Europe Airline Daily: Main News: 7 May 2008

Lufthansa: "We generally look at all companies offered to us, [though it is] too early", Stefanie Stotz, Spokeswoman. Source: Bloomberg, 06-May-08.

Lufthansa is reportedly considering a joint bid with Italian bank, UniCredit, to acquire a strategic stake in Alitalia (Reuters, 06-May-08). The German airline has reportedly set three conditions for a potential buy-in, including receving up-to-date financial information, a realistic turnaround plan and a diminished role for labour unions. Meanwhile, Brazilian turnaround specialist, Multi-Long Corp, stated it has made a "concrete bid" for Alitalia and provided details of the proposed business plan to European Union regulators (Bloomberg, 06-May-08).

Multi-Long: "We are the only private company that has offered a concrete bid for Alitalia. [The offer is] rock solid and not an adventure or irresponsible bid", Michael Breslow, CEO. Source: Bloomberg, 06-May-08.

British Airways stated (07-May-08) the problematic opening of Heathrow's Terminal 5 had "some impact" on Apr-08 traffic figures, "particularly on transfer traffic". The carrier's traffic highlights in Apr-08 included:

• Passenger numbers: 2.6 million, -7.9% year-on-year;
o UK/Europe: 1.6 million, -8.5%;
o Americas: 582,000, -7.9%;
o Asia Pacific: 147,000, -4.2%;
o Africa and Middle East: 269,000, -6.0%;

• Passenger load factor: 71.6%, -5.1 ppts year-on-year;
o UK/Europe: 64.6%, -5.6 ppts;
o Americas: 72.2%, -6.3%;
o Asia Pacific: 76.5%, -3.2 ppts;
o Africa and Middle East:73.7%, -5.1 ppts.

British Airways: “Market conditions are broadly unchanged with long-haul, non-premium traffic showing significant weakness. In April some impact was felt, particularly on transfer traffic, from the move to T5 and the operational problems in the early part of the month,”Company statement. Source: British Airways, 07-May-08.

British Airways: "Weakness in non-premium long-haul traffic has continued -- if anything it's a bit weaker. It's a reflection of consumer spending - people feel a bit of a pinch... in general, non-premium traffic from the US is at the weaker end", George Stinnes, Head of Investor Relations. Source: Reuters, 06-May-08.

Ryanair reports (06-May-08) total passenger numbers in Apr-08 rose 15% year-on-year to 4.7 million, while passenger load factor fell 4.0 ppts to 79%.

Airbus CEO, Tom Enders, has written to Emirates and Etihad Airways warning they face further A380 delivery delays, with a further details to be announced in two to three weeks (Reuters, 06-May-08). Airbus announced a "major review" of the A380 production programme last week. Emirates was scheduled to receive five A380s before 31-Mar-09 and another 12 in the year to 31-Mar-10.

Emirates: “[Airbus informed of possible delays] in ‘wave 2’ deliveries next year…This will do us serious damage…We'll know in two to three weeks if it's ok or not”, Tim Clark President. Source: Reuters, 06-May-08.

Lufthansa: “We still expect to receive the first A380 [of 15 on order] in Summer 2009," Stefanie Stotz, Spokeswoman. Source: Dow Jones, 06-May-08.

Oil prices rose to another record intra-day high in New York on 06-May-08 of USD122.73, before closing at USD121.84 per barrel. Goldman Sachs stated tightening supplies of crude oil make a "super-spike" in prices to between USD150 and USD200 per barrel increasingly likely within the next six to 24 months.

Goldman Sachs: “We believe the current energy crisis may be coming to a head, as a lack of adequate supply growth is becoming apparent and resulting in needed demand rationing in the West and especially in the US”, Arjun Murti, analyst. Source: Dow Jones, 07-May-08.

Aer Lingus announced (06-Mar-08) plans to increase its checked baggage fee for all passengers on short-haul services effective 08-May-08. Baggage booked online via the airline's website will be charged at EUR12/GBP8, while a fee of EUR18/GBP12 will apply to baggage checked in at the airport. The carrier does not apply baggage fees on long-haul services.

Aer Lingus: "The increase reflects the general pricing structure across the industry. By reducing the number of checked bags we process, this will in turn allow us to reduce our handling costs at airports thus enabling us to continue to offer our customers lower fares with a quality service," Enda Corneille, Director of Corporate Affairs Source: Aer Lingus, 06-May-08.

British Airways reports (07-May-08) operations in Terminal 5 at Heathrow Airport "continue to show improvement". The carrier stated a normal schedule has operated for more than three weeks and more than 1.4 million passengers have travelled through the terminal.

Silverjet confirmed it was in take-over discussions with three Gulf-based companies, although further details were not disclosed (Emirates Business 24/7, 06-May-08). Last week, the carrier secured a USD25 million fund injection from Viceroy Holdings, a UAE/US-based development fund.

Silverjet: “We have had a number of discussions with a number of investors in the Middle East and Asia for a potential takeover. Of this, three Middle East companies have approached us for a complete takeover,” CEO, Lawrence Hunt. Source: Emirates Business 24/7, 06-May-08.

Air Berlin has entered (06-May-08) a new long-term catering contract with Gate Gourmet in Germany and the rest of Europe, after Gate Gourmet agreed to purchase airline catering units in five German cities from Air Berlin and SCK Sky Catering Kitchen [more information at Peanuts.aero]

Air Malta launched services to Leipzig Halle on 04-May-08 - its sixth destination in Germany - see Route Changes Table for more information.

Finnair is entering a second day of talks with pilots today (07-May-08) over a new salary agreement. No threat of industrial action has yet been issued.

Futura International Airways, a Spanish carrier, took delivery of the first of two B737-900ERs from GECAS on 06-May-08. The carrier is the first to operate the type in Europe and will use the aircraft’s increased range capabilities to launch services new destinations. The aircraft are powered by CFM56-7B engines.

El Al Israel Airlines has agreed (06-May-08) to purchase four B777-200ERs. Three aircraft are scheduled to be delivered in 2012 and the fourth in early 2013. The B777s will be equipped with Rolls Royce engines and configured with 279 seats. EL AL also has options to purchase four B777-300 aircraft.

Smart Wings confirmed plans to launch Budapest-Dubai service, effective 14-May-08 – see Route Changes Table for more information.

SkyEurope reports (06-May-08) the following traffic highlights in Apr-08:

• Passenger numbers: 293,688, -4.7% year-on-year;
• Passenger load factor: 81.2%, -10.5%.

WizzAir has suspended Gdansk-Coventry service and is expected to suspend more services in Poland next week (Dziennik, 06-May-08). The "realignment" in its Poland schedule stems from the recent launch of services in Ukraine.

Air Canada and Northwest Airlines reports (06-May-08) the following traffic highlights in Apr-08 on Atlantic service:

• Passenger traffic (RPMs):
o Air Canada: +0.8% year-on-year;
o Northwest Airlines: +15.3%;

• Passenger load factor:
o Air Canada: 86.8%, -0.4 ppts;
o Northwest Airlines: 79.4%, -7.8 ppts.

Delta Air Lines President & CFO, Ed Bastian, stated that US carriers may be approaching a “break point” regarding fuel costs, if there is no consolidation in the market (Bloomberg, 07-May-08). Fuel has increased from 17% of Delta’s total costs to 43% over the past five years.

Delta Air Lines: “If we were left as standalone carriers, we may already be approaching that break point. It may be here. You're seeing that in the industry, as carriers are falling almost on a weekly basis. And this time, they're going into liquidation. They're not coming back,” Ed Bastian, President & CFO. Source: Bloomberg, 07-May-08.

United Airlines announced (06-May-08) plans to launch service from Washington Dulles to Moscow in Oct-08 – see Route Changes Table for more information.

Etihad Airways confirmed it is confident of achieving a break-even result by 2010 (Emirates Business 24/7, 06-May-08.). The carrier stated that fuel remains a “huge concern”, but the impact is alleviated by hedging much of its requirements up to 18 months in advance.

Etihad Airways: “We are very much in the start-up phase - which requires a lot of investment - and we are looking forward to breaking even in 2010. We have been looking at the oil market and buying fuel about one year and a half in advance. We hedge 10-50% in advance, and this guarantees us against rising fuel prices,” Geert Boven, Executive VP, Sales and Service. Source: Emirates Business 24/7, 06-May-08.

NWA Cargo announced (06-May-08) plans to raise international fuel surcharges from USD1.05 per kg to USD1.10 per kg effective 15-May-08. Westbound trans-Pacific shipments from the US to Shanghai, Guangzhou, and points beyond will also be subject to a USD0.30 per kg fuel surcharge above current base rates.