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.
All Nippon Airways 1H2014: profits up despite greater sixth freedom traffic push in Tokyo hub
All Nippon Airways reported a larger first half profit (for the six months to 30-Sep-2014) in line with its projection. ANA's delivery was comprised two different strategies for its domestic and international network. ANA's core domestic market saw load factors improve at the expense of yields, a strategy ANA is undertaking to boost traffic and make up for sluggish consumer demand following consumption tax increases, something initially ANA wasn't concerned about.
In the international market, ANA has seen yield grow but load factor decline as its large capacity ramp-up at the start of the year is still being absorbed. This growth was concentrated in Europe, where ANA's performance lags compared to its other foreign markets.
With more international, and especially long-haul growth, ANA is pushing sixth freedom traffic, typically lower yielding. This segment, albeit small, is growing faster than traffic to/from Japan. The higher share of premium seats on long-haul has helped ANA record 12% of its international passengers in business class, up from 10% in 2010.