Data/Airline Economics Channel

Featured Articles

Downsizing United

By Aaron Karp

United Airlines is shrinking in size, and curbing its ambitions as it focuses on cash flow and survival.

Capital Takes a Holiday

By Perry Flint

The liquidity crisis is likely to have a major impact on the availability of aircraft financing in 2009, as will the looming recession.

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China Eastern gets additional CNY4 billion from Beijing

Tuesday January 6, 2009

The Chinese government injected an additional CNY4 billion ($584.5 million) into China Eastern Airlines on top of the CNY3 billion provided last month in an effort to help the carrier work through its financial difficulties. [more]

Aeroflot forecasts brighter 2009

Tuesday January 6, 2009

Aeroflot said it plans to post a profit of RUB9.3 billion ($316 million) this year, which would be "higher than the expected level of 2008," as it moves forward with a plan and budget "taking into account the anti-crisis-management program aimed at increasing the efficiency of the operational and commercial activity." [more]

Southwest to save $1.4 billion on reduced fuel hedges

Tuesday January 6, 2009

Southwest Airlines said it reduced its fuel hedge contracts to cover just around 10% of its estimated consumption each year through 2013. This year it expects to save approximately $1.4 billion compared to the guidance provided last summer as its economic fuel cost per gal. excluding taxes is expected to be around $1.80. Its current unhedged estimate is $1.60 per gal.

Tuesday January 6, 2009

Air Canada boosted its liquidity with a series of financial agreements in late December. It arranged a five-year, $78 million loan from Calyon New York Branch and Norddeutsche Landesbank Girozentrale and secured a revolving credit facility with the Canadian Imperial Bank of Commerce, which agreed to provide AC with up to C$100 million ($82.9 million) of revolving credit for one year. AC said it drew C$50 million from the facility upon closing.

The carrier also concluded a series of agreements for secured financings with General Electric Capital Corp. and its affiliates, providing the airline with up to $195 million. Under the agreements, $80 million was funded as the first of two tranches of a loan agreement that would provide AC with $155 million. The loan matures in 2014. The second tranche of the secured loan is expected to close by the end of this month. Funding of the second tranche as well as retention of the funded first tranche are subject to conditions that include the sale and leaseback of a 777-300ER with GECAS. The lease term is 12 years and the deal will provide AC with at least $40 million in additional financing.

HNA, Grand China, SAL join rush for government aid

Wednesday December 24, 2008

HNA Group subsidiary Grand China Express Airlines is expected to receive a CNY200 million ($29.1 million) injection from the Tianjin municipal government following the signing of an agreement yesterday. [more]

Austrian faces drop in passengers, but not in share price

Wednesday December 24, 2008

Austrian Airlines CEO Alfred Oetsch told ATWOnline that the carrier is expecting a "single-digit" drop in passengers next year and that further adjustments in capacity and costs are possible if demand continues to fall, including moving some workers to part-time status, but he ruled out layoffs. However, he said the company is facing declining traffic "in all classes" (ATWOnline, Dec. 23) and that while its key routes to Eastern Europe are being affected, they are not hurting "as strong compared to other areas." The outlook has not damaged AAG's value (ATWOnline, Oct. 29), with Austrian takeover authorities setting the per-share price that Lufthansa will offer AAG shareholders at €4.49, up from the original €4.44 (ATWOnline, Dec. 4). AAG shares have risen 34% since LH's offer was announced, but the new price still is 26% higher than Monday's closing price, Reuters reported.

THY's Bosnian acquisition finalized

Wednesday December 24, 2008

Turkish Airlines said it signed an agreement Monday to purchase a 49% stake in Bosnian flag carrier B&H Airlines (ATWOnline, Oct. 13). The Bosnian government will continue to hold 51%. Under a first stage, THY will invest €5 million ($7 million) on the lease of two additional aircraft (one 737 and one Airbus type) for B&H, with an additional €5 million injection to follow, Reuters reported.

Wednesday December 24, 2008

Southwest Airlines reached a sale and leaseback deal with an unnamed lessor for 10 737-700s. Under the agreement's first tranche closed yesterday, SWA sold five -700s for "approximately" $175 million and immediately leased them back for 12 years. It will make monthly payments of around $7.8 million during the first six months of the leases, with the amount scheduled to reset every six months based on the six-month LIBOR rate. In the first quarter of 2009, SWA will sell the five remaining -700s and lease them back for 16 years under "similar terms."

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