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Aeropolitics

This category contains 52 posts

Ethiopian Airlines (ET) is on a roll with is domination of the African skies as it takes equity positions in many new state owned airlines, the latest being tiny Eritrean Airlines (1 x ACMI leased B737-500), now that peace has come at least between the two neighbours. Ethiopian Airlines has for years had minority ownerships in ASky of Togo (40%) and Malawian Airlines (49%), but now it has gone on a binge of ownerships and partnerships from new national carrier start-ups and existing state carriers like Zambia Airways II (45%) to Guinea, Ghana, Chad, Mozambique, Equatorial Guinea, DRC and now possibly newly announced Nigeria Air. As Africa’s biggest and best managed airline (private and state owned) in Africa, ET is well positioned to dominate the continent with its equity and partnership ‘alliance’ strategy. Helping local airlines like Malawian Airlines (ex-Air Malawi) is very good, but when you start controlling a dozen plus airlines, it begins to be worrying, competition is being limited, and that is something Africa needs more of, not less. Now, new start-ups that plan to compete with Ethiopian, especially in long-haul, like Air Tanzania and Uganda Airlines and to a lesser degree for now, Senegal Airlines II face a mighty competitor that is going to pull traffic from all corners of Africa, N.A., Europe, Middle East and Asia with 100+ aircraft through Addis Ababa, and the small carriers will find it very hard to compete on costs, price, schedules, network to service. It is a very tough business to be entering today.

Read my regular Articles and Posts on LinkednIN:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/     Ethiopian Airlines confirms it is eying stake in Eritrean Airlines   Avitrader – July 20, 2018       Tomas’s Comment:   This peace between Ethiopia and Eritrea, (a country of 5.5 million people) is good news for sure, the first flight in years … Continue reading

EC approval of Ryanair and LaudaMotion deal, where Irish Rynair is buying 75% of LaudaMotion (up from existing 24.9%) sparks war of words with Lufthansa, which was forced to drop its bid for NIKI in December, 2017 after the EC’s Directorate General for Competition warned that the tie-up would have harmed passengers in Germany, Austria and Switzerland. NIKI was part of airBerlin and had been kept going through a combination of as much as 10 million euros ($12 million) in weekly support from Lufthansa and a 150 million-euro government loan granted to Air Berlin in August to prevent a wholesale grounding of flights. Lufthansa was successful in acquiring some other Air Berlin assets, including multiple aircraft, crew and slots, as well as regional air carrier LGW, subject to conditions set by the EC to avoid competition “distortions”. These included a reduction of Lufthansa’s project acquisition of slots at Dusseldorf airport and the transfer of 11 aircraft to LaudaMotion.

    Read my regular Articles and Posts on LinkednIN:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/         EC approval of Ryanair/LaudaMotion deal sparks war of words with Lufthansa   19 July 2018 by Naomi Smith – Getting The Deal Through           Lawyers from Cleary Gottlieb Steen & Hamilton have helped Ryanair win unconditional … Continue reading

Two of Europe’s biggest regional airlines, Air Nostrum and CityJet aim for closer cooperation , with a combined fleet of 88 aircraft and up to Euro 700 million in revenue from wet lease and franchise contracts they are out to conquer the regional market in Europe? Yet they are both over dependent on 1 major customer each for their survival, CityJet on SAS and Air Nostrum on Iberia Regional, they both have a large fleet of what I call “loser” aircraft programs as CityJet has 7 (+8 on order) of the 95 passenger Russian Sukhoi SSJ100’s, the ONLY operator in Western Europe, and only the 2nd western airline to operate it commercially (after Mexico’s Interjet), its cheap and it is about to get the boot from LH’s Brussels Airlines for poor dispatch reliability! Air Nostrum has 27 of the 60 delivered (just 68 ordered in 8 years of production) 100 passenger CRJ1000’s (a 18.2 meter stretch of the 1970’s CL-600 Challenger business jet), that airlines just don’t want or need, it is a very long tube from the back, and noone is buying it, airlines know best as to what is good and bad, it is why aircraft orders say novels about any aircraft no matter what an OEM says or thinks!

Read my regular Articles and Posts on LinkednIN:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/     July 17, 2018   100 passenger CRJ1000 of Air Nostrum (Spain)   95 passenger Sukhoi SSJ100-95 of CityJet (Ireland)       Tomas’ Comment:   Interesting development, but no surprise, CityJet has been looking to buy other other operators as it looks for M&A … Continue reading

SUMMARY: DAY #1 at Farnborough International Airshow – July 16, 2018

Read my regular Articles and Posts on LinkednIN:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/         July 16, 2018,  Airfinance Journal:        Day One of Farnborough 2018 belonged firmly to Boeing in terms of firm orders, although the US manufacturer saved up many of its largest announcements from deals done earlier in the year.   Airbus, meanwhile, … Continue reading

The Caribbean wide aviation reform (aka “Bang On” to some) which targets air service liberalization for better connectivity, high air ticket taxes and high airport charges, which are all holding back the development of a profitable Caribbean air transport system today. The Bahamas alone can have a $415 million gross domestic product (GDP) expansion and the creation of over 16,000 jobs. It estimated that air arrivals to this nation would increase by 1.058 million or 42 percent above baseline, with the majority – 901,035 – coming from abroad and representing the high-spending stopover tourists the Bahamas is targeting. None of this is new, it is old hat for decades, we need new young politicians to step forward and push for REAL changes, instead of talking about them over and over again! Time for big political change like in Barbados 2 months ago! out with old inept ‘dinosaurs’ politicians and in with the new young visionaries that want to make real changes for the betterment of the good people of the Caribbean, no more excuses. Money losing state owned inefficient airlines need to kick the addiction of using public money to stay afloat, swim or sink and make room for private capital to takeover from where the state has failed for 50+ years in the region!

Read my regular Articles and Posts on LinkednIN:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/       ‘Bang On’ Over $415m Aviation Boost For GDP As of Wednesday, July 11, 2018 – Tribune 242 – By NEIL HARTNELL           #Research showing The Bahamas will enjoy a $415m economic boost if it participates in Caribbean-wide aviation reform … Continue reading

Oman Air Targets Africa for Potential Network Expansion, another non-African airline moving into Africa competing with local airlines for traffic out of Africa. If African airlines do not meet the challenges soon, foreign carriers (Emirates, Qatar, Turkish, Saudia, flyDubai, etc.), will dominate flights out of Africa to their respective 1-stop hubs and local African carriers will struggle to make their non-stop long haul services profitable, as the BIG players have much lower costs, and feed to and from many different destinations to fill their flights.

Read my regular Articles and Posts on LinkednIN:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/   Oman Air Targets Africa for Potential Network Expansion Aviation Tribune – July 11, 2018           Oman Air (47 aircraft, 4 x A330-200, 6 x A330-300, 23 x B737-800, 3 x B737-8, 5 x B737-900ER, 4 x B787-8, 3 x B787-9, plus … Continue reading

Possibly the ‘WORST AIRLINE’ in the world today financially, South African based Fastjet Group (once a LCC with 3 x A319’s, ex-Fly540), now just a point to point regional 2 x E190’s, 3 x ERJ145’s. Just received $10 million from shareholders to stay alive, after losing $48 million in 2016 on revenues of $68.5 million (-70% loss margin), and in 2017 it lost $24.5 million on revenues of $46.2 million (-53% loss margin) while it received $72.8 million in new investment in the same year along on top of its $35.2 million in debt. With cash balance down to $3.3 million on June 18, 2018 it was on the verge of collapse, having “burned” $16.7 million in 6 months and the investors have saved its ass again, but WHY? This fastjet has lost $303.4 million since 2012 on revenues of $308.1 million (-98% loss margin), and retained earnings at the end of 2017 were at a negative $338.5 million? its yield ($/RPK) is lower than its CASK, for a 108% breakeven load factor? Yet more money is forthcoming? as are 3 new ATR-72-600s’ to add more capacity and it wants to buy South Africa’s regional airline, Federal Air (aka FedAir, runs 18 x CE-208’s to Beech 1900D’s)? WHERE is the light at the end of the tunnel for this LOSER?

Read my regular Articles and Posts on LinkednIN:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/   July 9, 2018     Tomas’ Comment:   So Fastjet gets another $10 million? this is the troubled airline that lost a ridiculous $48 million in 2016 on revenues of $68.5 million (-70% loss margin), then came in a new team in August 2016 and … Continue reading

A South Korean court granted a reprieve to the CEO of Korean Air Lines (KAL) Cho-Yang-ho early Friday, denying prosecutors an arrest warrant based on multiple allegations, including embezzlement and fraud.

Read my regular Articles and Posts on LinkednIN:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/   South Korean airlines face operational and familial headwinds By EUN-YOUNG JEONGThe Wall Street Journal – July 7, 2018 It was a rare bit of good news for Cho Yang-ho, the head of Korean Air Lines Co. He is the patriarch of a clan whose string … Continue reading

Aviation consultancy IBA has questioned whether airline profitability may have peaked considering the current macroeconomic outlook. A number of airlines are today operating with negative margins and may find the times ahead particularly difficult. Costs will continue to rise and more airlines may begin to feel the squeeze later in the year.

Read my regular Articles and Posts on LinkednIN:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/   Airline Economics Daily – July 5, 2018     Tomas’s Comment:   We all know the airline business is a tough business to make a living in, margins are low and many costs are not controllable and the industry is very dependent on economic growth … Continue reading

The European Court of Justice has said that liability for delayed flights under Regulation EC 261/2004 doesn’t extend to airlines that wet lease aircraft and crew to other carriers. The court found that a carrier that decides to perform a particular flight, including fixing its itinerary, and therefore enters into a contract of air carriage with members of the public in the process, must be considered the operating air carrier for the purposes of compensation under regulation 261. If the purpose of the regulation is to ensure “a high level of protection for passengers”, then it is the air carrier which actually planned and operated the flight which should be held responsible for delays, the court said.

Read my regular Articles and Posts on LinkednIN:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/     Lessors don’t count as “operating air carriers” under Reg 261, ECJ rulesNews – 05 July 2018 by Naomi Smith         The European Court of Justice has said that liability for delayed flights under Regulation EC 261/2004 doesn’t extend to airlines that … Continue reading

Boeing and Embraer sign MOU for a new strategic partnership

Read my regular Articles and Posts on LinkednIN:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/   Airline Economics Daily – July 5, 2018       Putting an end to speculation, Boeing and Embraer have signed a Memorandum of Understanding (MOU) to establish a strategic partnership that will focus on the development of a commercial airplane portfolio that ranges from 70 … Continue reading

Strikes by airline and ATC employees and unions are on the rise in Europe as workers see airline profits going up and their salaries eroding and now many employees are scrambling to join unions, even ULCC Ryanair now has to deal with unions. From pilots, flight attendants, maintenance to catering workers are uniting together and in May we saw Air France under siege by unions as its stock prices dropped 10% and its CEO quit, unable to get a deal done with his employees. Its time for employees to benefit from these boom days in the industry, the employees deserve a slice of the new profits, its not just about making executives and investors richer anymore. For too long, airline workers made too many sacrifices, especially at LCC, now that those LCC have matured and become highly profitable, the employees want better pay, and that is the reality of the life cycle of LCC’s, when employees hit the peak of their pay scales after years of low pay, at some point its their time to be justly rewarded. In North America, employees are getting more money and better deals as well, from DL, AA, UA to Allegiant, Spirit, WestJet, unions are back and higher wages are increasing unit costs, but when an airline makes lots of money, it should share some of that with its employees, no? What’s the cost of strikes and its bad PR versus keeping your employees happy with appropriate pay increases, and its not just about highly paid pilots, there are other important employees in an airline beside them as well.

Read my regular Articles and Posts on LinkednIN:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/ Aerotime News Hub-July 3, 2018     If 2017 brought a fortune for the European aviation, half-way through the 2018 something just isn‘t right. First, it was the increased fuel prices and now, strike actions that pose a growing threat to European airlines. According to Eamonn … Continue reading

SUMMARY: Nigeria has cleared its IATA backlog of $US 600m owed to airlines from ‘blocked’ ticket sale repatriations, which is a deplorable act against global airlines that serve those states. There is no legal reason for any government to seize such funds from airlines. At the end of 2017 $4.9b was being illegally kept by various governments from IATA airlines. Now 16 countries are still blocking IATA airlines ticket sales repatriations still. The worst culprit is technically bankrupt Venezuela, which is headed for total collapse soon at $3.78b, followed by Angola still owing $386m (from a high of $500m), Sudan at $170m, Bangladesh at at $95m, Zimbabwe at $76m, plus 11 more states owing around $170m. This practice must stop, IATA needs to take action to help airlines repatriate those funds, and I say its time to seize the aircraft of those states national carriers when they land at a jurisdiction that allows the seizure of the aircraft, until the IATA accounts payable are straightened out, that means seizing aircraft of Conviasa (Venezuela), TAAG Angola, Sudan Airways, Biman Bangladesh, Air Zimbabwe and Zimbabwean Airways (ZANU-PF government corruption scam has 2 national carriers right now in Zimbabwe) and any other state owned airline aircraft, where the government has illegally been blocking IATA airline repatriation of funds, simple as that! and watch the governments pay up fast!

Read my regular Articles and Posts on LinkednIN:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/   Nigeria clears foreign airlines’ $600m trapped funds Published June 6, 2018 – Maureen Ihua-Maduenyi – Punchng.com       Tomas’s Comment:   When governments start to hold IATA airline ticket sales repatriation, it is theft in my book, and for too long IATA and its 290 … Continue reading

Oil price falls on OPEC decision to increase production by 1,000,000 barrels a day, as Venezuela, Libya and Iran struggle to return to their glory days of production, which is all good news for Russia and OPEC, while the US shale producers are surging forward as oil exports from the US grow and compete with Russia and OPEC which is bad news for them. Is it finally time to break the grip of the OPEC cartel? which is technically illegal as it fixes prices, but till now no one has dared to challenge OPEC on its price fixing business model. Lastly, oil speculation significantly raises the volatility and price of oil, time to shut that down, as many rich and powerful make huge profits from oil speculation, hurting consumers and industries around the world.

Read my regular Articles and Posts on LinkednIN:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/   June 28, 2018       Tomas’ Comment:   Oil prices are heading back up, which is bad news for airlines, but airlines have done well with newer technology aircraft the last 18 years and as you see in the graph below, roughly a 40% … Continue reading

Fastjet hits back at media for being to harsh on it, yet while no one can be as bad as Fastjet was in 2016, with an operating loss of $US 63.9m (yes, -48% operating loss margin) operating 3 x A319’s, things have not changed much since August 1, 2017. The airline received $US 72.8m in new investment in 2017 and had an operating loss of $25.3 million and in that 18 months it has burned it all away with a smaller fleet (3 x ERJ-145, 2 x E190)? yes it reduced expenses, off course with smaller aircraft, but burning cash at $4.0m a month one has to really ask is this ‘new’ business model any better? as load factor is 71% and revenue per seat of just $60.90 means its yield is way too low, again another carrier offering LOW FARES, but NOT a LOW COST CARRIER! and PRASK is well below CASK, and they want more money? seriously?

Read my regular Articles and Posts on LinkednIN:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/       Tomas’ Comment: They can paint a rosy picture, but it has been under a turnaround since August, 2016, so 22 months of restructuring they should be further along in their recovery, but they are not and yes they have down-gauged to much smaller … Continue reading

Start-up Vietnamese airline, Bamboo Airways, has committed to purchasing 20 787-9 Dreamliners and 24 x Airbus A321neo’s back in March. The airline will be up against state owned and soon to be 49% privatized Vietnam Airlines with 83 aircraft and 28 on order, LCC VietJet Air with 55 aircraft and 179 on order and lastly Jetstar Pacific with 19 aircraft, if all airlines take their orders, Vietnam should have 4 airlines operating a total of 408 commercial jet airliners by +/- 2024, that is going to be a highly competitive market for sure.

SEE:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/   Airline Economics Online- June 27, 2018       Tomas’s Comment:   Bamboo Airways, is a startup airline by a Vietnamese construction company, FLC Group. It will start in late 2019? and will serve destinations where FLC Group has heavily invested in tourism infrastructure, as well as other secondary domestic routes.   … Continue reading

SUMMARY: NO surprise! Fastjet of South Africa is on the brink of failure, without a cash immediate injection, as cash on hand is down to $US 3.3m, this airline’s LCC business model with A319’s was broken for years, then they abandoned the model for regional jet flying with 3 x ERJ-145’s and 2 x E190’s. With operations in Mozambique (under Solenta Aviation Mozambique), South Africa (“branding licence”? with Federal Airlines), Tanzania (Fastjet Tanzania 49% owned) and in Zimbabwe (FastJet Zimbabwe 49% owned) and still cannot make money, share price fell 70% today, and yet still the airline is valued at $US 29m seriously?

SEE:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/   Fastjet warns it cannot continue without equity raising Airline Economics Daily – June 27, 2018 Tomas’s Comment: This is a sad story, the LCC model was a disaster, in 2016 it lost $US 48m on $US 68.5m in revenue? a -70% loss margin? what kind of business is that? They found a … Continue reading

SUMMARY: The 2nd last multi-national owned airline left in the world, SAS Scandinavian Airlines, the state carrier of Sweden, Norway and Denmark since 1951, is about to lose Norway as its shareholder, as it is selling the last of its 9.88% of the airline (down from the original 14.3%). Multi government airlines don’t work, from Air Afrique, Gulf Air, MSA, East African Airways to LIAT, they served their purpose but now its time for owners to go their own way, state owned airlines are hard to run imagine 11? it is time for that business model to be put to rest.

SEE:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/   June 26, 2018 – Airwise Norway has announced it will sell its remaining shares in flag carrier SAS Scandinavian Airlines.   The Norwegian Ministry of Trade and Industry on Tuesday launched the sale of its remaining 37.8 million shares, representing 9.88 percent of the airline.   Norway originally held a 14.3 percent … Continue reading

SUMMARY: The Chairman of the Republic of China (ROC) (aka Taiwan) based Daily Air, has been detained over fraud. It is alleged the airline created fake invoices to get more state subsidies, and at this point no word if there was any ‘irregularities’ with the recent acquisition of 4 x DHC-6 Series 400’s from Viking Air which has a value of $US 30 million. The airline flies into the highly volatile and politicized islands of Penghu, Kinmen, and Matsu, which are claimed by the Peoples’ Republic of China (PRC) which considers the islands and Taiwan, its territory, and makes no bones about the fact the ‘renegade’ province will one day be part of the PRC again, ideally peacefully but by military force if need be. The ROC is now, sadly down to just 17 UN member states that recognize it over the PRC out of 193 UN member states, the tide is turning against Taiwan and its once big aspirations of full independence.

SEE:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/   Head of Taiwan’s Daily Air detained over fraud June 21, 2018 Daily Air’s new Viking Air DHC-6 Series 400 Twin Otter     The Chairman of Daily Air Corporation (4 x DHC-6 Series 400 from Viking Air and 2 x Do228-212), a state-subsidized domestic airline, serving several of the offshore islands of … Continue reading

SUMMARY: The Etihad Airways “Equity Alliance Strategy” was a disaster just like the 1990’s Swissair “Hunter Strategy” which bankrupted Swissair in 2001, now Etihad has to dig itself out of a mess and right size its business, which means less aircraft, which is bad news for Boeing’s B777X order book, but with just 25 orders out of a total of 326 its a small hit, the big hit will be on Etihad which now has to be thinking of joining Emirates and flyDubai under one Group ownership, that will take some soul searching and loss of pride in Abu Dhabi, but it makes sense for the future of Etihad.

SEE:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/   Etihad B777-300ER     $6 Billion Order Loss For Boeing? Jun.18.2018 – Seeking Alpha -Dhierin Bechai         Tomas’s Comment: Etihad Airways has 8 x $394.8 million B777-8’s on order and 17 x $425.8m B777-9’s on order since November, 2013 when life was good for Etihad Airways, and ordering 25 … Continue reading