CSA Czech Airlines’ Board approved a plan to sell the carrier’s duty free unit, as well as three B737-500s and two B737-400s over the next nine months, in addition to securing new bank loans, to generate up to USD285 million in fresh capital (AP, 07-Oct-2009). The Czech Government plans to sell its 91.5% stake in the carrier, and confirmed it will make a decision on the USD58 million bid by Czech Unimex-Travel Service consortium, the only bidder in the latest public tender, within the next few weeks.
CSA selling duty free unit, five aircraft to generate cash
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CAPA airline profit outlook. Record margins from capacity restraint, but upswings are not forever
This six-monthly update of the CAPA world airline operating margin model continues to expect industry margins in 2015 to 2017 above previous cyclical peaks, albeit falling slightly in 2017. This is in spite of unexceptional global GDP growth, which has not regained its long term trend rate since 2010.
The higher level of airline operating margin from a given GDP growth rate has been due to several factors. Lower oil prices have played their part, particularly since mid-2014, as does a higher level of global traffic growth than would previously have been expected from relatively sluggish GDP growth. In addition to these external issues, perhaps the most significant factor is a greater degree of capacity discipline. This is now most deeply rooted in the US, which is now by far the most profitable airline region, helping to drive the global result.
On a more cautionary note, the IMF has recently cut its global GDP forecasts, citing Brexit and other geopolitical risks. In addition, profit warnings in recent weeks from IAG, easyJet and Lufthansa are a reminder that cyclical upswings do not last forever. A test of the airline industry's improved profitability will be its resilience in a downturn.