Showing posts from March, 2012

Aer Lingus: Independence Day ©

                                                                                    “Neutrality contributes to the bottom line it is paramount”- CEO Christoph Muller In recent weeks their has been speculation as to whom to the government will sell it’s 25% stake however the sale process is a long way off as Market conditions remain extremely tough as a number of flag carriers in the EU are up for sale, IATA has warned that high fuel costs will adversely impact on airlines profitability and domestic demand in Ireland its core market remains very weak. The Government has indicated it will sell the shares at the "Right Price and Right Time". The Aer Lingus Management team has consistently stated since the adoption of the Hybrid Business Model ( elements of LCC & Legacy model) which has restored profitability, that it is essential the carrier remains independent as is key to the future leveraging its geographic position and Dublin Hub to create new traffic fl

Aer Lingus & Ryanair new aircraft orders ©

The prospects of Aer Lingus and Ryanair securing very attractive new aircraft  pricing in the next 18-24 months have improved considerably as cracks begin to appear in the current aircraft order cycle as industry pressures begin to mount, it will be interesting to see will the carriers be able to secure similar deals to those after 9/11 when both carriers placed orders enabling them to widen the unit cost differential with competitors can they repeat the trick again? The factors: 1)     American Airlines is likely to consolidate post Chapter 11 process & on-going consolidation in US Airline industry 2 )    Lufthansa considers freezing capacity (2011 Annual Report) 3)   A recent S&P  report on the European airline sector highlighted GDP/Fuel issues 4 )   IATA warns airlines face bankruptcy if fuel costs rise from $120 to $150 per barrel particularly in Europe  5) Industry analysts have warned of a bubble with the existing aircraft order backlog due long-lead times 6) Airbus

Ryanair: Managing Demand ©

Ryanair 737s at Cork Airport: Picture Courtsey of Paul Daly   Ryanair has responded to evolving market conditions with speed through the Chief Operating Decision Maker (CODM) modelling to allocate the aircraft in terms of where it will generate the highest yield and revenue to achieve the highest rate of return rather than individual route performance, thus protecting its margins as fuel costs expected to rise by €350 million in FY2012. Ryanair announced on the 6 th of March the airline announced that it was to cease routes from its new Budapest Base to Chania, Palma , Rhodes and Trapani citing weak demand, and replace them with two new routes to Billund and Dusseldorf Weeze and increase frequency on routes to Barcelona London Stansted, Paris Beauvais ( 6 th March 2012) Ryanair announced on the 2 nd of March it would not proceed with plans to base an 8 th Boeing 737-800 at Faro, with the carrier to terminate three routes to Bergamo, Marseille and Leipzig

Irish Airlines Report February Traffic ©

Aer Lingus announced that it carried 658,000 passengers in February up 8.8% with a load factor of 67.3% up 1%. The airline carried 45,000 long-haul passengers up 15.4% with a load factor of 64.9% up 2.2% and 554,000 short-haul passengers up 6.9% with a load factor of 68.5% up 0.9%. The Aer Lingus Regional operation carried 59,000 passengers up 22.9% and as usual the figures exclude passengers carried on the United Airlines Joint-Venture Washington Dulles to Madrid route. The Aer Lingus short-haul load-factor of 68.5% is above the AEA Airlines of 65.4% and on the long-haul the Aer Lingus long-haul load factor of 64.9% versus AEA Airlines at 72.6%, the information in based on AEA Data for the four weeks ended 26 th of February.                   Ryanair announced that it carried 4.47 million passengers in February down 2% with load factor of 76% and in the rolling 12 months to the end of February it carried 76.1 million passengers. The carrier’s traffic will have b

IAG CEO Willie Walsh: Consolidation through Joint-Ventures ©

The IAG CEO Willie Walsh gave an insight into his views of consolidation in the airline industry, on the announcement of the IAG 2011 Full Year results on the 29 th of February in a rapid changing environment where there is opportunities and threats. A constantly theme on the conference call was the need for further consolidation with a particular emphasis on the US Industry, this is very interesting on the context of a potential marketing tie-up between American Airlines (Oneworld) and JetBlue Airways. The IAG CEO previously stated interest in JetBlue Airways given its strong position in the New York market where it is competing against Delta Airlines (JFK) and United Airlines ( Newark ). The IAG CEO Willie Walsh views on the evolving consolidation are interesting as Aer Lingus considers its strategic options, Willie indicated that Joint-Ventures offer many benefits (Cost/Revenues) without the full issues of a merger and there is a growing trend of these Joint-Venture