Commentaries

Now raising intellectual capital

Consolidation Air, nobody’s favourite airline

Photo
-

JAL/With airlines around the world struggling to survive the economic downturn, the time should be nearing to break the taboo of consolidation in the sector.

Airlines around the globe face losses of $11 billion in 2009, according to IATA. Margins are expected to fall this year and next, with analysts predicting carriers are likely to struggle for years to reach levels needed to produce an acceptable return for capital market investors.

Societe Generale estimated in a recent note that margins would drop to -3.1 percent in 2010 before recovering to 1 percent in 2011, well short of the 10 percent needed.

Effectively we are back to the ice age of 2001-2.

Eight years ago, the collapse of Sabena and Swissair kicked open the door of cross-border consolidation — within Europe at least. But while deals like Lufthansa’s merger with the Swiss airline allowed for some rationalisation, the merged entities remain hamstrung by national aviation regulations.

Ryanair has sights set on greater market share

Photo
-

EUROPE RYANAIRRyanair’s warning that things are going to get worse in Europe’s economies has understandably got investors in airline shares flustered. The airline’s own shares fell by more than 8 percent.

The low-cost airline’s finance director Howard Miller couldn’t have been more stark in his comments: “There are no signs of recovery in any country across Europe. We think things are getting worse. There are no signs of green shoots so a tough winter for everyone”.

Standing up for your flights

Photo
-

Is it time to stand up for your flights?

Airlines the world over are struggling to cope with the downturn as people and companies save money by flying less.

AUSTRIA/Ryanair under Chief Executive Michael O’Leary (pictured) is one of the airlines that has already pared air travel back to the bare basics in its drive to lower costs.

  •