Sunday, 13 October 2013

This and that

-Alitalia is being rescued,- again. Unsurprisingly its Board has warmly accepted and unanimously approved the issue of 300m Euros of new shares and a 200m Euro line of credit. 25% owner Air France/KLM apears to be upping its stake to keep its percentage holding intact. Air France/KLM have also recently been reported to be interested in increasing their percentge. One wonders why other than to paint the map of Europe blue, or any other fancied colour (Surely not dark green underlined in red?) Unlike IAG, the Franco/Dutch group do not have a consistently profitable arm (BA) with which to finance the losses of an unprofitable one (Iberia) and even in that case the shareholders can't be delighted at the prospect of possibly/probably years without a dividend.
There is no sign in the announcement of what Alitalia might do to ensure that the new pile of cash doesn't just go the way of its predecesors but presumably there is a plan. It wasn't revealed in the announcement though. There was just a whoop of joy at being off the hook again , accompanied no doubt by the popping of corks of something better than Asti Spumante.
The Italian government has always seen the preservation of a national carrier as a strategic necessity. Again one has to wonder why. The UK is doing well enough without one other than as a foreign owned brand name and it is (economically and populationwise) a large country. At the other end of the scale some much less well off African countries have also done well,- better in fact,- without one. If Italy were to unleash market forces it is likely that it would find that it was also doing just as well for air services without this financial albatross around its neck,- and probably a lot better.

- JAL has added insult to ANA's injury in ordering A350s rather than Boeing 787s and /or 777xs.The US airframe and engine manufacturers, backed by strong political trade links, had previously had things very much their own way in Japan and especially in its global airline, JAL. ANA had occasionally broken ranks, first by operating nine Viscount 828s in the 1960s and then in 1973 buying Rolls-Royce powered Tristars rather than DC10s. That though did not please British Prime Minister Edward Heath. Indeed he is said to have flown into a rage at the news. He had gone to Tokyo to persuade the Japanese government to get JAL to buy the then struggling Tristar. Both the aircraft and its engines had been dogged by Rollys Royce's bancrupcy. Heath, who had nationalised the Rolls business, wanted to get the show back on the road and see the RB 211 engine in common use along the world's air routes. This made JAL a prime target. The Japanese received him with great courtesy,promised to do what they could to help, and he returned to his hotel room much encouraged. Then, while he was still there, his hosts had done what they thought was coming good.  The country would buy the Tristar with its British engines. Then the bad news. The purchaser was ANA, then an almost exclusively domestic airline, not JAL. With ANA the aircraft and engines would barely be seen outside Japan. Heath is said to have been beside himself . Meanwhile the Japanese shook their heads at what to them was the inexplicable lack of gratitude.  Until this week that was the last time their airlines bought anything British other than Dart turboprops for their  home built YS-11s.  Europe did little better apart from selling a handful of A300s to domestic carrier JAS . Hence this week's major purchases of European airframes and British engines are a major breakthrough. Boeing is the prime loser. It is hard to say how much of the decision is down to the long delays to the 787 programme and ANA's post delivery problems with the aircraft ( The airline says it will never be the lead customer for any aircraft again.) but it's likely to be somewhere in the mix.

-In the UK the great London and South East airport capacity debate sparks into life,- or some would say death,- from time to time. The interim report on the report is due later this year= quite soon as we are beginning to run out of year. Neither it nor the eventual full blown version ,due after the 2015 election, is likely to say  "This is the one, -go for it". This interim one is likely to simply which of the 50+ possibilities, some sane, some ridiculous,  have been eliminated.  The full version will whittle the possibilities down to a handful and throw it to Parliament to make a decision . Politicians don't like that. Nobody else to blame for any downsides. The pure and simple conclusion which doesn't involve huge new infrastructure, is where the customers largely want it to be It isn't in Essex and doesn't risk laying waste the economy of a swathe of West London, the Thames Valley and points beyond as far west as Bath and Bristol . It is simply Heathrow. Companies like Smith Kline aren't where on the M4/A4 corridor they are because it's handy for the Thames Estuary. If  David Cameron hadn't blown it in the (unnecessary- he'd have got them anyway)  persuit of West London seats in the 2010 election the diggers would have been at work by now.
While there have been some recent signs of the government inching its way off the "No to Heathrow" hook, there have been sounds of a double barreled in-own-foot shooting this week. The new junior minister responsible for aviation is Robert Goodwin, MP for the north eastern seaside town of Scarborough. He has previously lined up with Greenpeace in opposing Heathrow expansion. His new LibDem assistant is Baroness Kramer, also previously opposed to the project. That's not an encouraging start on a journey that needs to be back where it was before the election.
In any event the actual construction of  new runway anywhere is least ten and probably 15/20 years away. By that time much of the growth will have had to go somewhere else. It is actually doing so already (More on this soon).

-BA has launched a new well crafted advertising campaign in the UK, wrapping in its virtues such as innovation and their implied benefits , comfort and safety. It finishes up "To Fly To Serve". OK, but serving isn't it's greatest strength.  Just "To Fly to Smile" would be nice.

-Lufthansa's order for 25 A350-900s will have been another disappointment for Boeing. Part of the price for Airbus though has been the reduction of their A380-800 order from 17 to 14. They would have hoped to see this fleet expanded by maybe a couple or three a year to keep the order book edging slowly upwards and ticking over until the timing is right and the funding possible for the -900, something that Emirates have long wanted and which might finally persuade Cathay to join its list of customers.

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