SkyTeam Chairman, Leo van Wijk, stated he can see the potential for more mergers of major carriers within a continent, but intercontinental mergers remain difficult and complex (BTNonline, 30-Jul-2010). The trans-Atlantic JV between Air France-KLM and Delta Air Lines offers an “excellent alternative, which avoids the complexities but to a large extent generates the same benefits”. Mr Van Wijk confirmed Alitalia is working with Air France-KLM and Delta to be incorporated in the joint venture.
SkyTeam sees JVs as alternative to mergers
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Ryanair's 117million pax in 2016 tops European airline groups. The first time an LCC topped rankings
For the first time ever in Europe, in 2016 a low cost airline carried more passengers than any other airline or airline group, as Ryanair's 117 million passengers pushed Lufthansa Group's 110 million into second place. Ryanair had beaten Lufthansa itself, but not the whole Lufthansa Group. IAG's first full year of including Aer Lingus helped it to take third place from Air France-KLM. Europe's number two LCC, easyJet, was ranked fifth.
The big five can be expanded into a big seven to include Turkish Airlines and the Aeroflot Group, although these two had contrasting growth rates in 2016. A chasing pack of middle sized airline groups includes three LCCs (Norwegian, Pegasus and Wizz Air) and three legacy airlines with varying challenges to establishing sustainable profitability (SAS, Air Berlin Group and Alitalia).
Most of the faster growing airline groups in the top 20 are LCCs and the main growth drivers for Europe's big three legacy groups are their LCC subsidiaries. Just outside the top 20 are some fast growing legacy airlines in Eastern Europe, demonstrating the potential there. Nevertheless, unless there is a big merger or acquisition, Ryanair looks set to remain at number one for some time.
US airlines Part 1: labour and oil costs create challenges for the Big 3 airlines as 2017 begins
US airlines, across all business models during 2017, are attempting to arrest negative unit revenue trends that have remained stubbornly in place for two years. Rising labour and fuel costs are heightening the importance of a return to positive unit revenue as investors attempt to determine whether an inflection point in the weaker US pricing environment has been reached.
In order to achieve their stated targets to return to positive unit revenue during 2017, most US airlines are planning lower capacity growth than the year prior as a means to stabilise pricing trends in the market. Many of the country’s airlines struck a positive tone at the end of 2016 after close-in yields began to stabilise in the domestic market. However, challenges remain in some international markets, particularly the trans-Atlantic. American, Delta and United are working to adjust their capacity in order to fuel investor confidence that their unit revenue fortunes will turn positive in 2017.
Investors are likely viewing declarations by US airlines of a return to positive unit revenue in 2017 with some level of scepticism, since many of those entities have inaccurately predicted when their unit revenue performance would improve. But with higher labour and fuel expenses, the urgency to chart a positive unit revenue performance is becoming more pronounced.
This is is the first of two reports examining the outlook for US airlines in 2017.