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Airbus develops, produces and supports commercial aircraft in the 100 seat and above range. In 2001 Airbus became a single fully integrated company incorporated under French law as a simplified joint stock company. The four national entities which had previously formed the Airbus consortium transferred their Airbus-related assets to the new company and became shareholders in Airbus -- Airbus France, Airbus Deutschland and Airbus Espana merging as the European Aeronautic Defence and Space Company (EADS) with 80% shares and BAE Systems with 20%. In 2006, following the sales of BAE Systems' shares, Airbus became an EADS company.
Manufacturing, production and sub-assembly of parts for Airbus aircraft are distributed around 12 sites in Europe, with final assembly in Toulouse and Hamburg.There are also centres for engineering design, sales and support in North America; and sales and customer support centres in Japan and China. Airbus has a joint engineering centre in Russia with Kaskol. Airbus is managed by an Executive Committee headed by a President and Chief Executive Officer appointed by the EADS Board of Directors.
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The Lion Air Group has a massive 600 aircraft on outstanding order following its landmark order for 234 A320 family aircraft, which was signed on 18-Mar-2013. The figure at first glance seems overly ambitious given the intensifying competition in Southeast Asia’s low-cost carrier market. But Lion enjoys a very strong position in its massive and fast-growing home market of Indonesia, which could easily support, over the next decade, at least half of the additional aircraft it has committed to acquiring.
Lion also has ambitions of establishing new affiliates and subsidiaries, following the model of rival LCC group AirAsia. The Lion Air Group is launching Malindo, a joint venture carrier in AirAsia’s original home market of Malaysia, on 22-Mar-2013.
The group also has the option of placing some of the 600 aircraft it has on outstanding order with airlines outside Lion through its new leasing subsidiary. This gives Lion unique flexibility should its growing portfolio of airlines not require all 600 aircraft for their own growth and replacement needs.
The world is entering its fifth year since the global financial crisis and world GDP growth remains below historic trend rates. In addition, fuel prices look set to remain in a historically high range. In spite of these headwinds, IATA is forecasting global airline operating margins of 2.1% and 2.9% in 2012 and 2013 respectively. While these margins are very slight compared with other sectors of the aviation supply chain, they represent a creditable mid-cycle level for the airline industry.
Capacity discipline appears to be helping mitigate the impact of a sluggish global economy and high fuel prices. In this analysis, we examine the relationship between capacity utilisation and airline sector profitability and derive our Capacity Index to assess the stage reached in the cycle. We also look at how it came to pass that the industry decided to embark upon the righteous path as disciples of capacity discipline.
The AirAsia Group has followed through on promises to order another 100 A320s, enabling it to accelerate expansion at its fast-growing portfolio of low-cost carriers. The new order, announced on 13-Dec-2012, means the group is now committed to more than 350 A320/A320neo deliveries over the next 14 years. While adding aircraft at an average pace of 25 aircraft per year may seem ambitious, the reality is that even faster expansion is potentially sustainable given the fact that AirAsia now comprises of five A320 airlines in five distinct markets, all of which are rapidly growing. Indeed, the real issue is more about keeping ahead of the field in Asia's booming short-haul low-cost market.
Indonesia's Lion Air Group, which has quietly overtaken AirAsia as the largest LCC group within Southeast Asia (albeit mostly domestic), captured headlines in late 2011 when it one-upped AirAsia’s order for 200 A320neos from mid-2011 by committing to 201 737 MAXs.
AirAsia is taking the threat of increased competition with Lion, which is planning to launch a new affiliate in AirAsia’s home market of Malaysia in 2013, very seriously. It’s no surprise AirAsia is using the latest order in part to accelerate expansion in Malaysia, where it will aim to beat new Lion subsidiary Malindo into oblivion, and in Lion’s home market of Indonesia.
South African Airways bears all the scars of a government-owned legacy carrier in terminal decline, accelerated by continued political fumbling and interference which in Sep-2012 resulted in the mass board walkout and the resignation of three top executives, including its CEO.
The flag carrier is deeply mired in debt, bereft of a positive outlook. A temporary sop of a government guarantee is unlikely to support a turnaround in 2013 and offers little hope of improvement in South Africa’s troubled aviation sector while government fumbling continues. Moreover, subsidy of one airline – by providing government guarantees – in a supposedly deregulated domestic market only serves to destabilise competitive operations.
That does not offer a sustainable recipe for an airline industry in a country which relies heavily on dependable commercial air services to support economic activity. Yet, unless its masters in Pretoria miraculously gain, and apply, a clearer vision for SAA, the future promises only the continuing decline of a once proud airline.
Africa’s newest airline, FastJet, launched services on 29-Nov-2012 with two daily flights on two domestic routes in Tanzania, Dar es Salaam to Kilimanjaro and Mwanza, using three leased A319s. The launch was delayed by a month and the low-cost carrier has started on different routes than announced in Oct-2012, when Dar es Salaam-Nairobi was favoured, and on the opposite side of the continent than originally envisaged in Jun-2012, when Accra in Ghana was seen as the optimum starting hub over Tanzania.
FastJet will gradually spread its wings west and south across sub-Sahara Africa, rebranding the pan-African Fly540 operations which it acquired from African conglomerate Lonrho in Jun-2012 and transitioning the operation from the full service to LCC model. The carrier is relying on an average fare of USD70 to USD80, historically low by intra-Africa standards, to stimulate demand and encourage Africans to swap road travel for air travel, as has been the experience in other emerging markets such as Southeast Asia and Latin America.
Faroe Island-based Atlantic Airways has excelled in mastering unaccommodating operational challenges
At first glance Atlantic Airways has the perfect life: it is majority state owned and it has no competition in its home market. It is the sole airline providing air service to and from the Faroe Islands since now defunct Maersk Air stopped serving the country in 2004.
However, a deeper look into the small Faroese carrier’s operations quickly reveals that its situation is not enviable; it is quite the opposite, as it operates in an extremely challenging environment that includes a mountainous topography allowing only narrow and offset approach paths, extreme seasonality and the prevailing volatile North Atlantic weather. Cancellations or diversions due to the low cloud base, unfavourable winds or snowfall can cause knock-on disruptions for days at a time as the nearest alternates to Vágar Airport, the airline’s base, are in Iceland, Scotland or Norway.
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