Brazil's No. 2 airline, Gol, confirmed on Friday it plans to buy smaller rival Webjet for BRR96 million reais (USD$61.4 million), the latest consolidation in the booming Latin American airline sector. Gol Linhas Aereas will complete the transaction to buy 100 percent of Webjet through its Varig subsidiary. Webjet has been valued at BRR311 million reais, much more than the deal price. The filing did not explain why the price was less than a third of Webjet's estimated worth, or whether Gol would assume any debt as part of the deal. Gol said the deal's completion still depended on legal and technical audits of Webjet and the approval of government authorities. It said it would provide more details on July 11.
A source said earlier on Friday that lawyers representing the Constantino family -- Gol's majority shareholders -- and Webjet's biggest shareholder, Guilherme Paulus, had been finalising the terms. The takeover underscores Gol's efforts to expand capacity to meet growing demand as more Brazilians use air travel as household incomes increase. Webjet operates 154 daily flights to 14 Brazilian destinations, including the country's largest cities, while Gol operates around 900 flights per day. Webjet's Paulus sold a controlling stake in his tourism company, CVC, last year to buyout firm Carlyle Group in a deal valued at USD$300 million at the time. He refused to include Webjet because he expected better offers from other parties, people familiar with the situation said at the time.
The potential alliance comes as Gol faces increased competition from a handful of relatively new carriers in Brazil which, like Webjet, target routes largely underserved by Gol and its largest rival TAM. TAM and start-up TRIP signed a letter of intent in March to explore a potential "strategic alliance" that would complement their existing codeshare agreement. Brazil's No. 2 airline, Gol, confirmed on Friday it plans to buy smaller rival Webjet for BRR96 million reais (USD$61.4 million), the latest consolidation in the booming Latin American airline sector.
Gol Linhas Aereas will complete the transaction to buy 100 percent of Webjet through its Varig subsidiary. Webjet has been valued at BRR311 million reais, much more than the deal price. The filing did not explain why the price was less than a third of Webjet's estimated worth, or whether Gol would assume any debt as part of the deal. Gol said the deal's completion still depended on legal and technical audits of Webjet and the approval of government authorities. It said it would provide more details on July 11. A source said earlier on Friday that lawyers representing the Constantino family -- Gol's majority shareholders -- and Webjet's biggest shareholder, Guilherme Paulus, had been finalising the terms.
The takeover underscores Gol's efforts to expand capacity to meet growing demand as more Brazilians use air travel as household incomes increase.
Webjet operates 154 daily flights to 14 Brazilian destinations, including the country's largest cities, while Gol operates around 900 flights per day.
Webjet's Paulus sold a controlling stake in his tourism company, CVC, last year to buyout firm Carlyle Group in a deal valued at USD$300 million at the time. He refused to include Webjet because he expected better offers from other parties, people familiar with the situation said at the time.
The potential alliance comes as Gol faces increased competition from a handful of relatively new carriers in Brazil which, like Webjet, target routes largely underserved by Gol and its largest rival TAM.
TAM and start-up TRIP signed a letter of intent in March to explore a potential "strategic alliance" that would complement their existing codeshare agreement. Webjet is Brazil's fourth largest carrier, while TRIP is the sixth biggest.
TAM plans to merge with Chilean carrier LAN Airlines, which could create Latin America's largest airline. The deal is pending approval by Chilean authorities.
Webjet is Brazil's fourth largest carrier, while TRIP is the sixth biggest. TAM plans to merge with Chilean carrier LAN Airlines, which could create Latin America's largest airline. The deal is pending approval by Chilean authorities.
Monday, July 11, 2011
Sunday, July 10, 2011
AirAsia extend Airbus order by another 100 A320neo
AirAsia will buy an extra 100 Airbus A320neo jets, taking its record-breaking order to 300 planes, a source said, a deal that would make the Malaysia-based low-cost airline one of the world's largest carriers. AirAsia and Airbus announced an USD$18.2 billion deal for 200 planes at the Paris Air Show last month, shattering aviation records for the largest ever airline order. The additional order takes the list price of the contract to a staggering USD$27 billion. The bumper order highlights Airbus's growing lead over Boeing and throws the spotlight on AirAsia's aggressive growth plans at a time when high oil prices and an uncertain global economy are clouding the outlook for travel demand. Analysts expect the extended order to drive AirAsia's expansion as it competes with short-haul carriers such as India's IndiGo, Singapore's Tiger Airways and Australia's Jetstar in the Asia-Pacific region, the fastest growing in the world. "AirAsia's last replacement order was in 2007/2008. These new orders are long overdue so it's not an aggressive order," said Kunal Sinha, an aerospace expert with the Frost & Sullivan consultancy. "AirAsia's new fleet is to be used mostly to link Southeast Asia to India and China. By 2015, Southeast Asia will have open skies so you have to have a growth plan."
Boeing on Wednesday said it expected 33,500 new planes to be delivered by 2030, driven by growth in India and elsewhere in Asia. AirAsia plans to list its operations in Thailand and Indonesia this year as it expands in those markets and is in talks to open a hub in Singapore, its chief executive Tony Fernandes has said. Like the previous order, the additional 100 planes would also use CFM International engines, the source with direct knowledge of the deal said, declining to be identified because the deal is not public yet. The source said AirAsia would receive a discount for the entire order, but did not give further details. AirAsia's regional head for corporate finance and treasury Aireen Omar said, "We ordered 200 and so far there are no changes." An Airbus spokesman said the manufacturer would not comment on commercial discussions with customers that were confidential. AirAsia, which flies to 63 destinations in more than 20 countries, has 90 planes currently, almost all single-aisle Airbus A320s. Besides the 300 Airbus A320neo deal, it has another 75 Airbus aircraft already on order. "Though we look aggressive, we have expanded very cautiously," Fernandes said this week. "But I have always said this airline is worth at least 500 aircraft."
According to International Air Transport Association (IATA) data, United Continental had the largest passenger fleet of 737 planes at the end of 2010, followed by Delta Air Lines with 722, American Airlines with 618 and Lufthansa with 427. Non-IATA member Southwest Airlines, the only low-cost carrier currently in the top five, has around 550 planes. "AirAsia had the first-mover advantage and it continues to stay ahead of the game by ordering fuel-efficient planes and keeping the size growing," said an aviation analyst with a Malaysian investment bank who declined to be identified due to company policy. "But the key risk is if expansion plans do not succeed. The Malaysian base is fairly saturated so if the other markets do not grow or cannot take off because of protectionism or other factors, then they will find themselves having to manage a lot of aircraft," the analyst said.
Fernandes said the A320neo purchases would be funded by debt and cash flow as staggered deliveries begin in 2016. "We're buying the planes now, we don't pay for it all now. They become due in 2016 so we're just paying some deposits now which is not erroneous at all to our balance sheet." The A320neo is a version of Airbus's best-selling 150-seat passenger jet offering fuel savings with new engines from 2015. The huge orders for the single-aisle plane at the Paris Air Show have piled pressure on rival Boeing to come up with a newer version of its 737 workhorse. Fernandes said his airline's growth was closely twinned with Airbus. "We have a fantastic relationship with Airbus," he said. "They are much more than just suppliers to us. I credit them tremendously with our growth and I want to be more than just a customer of theirs."
It is now part of aviation industry lore that Fernandes asked Airbus chief salesman Joe Leahy to come on to the dance floor of a Paris nightclub before signing the A320neo deal. "As part of a family we do some crazy things together," the 47-year-old Malaysian millionaire said. Asian budget airlines placed a record USD$42 billion in plane orders during the Paris Air Show, illustrating their high expectations for travel in the world's fastest growing market and also triggering worries some may not survive. Many of the no-frills carriers such as AirAsia and Indigo aim to more than double their fleets to power rapid growth, partly at the expense of full-service airlines such as Cathay Pacific and Singapore Airlines. Worldwide passenger demand is expected to rise 4.4 percent over the next year with the Asia-Pacific region growing faster at 6.4 percent, according to IATA, which represents the majority of airlines operating in the USD$598 billion industry. The Centre for Asia Pacific Aviation, an independent aviation market research provider, said low-cost carriers accounted for 16 percent of the market in terms of seats within Asia Pacific last year, up from 6 percent in 2005. Their market share is set to rise 2 percentage points annually to about 26 percent in 2015, it said.
Boeing on Wednesday said it expected 33,500 new planes to be delivered by 2030, driven by growth in India and elsewhere in Asia. AirAsia plans to list its operations in Thailand and Indonesia this year as it expands in those markets and is in talks to open a hub in Singapore, its chief executive Tony Fernandes has said. Like the previous order, the additional 100 planes would also use CFM International engines, the source with direct knowledge of the deal said, declining to be identified because the deal is not public yet. The source said AirAsia would receive a discount for the entire order, but did not give further details. AirAsia's regional head for corporate finance and treasury Aireen Omar said, "We ordered 200 and so far there are no changes." An Airbus spokesman said the manufacturer would not comment on commercial discussions with customers that were confidential. AirAsia, which flies to 63 destinations in more than 20 countries, has 90 planes currently, almost all single-aisle Airbus A320s. Besides the 300 Airbus A320neo deal, it has another 75 Airbus aircraft already on order. "Though we look aggressive, we have expanded very cautiously," Fernandes said this week. "But I have always said this airline is worth at least 500 aircraft."
According to International Air Transport Association (IATA) data, United Continental had the largest passenger fleet of 737 planes at the end of 2010, followed by Delta Air Lines with 722, American Airlines with 618 and Lufthansa with 427. Non-IATA member Southwest Airlines, the only low-cost carrier currently in the top five, has around 550 planes. "AirAsia had the first-mover advantage and it continues to stay ahead of the game by ordering fuel-efficient planes and keeping the size growing," said an aviation analyst with a Malaysian investment bank who declined to be identified due to company policy. "But the key risk is if expansion plans do not succeed. The Malaysian base is fairly saturated so if the other markets do not grow or cannot take off because of protectionism or other factors, then they will find themselves having to manage a lot of aircraft," the analyst said.
Fernandes said the A320neo purchases would be funded by debt and cash flow as staggered deliveries begin in 2016. "We're buying the planes now, we don't pay for it all now. They become due in 2016 so we're just paying some deposits now which is not erroneous at all to our balance sheet." The A320neo is a version of Airbus's best-selling 150-seat passenger jet offering fuel savings with new engines from 2015. The huge orders for the single-aisle plane at the Paris Air Show have piled pressure on rival Boeing to come up with a newer version of its 737 workhorse. Fernandes said his airline's growth was closely twinned with Airbus. "We have a fantastic relationship with Airbus," he said. "They are much more than just suppliers to us. I credit them tremendously with our growth and I want to be more than just a customer of theirs."
It is now part of aviation industry lore that Fernandes asked Airbus chief salesman Joe Leahy to come on to the dance floor of a Paris nightclub before signing the A320neo deal. "As part of a family we do some crazy things together," the 47-year-old Malaysian millionaire said. Asian budget airlines placed a record USD$42 billion in plane orders during the Paris Air Show, illustrating their high expectations for travel in the world's fastest growing market and also triggering worries some may not survive. Many of the no-frills carriers such as AirAsia and Indigo aim to more than double their fleets to power rapid growth, partly at the expense of full-service airlines such as Cathay Pacific and Singapore Airlines. Worldwide passenger demand is expected to rise 4.4 percent over the next year with the Asia-Pacific region growing faster at 6.4 percent, according to IATA, which represents the majority of airlines operating in the USD$598 billion industry. The Centre for Asia Pacific Aviation, an independent aviation market research provider, said low-cost carriers accounted for 16 percent of the market in terms of seats within Asia Pacific last year, up from 6 percent in 2005. Their market share is set to rise 2 percentage points annually to about 26 percent in 2015, it said.
Friday, July 8, 2011
Passenger Jet crashes in Congo
An airliner plowed into dense forest as it tried to land during a rainstorm in the Democratic Republic of Congo on Friday, killing 127 people on board, the Congolese transport ministry said. There were 51 survivors, a ministry statement said. The chief executive of the airline involved in the crash told Reuters earlier that there had been 110 people on board the plane, of whom 53 had died and 57 survived. But a spokesman for the transport ministry, Gudile Bualya, accused the airline of underestimating the number of passengers.
The accident at the international airport of Kisangani, a commercial center and river port town in the east, is the latest in a string of disasters in the vast central African country which has saddled it with one of the worst air safety records in the world. "The pilot tried to land but apparently they didn't touch the runway," Stavros Papaioannou, chief executive of Hewa Bora airline, told Reuters by telephone. Hewa Bora is on a European Union list of airlines banned due to security concerns, as are all carriers certified in Congo. It is the second fatal accident involving the airline in three years, after its DC-9 airliner plowed into a suburb of the eastern Congolese city of Goma, killing 44, in 2008.
Earlier, government spokesman Lambert Mende said rescue services had pulled 40 survivors from the Boeing 727. Jean-Paul Bongisa, a local reporter for Congolese state television at the scene of the crash, told Reuters the rescue was being hampered by difficulties in reaching the wreckage, some 200 meters (yards) from the runway in dense equatorial forest. Congo is roughly the same size as Western Europe but rail and road links through its jungles are few, so air and river travel are usually the only viable options for long distance journeys. In April, 32 people were killed when a U.N. plane crashed as it tried to land at the airport serving Congo's capital Kinshasa. The operator of the plane was Georgian flag carrier Airzena Georgian Airways. According to Hewa Bora's website, the airline has two Boeing 727s, both configured as passenger planes with 137 economy seats and 12 business class seats. They fly purely within Congo. Once the world's best-selling airliner, the Boeing 727 first flew in 1963 and was designed for short- and medium-haul routes. The last aircraft was delivered in 1984.
The accident at the international airport of Kisangani, a commercial center and river port town in the east, is the latest in a string of disasters in the vast central African country which has saddled it with one of the worst air safety records in the world. "The pilot tried to land but apparently they didn't touch the runway," Stavros Papaioannou, chief executive of Hewa Bora airline, told Reuters by telephone. Hewa Bora is on a European Union list of airlines banned due to security concerns, as are all carriers certified in Congo. It is the second fatal accident involving the airline in three years, after its DC-9 airliner plowed into a suburb of the eastern Congolese city of Goma, killing 44, in 2008.
Earlier, government spokesman Lambert Mende said rescue services had pulled 40 survivors from the Boeing 727. Jean-Paul Bongisa, a local reporter for Congolese state television at the scene of the crash, told Reuters the rescue was being hampered by difficulties in reaching the wreckage, some 200 meters (yards) from the runway in dense equatorial forest. Congo is roughly the same size as Western Europe but rail and road links through its jungles are few, so air and river travel are usually the only viable options for long distance journeys. In April, 32 people were killed when a U.N. plane crashed as it tried to land at the airport serving Congo's capital Kinshasa. The operator of the plane was Georgian flag carrier Airzena Georgian Airways. According to Hewa Bora's website, the airline has two Boeing 727s, both configured as passenger planes with 137 economy seats and 12 business class seats. They fly purely within Congo. Once the world's best-selling airliner, the Boeing 727 first flew in 1963 and was designed for short- and medium-haul routes. The last aircraft was delivered in 1984.
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