//
archives

Airline Restructuring

This category contains 28 posts

Surinam Airways must ‘think Big’, with a Big vision for the future beyond just Suriname, too many small national carriers think ‘small’ and never achieve their full potential, sticking to old tried ways without much success, yet look at the success of COPA (Panama), Norway Air Shuttle (Norway), Ethiopian Airlines (Ethiopia), Ryanair (Ireland) to Singapore Airlines (Singapore), think Big, plan Big, act Big and do Big things and you become Big in time, step by step. But if you think small, plan small, act small you will always remain small and insignificant and most likely, not profitable.

Surinam Airways must ‘think big’, says aviation expert Published on January 23, 2017 by Caribbean News Now by Ray Chickrie Email To Friend    Print Version  By Ray Chickrie PARAMARIBO, Suriname — In his assessment of Surinam Airways (SLM) (3 x B737-300’s and 1 x A340-300), aviation expert Tomas Chlumecky has called on the airline to “get out … Continue reading

UPDATE: Transwest Air is now a fully owned subsidiary of WestWind Aviation, now there is only 1 large regional airline in Saskatchewan, and 80% owned by 2 First Nations economic development corporations (EDC’s). These First Nations EDC’s now pretty much own ALL airlines in Canada’s north, usually through Aboriginal economic development corporations (EDC’s), with a few family and corporate hold outs in the Northwest Territories, especially at Yellowknife (Summit Air, Discovery Air-Air Tindi/Great Slave Helicopters, Buffalo Airways) and in Fort Smith Northwestern Air Lease Ltd. Is this a good thing or a bad thing where First Nations own all air services in Canada’s north ? Is this the only viable exit strategy available in the north or are there “pressures” to sell to local First Nations ? and Can the EDC’s create long term financially sustainable airlines ? First Air (Makivik Corp.) and Canadian North (IDA), have tried to merge several times but each time it has failed, even though it makes lots of economic sense to do it, or is more cooperation among the EDC’s needed, like the recent cooperation between Air North and First Air ?

As to my blog of August 21, 2016, the Transwest Air deal is done and it is now a fully owned subsidiary of WestWind Aviation, which itself is owned 55% by the Athabasca Basin Development (ABD) and 25% owned Prince Albert Development Corporation (PADC), in short 80% First Nation owned with 20% owned by the … Continue reading

UPDATE: Canadian regional airline consolidation continues as the once fragmented industry starts to consolidate around a single provincial operator. After 11 months under Canada’s CCAA (+/- Chapter 11 bankruptcy/reorganization), Quebec based regional airline, Pascan Aviation is acquired by 2 senior executives in a management buyout (MBO). Meanwhile Saskatchewan based WestWind Aviation, fresh from its acquisition of Osprey Wings last November, looks to takeover its main local competitor, Saab 340 operator Transwest Air, itself the product of two old local airlines and their pioneers (Athabasca Airways of Floyd Glass and La Ronge Aviation of Pat Campling) coming together in 2000, leaving WestWind Aviation a monopoly in Saskatchewan, much like Manitoba with Perimeter Airlines, Calm Air, Keewatin Air and Bearskin Airlines, all under one ownership. Times are changing for regional airlines in Canada, as the second generation of airline owners retire or sell of the businesses that their fathers and mothers built from scratch, usually with nothing more than a single Cessna 180 aircraft. Sad to see the old names disappear, it is the “circle of life”, but the legacies of our Canadian aviation pioneers will always remain with us.

UPDATE: As I wrote this, I found out that WestWind Aviation (80% First Nation owned) has bought Transwest Air for an undisclosed amount, now only 1 airline exists in Saskatchewan, like it or not.   This is my follow up to the January 5, 2016 article “Consolidation in the Canadian Regional Airline Industry”, as the … Continue reading

SUMMARY: Once infamous Wasaya Airways is out of bankruptcy proceedings after owing $35 million, and now looking to become the 1st commercial operator of the $US +/- 28 million Airbus C295W aircraft to serve the 12 First Nations of Northern Ontario that own 100% of the airline. Under new President and CEO Michael Rodyniuk, the once poorly run airline finally has potentially a ” bright” future ahead. But what does a Northern Ontario First Nations airline need 5 x C295W’s costing $US +/- 140 million ? there are much cheaper options, especially when cargo does not care what aircraft it flies in. Recent addition to Wasaya Airways Board is Stephen Smith, the once high flying airline executive at Air Toronto, WestJet and Air Canada, a much needed boost to the Board that oversaw lots of mismanagement and chaos over the past 10+ years. Why would any regional airline become the first and only commercial buyer of any aircraft ? What about support for a high utilization operation ? what about resale value one day ? what about certification ? the price ? military maintenance program ? especially when you can get good used ATR-72 freighters ? and when will Canada stop operating 40+ year old B737-200’s and HS 748’s ? as for a modern country we operate older aircraft fleets than many third world nations. Lastly, with only 9 x HS 748’s left in Canada and 15 at best in the world, it will be sad to see the old workhorse fade away after 55 years after production began.

In June, Airbus demonstrated its C295W transport plane to Northern Ontario based First Nation owned Wasaya Airways (“it is bright” in oji-cree), which comes just as the airline gets creditors approval for its $C 35 million debt restructuring plan, giving just 10% of unsecured debt value to its long list of creditors. The airline has … Continue reading

PRESENTATION: Finding the elusive sustainable airline business model in the Caribbean, a large graveyard for regional airlines for decades. The region has a great deal of potential, but government taxes (up to 100% of net ticket price) play havoc with passenger demand, poor intra regional connectivity and government protection for state subsidized airlines (LIAT, Caribbean Airlines, Bahamasair, Cayman Airways) limits any real competition. Time for real Open Skies, allowing freedom to serve any route by appropriately licensed carrier, and governments to get out of the airline business, and stop taxing airline tickets to the point where tourist traffic is 1/3 of what it was 10 years ago, the whole idea is to get tourist to the islands and then tax them, rather than tax them to death on airline tickets as they then chose other destinations to travel to, its all backwards. LIAT flies 35% of its routes on money losing “social routes” with ATR-72/42’s, time to get small regionals with 15-19 passenger turboprops to compliment and even replace LIAT services on money losing routes, frees up ATR capacity for money making routes and reduces or eliminates loses on “social routes”. Time for a more intelligent approach on air transport and air connectivity in the region, where tourism is still struggling after 8 years, and it is tourism that drives the economies in the Caribbean.

I attended the Carib Avia’s 1st annual Caribbean Aviation Meetup between June 14-16, 2016 in Roseau the capital city of the beautiful Commonwealth of Dominica, and attached is the 2 hour presentation from the Conference. The Presentation covers airlines that have gone bust, regional aircraft, multi-government owned airlines, airline business models, regional airline valuations to … Continue reading

UPDATE: VLM Airlines says NYET to the once planned 14 x Russian Sukhoi SSJ-100’s SuperJet’s, due to potential certification and geopolitical risks, which I have been talking about for some time. It took a new CEO Hamish Davidson to see things clearly, the SSJ-100 program is in BIG trouble, 102 manufactured and 35+ “white tails” sitting and waiting in the cold for a buyer or lessee, basically any airline with a pulse and in desperate need of 80-90 seat regional jets. The aircraft are going to Russian airlines off course and then to very financially weak and desperate airlines outside of Russia like Thailand’s Kan Air, which recently was one of 4 airlines in Thailand identified by it’s CAA as having safety concerns due to high debt loads. While another SSJ-100 customer, Bek Air (Kazakstan) sues it’s CAA because it does not want to undertake a compulsory IOSA (IATA Operational Safety Audit) ? Other than InterJet (Mexico) the foreign customers of the SSJ-100 have been very weak airlines most have gone bankrupt operating the SSJ100 or just waiting for the SSJ100 to arrive, not sure which is worst, either way, financial condition of the operating carrier is obviously not a major criteria at SuperJet International. The list of failed Sukhoi “customers” is pretty long for a 5 year old program, from Armavia (Armenia), Moskovia (Russia), Air Armenia, Sky Aviation (Indonesia), Lao Central Airlines (Laos) Kartika Airlines (Indonesia), while Blue Panorama (Italy) just cancelled it’s order. Airline executives should not take big risks with their airlines, the SSJ100 has many risks, political, economical, customer perception to operational. Finally, Russia’s Prime Minister Medvedev “wonders whether it is 2016 or 1962 ?” as the “New Cold War” is on according to him, meanwhile many Europeans wonder if it is not 1938-1941 all over again with 3 internationally recognized independent countries (Georgia, Moldova and Ukraine) now having had part of their territory annexed by force in the past 20 years by Russia, who is next ? Estonia ? Latvia ? Lithuania ? it is time for tougher economic sanctions on Russia that include Sukhoi and it’s commercial aircraft program, the SSJ-100, wake up Europe, because it is 1938 all over again, will history repeat itself ?

In a smart move, Begium’s VLM Airlines is backing away from its planned acquisition of 14 x Sukhoi SSJ-100-95LR Superjets (4 lease options + 10 purchase rights), due to certification concerns and geopolitical issues between the West and Russia. This is what I have been talking about in my previous articles on the SSJ-100, the … Continue reading

UPDATE: Canada’s first ULCC (ultra low cost carrier) is Winnipeg based NewLeaf, which will launch services to 7 Canadian destinations on February 12, 2016 with Boeing B737-400’s operated by Kelowna based Flair Airlines. It is not a perfect business model to start with, but given that Naked Jet/Enerjet and Canada Jetline have not been able to get their business plans executed for the past 2 years, it is better than nothing. In fact, this model was used to run Greyhound Air between July 1996 and September 1997, when Kelowna Flightcraft operated 7 x B727-200’s under its AOC for Greyhound Air, and Winnipeg was the hub, so it has been done before, but today the market landscape is different and it just may work. NewLeaf will offer fares as low as $99 one way but also will need to supplement it’s low fares with “non-ticket” revenue from baggage, seat selection, exit row, food and beverage fees, that today at US based ULCC’s make up around 45% of total revenue or 79% of the ticket price (i.e. Spirit Airlines), so expect that on average that $99 one way ticket will become on average a $+145 one way ticket when all is done and paid, still much lower than what Air Canada and WestJet charge today. Some people still think of WestJet Airlines as a low cost airline, but that story is long gone, as WestJet realized it did not have to be a low cost airline, just come close to Air Canada’s fares and the service would win over. Today Air Canada and WestJet Airlines have roughly the same passenger yields ($/RPM) at around $cents 0.192, both have the same average load factor of +/-81%, their PRASM (passenger revenue per available seat mile) are pretty much the same at $0.155, and Air Canada is reducing its units costs while WestJet’s keep going up. It is time for Canadians to have access to LOW airline fares, and have another choice over the duopoly that runs our airline industry, as we are the ONLY country in the developed world today without a low cost airline, and while Air Canada’s ‘rouge’ is a low cost subsidiary (mostly just due to higher seating density on its aircraft) it’s fares are the same as Air Canada’s, as its role is to make more money for Air Canada and not to reduce air fares to Canadians. It is estimated that 4.8 million Canadians fly each year from US airports that are close to our border (e.g. Buffalo, Detroit, Bellingham, etc.) to save on airfare ! This is the Canadian ULCC opportunity and challenge, to get some of those passengers back. With low frequencies and just 7 airports served, NewLeaf will not threaten Air Canada or WestJet but then 20 years ago WestJet started with 3 B737-200’s and 5 destinations and look at its evolution, every company has to start somewhere. Lastly, Iceland based ULCC operator WOW Air is coming to Canada in May, 2016 and is offering great deals to Iceland at $C 99 one way and $C 149 to Europe, it is about time Canadians had low cost options and let’s hope the low cost trend spreads fast and forces the duopoly to stop ‘milking’ Canadian air travelers !

Well, Canada finally has another low cost champion, as NewLeaf Travel Company Inc. (http://www.FlyNewLeaf.ca) announces it will begin operating Boeing B737-400 commercial flights to 7 Canadian cities for as little as $99 one way under the AOC of Flair Airlines of Kelowna, B.C. on Friday, February 12, 2016, only 1 week short of the 20th … Continue reading

SUMMARY: The Latvian airline, airBaltic was recently a target of Russian ‘agents’ to sell it 5 x Sukhoi SSJ-100 SuperJets, though it has 13 x CS300 on order and 7 options. The Russians are desperate to open the Western market for the SSJ-100 even as they deliver only the 100th unit produced after 49 months of production (only 17 produced this year versus a planned 45 and only less than 60 in service ? yes that is right, 40 x SSJ-100’s sitting in Russia with no where to go ! it’s a fire sale now). President Putin is putting $US 2.0+ billion into the program to open the Western market for the SSJ-100 to be followed by the Irkut MC-21 narrowbody.The SSJ program is crucial to Russia’s “hopes” of becoming a major commercial aircraft producer. But right now Sukhoi is part of the Russian military industrial complex now under international sanctions, as is it’s parent company United Aircraft Corporation (UAC) and a therefore all risky suppliers. To sell the aircraft, the Russians have resorted to their well known Russian business practices and desperate measures. Recent scandals at the highest levels in Latvia and at airBaltic show how secretive and underhanded they are to make things happen. In this case a new “undesirable” and a “potential security risk” (according to Latvia’s ex-Transport Minister), German investor with very close ties to Russia’s aerospace industry and Russian ‘elites’ comes out of nowhere with $US 57 million and puts money into a desperate national airline (opposed by Latvia’s then Transport Minister who was fired for his opposition), gets 20% equity and a whole lot more. He gets the airline to change its Business Plan to include 5 x SSJ-100’s, and somehow gets exclusive rights to provide aircraft to the airline ? who agreed to that ? Thank god that whole “scheme” was torpedoed by the Latvian Prime Minister right away with the urging of his Minister for Defense. A special NO purchase/lease or utilization of Russian aircraft special clause was inserted into the Shareholders Agreement plus 20 controversial points were removed ? Where did CEO Martin Gauss stand on all of this is a big question. But this shows how Russians plan to sell the Sukhoi, use money from who knows where to invest in private small airlines, fund management buyouts, pay off executives, buy airlines from privatization, etc. Slovenia’s Bad Asset Management Company is now privatizing it’s national airline Adria Airways, with Intro Aviation in the running, a word of caution here is needed as the real Intro Aviation interest may have more to do with placing SSJ-100’s then anything else (Adria Airways has 6 x CRJ900’s and 3 x A319’s). In fact, Ireland based CityJet’s (owned by Intro Aviation and now lessee to 25 x SSJ-100’s ) Chief Executive calls the SSJ-100 a real “game changer”, seriously ? it’s a 9 year old design that faces obsolescence in the next 2-3 years as the new generation Embraer E175-E2, Mitsubishi MRJ90 and the Bombardier CS100 enter service. Some in the industry are greatly exaggerating the SSJ-100 capabilities. The fact is that till now, the only western customer was Interjet of Mexico, otherwise the rest of the customers are just Russian/CIS operators (not counting the failed operators in Indonesia, Laos and Armenia) who have no choice in Russia, but the SSJ-100. So why buy anything MADE IN RUSSIA ? does anyone buy anything Made in Russia today ? Any executive worth his salary knows that in business you must always minimize business risk where possible, when you buy a SSJ-100 you greatly increase your political risk. Tensions between NATO and Russia are heating up again after the annexation of Crimea and the provocations in Ukraine, and you put your company’s future at risk of bankruptcy if you operate SSJ-100’s. One only has to look at the fact that the vast majority of western airliners in Russia today (inc. national carrier Aeroflot) are on VP-B (Bermuda) or EI (Ireland) registration, as RU (Russian) registration is too “risky” for lessors, financiers, banks and aircraft investors. If relations with Russia deteriorate further in the future, a SSJ-100 operator will have to shut down, as new sanctions and any subsequent public and corporate boycotts/petitions against the your airline’s use of the SSJ will ground you, do not take political risk likely today. That is the world of economic sanctions, just ask the Cubans and Iranians how tough it is to keep old cars and planes operational in such an environment, so be smart, saving some money up front on a 20 year commitment to an aircraft does NOT mean that you have a great deal in the end.

In a major press announcement on December 2, 2015 in Latvia, the Prime Minister Laimdota Straujuma came out to say the government supports the inclusion of a cause in the Agreement of Shareholders that prohibits “ airBaltic and its affiliated companies are prohibited from purchasing, renting or otherwise utilizing equipment produced by the military industrial … Continue reading

UPDATE: The end of Estonian Air, and airBaltic’s new capital and it’s “undesirable” and contentious new investor and Russia’s SSJ-100 SuperJet desperate and murky measures to sell into the Western European market: As predicted along time ago, Estonian Air will shut down its operation tomorrow November 8, 2015 after today’s EU Commission order to the Estonian Government to recover the Euro 85 million ($US 92 million) in “illegal” state aid given to the state owned airline the past 5 years. This is the 2nd airline this year (Cyprus Airways back in January was forced into liquidation) that had to close down after the EU ruled that the airlines received state aid beyond the “one time, last time” guidelines for restructuring aid. Estonian Air was a cash burning operation since 2010, going through Euro 87.6 million ($US 95 million) in 5 years, with a current fleet of just 3 x CRJ-900’s and 2 x CRJ-700’s, an inept underachiever for 5 years that even according to the EU Commission, did NOT have a credible restructuring plan that ensured it will not be going back to the trough of public taxpayers money to keep flying. The airline had NO sustainable business plan, other than “white label” flying (ACMI operations) for third party airlines, which are not a long term sustainable business. Realistically, Estonia with only 1.3 million people is a small country and aviation market (only 44nm from Helsinki, a big northern hub) and Europe’s 51 independent countries cannot ALL have their own national airlines, it is just not economically viable, and state aid is NOT an option, it distorts competition against private airlines. Malev’s closure in 2012 showed that when the home airline does close down, new airlines and routes are picked very quickly by other airlines. BUT the stubborn Estonians already have Plan B in place for weeks, the same day Estonian Air shuts down, Nordic Aviation starts up and ready to use Euro 40.7 million of taxpayers money and Adria Airways AOC and throw it all away again a few years down the road, as some people will just never learn from their mistakes ! Meanwhile next door in Latvia, the state owned airline, airBaltic is about to get a Euro 80 million ($US 87 million) state cash injection to shore up its negative Euro -75 million ($US -82 million) shareholder equity so it can borrow money to finance $US 1.3 billion for the 12 ordered and 7 optioned Bombardier CS300’s, again the EU Commission will have to investigate as this is state aid to bolster a national airline, and it does affect competition. Also again there is some ‘funny’ stuff going within the airline and government has a dubious new German investor (Ralf-Dieter Montag-Girmes), very close to the Russians and their aircraft industry, buys 20% of airBaltic for Euro 52 million (US$ 57 million) valuing the little airline at a ridiculous $US 285 million, and he has been called the “least bad option” and a “undesirable” investor with “potential security risks” by the recently fired Latvian Transport Minister, Mr. Matiss. The Russians are quietly targeting airlines like airBaltic, VLM, City Jet, Greenland Express, Adria Airways, etc. for the Sukhoi SSJ-100 SuperJets by buying into these airlines through intermediaries, investing in them or management buyouts or going to bed with their existing owners or investors as billions of dollars are going into the SSJ-100 program and its ultimate success lies in breaking into the western commercial aircraft market, and it must open the door for the Irkut MC-21 narrowbody airliner due in 5 years time as well. Russia it is ready to do ALL it can, huge lease and price reductions to bribes or buying “influence” in small European airlines to place its SSJ-100’s, which has had 7 airlines go bankrupt while 8 customers which ordered 77 SSJ-100’s with 29 options have not been heard from in a long time, its all murky with the Russians, just beware !

I have repeatedly said that Estonian Air will become the next European airline forced to shut down its operation because the airline repeatedly benefited from illegal state aid for its existence. (READ BLOG of JUNE 17, 2015) Well today, November 7, 2015 the European Commission ordered Estonia to recover the state aid given to Estonian Air … Continue reading

SUMMARY: Another Canadian airline has shut its doors again, as IMP Group’s CanJet Airlines has packed it in after 15 years of trying everything to be successful, from being sold to Canada 3000 and then revived, then went into scheduled services, then went into charter flying for tour operator Sunquest followed by ACMI flying for Air Transat and when that ended a failed quick and poorly planned attempt at becoming a tour operator as well, but CanJet Vacations lasted 2 months at best, again poor execution of a business plan and now it has run out of ideas. The airline has run the gauntlet of airline business models without any long term success or profit, the problem is more to do with execution than the business plans used, a common Canadian aviation problem. Now it will dry lease out its last 4 x B737-800’s and return them to their owners in May, 2016, but with no operations the AOC will be gone, and that is worth something for Canada’s aspiring ULCC start-ups like Canada Jetline or Maple Leaf Travel who have no AOC or money right now. Canada needs a ULCC, the business model is proven and LCC companies like Indigo Partners LCC and Irelandia Aviation surely would love to give it a try in Canada where 85% of domestic travel is in the hands of the duopoly of Westjet Airlines and Air Canada. Why are airlines like Air Transat allowed to lease in 10+ foreign B737-800’s on ACMI leases when Canadian aircraft and crews are available ? foreign ACMI leases should be allowed only when there is no Canadian lift available, time for the government to investigate this matter.

As expected (my Blog May 19, 2015), Canada has lost another airline last week, when CanJet Airlines, shut down the operation of its last operational Boeing B737-800 which was operating on an ACMI lease for Air Transat out of Toronto, and was downgraded to just a dry lease, forcing the company to furlough its last … Continue reading

SUMMARY: The good airline news out of Europe is that TAP Portugal is finally 61% privatized and in good hands for the future while the Irish Government gives the go ahead for IAG’s buyout of Aer Lingus. The bad news is that Lithuania’s small national airline, Air Lituanica becomes the 5th European airline this year to shutdown (27 in 2014), while Croatian Airlines and Adria Airways nervously wait for their privatization as it is “swim or sink” time for them and others like LOT, TAROM, Estonian Air, Czech Airlines, AirBaltic, etc. as they have all taken or will take their last “one time” EU allowed state aid packages, and from now on for most, if they run out of money, they have NO choice but to file for bankruptcy. The low cost carriers (LCC) in Europe continue to grow at a fast pace and challenge the existence of national carriers as incumbents cannot muster any significant competitive response against the LCC onslaught in Europe. Meanwhile, fully government owned AirBaltic of Latvia becomes the launch customer for Bombardier’s CS300 (20 on order, 13 + 7 options), the $US 1.44 billion aircraft cost and launch customer designation is not realistic from an airline based in Latvia that lost $US 220 million since 2010, bailed out by the Government in 2011 and has made only $US 11 million in net profit in the past 2 years on revenues of $US 688 million (a slim 1.6% net profit margin), it is a barely a financially viable carrier without the new and expensive CS300’s. The airline has 24 aircraft today (B737-300/500, Q400’s) making it the 36th largest airline in Europe (following ‘big’ names like Onur Air and Norwind Airlines ?) is this a joke ? Bombardier has NO “better” customer for the launch of the CS300 ? the quality of its current customer order book is sad indeed after Lufthansa and Korean. It reminds me of the Sukhoi SSJ-100 tragic launch customer Armavia (of Armenia), which was an absolute PR and marketing disaster, as it accepted the 1st aircraft, could not finance the 2nd aircraft, and then went bust. Anyway, the plight of the small/medium government owned and private airlines in Europe continues, what is their future ? or is there one ? Air Serbia pulls off an incredible corporate turnaround in 1 year under its “white knight” equity partnership with Etihad Airways, but other airlines may not be so lucky, time to look at new business models for survival before the wave of European bankruptcies begins as surely 50 European countries cannot all have a national airline !

The European airline industry is tough, unstable and very dynamic, the latest casualty is little known Air Lituanica of Lithuania, which is the 5th European airline victim in 2015 (not counting Russia), following Cyprus Airways, EuroLot (Poland), Tend Air (Romania) and Wizz Air Ukraine into the history books. The European airline industry is in trouble … Continue reading

SUMMARY: Canada’s charter airlines struggle, CanJet Airlines (owned by IMP) future in serious doubt while Air Transat limps along in its recovery, but Air Canada’s Rouge is growing and on its heels. Meanwhile the 3 ultra low cost airline candidates struggle to raise money, with Jet Naked (Enerjet) lost its 3 star ULCC (ultra low cost carrier) executives and now Enerjet is being sued by them for breach of contract. Meanwhile, NewLeaf Travel Co. Inc. ties up with Flair airlines to operate 2 x B737-400’s for it, IF and WHEN it raises sufficient start-up capital. Over in Vancouver, Canada Jetlines orders 5 and options another 16 Boeing B737Max7’s before it even has start-up financing in place ?? Interesting developments in this segment, and worth watching, as Canada needs a ultra low cost airline (ULCC) to offer low cost air travel to Canadians. Canada is the ONLY large country left without a LCC, and is controlled by a duopoly. Troubled CanJet Airlines has the potential to be a ULCC and save itself from doom, but right now it looks like no ULCC will start-up in Canada this year and CanJet will most likely be shut down, leaving NO low cost champion in Canada, and 34 million Canadians are prisoners to only 2 airlines domestically, a country that is only 2% smaller than all of Europe put together !

The first 4 months of 2015, have brought mixed results for some of Canada’s airlines. In big trouble is one of Canada’s leisure and ad hoc charter airlines, Halifax based CanJet Airlines, owned by IMP Group International, a diversified conglomerate owned by the Rowe family, that now employs 4,500 employees in 6 Divisions in Aerospace … Continue reading

ABSTRACT: Chorus Aviation, the biggest Air Canada Express partner with 122 aircraft, is buying DHC-8 / CRJ-200 ACMI operations specialist Voyageur Airways for $C 80 million on the heels of an amended CPA (capacity purchase agreement) with Air Canada (AC) that now extends into 2025, and one that requires Chorus to lower its costs, one way to do that is to set up a separate low cost unit (Voyageur Airways) to operate the older DHC-8-100/300’s at a lower cost base , and another unit will continue to operate the newer and bigger Q400’s, CRJ-705’s and the CRJ-200’s, it is a strategic move to lower labor costs (at $95,442 per employee, 9% higher than at AC) and to stop other regional airlines like Sky Regional and Air Georgian from winning new AC CPA business in the future, Chorus Aviation is paying a rather high 4.7 times EBITDA to have its ‘low cost subsidiary’, the old and out of production DHC-8’s (average 26 years old) have become a burden on Chorus which generates 99.2% of its business from AC, its previous attempts to diversity have all failed, a regional LCC is a fantasy, too little room for extra seats or extra utilization to drive CASM’s down, Chorus Aviation’s 2014 Net Income margin of 3.9% is very low and cash flow was negative $C 45 million, AC needs low cost regional partners more than ever now and it just gave Chorus a 10 year life line to shape up.

Canada’s Chorus Aviation Inc.  (TSX: CHR.B, CHR.A) is to buy all of the issued shares of 519222 Ontario Ltd. A holding company that owns North Bay, Ontario based Voyageur Airways and its affiliated companies for around $C 80.0 million to be its ‘low cost’ DHC-8-100/300 operator, a mini version of Rouge, which is Air Canada’s … Continue reading

ABSTRACT: IAG (International Airline Group) acquires Ireland’s Aer Lingus and gains 23 valuable slots at Heathrow, while oneworld partner Qatar Airways buys 10% of IAG, Europe’s highly fragmented airline industry with 200+ airline groups where the top 5 airlines by traffic have a 46% market share compared to 87% in the highly consolidated and concentrated US market, and a new stage of European consolidations will soon begin, as state aid is all but gone now, and already in 2015 both Cyprus Airways and EuroLOT are shut down, Lufthansa Group and Air France-KLM Group both struggle with sustainable profitability and many of the remaining small carriers are waiting for a “white knight” before they go bankrupt, meanwhile most of the recent European airline acquisitions have been from outside of Europe, the industry is changing, and many airline bankruptcies are expected as there are no more “white knights” around like Etihad Airways to rescue the weak and struggling airlines.

The Irish national carrier, Aer Lingus is being acquired by IAG (International Airline Group, LSE:IAG), the 6th largest airline group in the world with revenue of $US 24.7 B (billion) and the parent of British Airways, Spain’s Iberia and LCC Vueling, valuing the airline at Euro 1.36 billion (+/- $US 1.53 billion). Under current CEO … Continue reading

ABSTRACT: Bombardier takes another credibility hit, stock drops 25% in one day as investor confidence is shaken and they are selling, another senior executive departs, the Learjet 85 is “paused” with a $US 1.4 billion write down, certifying 4 new jets at once costing $US 6.9 billion was “nuts”, the Q400 and CRJ’s programs are near their end, another 1,000 employees are to be laid off on top of 2,000 last year, corporate credit rating cut, talk of a Q400 and CRJ assembly line in China, only 243 firm orders for the CSeries after 78 months of effort, and probably 100+ will NOT take delivery, Alenia a major CSeries subcontractor sues for $US 121 million, CSeries EIS not till 2016, low fuel prices diminish the fuel efficiency argument for CSeries, while it’s launch customer is a secret ? sell Commercial Aircraft Division to China’s COMAC and create Combardier ? capital markets worried about liquidity and management, Business Aircraft Division now discounting some aircraft, Learjet cannot survive on only 33 Learjet 70/75 sales (+/- $US 335 million) a year, is it doomed ? sell it off ? with a cashflow of only $US 800 million in 2014 will Aerospace have the cash to complete certification and produce the $US 1 billion Global 7000/8000 business jets and the $US 4.5 billion CSeries ? time for an outsider as CEO – again ?

Bombardier, the world’s only plane and train manufacturer continues to disappoint shareholders, employees and customers, and on Wednesday, January 15th, we saw the wall crash down, when Bombardier stock (TSX:BBD.B) crashed downwards by 25.85% in one day ($US 1.8 billion in market capitalization) on volume of 57 million shares, to $CAD 3.07 from $CAD 4.14, ouch … Continue reading

ABSTRACT: MAYDAY ! Russian Ruble (RUB) half its value of a year ago and oil prices at a 6 year low of $US 48/barrel while Russia needs the Brent oil price at $US 105/barrel to balance its budget and EU/US sanctions in place with more to come, the Russian airline industry is feeling the pain, Transaero Airlines asks for and gets State Aid while UTAir is also in line for a bail out, will national flag carrier Aeroflot and others be next ? how will the commercial aircraft industry move forward with the Sukhoi SSJ-100 and Irkut MC-21 under these harsh economic times in Russia ?

The deteriorating economic situation in Russia and the political tensions from its annexation of the Crimea and support for separatist rebels in Eastern Ukraine is causing huge problems for the Russian aviation industry, and Russia is no busy bailing out its airlines, 2nd largest Russian airline Transaero Airlines and smaller UTAir are getting state aid … Continue reading

UPDATE: India’s LCC Spicejet was grounded today, due to fuel now being COD (cash on delivery), the writing has been on the wall for 5 quarters, action was taken too late, and yet the airline still ordered $US 4.2 billion worth of 42 Boeing B737-8MAX aircraft in March ! The Indian market is high risk for any local airline and off course for any lessor or OEM planning to deliver aircraft into the market and why troubled companies need to acknowledge there is a problem as soon as possible, then diagnose the problems and deal with them right away, do not ignore them, or pay the price of failure.

As expected LCC Spicejet is grounded, its fate is unknown at this time, but very doubtful it will fly again, surely all lessors of the B737-800/900ER’s and Q400’s are there now, looking to get their assets out. There are 15 x Bombardier Q400’s with Spicejet, and up to 39 Boeing B737-800/900ER’s scattered around the country, … Continue reading

ABSTRACT: India’s LCC (low cost carrier) SpiceJet is in trouble, finally restructuring after 5 consecutive quarters of losses, just today it’s stock dropped 13.8%, as lessors start repossessing aircraft, yet 9 months ago it made a $US 4.4 billion order for 42 Boeing B737-8 MAX, now out of money ? where is the financial planning ? is the restructuring too late, again ? when will India’s airline industry be profitable with such low yields and high costs ? time for Air India to go bankrupt finally ? and yet LCC IndiGo is making money and orders 250 Airbus A320neo’s ready to dominate the Indian market with up to 528 Airbus A320/321’s by 2026 !

The airline industry in India is a bloodbath, everyone except LCC (low cost carrier) IndiGo and possibly GoAir is bleeding cash, with high operating costs and very low yields, the market is now facing another major bankruptcy after Kingfischer Airlines with SpiceJet in big trouble. India is the most under served airline market in the … Continue reading

Once again the Makivik Corporation and NorTerra Inc. could NOT agree on a merger between their respective First Air and Canadian North airline operations, the merger is dead even though they acknowledge “that the Northern airline industry was not economically viable”, so will the owners subsidize their airlines forever ? or make changes to their business model ?

Back in mid-April, 2014, The owner of Canadian North, NorTerra Inc. and the owner of First Air, Makivik Corporation, announced that talks were under way to merge the two northern Canadian airlines, which together operate 39 aircraft (DHC-8-100’s to Boeing 737’s and a B767), to “improve the sustainability of the critical Inuit birth right enterprises” … Continue reading

ABSTRACT: Etihad Airways (aka “White Knight”) buys 49% of money loosing Alitalia for $2.4 billion and adds its 8th Equity Alliance partner, and the 3rd big partner that desperately needs cash along with Air Berlin and Jet Airways just to survive, it saved much smaller partners Air Seychelles and Air Serbia (ex-JAT) from certain death, and does anyone remember Swissair’s infamous “Hunter Strategy” ? it acquired equity in 10 European airlines and it collapsed in 2002 ! well this Etihad Equity Alliance strategy is nothing like it.

The unique Equity Alliance strategy followed by Etihad Airways CEO Mr. James Hogan is really taking off as Etihad Airways has just signed a $US 2.4 billion deal to buy 49% of Italy’s struggling Alitalia, and in one move Etihad gains access to Europe’s 4th biggest market. Hats off to James Hogan for the creative … Continue reading