SOUTHWEST AIRLINES CLOSES AIRTRAN ACQUISITION
US low-fare carrier pioneer Southwest Airlines has closed its purchase of all of the outstanding common stock of AirTran Holdings, the former parent company of AirTran Airways, and will now begin the integration of the two budget airlines. Based on the average of Southwest’s closing prices for the 20 trading days ending three trading days prior to May 2, of $11.90, the transaction values AirTran common stock at approximately $7.57 per share, or $1.0 billion in total. “The successful closing of this transaction is a significant accomplishment and marks a great day in the history of Southwest Airlines,” said Gary Kelly, CEO, Chairman, and President, Southwest Airlines. “The acquisition of AirTran represents a unique opportunity to extend our network into key markets we don't yet serve, such as Atlanta and Washington, D.C., via Ronald Reagan National Airport. It gives us the opportunity to serve more than 100 million customers annually from more than 100 different airports in the US and overseas.” Southwest and AirTran will immediately begin the work to integrate the brands although for now AirTran will continue to operate under its own name and with its current policies, procedures, and product features. Southwest plans to transition the AirTran fleet to the Southwest Airlines livery, developing a consistent customer experience, and transitioning the operations of the two carriers onto a Single Operating Certificate (SOC). Southwest currently expects to achieve this in the first quarter of 2012, although it estimates it will take several years to fully transition into a single airline.
DUBAI AIRPORTS PROJECTS RAPID GROWTH TO 2020
Dubai Airports this week announced its ten year traffic forecast for Dubai International (DXB) and Dubai World Central-Al Maktoum International (DWC) that projects international passenger and cargo traffic will increase at an average annual growth rate of 7.2 per cent and 6.7 per cent respectively, outperforming industry projections for average annual growth of 5 per cent globally. Based on this forecast by 2020 passenger numbers will reach 98.5 million and cargo volumes will top 4.1 million tonnes. Pace-setting growth has certainly been the norm at Dubai International and over the past 50 years passenger traffic has increased at an average annual rate of 15.5 per cent. Even while other airports saw traffic decline during the recent economic recession, Dubai Airports saw international passenger numbers increase 9.1 per cent demonstrating the resilience of Dubai’s aviation sector in challenging market conditions. Since 2005 traffic has almost doubled from 24.8 million to 47.2 million last year. “Increased liberalisation, GDP growth and increasingly affluent and mobile populations in emerging markets will combine to propel air travel growth worldwide,” said Paul Griffiths, Chief Executive Officer, Dubai Airports. “Dubai is extremely well positioned to capitalise on that growth. The combination of rallying tourism and Dubai’s established role as a trading hub linking economies in the Far East, Europe, Africa and North America, are also key advantages.” Similarly, bolstered by expanded trade and commerce, airfreight volumes will almost double from the 2.27 million tonnes recorded in 2010 to 4.1 million tonnes in 2020, based on a 6.7 per cent annual growth rate. Whilst much of the growth is driven by additional belly capacity in the passenger fleets flying into Dubai, the forecast also suggests a significant increase in freighter capacity. “Based on the current pace of growth we are seeing in other large international airports, Dubai International should become the busiest airport in the world for international passenger traffic as early as 2015 when passenger numbers are projected to exceed 75 million,” added Paul Griffiths.
RECORD EARNINGS FOR ASIA PACIFIC AIRLINES IN 2010
Preliminary financial performance figures released this week by the Association of Asia Pacific Airlines (AAPA) showed that Asia Pacific-based carriers reported a record $9.5 billion in net profits in 2010, a major turnaround from $1.7 billion in net losses suffered in the previous year. The strong results were underpinned by a resurgence of air travel and air freight demand, and operating efficiencies including record high load factors. International passenger traffic, measured in revenue passenger kilometres, grew by 9.6 per cent in 2010, whilst international cargo traffic, expressed in freight tonne kilometres, surged by 24.0 per cent. Combined revenues for Asia Pacific carriers reached $147 billion, 30 per cent higher than the $113 billion reported in 2009. Passenger revenues rose by 26 per cent to $106 billion whilst cargo revenues jumped 52 per cent to $22 billion. However, operating expenses increased by 18 per cent to $134 billion, mainly due to a 28 per cent increase in fuel expenses to $43 billion, the single biggest cost item. The share of fuel expenditure as a percentage of total operating costs rose to 32 per cent in 2010, from 29 per cent the previous year, as oil prices rose 29 per cent to an average of US80 per barrel in 2010. Non-fuel expenditures grew by 13 per cent to $91 billion, with overall staff costs rising 12 per cent. Commenting on the 2010 financial results, Andrew Herdman, Director General, AAPA said: “Buoyed by a firm recovery in premium business travel and a very strong rebound in demand for air freight, Asia Pacific carriers saw a welcome return to profitability in 2010, after two years of heavy losses. Asia Pacific airlines led the industry recovery, reporting combined net profits of $9.5 billion, reflecting a 6.4 per cent net margin, well above the industry average.” Looking ahead, he noted that the medium and long term prospects for Asia Pacific aviation remain very positive, but the immediate outlook is somewhat clouded by the sharp increase in oil prices this year, which may dampen the global economic recovery. “The lingering effects of the Japanese earthquake are also still evident, although there are some early signs of a recovery in demand for travel to and from Japan,” he added.
WORK BEGINS ON TEMPORARY RADAR SITE FOR CAIRNS
Airservices Australia, the country’s national air traffic control service provider, has begun site preparation work for a temporary radar facility at Machans Beach. The radar will maintain the current levels of flight safety in the region while the permanent Cairns Terminal Area Radar is upgraded. Airservices project manager Bruce Arnold said the $5.5m upgrade was part of a $80m nationwide infrastructure modernisation program to ensure the safe and efficient movement of air traffic in Australian airspace. “Cairns Airport is a vital link and an essential part of the Queensland tourism industry. It’s imperative we ensure it continues to function safely and efficiently while this upgrade is carried out,” he said. The Machans Beach site is already owned by Airservices and was chosen to host the temporary radar because it is ideally located to accurately track aircraft approaching and departing Cairns Airport during the period the permanent radar is out of service. Other locations were considered but were deemed to be technically unacceptable due to interference from buildings or the topography around Cairns Airport. The only suitable location on the airport itself is occupied by the radar to be upgraded by Airservices. A transportable radar previously used in Sydney and Melbourne is being shipped to Cairns and will be used for up to 12 months while the upgrade is carried out.
EU AND THE US AVIATION SAFETY AGREEMENT ENTERS INTO FORCE
The agreement on Co-operation in the Regulation of Civil Aviation Safety between the European Union and the United States has entered into force, and will boost safety and is likely to create opportunities for businesses. This agreement means less cumbersome technical and administrative procedures for the recognition of certificates and approvals on both sides of the Atlantic and opens the way to progressively reaching the same level of mutual trust in other areas of safety. Siim Kallas, Commission Vice-President in charge of transport said: “This day has been long awaited by the entire aeronautical industry in Europe and the United States. Finally, what we negotiated three years ago can be put into place. It will cut red tape and save time and money. Most importantly, it will give a boost to all businesses in the sector both in the US and in Europe. Thanks to this agreement we can progress even further in our continuous efforts to ensure the highest level of safety for our citizens, and to strengthen EU-US co-operation in aviation.” This agreement will be the cornerstone of co-operation between the two sides in all matters of aviation safety. Despite difficult economic times, trade in the aeronautical sector has continued to grow. Already in 2009 and 2010 the total transatlantic trade in aeronautical products and services was more than €17 billion. The agreement is designed to boost trade in aeronautical products and services even further, but it goes well beyond mutual recognition of certification findings in the area of design, production and maintenance as it sets the framework for a continuous, transparent and timely exchange of solid and verifiable information affecting all areas of aviation safety law and policy. This agreement is designed to help the aeronautical industry grow further in a sustainable way, and the Commission says it is ready to explore with the US how to expand the scope of the agreement rapidly into new areas such as flight crew licensing and aircraft operations.
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