Airline Finance News - Europe

AirGuide Business, May 5, 2008

May 5, 2008

European Union and Australia signed a horizontal aviation agreement that removes nationality restrictions in bilateral ASAs between EU member states and Australia. The new agreement does not replace the bilateral agreements but brings them in line with EU law by removing nationality restrictions. More than 4 million passengers travel between the EU and Australia annually. The European Commission is seeking a mandate to hold broader aviation negotiations with Australia covering a reciprocal opening of market access as well as regulatory convergence and cooperation in security, environmental protection, safety, and competition rules. The proposal, which dates from September 2005, remains under discussion. May 1, 2008

Alitalia

Alitalia's nine unions have been invited to meet representatives of an unidentified group of investors interested in buying the government's stake, Italian media reported. Pirelli Chairman Marco Tronchetti Provera indicated that the Milan-based multinational, best known for its tires, is ready to invest in either an Italian consortium that would take over Alitalia or in Milan Malpensa, Thomson Financial reported. Apr 30, 2008

Alitalia

Italian Prime Minister-elect Silvio Berlusconi yesterday threatened to re-nationalize Alitalia if the European Commission continues to question the [euro]300 million ($469.1 million) bridge loan the outgoing government granted the virtually bankrupt company last week. Apr 30, 2008

Alitalia, Milan Airport SEA

Alitalia filed a counter-claim for damages against Milan's airport operator SEA on Wednesday, raising the stakes in a bitter battle over the ailing carrier's sharp cutback in flights from Italy's financial hub. The Italian national carrier charged SEA with not investing enough at Malpensa Airport near Milan and damaging Alitalia's sale prospects by suing it over the flight cuts. SEA said its lawyers would examine Alitalia's claim, but a first glance showed "serious errors in reconstruction of facts." Alitalia said the damages it was seeking were "not far" from the EUR1.2 billion euros sought by SEA in its lawsuit filed in February, when the carrier was trying to seal a doomed takeover by Air France KLM. That deal ultimately fell apart over union opposition, but the French carrier had also wanted the lawsuit by SEA withdrawn as a precondition for completing the takeover. May 1, 2008

Alitalia, Milan Malpensa Airport

Alitalia's decision to cut flights out of Malpensa by 70 percent stemmed from a restructuring plan it drew up last year to reduce losses, which caused an outcry from Milan politicians and officials worried about job losses in the area. Milan has since struck a deal with Germany's Lufthansa, which will nearly double the number of weekly flights from Malpensa, while Alitalia is still searching for a buyer. The carrier is expected to survive over the next couple of months thanks to a EUR300 million emergency loan from the government, but its long-term future remains unclear. The airline on Wednesday reported the short-term liquidity available remained stable at EUR180 million and that net debt shrank 1 percent due to proceeds from the sale of its stake in Air France KLM. Italian Prime Minister-elect Silvio Berlusconi has promised a home-grown consortium to buy the carrier will soon reveal itself, but so far no-one with concrete plans to rescue the airline has emerged despite constant speculation on the matter. Italy also faces the threat of being taken to court over the loan, with the European Commission warning it has doubts on whether the lending falls outside rules barring further state aid to Alitalia. May 1, 2008

Austrian Airlines

A Saudi-Austrian investor has pulled out of a deal to buy a stake in Austrian Airlines, an Austrian magazine reported on Saturday. The airline's main shareholder, state holding company OeIAG, had agreed terms in March for Sheikh Mohamed Bin Issa al Jaber to take a stake via a capital increase. But Profil magazine, citing a lawyer's letter, said he had pulled out of the deal on April 30. The magazine said the stake would have been worth EUR150 million euros (USD$232 million). Austrian Airlines has a market capitalization of around EUR350 million. May 4, 2008

Austrian Airlines

Austrian Airlines Group suffered a A60.4 million ($95.3 million) loss in the first quarter, widened from a A16.3 million deficit in the year-ago period, which prompted the company to say it expected a fall in full-year adjusted EBIT "due to the time-lagged effect of measures implemented through adjustment of fares and surcharges." Despite the "continued deterioriation in market conditions," OS has not given up on expansion. It will add two leased Premium Service A320s in 2009 and continue to build its network in Central and Eastern Europe and the Middle East, which CEO Alfred Oetsch said "will distinguish" Austrian from its competitors. First-quarter revenue fell 6.4% to A525.3 million as the airline continued to "redimension" its long-haul segment. Costs dipped 0.3% to A593.5 million as fuel prices offset the benefits of network rationalization. Adjusted EBIT was a A42.2 million loss compared to a A20.6 million loss in the year-ago period. The company flew 4.13 billion RPKs during the quarter, down 16.6% year-over-year, against a 14.6% decline in ASKs to 5.7 billion. Load factor fell 1.8 points to 72.5%. Passenger numbers rose 2% to 2.3 million. In March it flew 1.52 billion RPKs, down 12.7%, against a 13.9% fall in ASKs to 2.01 billion. Load factor rose 1 point to 75.6%. Apr 28, 2008