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Airline Restructuring

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Ethiopian Airlines is and always had been, what the CEO calls a “strategic asset and a policy instrument” for the government. Its key role in logistics is designed to aid the country’s industrialisation. Today, the company is busy exporting its model across Africa, buying stakes in existing airlines in Djibouti, the Democratic Republic of Congo, Eritrea and Equatorial Guinea, as well as setting up new ones in Chad, Ghana, Guinea, Mozambique, Nigeria and Zambia. Not all governments are fully on board with the company’s pan-African vision, a vision which led it to take a key role in pushing for the African Union’s single market for air transport launched earlier this year. “The main challenge is the lack of proper attention given to aviation by African countries,” Tewolde says. “At the policy level, African governments, unintentionally, consider aviation a rich man’s means of transport. They don’t consider it as an essential public service for the average person.”

    https://www.linkedin.com/in/tomas-chlumecky-aviation-doctor-3200a021/     Posted on Friday, 16 November 2018 Tewolde GebreMariam, Chief Executive Officer, Ethiopian Airlines   By Tom Gardner in Addis Ababa     http://www.theafricareport.com/East-Horn-Africa/itv-tewolde-gebremariam-chief-executive-officer-ethiopian-airlines.html   Tomas’s Comment:   There is no doubt that today Ethiopian Airlines is Africa’s dominant airline, the only African Airline that can compete with the likes of Turkish, … Continue reading

We had two VLM Airlines, and a joint AOC between Belgium and Slovenia, each with its own AOC, but VLM Airlines (Belgium) with 2 x A320’s under the old Thomas Cook Airlines Belgium AOC, which they bought and VLM (Antwerp) with 5 x F50’s? When the company is confusing, you know the business model is as well. The operation is owned by SHS Aviation (Netherlands) which is 60% Dutch owned and 40% Chinese owned and its business model was confusing as hell from the start. It is why they are now closing VLM (Antwerp), as that old VLM business model did not work before and did not work this time around either. Fokker F-50’s to London City, Aberdeen, Cologne, Rostock, Munich, Marbor and Birmingham and a planned big hub at Maribor, Slovenia from where regular flights to China would take place from, very similar to Air Belgium’s (4 x A340-300) plan to fly to China from Charleroi, and also a confusing business model, flying to China for China’s U-Tour, freighter aircraft, flights to the US, ACMI, now flying for BA, etc.? One thing you spot quickly on a start up is its focus or lack of, if it’s all over the place with its strategy, run! they are not focused, and trying to be everything and anything, is a recipe for failure everytime.

    https://www.linkedin.com/in/tomas-chlumecky-aviation-doctor-3200a021/         RŪTA BURBAITĖ – Aerotime News Hub – 4th September 2018 VLM Airlines (Brussels) unaffected by VLM (Antwerp) liquidation       VLM Airlines (Belgium) is to be dissolved and enter into liquidation. That was the decision made by SHS Aviation (Netherlands), the majority shareholder of SHS Antwerp Aviation … Continue reading

American Airlines will phase out its 23 remaining B767-300ER’s by 2020 as more B787-8/9’s arrive. By next year all MD-80’s will be gone as will 20 E190’s by 2020. This will improve AA’s unit costs per ASM as will its acceptance of 100 A321neo and 100 B737-8’s and a B787 fleet that will as of now go to 89 aircraft. Out with the old and in with the new, will make AA more competitive against DL and UA.

  https://www.linkedin.com/in/tomas-chlumecky-aviation-doctor-3200a021/         AMERICAN AIRLINES CONFIRMS BOEING 767-300ER RETIREMENT DATES by Enrique Perrella – Airways     In an internal memo, American Airlines (AA) confirmed that its fleet of 23 Boeing 767-300(ER)s will be phased out in 2021.   Ryan Travis, Managing Director of Fleet Planning at AA, confirmed that “The 767 … Continue reading

Embattled Jet Airways is seeking financial help where it can, and Boeing is ready to help the airline to save its 225 x B737Max and 10 x B787-9 orders. OEM’s do help strategic airline customers every now and then, but it is a gamble and when you support one airline what do the airline competitors think of that? does it not distort competition? in this case say SpiceJet? What happens when some of the big order LCC’s in Asia get into trouble, and some surely will with their highly speculative orders that exceed their current fleets by 100% to +300%? will the OEM’s come to their rescue to? It is a slippery slope that OEM’s need to be careful going down.

  https://www.linkedin.com/in/tomas-chlumecky-aviation-doctor-3200a021/     Boeing gives Jet Airways a helping hand   August 21, 2018 Rediff.com     ‘Boeing has returned some cash to the airline which will help it improve the current liquidity crisis.’ Arindam Majumder and Aneesh Phadnis report.       Tomas’s Comment:   When commercial aircraft OEM’s help out a struggling … Continue reading

The “new” Guyana Airways Corporation (GAC) is in trouble, as the Government of Guyana removed the privately-owned Guyana Airways Corporation Inc. (GAC) from the Companies Register two years after the entity was duly registered because the name is identical to two previous companies. Now out of the blue just 2 months away from starting with 2 x B737’s there is a problem with the name? This is a classic political “shakedown” of a new company by someone high up in the Government looking for bribe, nothing else makes sense with this, the nation has waited 15 years to have its own airline, and the now that it almost has one, someone wants to pillage it before it gets off the ground. GAC (aka Guyana Airways II) is already facing challenges, as Guyana is a FAA Category 2 country, so no carrier from Guyana can fly directly to the US, where a large Guyanese diaspora lives, especially in New York. Guyana Airways now plans to just serve Port of Spain, Barbados and Havana, going up against Caribbean Airlines (CAL) will not be easy, but then a JKF service may have to face JetBlue soon and this October American will start Miami to Georgetown, as a start-up you do not want to face the BIG airlines head on right from the start, many that have, died quickly.

    https://www.linkedin.com/in/tomas-chlumecky-aviation-doctor-3200a021/   Starbroek – August 25, 2018   Boeing B707 of Guyana Airways after the 2001 bankruptcy, a sad cannibalized aircraft rotting in Georgetown       Start of new local airline delayed over name-company deregistered by commercial registry Millions in losses loom for a new local airline as the start of operations … 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/ACMI aircraft and crew to other carriers.

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 rules News – 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 … Continue reading

Jet Airways seeking $400 million from global equity firms to stay alive while Turkish Airlines had a good year, but the collapse of the Turkish Lira versus the $US, will create major problems this year for Turkish, 2 big airlines now in trouble for different reasons, and add to that Air India which has 23% of its 118 aircraft, grounded at any given time due to a lack of spare parts, yes $US 3.6 billion in assets parked waiting!

Read my regular Articles and Posts on LinkednIN:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/       Airline Economics  August 13, 2018         Jet Airways is reported to have begun a formal stake-sale process to raise $350-400 million from global private equity firms.     Local media sources suggest that Blackstone, TPG, Cerberus Capital Management and Indigo … Continue reading

The sad Rise and Fall of Curacao based InselAir took another “dubious” twist 2 weeks ago, in line with the ‘disappeared’ $US 97 million in Venezuela “mystery” that brought the airline down in the first place. The the Curacao Government and 51% owner (after a $US18.3 million loan) of what is left of the airline (1 operational Fokker F50), selected One Laser Group LLC of Miami, to be Insel Air’s 49% strategic partner. The Government claims that ‘InselAir is Bankrupt Without One Laser Group’. The Group is to invest $US 11.1 million into InselAir’s revival, yet the problem is, that there is NO information on the company, executives, history, business dealings, press releases, not even a web page, just a Florida based LLC (limited liability company), basically a “shell company with 1 key person. The company claims it is a “conglomerate of companies that invest in various sectors like air freight, logistics in food & pharmaceuticals and oil supply”? whatever! What the hell is Curacao thinking? I am sorry, but I believe this is just another BS airline scam in the works, like the recent BVI Airways, PAWA Dominicana, Baltia Air Lines/USGlobal Airways and others I have covered and exposed. With 4 CEO’s since January, 2017 it says novels about the ‘fiasco’ within InselAir today.

Read my regular Articles and Posts on LinkednIN:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/               Tomas’s Comment:   This industry is never dull, always something and sadly too often I find some funny business going on, as this industry due to its high asset value seems to attract a lot dubious entrepreneurs, executives and … Continue reading

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

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

The national flag carrier of Fiji is Fiji Airways, whose history goes back to 1951, and which was until May 2012 known as Air Pacific, and from 2012 it has become a very profitable airline national airline under 2 excellent previous airline executives, American CEO’s Dave Pflieger (Ex-CEO Hawaiian Airlines and after Fiji Airways he went on to Silver Air, Island Air and now RAVN Alaska), German Stefan Pichler (Ex-CEO Thomas Cook AG, Ex-COO Virgin Australia, Ex-CEO Jazerra Airways, Ex-CEO airBerlin and now CEO Royal Jordanian) and now highly regarded and talented South African CEO Andre Viljoen (Ex-Comair, SAA, Ex-CEO Air Mauritius). Fiji Airways has grown its fleet to 12 jets (6 x A330-200, 1 x A330-300, 1 x B737-700, 4 x B737-800 and 6 on order, 1 x A330-300 and 5 x B737-8’s). The airline is part of the Air Pacific Group, which also owns 100% of Fiji Link (1 x ATR-42-600, 2 x ATR-72-600, 3 x DHC-6-300’s to be replaced by 4 x Viking Air’s Series 400 Twin Otters), with the Government of Fiji owning 51% of Air Pacific Group, 46.32% owned by QANTAS and 2.68% ownership spread out between Air New Zealand and the Governments of the Pacific island states of Kiribati, Tonga, Nauru and Samoa.

Read my regular Articles and Posts on LinkednIN:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/     FIJI AIRWAYS, THE LITTLE AIRLINE WITH A BIG HEART   Written by Tom Ballantyne July 14, 2018 – June 2018 edition of Australian Aviation.       It’s the little airline with a big heart. In the South Pacific, where history suggests financial success … Continue reading

The Chairman of Estonia’s Nordica resigns. Remember this was the airline that took over Estonian Air routes the very day Eastonian Air shut down (November 8, 2015) as per European Commission orders to give back to the Estonian people the Euro 85 million in illegal aid that was used to keep the struggling national airline alive as it distorted competition. With no money to give back, Estonian Air had to shut down, just like Hungary’s Malev (February 3, 2012) and Cyprus Airways (January 9, 2015) for using illegal state aid. The Estonians learned from the Malev and Cyprus Airways EC ruling on how to circumvent EC rulings, and Nordica (Nordic Aviation Group) was readied and waiting in the wings for 2 months before the EC Ruling with Euro 72.7 million in new Estonian state aid for a “new” state airline. Now it has 18 aircraft (6 x ATR-72-600, 2 x CRJ700 and 10 x CRJ900) and is 49% owned by LOT. Has Nordica and Estonia circumvented EC rules? did they find a way to beat the EC and just let the old national airline collapse and start a new one with no repercussion? You know, all EU states should get out of the airline ownership business, airlines today need to swim or sink and state aid distorts competition, especially with private airlines who need make a return for their shareholders. Time for the EU states to get out of the airline business finally! No more public money for EU airlines, that is what the EC should be aiming for now.

Read my regular Articles and Posts on LinkednIN:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/   Chairman of the Management Board of Estonian airline Nordica submitted his resignation   July 14, 2018 –  The Nordic Times       Jaan Tamm, Chairman of the Management Board of Estonian airline Nordica, submitted his resignation to the Supervisory Board of Nordic Aviation Group … Continue reading

Smart way for Estonia to avoid illegal state airline support? On November 8, 2015 state owned Estonian Air was forced to shut down after the European Commission declared it cheated with state aid to stay afloat and that it return Euro 84.9 million. Estonia knew this decision was coming and had already decided that the country must have a Estonian airline at all cost and two months before the closure it set up two new public aviation companies, Nordica and OU Transpordi Varahaldus, with Euro 72 million allocated by the state, and screw the EC, they were going to use state aid for another state owned airline to distort and compete with other EU based airlines? Ho wcan the EC allow this, should the Hungarian and Cypriot Governments have put up new money again for a new state airline when Malev and Cyprus Airways was forced into bankruptcy for illegal state aid? The EC needs to get its act together, the Estonians laughed in their face, and started flying their new state owned airline Nordic Aviation Group, the same day estonian Air stopped flying! What was the point? and what is the lesson for other EU state airlines, and where it the protections for privately owned airlines against state owned airlines like SAS, LOT, airBaltic, Croatian Airlines when the EC rulings are circumvented?

Read my regular Articles and Posts on LinkednIN:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/     This article was written and first published on gediminas.ziemelis.com on 13th February 2018   Smart way for Estonia to avoid illegal state airline support?         Tomas’s Comment: A sad story on how the European Commission failed privately owned airlines in the … Continue reading

There is good news and there is bad news out of Surinam Airways (SLM), first the good news, long time CEO Robbi Lachmising is gone and hopefully more executives will go at the top, as really little has been done to turnaround SLM, a drain on public funds, and not the driver of economic and tourist development a national airline should be. The new CEO is Greg Lau and the new CFO is Steve Silos, and they are not from the airline industry and what I know, they are not political appointees of President Desi Bouterse’s NDP (National Democratic Party), unlike the previous CEO. This is all good, a fresh set of eyes, ears and ideas is finally running the show at SLM, and hopefully ready and willing to look at new business models and strategies, beside the one that has changed very little since independence on November 25, 1975. The bad news, is really not that bad, it is just another loss for the last fiscal year 2017-2018 of $US 3.0 million, which seems better, but in light of a small fleet of 3 aircraft (1 x A340-300, 1 x B737-700 and 1 x B737-300) it is just another indication SLM needs a major overhaul of its business, fleet and staff, as +/-800 employees for 3 aircraft is at least 4 times what it should be, to be efficient and competitive with any airline in the Caribbean Basin.

Read my regular Articles and Posts on LinkednIN:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/   SLM suffered losses of US $ 3 million JULY 9, 2018 – Armand Snijders       Tomas’s Comment:   I know SLM pretty well, I was first there in the early 1980’s and I love the place and its people, the last time I … 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

RIP: Latin American Wings (LAW) operating 5 x B737-500’s on niche routes out of Santiago, Chile from January, 2016 is out of business and will not fly again as investigation revealed serious breaches in it operations.

Read my regular Articles and Posts on LinkednIN:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/   CLÉMENT CHARPENTREAU -Aerotine News Hub- 26th June 2018         LAW (Latin American Wings) operated 5 x B737-500’s from Santigo, Chile to Caracas, Miami, Lima, Mendoza, Punta Cana and Port-au-Prince, and will not fly again as investigation reveals serious breaches in its operations. The … 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

Air Transat to lease seven new A321neos from AeCap for delivery between 2010 and 2022 to replace its A330’s to lower costs per seat.

Read my regular Articles and Posts on LinkednIN:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/     Airline Economics Daily – June 28, 2018     Air Transat has signed an agreement with AerCap for the long-term lease of seven new Airbus aircraft: two A321neos and five A321neo LRs (long-range). These aircraft will be delivered gradually between 2020 and 2022 and … Continue reading