Airline Finance News - North America

AirGuide Business, April 21, 2008

U.S. major airlines will need to spend an estimated $110 billion to update their fleets, but even if they had the money, which they don't, the order backlog at Airbus and Boeing "means any replacements are years from delivery," according to a report from UK-based Ascend. The consultancy figures that U.S. carriers operate 1,420 aircraft that will be coming to the end of their service lives over the next 15 years. It said problems "are particularly acute" for American Airlines, Northwest Airlines and United Airlines. American, for example, operates 300 MD-80s with an average age of 16 years, while its 34 A300-600Rs have an average age of 18 years, its 15 767-200s are legal to drink at 21 years and its 58 767-300ERs average 14 years. Northwest's 69 DC-9s average 30-39 years while its 55 757s are 15 years old on average. United Airlines's oldest fleet is its 64 737-300s at 19 years, followed by its 97 757s and 30 737-500s at 16. "It is far from exaggerating to say we really are at crisis point for these airlines," Ascend MD Gehan Talwatte concluded. Apr 14, 2008

Air Canada

Air Canada's chief executive Montie Brewer, said a round of consolidation would give his airline an edge in the near term as its U.S. counterparts increasingly look inward and focus their resources and energy on consolidating their operations. David Newman, National Bank Financial analyst, called the merger a "positive development" for Canadian airlines because, in addition to stripping excess capacity out the U.S. market, it will likely lead to a reduction in seats on transborder and international routes as well. Delta and Northwest are also both important customers for Montreal's Bombardier, combined accounting for 28% of its regional-jet backlog. While there is some risk that a merger will lead to the cancellation of some of those orders, Benoit Poirier, Desjardins Securities analyst, sees more opportunity than risk in the deal. Apr 16, 2008

AirTran Airways

AirTran Airways flew 1.71 billion RPMs in March, up 15.8% on the year-ago month. Capacity rose 12.9% to 2.15 billion ASMs and load factor increased 1.9 points to 79.6%. Apr 18, 2008

American Airlines

American Airlines, Continental Airlines and Southwest all reported losses for the first quarter of 2008. American said its recent flight cancellations earlier month will cost the airline in the ihigh tens of millions,i and as a result, American will reduce capacity and sustain its current hiring freeze. Continental said it would cut capacity and cited a 50 percent increase in fuel costs. Southwest, too, said it would scale back plans for growth. Weak financial performance underlined the airline industryis other problems: Four carriers filed for bankruptcy in the quarter and flight cancellationsoprimarily but not exclusively by American angered hundreds of thousands of travelers. Apr 19, 2008

American Airlines

American Airlines parent AMR Corp. reached a definitive agreement this week to sell American Beacon Advisors, its wholly owned asset management subsidiary, to Lighthouse Holdings for $480 million cash. AMR will retain a minority equity interest in the business. The move is part of its strategic review aimed at sharpening the focus on core airline activities. Last year it announced plans to divest regional subsidiary American Eagle and Executive VP-Finance and Planning and CFO Tom Horton said this week that the company is "still in the process of determining the best structure" for the divestment, which it plans to finalize by year end. Apr 18, 2008