Italian Government to Finance ITA
The Italian government continues to throw good money after bad, as it prepares to approve $968 million in funding to jumpstart the Alitalia 2.0 project which it has named ITA to fool everyone into thinking its a new airline.
The government is planning to allocate as much as $3.63 billion to the new boondoggle of an airline as part of an initiative to restore the Italian economy following the pandemic. The money will be paid out whether it ends up remaining as Alitalia or does reinvent itself as ITA.
The first payment of $968 million is designed to show its fiscal worthiness as required by government agencies – the very same government that’s spending the $3.6 billion. To recap, Italian government agencies require enough capital in the bank to demonstrate to the Italian government that the airline is fiscally secure. To meet the requirement, the Italian government is doling out $3 billion to satisfy those agencies of the Italian government.
The airline plans to take $1.9 billion of the cash as startup costs, while the allocating the remaining $1.7 billion for future investments, fleet renewal, a really expensive brunch, and any medical issues stemming from excessive gesticulation.
Air Transat Loses Another Potential Suitor
Air Transat’s quest for a buyer took another hit this week when Canadian media mogul Pierre Karl Péladeau declared he was no longer interested in purchasing the airline.
Péladeau was the fallback plan for Air Transat when its agreement fell through with Air Canada earlier this spring. The Air Canada deal was scuttled due to European regulators taking too long to sign off on the deal, giving Air Canada the right to back out of the takeover.
Péladeau beef was with AT’s main shareholder over the valuation of the airline. Letko, Brosseau & Associates, Inc., the leading shareholder believed the airline was worth more than the C$5 Péladeau was proposing. Letko then declined Péladeau’s offer of C$5 per offer plus a year’s worth of free coffee at Tim Horton’s, which was the final straw Péladeau, leading him to walk away from negotiations.
Air Transat will now go back to the drawing board as it looks for a buyer. The airline is currently on several apps, including Tinder, Bumble, and Hinge in its search for the right suitor.
Cargojet Considers Moving South to Avoid Pilot Fatigue Guidelines
Cargojet, a Canadian cargo operator based in Hamilton, ON (YHM) is considering moving its base of operations to the United States after a new Canadian law that restricts the amount of flying pilots can perform at night, in addition to extending rest periods between trips.
The carrier applied for an exception to the new regulations with Transport Canada, which is currently pending. The appeal suffered a blow when Cargojet’s union overwhelmingly voted against the airline receiving the exemption. Revenue for Cargojet was $130 million in Q1, a 30% increase from a year ago and it has hired more than 60 new pilots to keep its operation running at full-capacity due to the new guidelines. The increased labor costs have hurt the airline’s bottom line and led to a very crowded company holiday party.
If the appeal is denied by Transport Canada, the airline is considering moving south of the border to the United States, where pilot fatigue and rest rules are far more lax for cargo pilots, especially when compared to those who operate passenger aircraft. The FAA only requires cargo pilots visit a Starbucks and make any purchase on their way to work in order to be cleared to fly.
Cargojet currently operates to the United States on behalf of Amazon, DHL Express and Purolator Courier, but has no base of operations in this country. To prepare for a possible move, employees have been working on their American accents, learning the differences in rules from the CFL to the NFL, and ditching their summer coats.
KLM Makes Changes to European Schedule
KLM announced changes to its summer schedule within Europe as the airline looks to capitalize on the increase in flying to beach and sun destinations in southern Europe.
The airline intends to fly to 96 destinations this summer, up from 92 in the summer of 2019. It will not fly to Växjö (VXO) in Sweden, suspending service indefinitely. Additionally, two routes in France – Marseille (MRS) and Nantes (NAN) will be operated from Paris/CDG on Air France as a KLM codeshare instead of on KLM metal.
But the airline is adding four new destinations to its route map from Amsterdam:
- Belgrade (BEG) – daily, beginning May 13
- Dubrovnik (DBV) – daily, beginning June 26
- Palma de Mallorca (PMA) – daily, beginning June 26
- Verona (VRN) – daily, beginning June 26
KLM also says it will add flights or larger aircraft on routes as demand fluctuates. The airline is safe in its belief it won’t need to add anything to its routes to the UK, feeling confident that the news of London’s place as a hot summer destination hasn’t reached the Netherlands quite yet.
Vietnam Considers Deregulating Airline Pricing
Similar to where the United States was two generations ago, Vietnam currently regulates the pricing market for domestic flights by capping what carriers are permitted to charge on all flights.
A push from flag carrier Vietnam Airlines to repeal the mandate is gaining steam within the federal government. Currently price ceilings are based on distance, with five “buckets,” ranging in price from $69-$193.
The current proposal would allow airlines the freedom to set their price with no cap on all routes served by three or more airlines. The airlines say this will allow the market to operate according to supply and demand instead of outside government forces. They also say that it will improve service quality, as airlines would be more incentivized to offer better service when asking for a greater price – no doubt that’s true, just look at what meals are on US airlines compared to 50 years ago – it’s gotten so much better.
When the law went into effect, Vietnam Airways was the only scheduled passenger carrier in the country, but today there are seven, including three LCCs, leading to intense competition for the domestic market in the country.
- 21 Air has added its first B767-300 freighter aircraft in a deal with DHL Express.
- Aeroflot took delivery of four A320neo aircraft.
- Air India is being sued by Scottish energy company Cairn Energy to force the airline to pay a $1.2 billion settlement from an earlier arbitration.
- Allegiant entered an underwriting with Barclays Capital and Morgan Stanley for the sale of 1.5 million shares of its stock. The deal took especially long to confirm because no executive with Barclays or Morgan Stanley had ever heard of Allegiant, much less stepped foot on one of its planes.
- CargoAir will be the first European Operator of the B737-800SF.
- Eastar Jet has launched an open auction to find a secondary investor after I signed a deal with an unnamed preliminary preferred investor on May 14. Westjet had no comment.
- Emirates is considering swapping its fleet of B777 aircraft for Dreamliners and two planes to be named later.
- Freebird Airlines Europe is letting loose by opening a base in Cologne, Germany (CGN) where it will house a single A320-200 aircraft.
- LATAM Brazil is outsourcing ground agents at most airports in the country as a cost-saving measure via its bankruptcy restructuring.
- Lufthansa’s demand for flights to the USA has increased by 300% says Lufthansa.
- Mokulele Airlines is introducing a 19-seat B-1900D for its weekday roundtrips between Honolulu and both Moloka’I (MKK) and Lanai (LNY) beginning this fall.
- Montenegro Airlines recent windfall of $56 million in state aid was ruled illegal by a Montenegrin court. The airline said it would repay the funds, but they’ve already been spent neon LEDs to trick out the interior of its aircraft.
- Norwegian had its reconstruction plan approved by the High Court of Ireland and the Oslo Byfogdembete. The airline is one approved reconstruction plan away from receiving a free sub sandwich at Oslo-area Subway shops.
- Sun Country announced the beginning of a proposed second public offering of six million shares of its common stock. For more information, ask someone you know who owns a lot of stock.
Why couldn’t the green pepper practice archery? Because it didn’t habanero?