Aircraft Finance & Leasing News - Europe

AirGuide Business, July 21, 2008

7/21/2008

At Farnborough this week, high oil prices have raised fears of a slew of order deferrals and cancellations as airlines trim capacity or wrestle with bankruptcy. Economic and oil fears appear to have sharpened the normal cyclical decline expected after a prolonged upswing. Some analysts say that could prompt the jetmakers to slow down production which has risen to meet a record backlog, or encourage them to let the timetable for the next generation of single aisle planes which dominate their volumes quietly slip. What worries many in the industry is not the outright number of planes sold but how struggling airlines, other than those in the Gulf buttressed by high oil prices, can find the funds to finance their purchases as the global credit crisis spirals. 7/17/2008

Passengers will have to pay more to fly as airlines struggle to produce further savings to cover rising fuel bills, airline executives said at Farnborough Airshow on Wednesday. Airlines will likely plunge back into billions of dollars of losses this year as fuel costs grow to USD$190 billion, or 34 percent of operating costs, according to the International Air Transport Association (IATA). Many carriers are imposing fuel surcharges, cutting flight capacity and even flying more slowly to lower costs, but higher air fares may also be inevitable with oil recently nudging USD$150 a barrel, the executives said. Economy class passengers were not even paying enough to cover the cost of being flown with fuel prices at current levels, but there may be limits to how much first and business class travelers were prepared to subsidize the rest of the cabin. 7/16/2008

Airbus, EADS

Airbus parent EADS' CEO said he is confident his company and U.S. partner Northrop Grumman Corp. will win a disputed $35 billion Pentagon Air Force tanker contract when the bidding process reopens. The Air Force in February selected the Northrop team to replace 179 Eisenhower-era aerial refueling planes. Boeing (nyse: BA - news - people ) filed a protest in March, and last week, Defense Secretary Robert Gates said the Pentagon will reopen the bid. The deal - one of the largest in Pentagon history - is the first of three contracts worth up to $100 billion to replace nearly 600 refueling tankers over the next 30 years. 7/14/2008

Condor, TUIfly, Germanwings

German charter airline Condor has joined months-old merger talks between fellow charter airline TUIfly and budget Lufthansa unit Germanwings after the failure of a deal with Air Berlin, sources familiar with the situation told Reuters on Saturday. 7/14/2008

ILFC, Airbus, Boeing

ILFC announced the following lease agreements: One used 737-800 to Miami Air International for four years; four new A321-200s and two used A330-200s to Vietnam Airlines for 10 and eight years each respectively; three used A330-200s to Gulf Air for eight years each; one new A321-200 to Air France for six years; one used 737-800 to Caribbean Airlines for three years; two new A321-200s to Aegean Airlines for six years each; one new 737-800 to Oman Air for 10 years; two used 737-800s to Orenburg Airlines for five years each; two used A320-200s and three used 767-300ERs to Rossiya for five and seven years each respectively; two used 737-800s to Saga Airlines for seven years each; one new A320-200 to SATA for six years; one new 737-800 to Shanghai Airlines for 10 years; one used 767-300ER to Blue Panorama for five years; two new A320-200s, four used 737-800s and one used 767-300ER to S7 Airlines for six years each; two used 737-800s to Garuda Indonesia for eight years each; two new 737-800s to Korean Air for eight years each. 7/17/2008

Norwegian Air, Boeing

Norwegian Air ended the quarter with 41 aircraft in operation compared to 24 one year earlier. It took delivery of six 737-800s, continued to integrate the former FlyNordic (now Norwegian.se) and settled into its new base at Oslo Rygge. 7/18/2008

SAS Scandinavian

SAS Scandinavian said on Wednesday it would ground 15 aircraft in September and October and cut about 900 jobs, giving it a EUR90 million euro (USD$143 million) earnings boost in 2009. SAS, which last month abandoned a plan to sell Spanair, will cancel nine unprofitable routes. SAS Scandinavian Group likely will announce a new cost savings program featuring further "dramatic" cuts as it grapples with high fuel prices and weakening demand, CEO Mats Jansson told Sweden's Dagens Industri. 7/16/2008

Spanair

Spanair yesterday unveiled a "feasibility plan" designed to negotiate the "economic crisis" and rising fuel prices that will generate an estimated EUR90 million ($143.4 million). It will ground 15 aircraft in September and October, lay off 900 fulltime employees and permanently cancel service from Madrid to Vienna, Munich, Girona, San Sebastian, Granada and Oviedo as well as Barcelona-Zurich, Bilbao-Malaga and Bilbao-Jerez. It still will operate more than 80% of its network, equal to 260 daily flights to 48 destinations. "I am proud to see that in this challenging environment Spanair can lead the process to normalize capacity in the Spanish market," CEO Marcus Hedblom said. SAS Group last month abandoned its effort to divest Spanair. 7/17/2008