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State Owned Airlines

This category contains 15 posts

SUMMARY: The Caribbean is a “graveyard” for airlines over 40 in the past 30 years, with 6 government owned airlines still flying and still burning taxpayers money, destined to never make money because they never change, till now. Cayman Airways, owned by the British Overseas Territory of the Cayman Islands has been changing quietly for years, reducing its debt, modernizing its fleet with 4 x B737-8 (Max8’s), but still dependent on $20+M per year from the government. A new modern fleet will help reduce operating costs but lease rates will be 6 times more than the B737-300’s, and new routes like the latest to Roatan, Hondurans are a good sign of expansion. It is at least a change, the other 5 government owned airlines are ‘business as usual’, politicians sticking their noses into everything they don’t understand, no new initiatives, no new strategy, no new leadership, just sitting around their desks “doing the same things over and over again expecting different results” (Einstein’s definition of insanity) and it applies so well to these 5 perpetual money losers. Only radical change will bring about a brighter future for Government owned Caribbean airlines, its time for surgery to revive them or its time for euthanasia, and cut off their life support (aka taxpayers money) ? one or the other, but things cannot keep going on usual, at some point creditors will have had enough, and then its THE END.

I have written about the Caribbean airline fiasco for years, you can read previous Blog articles on LIAT, Surinam Airways, InselAir, etc.by clicking on State Owned Airlines (under Categories) For many years I have written about the plight of Caribbean airlines, and the infamous region I call a “graveyard” for airlines. Yes, the list of … Continue reading

SUMMARY: The Chinese COMAC C919 airliner made its first flight today (May 5, 2017), and hopefully it will not be long before it is delivered to its first customer, China Eastern. The Comac ARJ-21-700 regional jet (evolved from the locally built MD-82’s and MD-90-30’s programs) took an incredibly long 2,769 days (93.3 months or 7.6 years) from its first flight to delivery to its first customer. This C919, is NO ARJ-21, this is an aircraft China can be proud of and one that can and will compete with Airbus, Boeing, Irkut and Bombardier when it gets its EASA Type Certificate which will take time, as the shadow certification of the ARJ-21 with the FAA did not materialize. Yes, there will be many issues with very poor sales & marketing, product support and after sales service, something Comac has no experience with and AVIC is horrible at. The ARJ-21 has no FAA certification and most likely never will, and will be relegated to flying for Chinese airlines and the very few “dubious” nations that do not require EASA or FAA certification for local registration and operations. The C919 has 99 orders, 227 options and 566 “commitments” so well over its stated break-even of 400 units. A proud day indeed, given the fiasco with the ARJ-21, now Comac will work with EASA to shadow certify the C919, but that will take a few years for sure, so no immediate concerns for the other 4 competing OEM’s. Lastly, this C919 is not the first Chinese indigenous jet airliner, back in 1970 the Chinese then under Chairman Mao Zedung, developed the Shanghai Y-10, a close similarity to the Boeing B720/B707, but it started way before President Richard Nixon’s famous trip to China in 1972 with Air Force One, a C-137 Stratoliner, a modified long range Boeing B707, referred to as SAM26000 (special air mission), in service from 1962 to 1999.

With the Comac C919 making its first flight, China finally has a commercial aircraft it can be proud off, and this aircraft will be able to compete with the Airbus A320neo, Bombardier’s CS300, Irkut MC-21, Boeing B737-7 and, B737-8 in time as it will require years to get its EASA certification, but Chinese airlines who … Continue reading

UPDATE: Bombardier stock (TSE:BBD.B) has been at $1.00 all day today, and late this afternoon it went south of that “psychological” barrier and became a “penny” stock, as it closed at a 25 year low of $0.99 on the Toronto Stock Exchange. Investors are dumping their shares for good reasons. No new CSeries order since September, 2014, lost United deal to Boeing, 3 of the 4 first CSeries orders from 2009-2011 are NOT happening (Lease Corp. International, Odyssey, Republic add up to 53 ‘firm’ orders and 57 options) and the 4th is Gulf Air (2011 order for 10 x CS100’s and 6 options) that last week ordered 19 x A320/321 with 10 x A320 already on order, and their CEO Maher Salman Al Musallam comments on the CSeries are not optimistic “I don’t know, as a small airline, whether we are able to operate a third type or not”, “whether it’s going to be viable for Gulf Air to continue to renegotiate a delivery date with Bombardier or something else”, also today, the CEO of Gulf Air offered his resignation, no reason given. Meanwhile, Bombardier eyes Iran, but Iran will order 127 Airbus airliners this week, meanwhile Delta Air Lines order that Bombardier wants so badly, will not be any time soon and then will require a very good price, that will have to compete with Embraer, Boeing and maybe Airbus. Bombardier wants Federal government to buy 50% of CSeries, yet Quebec’s Mayors block East pipeline that western Canada desperately needs for its oil. If Bombardier gets money from the Feds, western Canada will NOT be happy with Ottawa. I say NO to any funding until current special voting shares by which 60% control is still in the hands of the 2 families, eliminated and then some sizable injection of capital by the 2 families that today control Bombardier and who orchestrated the current fiasco, otherwise I say NO to Federal money for Bombardier, too many other needs in Canada. Lastly, Bombardier needs to just stop talking about all the deals they are working on, it is bad PR when they lose and it is un-professional, when you sold something then brag about it but don’t brag about being in this or that campaign, because the sad reality is they will lose +85% of the campaigns when competing with the duopoly of Airbus and Boeing, it is just sad they are so “desperate” for any good news.

This is the event few would have expected at Bombardier a few years ago, but today the Bombardier shares (TSE:BBD.B) went to $0.99 a share, the lowest in +25 years (since 1991), and it is a “penny” stock today, this is how bad the company is now perceive don the market, a total mess from … Continue reading

UPDATE: The national airline of Slovenia, Adria Airways has been sold for a mere $US 1.2 million, the buyer is an unknown German/Luxembourg company, 4K Invest that has a nice web page but absolutely no information about the company, it’s executives or past deals. It’s one of many recent “funny” deals going on in Europe’s airline industry. We had a Sukhoi “agent” invest into airBaltic looking to sell SSJ-100 regional jets, we have Ireland’s City Jet buying up to 25 x SSJ-100’s the first in Western Europe and very risky for any airline these days, and yet as quickly as the ink was dry on the Sukhoi deal, the owner of City Jet, Germany based Intro Aviation (aka “turnaround specialist”) is negotiating to sell the airline and bail out before any SSJ-100 operations begins ? does that seem odd ? To go through all the “trouble” of putting in a new Russian airliner that no one has bought in Western Europe. They praise the SSJ “game changer” as if they found the holy grail, and then sell the airline once a SSJ deal is done ? It shows that they do NOT have confidence in the long term success of the SSJ’s and City Jet. Who is the new buyer ? well apparently they are new to the airline business but not aviation. I wonder if they realize what they are getting into ? or is it the Russians coming through the back door ? it is all possible these days. Intro Aviation once was known for turning around troubled airlines, now it has lost it’s touch as on top of City Jet’s loses it could not turn around it’s own InterSky (Austria) DHC8/ATR-72 operation either, and tried to sell it in September, but no takers, so it shut it down in November due to a debt of EUR 5.0 million ?, while it also sold money losing VLM Airline in 2014 in a MBO (management buy out) and surprise and behold, it wanted to buy/lease 12 x SSJ0100’s right away (makes one wonder who funded the MBO ?) , seems SSJ’s orders follow the company. Intro Aviation was also one of the 3 German companies in the running to buy Adria Airways, which is a perfect target for SSJ-100 sales as it operates 7 x CRJ700/900’s today, and surely had it won, SSJ’s would be flying in Adria Airways livery in 2016, and maybe still will given that so little was paid and so little is known about K4 Invest. Russia’s President recently declared NATO as major security threat, and therefore Western European airlines should NOT be buying Russian airliners or leasing them, as they are built by the Russian military complex, Sukhoi is a big Russian arms manufacturer and is currently on the EU/US economic sanctions list, time to put the SS-100 SuperJet on that list as well. We cannot support the Russian arms industry and Europeans should not buying, leasing or flying on Russian airliners (basically that was the Latvian Government’s addition to airBaltic’s shareholders agreement in November, to stop a “undesirable” new investor form making a SSJ-100 deal going forward).When Putin thinks we are the enemy and talks of the possibility of using tactical nuclear weapons in a limited engagement we have no choice but to say NYET to Russian aircraft. “Beware of false prophets, who come to you in the sheep’s clothing, but inwardly are ravenous wolves” (Matthew 7:15), as the Russians are doing everything and anything possible to sell the poor selling SSJ100 (40+/- current sitting “white tails”) to the West, if it fails, then the Irkut MC-21 will fail as well, and for Airbus, Boeing, Comac and Bombardier and the West, that is a good thing.

The Slovenian Government approved a capital injection plan of $US 3.3 million for national flag carrier, Adria Airways and simultaneously sold the airline to German investment group, 4K Invest (www.4k.ag), which is to inject only $1.1 million for the 91.58% owned by the government and pay Adria Airways another $US 100,000 ? The Slovenian Government … 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

ABSTRACT: Sukhoi’s 93 seat, $35 million SSJ-100 has received 30 orders this year already (Aeroflot x 20, Interjet x 10) and is looking to a new stretched version by 2018, is this aircraft a real competitor to Embraer, Bombardier and Mitsubishi ? or just a ‘niche’ aircraft mainly for the Russian Federation ? it’s Snecma SaM146 engine is a CFM56 derivative which is being phased out in the industry as new generation engines come on line on the Boeing MAX, CSeries, MRJ Embraer E2’s and Airbus neo aircraft, with published SSJ fleet aircraft utilization at 8 operators between a low 93 to 166 hours per month this has to be worrying for any operator, is there a problem with support ? reliability ? or the operators ? delivery to its first Western European customer, VLM Airlines of Belgium is delayed until 3Q/2016 due to cerification, as well the aircraft’s future international success depends on Russia’s foreign policy, if new sanctions have to be added they will target the Russian aerospace industry, crushing Russia’s dream of being a serious international commercial aircraft player with the SSJ-100 and future Irkut MC-21, without international orders, no company can be a major player in this industry, no matter how big its domestic market is.

The SuperJet International SpA (a joint venture between Alenia 51%, Sukhoi 49% on the Sukhoi SSJ-100 SuperJet) with 182 orders, has received a follow on order from Mexico’s Interjet for 10 more of the aircraft for a list price of $US 350 million, though no one pays list price for commercial aircraft today, not at … 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: Porter Airlines, now 8 years in operation and Canada’s 3rd largest scheduled airline has been in a state of semi-oblivion since 2011 when it received the last of its current 26 Q400’s, but the latest sale of its Passenger Terminal at Billy Bishop Toronto City Center Airport (CYTZ) for a reported C$ 750 million now gives Porter the money to move forward with its purchase of 12 plus 18 options for the Bombardier CS100’s, just needs to ‘influence’ Toronto’s City Council to allow jets into the airport and lengthen the runway by 400 meters, Bombardier desperately needs this Canadian/North American order for its struggling program, the political obstacles will surely be taken care off, so it is now very likely that Toronto’s City Council will approve of the lifting of the jet ban, agree to the runway extension and the CSeries will be in Porter’s livery one day as money always talks in politics and business, though Toronto will have another major airport right in downtown Toronto that will have to handle +4.5 million passengers ! but is the CS100 strategy the right one for Porter Airlines ? get the strategy wrong and it will bankrupt the airline in no time and can anyone ever change the airline duopoly in Canada ?

Porter Airlines, Canada’s 3rd largest scheduled airline (though it has less than 2.5% of the C$ 13 billion a year Canadian domestic and trans-border market) was heading into its 9th year of operation in a state of oblivion, as its fleet of 26 Bombardier Q400’s (74 passenger seats) and 1,400 employees has remained constant since … Continue reading

SUMMARY: Russia’s United Aircraft Corporation (UAC) changes its CEO/Director General as the manufacturer struggles with the SSJ-100 regional airliner, deliveries to Belgium’s VLM Airlines and Switzerland’s Comlux Aviation could not have come at a worst time for EU/US and Russian relations, Russia is very committed to having Russians flying on Russian airliners, but at what price ? the SSJ-100 deliveries began in April, 2011 and only 84 have been delivered by the end of 2014, with 13 in storage and 3 international airlines and 1 Russian airline having gone bankrupt operating them.

Troubled United Aircraft Corporation (UAC), which since 2006 controls all the aircraft manufacturers and design bureaus in the country,  is changing its leadership. The new CEO/General Director is Deputy Industry and Trade Minister Mr. Yury Slyussar as he replaces Mr. Mikhail Pogosyan who has held the post since February 2011. You can read more about … 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

ABSTRACT: The new commercial LM-100J Hercules is launched, a look at L-100 Hercules commercial operators, clandestine airlines fly illegal or illicit arms and guerrillas to then flying UN peacekeepers, Red Cross, UNICEF, WFP ? so they profit from starting and escalating conflicts to profiting from peace as well ? flags of convenience, rendition, “extraordinary” rendition flights, arms brokers and it all comes together in one shady business, the ‘unscrupulous’ side of commercial aviation !

At this year’s Farnborough Air Show, we had the expected announcement that did not get to much coverage, but important in many ways to some airlines around the world, that Lockheed Martin is launching the certification and eventual production of the commercial version of the C-130J Hercules, the LM-100J a successor to the commercial version … 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

ABSTRACT: LIAT “The Caribbean Airline” on the Brink of Doom – BUT Still in Denial and Brushes Off Calls for a MAJOR Restructuring, why is it that the Caribbean is a graveyard for airlines ? no local airline has been financially successful for any length of time if there is no government ownership, and even then they go bust ! I think it comes down to poor management and political interference and corruption ! where are the accounting books for LIAT ? hundreds of millions of EC taxpayers dollars have gone into the airline, where did it all go ? a black hole that no one dares to look into ? well the EC countries are running out of money, some close to defaults on loan and bond obligations and LIAT will have NOWHERE to turn to for money, and then ??

Today, Mr. David Evans takes over as CEO at LIAT “The Caribbean Airline”, 7 months after the previous CEO, Capt. Ian Brunton resigned over his attempt to turnaround the forever struggling regional airline that serves 22 destinations with around 112 flights per week and a current fleet of DHC-8-300’s and ATR-42-600’s and ATR-72-600’s as it … Continue reading

NO More State Aid to Government Owned National Airlines, Fly on Your Own or Go Bankrupt

This week the under pressure from the Polish Government, the  Supervisory Board of Poland’s LOT Airlines dismissed  CEO Mr. Marcin Pirog for poor financial results at the national carrier, which reportedly has lost $US 37 million in 2012, which actually and sadly is one of its better performing years, though last year LOT estimated a … Continue reading

LIAT has a Viable Growth Plan with New ATR’s To Replace Aging Bombardier DHC-8 Fleet

Caribbean regional LIAT (Leeward Islands Air Transport) has put it new business plan under new CEO Capt. Ian Brunton into action, by ordering three (3) ATR-42-600’s (48 passenger seats) from the manufacturer and leasing two (2) new ATR-72-600’s (68 passenger seats) from Air Lease Corporation. It also plans to purchase two (2) ATR-72-600’s in 2014 … Continue reading