In its first confirmation of a potential deal with Abu-Dhabhi based Etihad, Jet Airways  has said  that it is in talks with the Gulf airline  for a potential stake sale, although terms have not been finalised yet.

The statement comes a day after a government source said Etihad could pay up to Rs 1,800 crore  for a 24 percent stake in Jet.

Even a CNBC-TV8 report said that the two airlines are in final stages of discussion and a deal could be signed by next week.

The two airlines are negotiating a two-part deal structure. The founder of Jet Airways Naresh Goyal  is likely to convert shares owned by its holding company into his personal stake to comply with foreign investment regulations. Tail Winds Ltd, the Isle of Man-based investment vehicle of  Goyal, currently holds 79.99 percent of Jet Airways.

Jet promoters will sell stake via the issue of preferential shares and warrants. The latter will be converted into equity within 18 months, the CNBC-TV18 report said.

Read more…

Source:http://www.firstpost.com

SEATTLE, Jan. 2, 2013 /PRNewswire/ — Boeing [NYSE: BA] announced today an order by Aviation Capital Group (ACG) for 60 737 MAX airplanes. ACG’s order, consisting of 50 737 MAX 8s and 10 737 MAX 9s, was finalized in December 2012. The 737 MAX has now accumulated more than 1,000 orders to date.

“This order is a major step in building our broad portfolio of modern, fuel-efficient airplanes,” said Denis Kalscheur, chief executive officer of ACG. “The 737 MAX enables us to offer our customers airplanes that provide the fuel efficiency, reliability and passenger comforts needed to grow in tomorrow’s marketplace.”

The order, worth $6 billion at current list prices, further illustrates the strong demand for the 737 MAX in the airplane leasing industry.

“We are proud of the confidence that ACG has placed in the 737 MAX,” said John Wojick, senior vice president of Global Sales, Boeing Commercial Airplanes. “The 737 MAX will deliver to ACG’s customers unsurpassed efficiency in the single-aisle market as well as improved environmental performance.”

The Next-Generation 737 is the most fuel-efficient and reliable single-aisle airplane today with an 8 percent per-seat operating cost advantage over the nearest competitor. The 737 MAX builds on these strengths with advances in fuel-efficiency and environmental performance. Equipped with new LEAP-1B engines from CFM International and improvements such as the Advanced Technology Winglet, the MAX reduces fuel burn and CO2 emissions by 13 percent while maintaining the 8 percent operating cost advantage over future competition.

These efficiencies have powered the 737 MAX to the impressive order milestone. With ACG’s order, the 737 MAX has orders for 1,029 airplanes from airlines and leasing companies worldwide.

“Reaching 1,000 orders in just over a year’s time from our first order validates the exceptional value the 737 MAX offers our customers,” said Bob Feldmann, vice president and general manager, 737 MAX. “Customers are expressing confidence in our ability to deliver improved performance on schedule.”

Contact:
Tim Bader
North American/Leasing Communications
425-717-0672
tim.s.bader@boeing.com

Turkish PM Recep Tayyip Erdoğan said that a merging and establishing joint venture of Germany’s  Lufthansa and Turkish  flag carrier Turkish Airlines (THY) was offered by German Chancellor Angela Merkel during the Germany visit of Erdogan which it was last week.

Erdoğan noted  ”During my visit to Germany, Chancellor Merkel offered to establish joint management for Lufthansa and Turkish Airlines. And, I have responded positively to Merkel’s offer. We have already had plans for joint projects and I hope to take such a joint step together with Lufthansa”.

We do hope that the THY and Lufthansa can take such a step, Erdoğan said.

Ankara

Related News:

Erdogan signals Turkish Air, Lufthansa “joint management”

Source: Airlinberg.com

KUALA LUMPUR: The question many people ask now is whetherMalaysia Airlines (MAS) can undertake a turnaround within its targeted timeframe, and the options available to ensure the national carrier continues to fly without having to contend with a financial turbulence time and again.

If its latest turnaround plan goes according to plan and achieves the desired results, it is possible for the airline to return to the black, but this will require a lot of cash, according to MIDF Research analyst Imran Yassin Md Yusof.

“MAS needs cash in order to move forward to rebuild its brand name and consolidate its financial structure to ensure it remains competitive among other regional players,” he said in an interview.

Privatisation of MAS would be another way to restore the position of the national carrier, he said, adding, that now would be the best time to do so as its share price was cheap.

MAS last week announced its target to return to profitability by 2014, which was an extension of a year from its turnaround plan announced in December last year.

Imran said further stability in the global economy would help the turnaround plan.

Despite its financial woes, he said MAS was still relevant as it played a major role in spurring growth in related activities such as aircraft maintenance, repair and operations businesses, leasing aircraft as well as the tourism industry.

He said that its top management needed to further bolster efforts to save the airline by focusing on its niche business.

He said MAS as a full services carrier should focus on attracting more passengers for its business and first class seats, which generate a higher yield compared to the economy class, which was more price sensitive.

“When we compare MAS with its peers, the cost structure is just about the same. However, in terms of revenue, MAS does not match them, and this is one main reason why it is still lagging behind,” he added.

MAS, he said, also lags in terms of services and products.

Citing an example, he said Emirates Airlines offered a very competitive fare, but at the same time the product offering was better than MAS, like flight entertainment with 100 television channels.

Comparing MAS and AirAsia, he said their business strategy was different and therefore any comparison would be unfair. “Although in terms of flights, some costs are about the same, their target market and pricing strategy are different,” he added.

Nevertheless, Imran said MAS could still learn from AirAsia which had performed well in areas such as cost control, mitigating high fuel costs as well as ways to attract customers.

He said the collaboration between MAS and Malaysia Airports Holdings Bhd (MAHB) should also be strengthened to offer extra services to the business and first class passengers. “They will not care much about the pricing if we can offer them extra when compared with others.

“MAS therefore needs to work closely with MAHB to upgrade its services and to offer extra services, especially for transit passengers at the airport,” he added.

On the idea of privatising MAS, he said this could be another way to save and help the airline.

By privatising MAS to any Malaysian conglomerate, it would be possible to do what is necessary for the turnaround and rebuild the airline out of the public eye, he added.

He also believes that now would the best time for any MAS privatisation, following the current lower share price. “In terms of ringgit and sen, the price of privatisation now can be cheaper, rather than later,” he said.

Imran added that if MAS made a recovery, the share would likely move up to between RM2 to RM3 per share.

(Reuters) - Japan Airlines applied on Wednesday to re-list its shares in September after it has raised about $8 billion in an initial public offering, doubling the government’s investment in a rare successful case of state-led restructuring in Japan.

The carrier, which rebounded sharply from bankruptcy and is booking record profits, submitted its application to the Tokyo Stock Exchange after an annual shareholder meeting, a person with knowledge of the matter said.

JAL is looking to raise 600-700 billion yen ($7.6-$8.9 billion) in the IPO, sources have said, which would make it the second biggest offering this year after social networking giant Facebook’s (FB.O) $16 billion IPO, and the seventh-largest ever in Japan. The listing is expected in mid-September.

A successful IPO at that valuation would allow the government to make a handsome profit on the 350 billion yen a state-backed fund injected into the airline following its bankruptcy in January 2010 with $25 billion in debts.

JAL’s revival is not without controversy.

Chief domestic rival All Nippon Airways (9202.T) has started to publicly question whether state support has created an unfair playing field, pointing to a massive tax credit that could allow JAL to forgo corporate tax payments for another eight years.

But to some observers JAL represents a rare success story, in sharp contrast to a common approach by both the state and the country’s top lenders of propping up ailing firms with funds without pushing for tough restructuring.

“JAL’s quick turnaround can change the impression of Japan. In the past, there was a perception that any revival scheme in Japan took a lot of time,” said Hideyuki Ishiguro, assistant manager at Okasan Securities’ investment strategy department.

A JAL spokeswoman said she could not confirm whether the carrier had applied on Wednesday to re-list. The Tokyo Stock Exchange also declined to comment. Official confirmation normally comes once applications have been approved.

The Enterprise Turnaround Initiative Corporation of Japan, the state-backed fund that owns 96.5 percent of JAL and is required by law to sell its stake by next January, or three years after its investment, declined to comment.

MASSIVE RESTRUCTURING

JAL’s strong recovery out of bankruptcy has come on the back of a massive restructuring that cost 16,000 jobs, several routes and cuts to pension benefits. It was also helped by debt forgiveness and lower depreciation costs thanks to a write-off of its fleet and other assets.

It posted record operating profit of 204.9 billion yen in the year to end-March – roughly on par with industry leader United Continental Holdings (UAL.N), which made a profit of $2.4 billion last year.

But analysts doubt JAL can keep up that level of profitability with labor and other costs set to rise and low-cost carriers starting to build a presence in Japan. JAL itself projects its operating profit will fall to 150 billion yen in the current year to next March.

“I’m highly skeptical whether they can maintain this high level of profitability, especially after the IPO,” said Tsutomu Noda, managing director and co-Japan representative of restructuring advisory firm AlixPartners Asia. “The biggest issue for the IPO is what’s the equity story. The airline industry is suffering from many negative factors such as recession, fuel cost increases and tougher competition.”

AlixPartners consulted for JAL in 2010 when it was working with creditors in a bid to avoid bankruptcy.

STABLE SHAREHOLDERS

In another hurdle for the IPO, JAL has struggled to secure the support of banks, insurers and other domestic business partners to help it meet its goal of putting at least 10 percent of its stock in the hands of stable, long-term shareholders.

Those firms are now weighing the prospects of ensuring good ties with JAL against the risk of investing in such a volatile industry and potentially saddling their balance sheets with equity losses again, sources have said.

“We feel frustrated. Our shareholding was reduced to just a scrap of paper,” said a top executive at an insurer which saw its shares of JAL reduced to zero in the 2010 bankruptcy. “I think everyone shares the same feeling of anger. But we still have to consider whether to buy the stock without any prejudice since airlines are big customers of ours.”

JAL has sounded out Australia’s Qantas Airways (QAN.AX), British Airways owner IAG (ICAG.L) and other members of the Oneworld alliance to take a stake in the IPO, sources have said.

Fostering Oneworld relationships is viewed as important for JAL as it seeks to boost its seat capacity on international routes by 25 percent over the next five years, offsetting expected weakness on domestic routes.

Source: Reuters

New partnership enables flydubai passengers to pay for flights at retail outlets across the UAE
Dubai, UAE : flydubai, Dubai’s innovative low-cost carrier, has signed a joint partnership with leading Sharia-compliant financial services group, Islamic Finance Company PJSC (AAFAQ), further expanding its network of payment options across the UAE.

The collaboration will see both companies enhance business opportunities to new audiences, while providing flydubai’s passengers with an additional window at which they can pay for flight bookings.

Commenting on the new partnership, Ghaith Al Ghaith, CEO of flydubai, said: “Since our launch in 2009 we have strived to provide more payment options for our passengers and this new partnership with the Islamic Finance Company (AAFAQ) increases our reach even further.”

The strategy of the Islamic Finance Company (AAFAQ) is to provide comprehensive financial solutions and services. Through this agreement the aim is to expand its marketplace for its joint partners by showcasing consistent financial services and activity in line with Sharia-compliant law.

Alwaleed bin Hamad Al Mubarak, Managing Director of the Islamic Finance Company PJSC (AAFAQ), said: “This strategic agreement with flydubai will bring added value to our operations and help us to offer a variety of high quality, easy-access services to passengers. We are confident that we can deliver and meet the level of commitment and excellence that flydubai stands for and we hope that this joint initiative will be a starting point for future collaborations.”

Through this agreement, passengers who book through flydubai.com or flydubai’s call centre now have 24 hours to complete payment windows at any Islamic Finance Company (AAFAQ) outlet across the UAE. Customers can also pay at any of the airline’s existing payment partners, which include exchange houses, Emirates Post and Aswaaq supermarkets.

flydubai, the world’s fastest-growing start-up airline, has built a regional network of more than 45 destinations in just three years, making it the second largest carrier operating out of Dubai International Airport.

Its fares include everything a person needs to travel – i.e. the price of the seat, all taxes and 7kg of hand baggage – with everything else, such as checked baggage, seats with extra legroom, refreshments and in-flight entertainment offered as optional extras, putting passengers in control of how much they choose to spend.

Flights can be purchased from flydubai’s website (flydubai.com), its call centre (+971 4 231 1000), flydubai Travel Shops and through travel partners.

Islamic Finance Company (AAFAQ) is on the list of key financing establishments that provide a variety of high quality financial services to organisations.

For a full list of Islamic Finance Company (AAFAQ) branches, please visit www.aafaq.ae.

About flydubai:
Established in March 2008, flydubai is Dubai’s first low-cost airline and the fastest growing start-up airline in the world. Since commencing operations in June 2009, the airline has established an operational route network of more than 45 destinations across the GCC, Middle East, North Africa, Indian Subcontinent, Asia and Central & Eastern Europe and has built up fleet of 23 aircraft. Owned by the Government of Dubai, the low-cost carrier supports the city’s commercial and tourism sectors by serving all travellers and providing them with affordable air links to a range of destinations. The airline is dedicated to quality service and comfortable travel, lowering costs by optimising operational efficiencies and offering the passenger more choice.

For more information about flydubai services, please visit www.flydubai.com or contact the call centre (+9714 231 1000) or travel partners.

For further information, please contact:
Aimee Greaves for flydubai at Mobile: (+971) 56 682 6100; Email: aimee.greaves@flydubai.com

Lucy Smith, DABO & CO at Mobile (+971) 50 389 2747; Email: lucy.s@daboandco.com

© Press Release 2012

SAS Scandinavian Airlines (SK), which has been working to return to profitability, is considering more cost-cutting initiatives.

“We still need to find a way to further strengthen our profitability and generate more cash,” SK president and CEO Rickard Gustafson told ATW on the sidelines of last week’s IATA annual general meeting and summit in Beijing. He said the carrier has a “very strong financial base today” but it also relies on credit. Gustafson said it needs to be more self-sufficient, which “means even more cost-saving efforts.” He believes employees will endorse the plan as it seeks to create a profit-making business model.

In September 2011, Gustafson announced SAS 4Excellence, aimed at reducing costs by 3%-5% annually until 2015 (ATW Daily News, Sept. 15, 2011). Its previous strategy—Core SAS, in which the group focused on the Nordic region as well as its home market—has enabled the airline to reduce unit costs by 23% since 2008.

Rejecting the notion of a potential investor, Gustafson toldATW the carrier needs to take control its own destiny: “Only we can develop a sustainable business on our own. When you have that, I’m sure this creates more interest in our company,” he said. “We still have a strong brand position in Northern Europe. We are improving. This is good news.”

He acknowledged the strong competition in the European network, especially against low-cost carrier Norwegian Air Shuttle. He said European business travelers make up 70% of SK’s ASKs.

Gustafson said the carrier has no plans to extend its long-haul operations. “At the moment, a key growth for us is with strong partnerships, like a recently signed joint venture with Singapore Airlines, which shares the risks of growth” (ATW Daily News, May 20, 2011).

Leases on SK’s five Airbus A340-300s will begin to expire in the next few years but the carrier has not decided which aircraft will replace it. Gustafson said the A330 is “one of several options,” although it has not yet made a decision. SK’s last MD-80 will leave by 2014. SK’s Stockholm Arlanda base will be an all-Boeing 737NG operation by 2013.

In five years, Gustafson said he sees SK as a vital part of Scandinavia’s infrastructure and the carrier will be still in the hands of Norwegian, Denmark and Sweden.

By Kurt Hofmann

Source:ATWOnline.com

ASIA BRIEFING: THE FIRST TIME I flew in mainland China was 20 years ago and the sign in Kunming Airport said, “We welcome our foreign fiends”.

The flight was delayed because someone had set up a stall on the runway selling food mixers and the whole cabin was full of people carrying these treasured white goods back home, along with various foodstuffs. There was one more person booked on the plane than there were seats, so two of the stewardesses had to double up.

How times have changed. Last week the International Air Transport Association (Iata) held its 68th annual general meeting and World Air Transport Summit. This year the meeting was in Beijing, capital of the rising star of the aviation firmament.

Air travel is booming in China. The country’s domestic aviation passenger market is the second largest in the world, while its international passenger market and international cargo market rank seventh and fourth respectively in the world. China’s airlines accounted for half of all global profits last year.

There are scores of airports being built around the country, none of which is likely to welcome “foreign fiends” but which will put the aviation infrastructure in many Western countries in the shade.

The boom in aviation offers opportunities for Irish companies too – Aer Rianta International will open its first Chinese outlets this year at the new Kunming Changshui International Airport in the southwest of the country.

Airport construction is part of the “mini-stimulus plan” the government has introduced, discreetly, to counteract slowing growth in China.

The expansion of the aviation industry in the past decade has been remarkable. Some 1.2 billion more people and 16 million more tons of cargo will fly this year than in 2001.

The meeting of the International Air Transport Association takes place at a troubled time for the industry, which is under pressure from high fuel prices and the impact of the global recession. The aviation industry faces a fuel bill this year of €164 billion, which is almost equal to the GDP of the Philippines or the Czech Republic.

“The biggest and most immediate risk, however, is the crisis in the euro zone. If it evolves into a banking crisis we could face a continent-wide recession, dragging the rest of the world and our profits down,” said Tony Tyler, the association’s director general and chief executive.

“The industry’s profitability is balancing on a knife edge. If the bottom line worsens by even the equivalent of just 1 per cent of revenue, our $3 billion [€2.38 billion] profit very quickly becomes a $3 billion loss.”

Asia-Pacific carriers make up 40 per cent of the world’s air cargo business and look set to make the biggest contribution to profits in the industry, at about €1.6 billion, but the outlook has been downgraded because of the slowing economies in China and India. It is also less than half of the profit the region reported last year.

Regional demand is expected to grow at 3.9 per cent, above the anticipated 3.3 per cent growth in capacity, providing some protection to airline profits.

China remains central to aviation industry growth. Wang Changshun, chairman of Air China and vice head of the Civil Aviation Administration of China, told the conference that the industry here would see stable expansion, although it faced an even more challenging economy than during the financial crisis of 2008.

“Chinese airlines will order 150 to 200 planes every year in the coming few years,” Wang told the conference. “I think the domestic routes offer better performance than international ones, and the growth of regional routes is faster than for trunk routes.”

European worries are there, as is sluggish US growth, but domestic Chinese consumption is growing. Air China, which has the biggest number of overseas routes among Chinese airlines, plans to order 52 aircraft in 2012, 56 in 2013 and 55 in 2014. Some analysts are worried about oversupply affecting capacities.

We have mentioned Joe McCarthy’s Swords- based Mach Aviation in this column before, and his belief in the potential of the private jet industry in China is shared by none other than Warren Buffett.

Buffett’s NetJets company is spending up to €7.62 billion to buy 425 jets from Bombardier and Cessna to exploit the booming Chinese market.

It is the largest order to date for business aircraft and is based on optimism about China’s prospects.

One sure sign of China’s growing aviation muscle has been the way it is playing hardball over Europe’s carbon charges on airlines.

China is leading the opposition to the European Trading System, which requires airlines that fly to and from Europe to buy permits for all the carbon they emit en route. India, Russia and 26 other countries also oppose the rules.

Beijing has barred its airlines from participating in the ETS and has put orders placed by its airlines with Airbus on hold.

China has also been swift to threaten rapid counter-measures that could include impounding European aircraft if the EU decides to punish Chinese airlines for non-compliance with the scheme.

China is the world’s biggest polluter and, as ever, when China complains about Western efforts to make polluters pay, you only have to look out the window to see why the developed countries have a point.

Aviation accounts for about 3 per cent of total carbon emissions, but is the fastest- growing source. China wants to wait until findings emerge from talks on a global system to regulate airline emissions, which have begun in the International Civil Aviation Organisation, a UN body. The EU has said it would be willing to reconsider its system if an agreement is reached.

If it wants to lose its status as a “foreign fiend”, and risk jeopardising Airbus’s position in China, it may have to come to an arrangement with the Chinese.

by CLIFFORD COONAN

Dubai: Emirates airline said on Monday it has repaid a $550 million (Dh2.01 billion) sukuk bond in full on its maturity date June 18, 2012 and eyes more Islamic financing in the future amid the Eurozone debt crisis.

Gulf News had reported last week in an interview with the airlines’ President, Tim Clark, in Beijing, that the airline will repay its bond in full instead of refinancing it.

The $550m sukuk bond, listed on the Luxembourg Stock Exchange, was originally issued in 2005 with a seven year term, and was the first of its kind to be issued by Emirates, the carrier said in a statement, adding that it represented its “commitment to utilising a diverse range of funding tools, including Islamic financing”.

“With the Eurozone debt crisis on-going it is likely that Islamic financing, with its large pool of liquidity, will play an increasingly important role for us moving forward,” Shaikh Ahmad Bin Saeed Al Maktoum, President of Dubai Civil Aviation and Chairman and CEO of Emirates airline and Group, said in a statement.
He added that the repayment of Emirates’ first ever sukuk bond is part of the airline’s “varied financing strategy” and reflects its “robust financial position”.

Long term growth
“Our consistent profitability and sound business model continue to ensure that we receive sufficient offers of financing to support our long term growth,” he said.

Clark, meanwhile, said last week that Emirates was indeed considering another bond soon and that the airline was “well financed” for its future aircraft deliveries.

“Emirates uses a variety of financing options, including: operating leases, EU/US export credits, commercial asset-backed debt, Islamic financing, Conventional bonds as well as Islamic Sukuks,” it said in the statement.

The airline’s net profit fell 72 per cent in the last fiscal as the airline took a $1.6 billion hit from high fuel costs as well as a massive hit from having to ground a large number of its Airbus A380s following wing-cracks.

By Shweta Jain, Gulf News

JEDDAH – Saudi Airlines Catering Company (SACC), the catering unit of Saudi Arabian Airlines, is seeking to raise SR1.3 billion ($350 million) by floating 30 percent (24,600,000) of its shares for individuals, the prospectus showed as the initial public offer opened to retail investors Monday.

Institutional investors subscribed to 50 percent of them, leaving retail investors to subscribe to the other half between June 18 and 24 at a price of SR54 per share, which was determined by a book-building process.
The sale of shares has been keenly awaited by investors as the company will be the first part of the Saudi flag carrier, one of the Kingdom’s largest state-owned entities, to be listed on the stock market.

Saudi Arabian Airlines started a process of privatization in 2006 by splitting into six units: catering, cargo, maintenance, airlines, flight academy and ground handling. It plans to privatize each of the units individually and offer them to the public.

The catering unit initially aimed for a flotation in late 2010, but it ran into delays in securing regulatory approval.
The listing of the unit will be the fifth in the Saudi stock market this year.

Saudi Fransi Capital, the investment arm of Banque Saudi Fransi, has been appointed lead arranger for the IPO and is the issue’s co-underwriter along with Saudi Hollandi Capital.

Eng. Khaled Bin Abdullah Al-Molhem, the director general of Saudi Arabian Airlines and chairman of the board of SACC, said during the international press conference held in Al Faysalia tower in Riyadh that the subscription started from June 18 will close June 24. Each individual investor is allowed to subscribe a minimum of 10 shares and 250 thousand shares as maximum.

If the number of subscribers exceeds 1,230,000, the company will not guarantee the minimum rate of allocation and the subscription shares will be equally allocated to all subscribers.

The process of allocation and the refund of the subscription surplus will be announced July 1, 2012. Al-Molhem maintained that the Saudia Catering Company will offer the subscription of its shares during the subscription period through the concerned banks, which are: Rajhi Bank, SAMBA, the Commercial National Bank, Dutch Saudi Bank, National Arabian Bank, SABB, French Saudi Bank, Riyadh Bank, Saudi Bank For Investment, Al Jazira Bank.

French Saudi Capital Bank will act as the financial consultant, the subscription manager and the corporation subscription book manager. The French Saudi Capital Bank and the Dutch Saudi Capital Bank will act as the underwriters.