Order, Defects to Boeing November 7, 2006

Posted by Andrew in Airbus, Boeing, Fedex.
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Fedex, frustrated with delays in the Airbus A380 program, cancelled its order for ten of the aircraft in the freighter configuration early this morning. Citing “significant delays for delivery of A380s” and a need to meet the growing global package demand, the freight carrier elected to purchase the Boeing 777F instead of the much larger Airbus A380 aircraft. In response to the largest blow dealt to the Airbus A380 program, an Airbus spokesman said that “Airbus regrets FedEx’s decision but understand[s] their need to urgently address capacity issues.” Although Dubai-based Emirates has been threatening cancellation in recent months, Fedex is the first major carrier to follow through. Fedex’s cancellation came as a surprise to the aviation industry this morning; United Parcel Service, the main competitor of Fedex was rumored to be considering a cancellation, but such an action was not expected from Memphis based Fedex. The Boeing 777F, scheduled to be first delivered in 2008, is not seen as a replacement for the A380. The Boeing 777F is of comparable size to the MD-11, the backbone of Fedex’s widebody fleet. With MD-11’s becoming more difficult to acquire, many see Fedex’s purchase of triple-sevens as a move to augment an aircraft size that serves the company well. Fedex indicated that the decision to purchase the Boeing 777 freighter variant came as a result of the recently announced delays. The freight company, an early proponent of the Airbus A380 program, noted however that it will continue “to be Airbus’ largest wide-body airplane customer and will add additional new and used Airbus wide-body aircraft to its fleet in the coming years.” Boeing did not comment on the recent deal, however investors rewarded the company by boosting its shares on news of the deal.

Source: Reuters

ExpressJet Creates New Corporate Jet Venture October 17, 2006

Posted by Andrew in Commercial Aviation, Continental, ExpressJet.
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ExpressJet, a former unit of Continental Airlines, announced today that it was converting ten of its aircraft into corporate configurations to serve the burgeoning private jet market. ExpressJet Corporate Aviation, the new unit of ExpressJet, is slated to begin operation in December 2006 with Embraer 145XR aircraft. The carrier plans to invest $5 to $6 million into its new corporate division. ExpressJet boasts that the refitted aircraft will come replete with amentities like satellite radio, but without the delays that plague mainstream commercial air travel. Some analysts see this move as a natural decision to diversify the carrier’s interests, particularly since “Continental canceled [their] capacity purchase agreement” with Expressjet. Saddled with sixty-nine aircraft and no future partner, ExpressJet is exploring offers with other legacy carriers. A decision on plans for the remaining aircraft will come at a November 9 shareholder conference.

Source: Reuters

Emirates to Order Planes to Account for A380 Delays October 12, 2006

Posted by Andrew in Airbus, Commercial Aviation, Emirates.
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Emirates Airlines said that it was looking into purchasing aircraft to make up for Airbus A380 delays. The carrier, which placed a $15 billion order for 43 A380 aircraft, will not receive an aircraft until August 2008. According to original plans, Airbus planned to deliver eighteen A380 aircraft to Emirates by the end of 2008. Seeking to make up for the lack of capacity, Emirates is evaluating deals from both Airbus and Boeing to fulfill their short-term needs. The carrier made no indication whether it had a preference for either manufacturer, but Tim Clark, Emirates CEO, said “We will acquire more aircraft, if we can, to fill the gap and we have teams of people actively involved in that.” Aside from leasing, it is not clear whether Emirates can receive new a substantial number of widebody aircraft before the delivery of the first A380. The Boeing 777 family is heavily booked for the coming years, while the inferior economics of the A340 family have made it less popular in light of high jet-fuel prices.

Source: Reuters

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