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.
American Airlines records solid 3Q2014 results, but continues to have capacity pressure in regions
American Airlines is sticking to its overall bullish view on demand going forward, buoyed by strong top-line 3Q2014 results despite its outsized exposure to Venezuela and the run-on effects of capacity cuts it has made on service to the country.
The airline is taking steps to mitigate oversupply in some of its geographic entities. But some of its peers are not following suit, which could create some short term headwinds until a rational supply-demand balance is restored.
American in particular will start to see relief from Venezuela’s currency issues in early 2015 after its network adjustments to the country pressured unit revenues in 2H2014.