All Nippon Airways plans to raise up to JPY141.7 billion yen (USD$1.53 billion) through a planned public share offering to shore up its battered finances.
Like other global airlines, ANA has suffered from the sharp downturn in air travel caused by the economic crisis, but Japan's No. 2 carrier is also looking to increase investment to tap an expected rise in passenger demand once the expansion of Tokyo's Haneda airport is completed next year.
Total funds to be raised are about 19 percent less than the amount ANA had earlier hoped for, after the company's share price fell 20 percent from July 1 when it initially announced the share sale plan.
Under the offering announced after the market closed on Monday, ANA will sell 537.5 million new shares at 259 yen each, giving a 3.3 percent discount to Monday's closing price of 268 yen.
The airline will also sell 37.5 million shares under an over-allotment option, leading to share dilution of 27.6 percent.
ANA shares fell 3.3 percent to close at 268 yen on Monday, their lowest since January 2004 as investors rushed to sell the shares amid concerns about dilution.
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Monday, July 13, 2009
Bangladesh To Go Ahead With Boeing Deal
Bangladesh told Boeing on Sunday that it would implement a USD$1.27 billion deal to buy eight aircraft signed last year, a government official said.
Under the deal, which was signed in April 2008 under the army-backed interim government, Boeing is to supply four 777-300ER aircraft to state-owned Bangladesh Biman Airlines by 2013 and four 787-8s aircraft by 2020.
So far, Bangladesh has not placed an order.
Miguel Santos, a Boeing sales director and James Moriarty, US ambassador to Dhaka, discussed the deal when they met Prime Minister Sheikh Hasinam, a spokesman for the US Embassy said.
"They (Santos and Moriarty) asked Bangladesh to implement the deal of buying planes," the spokesman said.
An official from the prime minister's office said that Hasinam had told the two men that Bangladesh would would honor the agreement.
"Bangladesh has assured Boeing of buying the aircraft as agreed," the official said.
He said that Hasinam also told Santos and Moriarty that the country needed more planes than eight in the contract, but did not give any further details.
When the deal was signed for the eight aircraft, the airline also said it was willing to buy two more Boeings by 2015 to boost the frequency of its flights.
Santos and Moriarty also met Bangladesh Finance Minister Abul Maal Abdul Muhith to discuss the agreement.
Biman, which will fund the purchase through bank loans, became a public limited company in July 2007, with 100 percent state ownership.
The airline was forced to halt its flights to New York, Paris, Tokyo, Frankfurt, Brussels, Yangon and Mumbai in 2006 due to a shortage of funds and aircraft.
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Under the deal, which was signed in April 2008 under the army-backed interim government, Boeing is to supply four 777-300ER aircraft to state-owned Bangladesh Biman Airlines by 2013 and four 787-8s aircraft by 2020.
So far, Bangladesh has not placed an order.
Miguel Santos, a Boeing sales director and James Moriarty, US ambassador to Dhaka, discussed the deal when they met Prime Minister Sheikh Hasinam, a spokesman for the US Embassy said.
"They (Santos and Moriarty) asked Bangladesh to implement the deal of buying planes," the spokesman said.
An official from the prime minister's office said that Hasinam had told the two men that Bangladesh would would honor the agreement.
"Bangladesh has assured Boeing of buying the aircraft as agreed," the official said.
He said that Hasinam also told Santos and Moriarty that the country needed more planes than eight in the contract, but did not give any further details.
When the deal was signed for the eight aircraft, the airline also said it was willing to buy two more Boeings by 2015 to boost the frequency of its flights.
Santos and Moriarty also met Bangladesh Finance Minister Abul Maal Abdul Muhith to discuss the agreement.
Biman, which will fund the purchase through bank loans, became a public limited company in July 2007, with 100 percent state ownership.
The airline was forced to halt its flights to New York, Paris, Tokyo, Frankfurt, Brussels, Yangon and Mumbai in 2006 due to a shortage of funds and aircraft.
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China Eastern Announces Merger Terms
China Eastern Airlines said on Monday it would merge with Shanghai Airlines in a share swap and issue A shares and H shares worth about CNY7 billion yuan (USD$1.03 billion) to replenish its working capital.
Trading in China Eastern's shares listed in Hong Kong and Shanghai, suspended since last month, will resume trading Monday, it said.
Shanghai Airlines will become a wholly-owned subsidiary of China Eastern while retaining its brand and independent operation, Xinhua news agency said late on Sunday, citing Liu Jiangbo, spokesman of the team overseeing the tie-up.
The two money-losing carriers have been grappling with weak air travel demand as China's economy slowed.
The merger will give China Eastern, one of China's three state-owned airlines, about a 50 percent market share in Shanghai, the wealthy coastal city that is China's financial hub.
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Trading in China Eastern's shares listed in Hong Kong and Shanghai, suspended since last month, will resume trading Monday, it said.
Shanghai Airlines will become a wholly-owned subsidiary of China Eastern while retaining its brand and independent operation, Xinhua news agency said late on Sunday, citing Liu Jiangbo, spokesman of the team overseeing the tie-up.
The two money-losing carriers have been grappling with weak air travel demand as China's economy slowed.
The merger will give China Eastern, one of China's three state-owned airlines, about a 50 percent market share in Shanghai, the wealthy coastal city that is China's financial hub.
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Air Canada Flight Attendants Approve Deal
Flight attendants at Air Canada have approved an agreement with the airline, a union spokeswoman said Sunday, a crucial endorsement the cash-strapped carrier needs to avoid possible bankruptcy.
Sixty-three percent of the flight attendants who voted backed the 21 month agreement, Katherine Thompson, president of Air Canada component of the Canadian Union of Public Employees (CUPE) said.
Debt-laden Air Canada has said that lenders it is talking to require labor peace before they will consider loans. The carrier recently renegotiated five contracts and CUPE is the third union to ratify its tentative agreement.
Results from votes by the Air Canada Pilots' Association and the International Association of Machinists and Aerospace Workers (IAMAW) are expected this week.
IAMAW members initially voted against their tentative agreement but after some clarifications with Air Canada are voting for a second time.
CUPE's Thompson said the ratification vote result did not mean that flight attendants, of which there are more than 6,800 at Air Canada, were happy with the deal that freezes their wages and benefits for the next 21 months.
"It doesn't reflect their contribution to Air Canada. What 63 percent is, is a testament to the fact that they believe in the future of Air Canada," she said.
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Sixty-three percent of the flight attendants who voted backed the 21 month agreement, Katherine Thompson, president of Air Canada component of the Canadian Union of Public Employees (CUPE) said.
Debt-laden Air Canada has said that lenders it is talking to require labor peace before they will consider loans. The carrier recently renegotiated five contracts and CUPE is the third union to ratify its tentative agreement.
Results from votes by the Air Canada Pilots' Association and the International Association of Machinists and Aerospace Workers (IAMAW) are expected this week.
IAMAW members initially voted against their tentative agreement but after some clarifications with Air Canada are voting for a second time.
CUPE's Thompson said the ratification vote result did not mean that flight attendants, of which there are more than 6,800 at Air Canada, were happy with the deal that freezes their wages and benefits for the next 21 months.
"It doesn't reflect their contribution to Air Canada. What 63 percent is, is a testament to the fact that they believe in the future of Air Canada," she said.
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Friday, July 10, 2009
European Airlines See No Signs Of Recovery
Figures from Lufthansa, one of the world's biggest carriers of air freight, a key barometer of world trade, showed the airline slump continuing, while Air France-KLM braced for temporary lay-offs.
Continental Europe's largest airlines -- Lufthansa by market value and Air France-KLM by revenues -- were unable to point to significant signs of recovery in separate announcements on Thursday, though Frankfurt airport operator Fraport sounded a rare but still fragile note of optimism.
Germany's Lufthansa said shipments of cargo and mail fell 14.3 percent in June after 10 percent in May as a slump in economic activity continued to weigh.
"In the air freight sector... the market environment remained weak in June," the German flag carrier said.
Passenger traffic retreated 5.2 percent in June, it said, though this was better than the 7 percent some analysts had feared, and an improvement on May's fall of 7.1 percent.
Cargo flows are under the spotlight as economists look for clues on physical trade movements. They have been hit both by economic weakness and a crisis over trade financing that G20 countries have promised to address by pumping in cash.
Just under half of international trade by value is shipped by air, according to airline lobbyists, and Lufthansa is the world's second-largest cargo network after Korean Air. When Air France and KLM, which merged in 2004 but still operate separately, are combined, they outrank Lufthansa.
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Continental Europe's largest airlines -- Lufthansa by market value and Air France-KLM by revenues -- were unable to point to significant signs of recovery in separate announcements on Thursday, though Frankfurt airport operator Fraport sounded a rare but still fragile note of optimism.
Germany's Lufthansa said shipments of cargo and mail fell 14.3 percent in June after 10 percent in May as a slump in economic activity continued to weigh.
"In the air freight sector... the market environment remained weak in June," the German flag carrier said.
Passenger traffic retreated 5.2 percent in June, it said, though this was better than the 7 percent some analysts had feared, and an improvement on May's fall of 7.1 percent.
Cargo flows are under the spotlight as economists look for clues on physical trade movements. They have been hit both by economic weakness and a crisis over trade financing that G20 countries have promised to address by pumping in cash.
Just under half of international trade by value is shipped by air, according to airline lobbyists, and Lufthansa is the world's second-largest cargo network after Korean Air. When Air France and KLM, which merged in 2004 but still operate separately, are combined, they outrank Lufthansa.
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ICAO Rejects EU Call For Airline Blacklist
The head of aviation body ICAO on Thursday rejected a proposal by European Transport Commissioner Antonio Tajani to work on creating a global blacklist for unsafe airlines.
"I don't think this is the solution at the global level," Roberto Kobeh Gonzalez, president of the International Civil Aviation Organization, told reporters when asked if he supported the idea.
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"I don't think this is the solution at the global level," Roberto Kobeh Gonzalez, president of the International Civil Aviation Organization, told reporters when asked if he supported the idea.
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Delta's Comair Unit Expects Pilot Lay Offs
Comair expects to lay off up to 100 pilots in wake of capacity cuts by parent company Delta Air Lines, the regional carrier said Thursday.
The furloughs are expected to take place between September 1 and year's end, Comair spokeswoman Christine Wever said.
Cincinnati-based Comair has 1,088 pilots, she added.
Wever said the number of planned furloughs could be reduced based on voluntary options that could be put in place as it works with the Air Line Pilots Association union.
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The furloughs are expected to take place between September 1 and year's end, Comair spokeswoman Christine Wever said.
Cincinnati-based Comair has 1,088 pilots, she added.
Wever said the number of planned furloughs could be reduced based on voluntary options that could be put in place as it works with the Air Line Pilots Association union.
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British Airways Credit Rating Cut Further
Moody's Investors Service on Thursday cut its rating on British Airways deeper into junk status, citing weakening travel demand and higher fuel prices.
The outlook is stable, meaning another rating action is not expected over the next 12 to 18 months.
"While the company expects fuel costs to be lower than last year, we do not believe that this will be sufficient to offset the negative impact on profits of lower demand," Moody's said in a statement.
Moody's cut British Airways by one notch to Ba3, the third-highest junk rating, from Ba2.
Hurt by global recession, the world's airlines lost more than USD$3 billion in the first quarter of 2009, airline lobby International Air Transport Association said last week.
Airlines have been conserving cash or merging to survive, while a bounce in oil prices looks likely to delay profits when demand recovers.
Moody's said that a recovery in air travel demand will be slow, particularly in the premium segment.
British Airways' rating is supported by its solid liquidity, but it could come under pressure if there are no signs of a general industry recovery in coming quarters, or if concerns develop about liquidity, Moody's said.
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The outlook is stable, meaning another rating action is not expected over the next 12 to 18 months.
"While the company expects fuel costs to be lower than last year, we do not believe that this will be sufficient to offset the negative impact on profits of lower demand," Moody's said in a statement.
Moody's cut British Airways by one notch to Ba3, the third-highest junk rating, from Ba2.
Hurt by global recession, the world's airlines lost more than USD$3 billion in the first quarter of 2009, airline lobby International Air Transport Association said last week.
Airlines have been conserving cash or merging to survive, while a bounce in oil prices looks likely to delay profits when demand recovers.
Moody's said that a recovery in air travel demand will be slow, particularly in the premium segment.
British Airways' rating is supported by its solid liquidity, but it could come under pressure if there are no signs of a general industry recovery in coming quarters, or if concerns develop about liquidity, Moody's said.
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Thursday, July 9, 2009
LAN June Passenger Traffic Up 9.3 Percent
Chilean airline LAN said on Wednesday its passenger traffic rose 9.3 percent in June compared with a year earlier, while cargo traffic fell by 16.2 percent as the global crisis drags on Latin American trade.
International passenger traffic rose 3.7 percent during the month, compared with the year-ago month.
Domestic passenger traffic in Argentina, Chile, Ecuador and Peru, increased 25.9 percent.
LAN accounts for more than one half of Chile's international passenger traffic and nearly three quarters of its domestic traffic.
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International passenger traffic rose 3.7 percent during the month, compared with the year-ago month.
Domestic passenger traffic in Argentina, Chile, Ecuador and Peru, increased 25.9 percent.
LAN accounts for more than one half of Chile's international passenger traffic and nearly three quarters of its domestic traffic.
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Air Canada Still Confident On Lender Talks
Air Canada is finding some support from lenders as it struggles to solve its financial Rubik's Cube, the cash-strapped airline's chief executive said Wednesday.
Tight credit markets have complicated discussions with the lenders that Canada's largest airline has approached for short-term financing, CEO Calin Rovinescu told reporters.
"There is a certain level of support. We have some very specific targets of what we need to raise as far as capital. We continue to be confident, but the discussions are ongoing," he said.
The airline was also able to offer some "clarifications" in weekend talks with its largest union, which recently voted down a tentative contract deal, but is scheduled to hold another vote next week, Rovinescu said.
Rovinescu declined to give specifics on the union talks, citing the ongoing ratification vote. Members of the 12,300-member machinists union narrowly rejected a tentative deal last week amid fears about job security.
Labour peace at the airline is critical to it securing government approval of a moratorium on payments into its pension fund and a deal with the lenders -- a situation Rovinescu compared to a Rubik's Cube puzzle.
"To get the colors all lined up you've got to turn it around and occasionally move backward and forwards to get the right outcome," he said.
He also sounded an upbeat note on the status of Air Canada's talks on getting pension relief from the federal government before the carrier is scheduled to make large funding payments at the end of July and in early August.
"We've had very good discussions with Ottawa about that. This is a process that has to be done at the same time (as getting union agreements and new financing)," he told reporters on at Vancouver Airport on Wednesday.
Rovinescu was at the airport to help unveil a new Boeing 777 aircraft painted to advertise the 2010 Winter Olympics in Vancouver, of which Air Canada is a major sponsor.
Wednesday's Olympic event, held inside a hanger with athletes, acrobats and a man walking around in an inflatable aircraft costume, offered a colorful contrast to recent news surrounding the airline's financial struggles.
Rovinescu and organizers of the Winter Olympics said they were confident Air Canada would be able to meet its sponsorship obligations -- such as providing air travel to Games officials -- even as it struggles to reorganize its finances and stay out of bankruptcy protection.
"What you're seeing here is that Air Canada sees the Olympics as a vital part of their own business," said John Furlong, chief executive of the Vancouver Organizing Committee.
Neither Air Canada nor VANOC have released financial details of the sponsorship deal. The plane unveiled on Wednesday will be used primarily on international flights to Europe and Asia, officials said.
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Tight credit markets have complicated discussions with the lenders that Canada's largest airline has approached for short-term financing, CEO Calin Rovinescu told reporters.
"There is a certain level of support. We have some very specific targets of what we need to raise as far as capital. We continue to be confident, but the discussions are ongoing," he said.
The airline was also able to offer some "clarifications" in weekend talks with its largest union, which recently voted down a tentative contract deal, but is scheduled to hold another vote next week, Rovinescu said.
Rovinescu declined to give specifics on the union talks, citing the ongoing ratification vote. Members of the 12,300-member machinists union narrowly rejected a tentative deal last week amid fears about job security.
Labour peace at the airline is critical to it securing government approval of a moratorium on payments into its pension fund and a deal with the lenders -- a situation Rovinescu compared to a Rubik's Cube puzzle.
"To get the colors all lined up you've got to turn it around and occasionally move backward and forwards to get the right outcome," he said.
He also sounded an upbeat note on the status of Air Canada's talks on getting pension relief from the federal government before the carrier is scheduled to make large funding payments at the end of July and in early August.
"We've had very good discussions with Ottawa about that. This is a process that has to be done at the same time (as getting union agreements and new financing)," he told reporters on at Vancouver Airport on Wednesday.
Rovinescu was at the airport to help unveil a new Boeing 777 aircraft painted to advertise the 2010 Winter Olympics in Vancouver, of which Air Canada is a major sponsor.
Wednesday's Olympic event, held inside a hanger with athletes, acrobats and a man walking around in an inflatable aircraft costume, offered a colorful contrast to recent news surrounding the airline's financial struggles.
Rovinescu and organizers of the Winter Olympics said they were confident Air Canada would be able to meet its sponsorship obligations -- such as providing air travel to Games officials -- even as it struggles to reorganize its finances and stay out of bankruptcy protection.
"What you're seeing here is that Air Canada sees the Olympics as a vital part of their own business," said John Furlong, chief executive of the Vancouver Organizing Committee.
Neither Air Canada nor VANOC have released financial details of the sponsorship deal. The plane unveiled on Wednesday will be used primarily on international flights to Europe and Asia, officials said.
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Virgin Blue In Code Share Deal With Delta
Australian airline Virgin Blue plans a code sharing tie-up with US carrier Delta Air Lines to allow the two carriers to compete better on routes between the US, Australia and the South Pacific, Virgin said Thursday.
In advance of their joint venture, the carriers are moving to implement code sharing, frequent flyer program reciprocity and lounge exchange privileges, the Virgin statement said.
The two will file antitrust immunity applications with the US Department of Transportation and with the Australian Competition and Consumer Commission.
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In advance of their joint venture, the carriers are moving to implement code sharing, frequent flyer program reciprocity and lounge exchange privileges, the Virgin statement said.
The two will file antitrust immunity applications with the US Department of Transportation and with the Australian Competition and Consumer Commission.
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