FedEx announced (09-Oct-2012) programmes targeting improvement in annual profitability of USD1.7 billion over the next three years. The company plans to achieve a significant portion of the benefits by FY2015. The company said a significant portion of the profitability improvement will come from cost reductions at FedEx Express and FedEx Services. FedEx chairman, president and CEO Frederick W Smith said, "We are revamping the Express cost structure through a combination of cost reductions, efficiency improvements, and service repositioning. Our overall strategy is closely tied to effective yield management. The key is striking the right balance between volume growth and yield improvements. With slow economic growth, however, the cost reduction programs...are also essential to achieve our financial goals." [more - original PR]
FedEx aiming to improve profitability by USD1.7bn over three years
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LOT Polish Airlines: now restructured, and long haul focus is on 2020 growth. Partnerships critical
On 8-Sep-2016 LOT Polish Airlines announced its "2020 profitable growth strategy". This involves a goal to achieve "sustainable viability", after a restructuring programme which returned LOT to operating profit in 2014 after six loss-making years. Its privatisation may even be back on the agenda.
LOT currently ranks behind LCCs Ryanair and Wizz Air by share of traffic in Poland, which offers superior traffic growth potential versus Europe as a whole. The airline aims to increase passenger numbers from 4.3 million in 2015 to 10 million in 2020, growing its fleet from 43 to 70 aircraft. LOT's expansion will focus on long haul, particularly North America and Asia, where it currently has only five routes and where competition is considerably lower than on short/medium haul. Initial plans include the launch of Warsaw-Seoul this winter and a return to Warsaw-New York Newark next summer.
According to data from LOT, its restructuring has left it with a fairly efficient cost base by legacy airline standards and this will be important in competing with LCCs (but there is still a cost gap with LCCs). LOT's growth will focus on long haul but will need short-haul European feed – and partnerships. Although LOT no longer appears to be considering leaving the Star Alliance, it remains excluded from American and Asian JVs. Further, those JVs preclude members from working with LOT. Partnership growth will be as critical as it will be challenging.
Turbulence at Virgin Australia: Some winners, some changes. Virgin's share register revolving door
The past month has been, as the Chinese might say, an interesting time for Virgin Australia. Two major new Chinese shareholders, HNA and Nanshan Group, an aggravated departure by one shareholder and now the announcement of a major restructuring, delivered to an unsuspecting world at 30 minutes’ notice, seemingly leaving behind its (previously) largest shareholder, Etihad – this has all occurred in a blur.
A financial restructuring has been in the wind for some time, but there was little to explain the breathless announcement of a one-for-one share issue on 15-Jun-2016. This involves a fully underwritten AUD852 million equity raising; together with a previously announced proposed AUD159 million placement to HNA Innovation, the total amount raised will slightly exceed AUD1 billion.
It sounds like good news for a cash-strapped Virgin Australia, but working out the winners and losers is more challenging as the dust settles.