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British Airways/Iberia merger in doubt; Turkish Airlines to focus on growing organically

15-Apr-2010

European carriers’ shares were pushed higher by wider markets on Wednesday (14-Apr-2010), despite a strong gain in oil prices (+2.1%), to USD85.84. European markets were boosted by positive financial results from Intel Corp and JPMorgan Chase & Co.

In key markets, UK’s FTSE (+0.6%), France’s CAC (+0.6%) and Germany’s DAX (+0.8%) were all higher at the end of trading.

British Airways/Iberia merger in doubt

Iberia (+2.1%) and British Airways (+1.5%) gained despite reports Iberia established an escape clause under its merger agreement with British Airways, if a ruling on the UK carrier’s pension debt shortfall is greater than Iberia deems affordable. British Airways has approximately USD5.6 billion in pension debts and operates two pension schemes; the Airways Pension Scheme, which closed in 1984 and the New Airways Pension Scheme, which closed in 2003. The UK pensions regulator could force greater costs on British Airways to resolve its pension debt shortfalls.

Turkish Airlines to focus on growing organically

Turkish Airlines was flat after CEO, Temel Kotil, stated the carrier would focus on organic growth to boost market share rather than acquiring another airline. But he has not categorically ruled out acquiring another carrier, such as JAT Airways or LOT Polish Airlines, as it seeks to become Europe’s third largest carrier.

Mr Kotil also stated the carrier could report a 40% increase in transit passengers in 2010, adding that the carrier may revise its year-end targets in the coming months, following a strong first quarter. The current target is for 30 million passengers and USD5.7 billion in revenue in 2010.

The carrier added that while it has no plans for another large-scale aircraft order in 2010, "this doesn't mean that this won't change by the end of the year." The carrier has so far received 89 of a planned 105-aircraft order with Boeing and Airbus.

Elsewhere, Jet2.com owner, Dart Group (+3.3%) gained, while El Al (+2.8%) moved higher with the Tel Aviv Stock Exchange (+0.9%). SAS (-1.5%) was down, as was travel providers, TUI Travel (-1.0%) and Thomas Cook Group (-0.5%), as investors expressed concerns over the weakness of the UK Pound.

Europe Airline Daily is an efficient morning briefing on European airline developments. Covering fleets, routes, financials, traffic, bilateral agreements, alliances, financing, ownership, along with analysis of all significant developments. Other stories featured in today’s issue include:

  • bmibaby appoints new Managing Director;
  • British Airways adjusts paid seat reservations;
  • Iberia to increase Madrid-Miami frequency;
  • S7 to launch service from Moscow to Alicante and Palma de Majora.

Europe selected airlines daily share price movements (% change): 14-Apr-2010


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