Alitalia has tentatively agreed to merge with Wind Jet and Blue Panorama Airlines. According to AGI reports, Alitalia has signed a MoU with both Italian carriers to this effect. Wind Jet is a LCC operating short haul European services and Blue Panorama operates charter and scheduled services from its Rome and Milan bases. According to Innovata data, Wind Jet and Blue Panorama hold 10.6% and 2.9% of Italy’s domestic capacity, respectively.
Alitalia to merge with Wind Jet and Blue Panorama Airlines
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Airline consolidation: could Europe follow North America's path to improved margins?
IATA's latest airline industry financial forecasts highlight the different performance of the different regions of the world. North America is the most profitable region, measured by its net margin (net profit as a percentage of revenues) and Africa the least profitable. Europe has the second lowest margin, but has gained a little on fourth ranked Asia Pacific. Latin America has improved the most since 2012 to rank second, just ahead of the Middle East.
North America has had a relatively good recovery, while Asia Pacific's margins have fallen from their 2010 peak. Even North America's net profit is only 4.3% of revenues, its best since the late 1990s, but still a very thin margin.
Analysis of the relationship between net profit margins and various explanatory factors appears to confirm that market concentration is a key one. Europe's perennial underperformance in airline margin terms – in spite of the region's wealth, high propensity for air travel and high load factors – owes much to the fragmented nature of the market. Nevertheless, a European deal that is truly transformational in terms of its market structure remains unlikely for now.
United Airlines continues its efforts to close the gap with peers after posting solid 3Q2014 results
United Airlines admits there is still much work ahead to close the gap with its large network airline peers in key metrics such as margin performance. But efforts United has undertaken to improve its revenue performance showed promise in 3Q2014 as it out-performed its peers in passenger unit revenue growth.
Even as it faces some unit revenue headwinds in 4Q2014, United believes it will sustain profitability during the last quarter of 2014 as the US domestic market remains robust.
Similar to rival Delta, United could grow its capacity to upwards of 2% in 2015, which may cause some concern among investors. But United stresses that much of the growth stems from aircraft up-gauging, improved utilisation and increasing density of certain aircraft.