MSC CRUISES PARENT OPENS TALKS TO BUY ITALIAN AIRLINE

MSC Group has told the Italian government it is interested in acquiring a majority stake in the new carrier ITA Airways.

ITA was born after the demise of Alitalia and MSC aims to create a partnership with the Italian government and Lufthansa as the project’s “industrial partner”.

 

MSC said: “Lufthansa has already expressed its interest in taking part in the initiative.”

 

Both parties now enter a 90-day period of exclusivity when the Italian government, which established ITA, will examine their proposal. Regulators will also examine the bid for any competition issues.

 

MSC added: “MSC Group’s interest derives from the possibility of activating positive synergies for both companies in the cargo and passenger sectors where the MSC Group is a global leader.”

Iata: ‘Widespread use’ of vouchers will accelerate cash burn

Iata: ‘Widespread use’ of vouchers will accelerate cash burn

The International Air Transport Association (Iata) has highlighted how the extensive use of refund vouchers will accelerate cash burn for airlines.

The association warned that the “widespread use” of vouchers in Europe is “one of the difficulties airlines will be facing as they are slowly moving towards restarting their operations”.

With the grounding of fleets in mid-March, as the pandemic crisis began to hit revenues, airlines opted to provide vouchers to passengers rather than immediate refunds.

“This proved useful in slowing down their cash burn and helped prevent bankruptcies,” reported Iata Economics in its latest Chart of the Week.

“However, airlines’ liability to transport these passengers was only deferred but did not disappear.

“A month after the easing of travel restrictions on intra-EU routes, we can already observe that passengers have used a large number of vouchers to pay for their travel.

“This means that airlines now incur the cost of transporting these passengers – against no or limited new revenues.

“Whilst the issuance of vouchers helped decelerate cash burn a few weeks ago, their use will now accelerate cash burn in the coming months.”

Iata also said the booking behaviour of passengers has changed “dramatically”, with 41% of global travellers booking up to three days before travel in June, compared to 18% last year.

“This makes it difficult for airlines to plan and optimise their schedules, crew and fleet,” said the association.

In April, Alexandre de Juniac, Iata’s director-general and chief executive, said airlines owed $35 billion for cancelled flights, so the use of refund vouchers would buy the industry “vital time to breathe”.

Last week, the Iata Economics chart showed how intra-Europe routes were leading the initial recovery in international flights after border restrictions were eased.

Most passengers were travelling to visit friends and family or going on holiday, rather than going on business trips.

Lufthansa warns aircraft to remain grounded until 2022

Lufthansa warns aircraft to remain grounded until 2022

Lufthansa expects air passenger demand to return so slowly that it plans to have 300 of the group’s aircraft still parked in 2021 and 200 in 2022.

Europe’s largest airline group, Lufthansa currently has 700 of its 763 aircraft grounded.

More: Cash refund demands ‘endangering entire travel industry’ – Lufthansa boss

‘Demand won’t return quickly’, warns Lufthansa chief

It reported: “Even after the end of the crisis, expected in 2023, the group expects its fleet to remain 100 aircraft smaller.”

Lufthansa secured €9 billion in German state aid this week after agreeing to EC demands to surrender slots at Frankfurt and Munich, but it plans to downsize sharply.

The group revealed customer demands for refunds are adding to the pressure to slash jobs, with hundreds of millions of euros per month been paid out on top of operating costs.

Thorsten Dirks, Lufthansa finance and digital chief officer reported: “Our [operating] cash burns runs at around €800 million a month. We expect cash consumption to run at a similar level for months. New bookings will remain far below normal.”

But in addition, he warned: “Cancellations mean customers can claim up to €2.5 billion in refunds.”

In the circumstances, Dirks said: “The stabilisation package we have secured in Germany marks a milestone.

“In order to repay the loans quickly, we will have to significantly increase our cash flow though global demand for flights will remain below pre-crisis levels for years.”

Group chief executive Carsten Spohr warned: “We have to make cash flow our focus and this has to be tough. We will carry an annual additional burden of €1 billion in interest and repayments. We will have to go through significant restructuring.”

Spohr insisted: “We want to avoid lay-offs as much as we can. But the business will become much smaller, [and] we have to share by everybody working less and making less money. The more we can do this, the fewer jobs will have to go.”

He insisted Lufthansa would “not give any concessions” to one group over another.

Restructuring is already underway at group carriers Brussels Airlines, which plans to cut its workforce by 25%, and Austrian Airlines which will reduce wage costs by 20%.

Spohr added: “The impact of the crisis on aviation will stay for some time, but at least the complete grounding of our fleet is behind us. Countries have begun to relax travel restrictions and travel bans. Demand continues to be far below normal standards.

“Our aim is to serve many destinations, using smaller aircraft and fewer frequencies.”

Lufthansa increased its schedule for June and July this week and plans to operate up to 40% of its original schedule by September, with services to 90% of its previous short-haul destinations and 70% of long haul.

The German state-aid package will see the German government take a 20% equity stake in Lufthansa and two places on the supervisory board.

Spohr said: “Before the coronavirus, a 20% government stake was nowhere in our plans. But we still have a smaller government stake than any of our three [main] competitors – Air France-KLM, IAG and Turkish Airlines.”

The governments of France and the Netherlands hold more than 28% of Air France-KLM, Qatar Airways – which is wholly state-owned – holds a 25% stake in British Airways and Iberia parent IAG, and the Turkish government owns 49% of Turkish Airlines.

Lufthansa Group reported an adjusted operating loss of €1.2 billion for the first quarter to the end of March and a net loss of €2.1 billion.

Boeing warns of ice risks for 787 and 747-8 jets

By Kate Rice

Boeing has alerted airlines that 787 and 747-8 jets with General Electric engines should avoid thunderstorms that may contain ice crystals.

Aircraft should fly 50 nautical miles around such storms, Boeing advised.

Boeing issued the advisory after finding that ice crystal formation in some instances reduced the engine's thrust.

United, Japan Airlines and Lufthansa are among the airlines that fly the planes covered in the advisory.

BA parent agrees €355 million bid for BMI

Nov 04, 2011 08:30AM GMT

British Airways/Iberia parent company International Airlines Group has agreed to buy loss-making Heathrow rival BMI from Lufthansa.

The deal, which will be seen as a major coup for IAG chief executive Willie Walsh, is expected to be completed early next year. Today’s announcement will come as a major blow to Virgin Atlantic which faces being further marginalised at the London hub.

BMI controls 9% of valuable take-off and landing slots at Heathrow, which is now operating at full capacity after plans to build a third runway were scrapped.

But the deal with IAG is likely to attract a competition probe over potential dominance of slots at Heathrow. BMI has 300 flights a week operating from Heathrow and recently sold six sets of slots to BA.

“It gives BA the opportunity to grow in the UK,” said Walsh, who admitted that the deal, reported to be worth €355 million, had yet to be finalised.

Walsh said the deal will mean IAG will have around half of the slots at Heathrow but this is still less than Lufthansa at Frankfurt and Air France/KLM has at Paris. The takeover of BMI will enable BA to expand its long-haul network.

Virgin Atlantic said: "British Airways' hold over Heathrow is already too dominant and we are very concerned - as the competition authorities should also be - that BA's purchase of BMI would be disastrous for consumer choice and competition."

Speaking on BBC Radio 4's Today programme this morning Walsh ruled out a bid for ailing Italian carrier Alitalia.

IAG said: “The sale and closing of the deal remain subject to conditions including a binding purchase agreement, further due diligence and regulatory clearances. It is envisaged that the purchase agreement will be signed in the coming weeks and the aim is for the transaction to be completed in the first quarter of 2012.”

BMI reported a loss of €154 million in the first nine months of 2011.