March 29, 2024

Spanish Airline Faces a Sweeping Restructuring

The planned reductions, equivalent to more than 20 percent of the airline’s work force, came as the company, the International Airlines Group, reported a 24 percent drop in third-quarter net profit and forecast an operating loss of 120 million euros ($152 million) for the full year.

“Iberia is in a fight for survival and we will transform it to reduce its cost base so it can grow profitably in the future,” Willie Walsh, the chief executive of I.A.G., said in a statement. Iberia’s unions were given a deadline of Jan. 31 to reach an agreement on the job cuts or face possibly deeper retrenchments.

Labor unions have been bracing for deep layoffs at Iberia for months as the grip of Spain’s recession tightens and I.A.G. gradually shifts operation of many domestic and European flights to its low-cost subsidiary, Iberia Express. On Thursday, I.A.G., which owns 46 percent of Vueling, a rival Spanish low-cost carrier, made a 113 million euro bid for the rest of the airline. It said, though, that it had no immediate plans to merge it with Iberia Express.

“The company is burning 1.7 million euros every day,” Rafael Sánchez-Lozano, Iberia’s chief executive, said in a statement. “Iberia has to modernize and adapt to the new competitive environment, as its cost base is significantly higher than its main competitors in Spain and Latin America.”

I.A.G. said Iberia’s operating losses of 262 million euros for the first nine months of this year had all but wiped out a 286 million euro profit made by British Airways in the same period. I.A.G. was formed by the merger of Iberia with British Airways last year.

The job cuts were the latest retrenchments for Europe’s biggest airlines as they compete with leaner and nimbler rivals like Ryanair, easyJet and Air Berlin in Europe and with rapidly expanding Middle Eastern carriers like Emirates and Etihad on long-distance routes.

Air France said in June that it would eliminate more than 5,100 jobs, or 10 percent of its work force, by the end of next year as part of a 2 billion euro restructuring. Lufthansa announced the elimination of 3,500 administrative jobs in May as it sought 1.5 billion euros in savings over the next three years.

While airlines globally have managed to trim costs and improve operating margins over the last year, the economic slowdown that has accompanied the sovereign debt crisis continues to weigh heavily on European carriers.

Last month, the International Air Transport Association predicted that European airlines would lose a combined $1.2 billion this year, while it forecast global industry profits of $4.1 billion. European losses are expected to shrink to $200 million in 2013, the I.A.T.A. said, while airline profits worldwide are predicted to rise to $7.5 billion.

This article has been revised to reflect the following correction:

Correction: November 9, 2012

An earlier version of this article stated incorrectly that Iberia would reduce its capacity by 25 percent. The airline’s network capacity will be cut by 15 percent, through a downsizing of its fleet by 25 aircraft.

Article source: http://www.nytimes.com/2012/11/10/business/global/spanish-airline-said-to-be-in-fight-for-survival.html?partner=rss&emc=rss

DealBook: Ryanair Offers $883 Million for Aer Lingus

LONDON — The European low cost airline Ryanair offered 694 million euros ($883 million) to buy the Irish carrier Aer Lingus, the latest in a number of deals in the fast-consolidating airline industry.

Ryanair, which already owns a 29.8 percent stake in Aer Lingus, said on Tuesday that it had bid 1.30 euros for each share in the carrier. The offer represents a 38 percent premium on Aer Lingus’ closing share price on Tuesday.

The announcement comes a day after Britain’s antitrust regulator said it would investigate Ryanair’s minority stake in Aer Lingus. Concerns has been raised that the low cost carrier’s share ownership could stifle competition.

Faced with continued high oil prices and a reduction in consumer spending, Western airlines have been striking deals in a bid to remain profitable.

International Airlines Group, the parent company of British Airways and the Spanish carrier Iberia, agreed last year to buy British Midland International from Lufthansa of Germany. US Airways also has been considering a merger with AMR Corp., the bankrupt parent of American Airlines.

Ryanair, which made an unsuccessful takeover approach for Aer Lingus in 2006, said its new bid would help the carriers compete with larger rivals.

“This offer represents a significant opportunity to combine Aer Lingus with Ryanair to form one strong Irish airline group capable of competing with Europe’s other major airline groups,” Ryanair’s chief executive, Michael O’Leary, said in a statement.

A potential deal for Aer Lingus may face tough opposition from antitrust authorities, which blocked Ryanair’s previous bid for the Irish carrier.

The Irish government retains a 25 percent stake in Aer Lingus, but plans to sell its shares as part of the bailout it received from the International Monetary Fund and the European Union. Etihad Airways also holds around a 3 percent stake in the Irish carrier.

Ryanair said it would be willing to work with an investor, such as Etihad Airways, that may acquire the government’s stake in Aer Lingus. The low cost carrier also said it would be open to selling its stake in Aer Lingus to the investor if both sides could agree on a price.

A representative for Aer Lingus was not immediately available for comment.

Davy Corporate Finance and Morgan Stanley are advising Ryanair.

Article source: http://dealbook.nytimes.com/2012/06/19/ryanair-offers-883-million-for-aer-lingus/?partner=rss&emc=rss

Airbus Beats Forecast for Revamped A320 Orders

The European plane maker announced commitments for more than 100 more A320neo jets at the Paris Air Show here, bringing the total backlog for the plane, which has been on offer since December, to nearly 600 aircraft — well beyond the 500-order benchmark that Airbus had initially predicted it would achieve by the end of the show.

Neo stands for New Engine Option. The momentum building for the 150 to 180 seat plane, which is being equipped with new engines that are 15 percent more fuel efficient than current models, is likely to put pressure on Boeing to make a decision on whether to follow suit with an enhanced version of its competing 737 jet, or to develop an entirely new narrow-bodied jet for delivery at the beginning of the next decade.

“It prompts Boeing to do something,” Henri Courpron, chief executive of International Finance Lease Corp., told Reuters. “It cannot do nothing.”

Boeing executives have said they expect to decide on the company’s future single-aisle strategy by the end of this year.

Airbus chalked up $11 billion in new jet orders and commitments on Tuesday, bringing its total haul for the first two days of the show to more than $26 billion.

Boeing received new orders worth $4.7 billion, bringing its two-day total to nearly $16 billion. The U.S. plane maker also disclosed the buyers of planes worth several billion dollars more, which it had previously attributed to unidentified customers.

CIT Aerospace, another leasing company, committed Tuesday to purchase 50 A320neos for delivery from 2016 to 2019. That commitment is valued at $4.6 billion at list prices.

JetBlue Airways, the U.S. low-cost carrier, announced its first purchase of A320neos, committing to order 40 of the revamped single-aisle planes for delivery from 2017 to 2021. The carrier, which is the world’s largest A320 operator with a fleet of 119 of the planes, also said it would convert 30 existing orders for classic A320s into the stretched A321 version, which will be delivered starting in 2013.

Elsewhere, Garuda Indonesia said it would buy 10 A320neo jets in addition to 15 classic A320s for its domestic low-cost subsidiary, Citylink, in a deal worth a combined $2.2 billion. Garuda, the Indonesian flag carrier, said the new aircraft would eventually replace Boeing 737s in Citylink’s fleet, though Garuda itself would continue to fly them.

TransAsia Airways of Taiwan ordered six A321neos, valued at $635 million at list prices.

“Passenger growth is a function of economic growth, and Asia-Pacific is where the growth is right now,” said Emirsyah Satar, the Garuda chief executive. He said air passenger traffic at Garuda had been growing at a “double-digit” pace for the past several years.

Air passenger traffic within the Asia-Pacific region is expected to expand at an average annual pace of around 7 percent over the next two decades, according to a long-term forecast published last week by Boeing. That compares with forecasts for annual traffic increases of just 2.3 percent in North America and 4 percent in Europe.

Asia-Pacific carriers are expected to receive more than one-third of all new aircraft deliveries between now and 2030, representing $1.5 trillion in sales.

Boeing announced new orders on Tuesday for a further 25 of its single-aisle 737-800 jets, valued at around $2 billion at list prices. Norwegian Air Shuttle, a low-cost carrier based in Oslo, ordered 15 of the planes while Malaysia Airlines said it had exercised an option to purchase 10, bringing its total 737-800 orders to 45. The Malaysian order had been previously attributed to an unidentified customer on Boeing’s order book.

Norwegian Air Shuttle also finalized a contract for three 787 widebody jets, worth $650 million.

Boeing also announced a number of widebody orders from GE Capital Aviation Services, the aircraft-leasing arm of General Electric. The lessor, known as GECAS, said it would buy eight long-range 777-300ER jets and two freighter versions of the stretched 747-8, which is making its debut at the Paris show. The value of that order was not disclosed, but would be worth $2.9 billion at list prices.

Boeing also disclosed that the Russian flag carrier Aeroflot was the buyer earlier this year of eight 777-300ER jets, valued at $2.3 billion, which the plane maker had previously attributed to an unidentified customer.

Elsewhere, Bombardier of Canada announced its second order in as many days for its forthcoming C-Series regional jet.

The firm order for 10 planes, worth more than $600 million, came from Korean Air, which also signed for 10 options and 10 purchase rights on the 130-seat version of the plane, the C300. Bombardier on Monday announced a 10-plane order from an unidentified “major network carrier.”

Bombardier now has 123 firm orders from seven customers for the plane, which is expected to enter service in 2013.

Article source: http://www.nytimes.com/2011/06/22/business/global/22iht-airshow22.html?partner=rss&emc=rss

Air Canada and a Union Reach a Tentative Agreement

OTTAWA — Air Canada and the Canadian Auto Workers union said Thursday that they had reached a tentative agreement to end a strike by 3,800 customer service agents.

While the union said that its members would all be back at work by Friday, the settlement put off resolution of the most contentious issue in the negotiations. Binding arbitration will now determine the fate of Air Canada’s plan to give new employees a different pension plan without defined retirement benefits. Current Air Canada workers have a defined benefit plan that is underfinanced by 2.1 billion Canadian dollars.

“We could not settle that issue in collective bargaining,” Ken Lewenza, the union’s president, told a news conference after apologizing to future Air Canada employees.

Mr. Lewenza said that the airline had agreed to significantly reduce and delay changes it sought to the pension plan covering current employees.

The union asked its members, who went on strike early Tuesday morning, to return to work rather than wait for the results of a ratification vote, a process that will take several days.

“It is business as usual at Air Canada,” Duncan Dee, the airline’s executive vice president and chief operating officer said in a statement.

But Air Canada’s labor situation is far from resolved. In addition to the uncertainty surrounding the arbitration process, the airline is in contract talks with other unions representing flight attendants, baggage handlers and mechanics.

Last month, Air Canada’s 3,000 pilots rejected a tentative agreement. That appeared to be mainly the result of a plan by Air Canada to start a low-cost carrier using employees who receive lower pay and benefits.

The move came two hours after Parliament began debating legislation that would have forced members to return to work.

Lisa Raitt, the Canadian labor minister, welcomed the settlement.

“The best deal you can have is one they worked out themselves,” she told reporters in Ottawa.

Article source: http://feeds.nytimes.com/click.phdo?i=208c360e7bc16973c8c5820802fb6949