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IAG seeks full ownership of LCC Vueling as its cuts Iberia to the bone

International Airlines Group (IAG) is putting its Spanish house in order and will eliminate up to 4500 jobs at Iberia and downsize the fleet by 25 aircraft while planning a full takeover of the Barcelona El Prat-based LCC Vueling Airlines.

Iberia is on a downward rollercoaster and is burning EUR1.7 million cash per day with operating losses deepening in the first nine months of 2012 to EUR262 million owing to Spain's challenging recession, the unstoppable inroads of LCCs and the airline’s high cost structure.

Iberia management was crystal clear in assessing the situation and warned that the airline is “in fight for survival” and tough decisions are needed now to save the company.

IAG’s intent to make a formal takeover offer for the 54% of Vueling that it does not already own is part of the Group’s remedy to help restructure Iberia's money bleeding short-haul operations and regain leadership in this segment. The LCC has managed to follow a steady and profitable growth path despite the Spanish economic slowdown, with a near doubling of net profit in 9M2012 to EUR41.3 million compared to the year-ago period. Vueling will bring a low-cost platform within IAG and give IAG geographic diversification as it has bases in Amsterdam, Toulouse, Rome Fiumicino and a noteworthy presence at Paris Orly Airport.

Delta’s new push to Paris confronts United and shows commitment to SkyTeam amid alliance shifts

Major shifts in the three major global airline alliances during the last few weeks have triggered a bevy questions regarding the future of those tie-ups. But just as Qantas attempts to forge a broad agreement with unaligned Emriates, British Airways has convinced reluctant members to allow Qatar to join oneworld and Air France has reversed its stance to embrace Etihad and airberlin, SkyTeam partners Delta and Air France are bolstering their presence in the US-France market.

It is not clear if Delta could benefit from the new Air France-Etihad tie-up that entails codesharing on flights to Abu Dhabi, but eventually Delta’s connecting customers in Paris could utlilise connections to the Middle East opened up by the new non-SkyTeam partnership.

Beginning in the northern hemisphere summer of 2013, Delta is introducing new flights from Newark Liberty International Airport to Paris Charles de Gaulle, and new seasonal flights from Boston to Paris. Delta also plans to add another daily flight from its Atlanta hub to Paris, which will increase to four the combined number of daily services offered by Delta and Air France on the pairing.

First tranche of United 787 routes to put aircraft’s mission to the test

United’s planned initial international destinations for its Boeing 787 widebodies will be a crucial test to prove out the concept of the aircraft’s optimal mission of long, thin routes as Asia features prominently in the first crop of routes the carrier plans for 787 operations. The deployment on some of United’s European routes will also allow the carrier to put its theory of using the 787 to manage seasonality throughout its network to the test.

Delivery of the first of 50 Boeing 787s to United is scheduled for Sep-2012. United’s acceptance of the aircraft will mark the first delivery to a US carrier, with six aircraft deliveries planned for the remainder of 2012. All Nippon Airways (ANA), Japan Airlines (JAL) and Ethiopian Airlines are now operating the aircraft, and South American airline group LATAM is scheduled to accept its first 787 in late Aug-2012.

Delta's 4Q2012 international route cuts free up significant widebody capacity

Planned route cuts by Delta Air Lines being instituted in late 2012 as part of the carrier’s capacity management scheme to reduce trans-Atlantic supply by 5% and trans-Pacific capacity by 1%-2% will free up a number of widebody aircraft. As the carrier makes seasonal adjustments throughout its network it is not exactly clear where the widebodies exiting certain markets will be deployed.

The carrier’s planned 4Q2012 cuts in trans-Atlantic capacity will mostly be implemented in late Oct-2012, at the start of the IATA winter 2012 schedule and about one month after the peak travel season in the US ends. Most of the capacity will be restored at the start of the summer 2013 schedule in late Mar-2013. Nearly one-third of Delta’s international capacity (seats) is currently deployed on routes to Western Europe.

UK carriers rush to snap up bmibaby’s planned route closures

British Airways (BA) is preparing to disband bmibaby, the low-cost unit it unwelcomely acquired from bmi after previous owner Lufthansa failed to find a buyer. But as the saying goes: one man’s meat in another man’s poison and the news of bmibaby’s grounding was welcomed by multiple airlines including Monarch, Flybe and Jet2.com, all of which are swiftly stepping in to backfill capacity.

Anemic-turns-dynamic is not exclusive to bmibaby’s network but a development seen following the recent demise of other small- and medium-sized airlines in Europe such as Spanair, Malev and Cimber Sterling. In those cases, competitors have reacted swiftly and within a couple of days to fill the void.

bmibaby’s closure is indicative of a recent development in Europe: the lavish injection of capital in loss-making carriers is coming to a standstill with public and private shareholders alike halting the operations of these entities, mostly small- and medium sized airlines, a trend long overdue and induced by low or no economic growth in most EU countries implementing stark austerity measures, and high fuel prices.