Tag: regulatory (Page 3 of 3)

IAG Ups Bet on Latin America with Air Europa Takeover

November 4, 2019 / WIL BALDWIN

* Buys Air Europa for 1 bln euros

* To be funded by external debt

* Shares rise more than 2%

* To be run by Iberia CEO

* Regulators may set requirements -analysts

Nov 4 (Reuters) – IAG, the parent of British Airways and Spain’s Iberia, announced a 1 billion euro ($1.12 billion) takeover of Spain’s Air Europa to boost its presence on routes to Latin America and the Caribbean.

The deal follows a setback in Latin America for IAG after Chile’s Supreme Court ruled against a plan that would have allowed it to bolster cooperation with partners in the oneworld airlines alliance.

**BA parent IAG ups bet on Latin America with Air Europa takeover**
Ryanair Chief Executive Michael O’Leary attends a Reuters Newsmaker event in London

Chile’s LATAM Airlines in September then announced it planned to leave the alliance, opting instead for a tie-up with SkyTeam member Delta Air Lines.

IAG shares initially rose more than 2% following the Air Europa takeover announcement but some analysts said IAG may have to shed routes in order to win regulatory approval.

IAG shares were up 1.2% at 1315 GMT.

Ryanair CEO Michael O’Leary said his company will ask the UK’s market watchdog to force IAG to make divestments as part of its Air Europa takeover, a deal he said would be bad for competition.

“Potential remedies, perhaps in the form of slot release or behavioural restrictions, may be required and these could impact the potential synergies,” an analyst at Liberum wrote in a note.

IAG also owns carriers Iberia Express, Level, Ireland’s Aer Lingus and Vueling.

“We are not convinced that having just another brand platform is the optimal move, and could see it potentially combining with Level, Vueling or potentially Iberia Express after some time,” analysts at Bernstein said.

FILE PHOTO: An Air Europa-branded Boeing 737 MAX aircraft is seen grounded at a storage area in an aerial photo at Boeing Field in Seattle

Air Europa serves 69 destinations, including long-haul routes to the Americas and the Caribbean. It had a fleet of 66 aircraft at the end of 2018.

Air Europa’s Spanish parent company Globalia earlier this year received authorisation from the Brazilian government to explore the possibility of flying domestic routes within Latin America’s largest economy.

It is unclear if that authorisation will remain with Globalia or be transferred to IAG.

Air Europa will initially keep its brand and as it gets integrated into the existing hub at Madrid it will be a standalone operation run by Iberia boss Luis Gallego, IAG said.

It will also withdraw Air Europa from the SkyTeam alliance once the deal is completed. Air Europa has a joint venture with Air France-KLM.

“This is of strategic importance for the Madrid hub, which in recent years has lagged behind other European hubs,” said Gallego, adding that Madrid had the potential to serve as a gateway between Asia and Latin America.

IAG said it expected the Air Europa deal, which will be funded through external debt, to close in the second half of next year and for it to add to its earnings in the first full year after the closure.

($1 = 0.8951 euros) (Reporting by Yadarisa Shabong in Bengaluru; additional reporting by Andres Gonzalez in Madrid and Marcelo Rochabrun in Sao Paulo, editing by Patrick Graham and Jason Neely)

An Air Europa Boeing 737 airplane takes off at the airport in Palma de Mallorca

United, Avianca and Copa’s South American Deal Delayed as They Mull Fourth Partner

October 28, 2019 / WIL BALDWIN

BRASILIA, Oct 28 (Reuters) – A proposed joint venture between United Airlines, Colombia’s Avianca Holdings and Panama’s Copa Holdings has been delayed due to the potential inclusion of a fourth partner, as well as problems at Avianca, the CEOs of two of the companies said.

United Airlines said last week it wants to include Brazil’s Azul SA, in which it already has a stake, in the planned tie-up with Copa and Avianca, the latest play by a U.S. carrier for a region expected to have significant air-travel growth in coming decades.

The three airlines had said in November 2018 they would file for U.S. antitrust approval “in the near term” in order to coordinate routes between South America and the United States, a bold move to expand their market share in the region. At the time, the carriers said they aimed to implement the agreements in 2020.

But almost a year after United, Copa and Avianca announced the preliminary joint venture plan, they have yet to file any paperwork with the U.S. Department of Transportation, seeking antitrust immunity. Now, the regulatory process may begin as late as next year, they said.

Copa Chief Executive Officer Pedro Heilbron said the group expects to file in early 2020, while Avianca CEO Anko van der Werff, said it would file between late 2019 and early 2020. Both spoke to Reuters in separate interviews on Monday on the sidelines of the ALTA Airline Leaders’ Forum in Brasilia.

Both said there was a delay on the original timeline.

United did not comment on a delay but said it planned to complete the application later this year or early next year. Azul had no comment other than saying it was “always looking for opportunities with its partners.”

The potential inclusion of Azul, which may be in the early stages of negotiations, has been one reason for the timetable slipping.

“Quite frankly, really completely open and honest, we haven’t had many discussions,” van der Werff said. “I personally haven’t had even one real, serious discussion at the CEO level about when to include and what to include.”

Both executives said they want Azul to be part of the joint venture – Brazil is by far the largest aviation market in the region – but its inclusion makes negotiations more difficult.

“It almost doubles the level of complexity,” Heilbron said.

Avianca has also gone through corporate turmoil. In May, United Airlines ousted the chairman and controlling shareholder at Avianca, revamping leadership.

“We should have filed with regulators this year but everything got delayed because of what has happened at Avianca,” Heilbron added.

(Reporting by Marcelo Rochabrun in Brasilia Additional reporting by Tracy Rucinski in Chicago Editing by Matthew Lewis and Sandra Maler)

Azul Eyes Partnership with United, Avianca, Copa

October 14, 2019 / WIL BALDWIN

SAO PAULO (Reuters) – Brazil airline Azul SA said on Monday that it is in discussions to join a planned partnership with United Airlines, Avianca Holdings and Copa Holdings for flights between the United States and Latin America.

The three airlines announced their plan to coordinate routes in November 2018, but have yet to receive regulatory approval to go ahead. United owned 8.2% of Azul’s preferred shares last month, according to the Brazilian airline’s website.

(Reporting by Marcelo Rochabrun)

E2-195 plane with Brazil’s No. 3 airline Azul SA logo is seen during a launch event in Sao Jose dos Campos

Embraer Delivers New Jet That Boeing May Soon Sell

September 12, 2019 / WIL BALDWIN

SAO JOSE DOS CAMPOS, Brazil (Reuters) – Embraer <ERJ> hopes to see more orders for its newest passenger plane by the end of the year, an executive said on Thursday, as Boeing <BA> readies to take over the Brazilian planemaker’s commercial jets division in what could mark the next phase of its rivalry with Airbus <EADSY>.

Manufacture of the E195-E2, as Embraer’s plane is known, will soon be controlled by Boeing, which needs regulatory approval to close on the deal to buy 80% of Embraer’s commercial jets division for $4.2 billion.

Embraer on Thursday delivered its first E195-E2 plane, which will seat about 140, to Brazil’s No. 3 airline Azul <AZUL> at its headquarters in Sao Paulo state. Embraer executives said the delivery should spur more orders, helping to fend off fresh competition from Airbus.

“I expect we will close more transactions, I’m hopeful … before the end of the year,” John Slattery, head of Embraer’s commercial plane division, told Reuters. “I’m not seeing a big wave of people that need to delay, or wish to delay because of the Boeing transaction.”

The new plane comes as the landscape for jets with under 150 seats is changing drastically. Airbus bought control of the Bombardier division competing directly with Embraer in 2018, followed by Boeing’s deal to take over Embraer’s commercial plane division.

The result would expand the global duopoly for jumbo jets into a smaller category, as Boeing and Airbus work to lure orders across a broader lineup of commercial aircraft.

Azul was founded by U.S. airline executive David Neeleman, who also founded JetBlue Airways <JBLU>, which was a launch customer and key customer for Embraer’s last generation of jets.

“We can have 18 more seats with this plane, with a travel cost that is 15% less,” Neeleman said of the improvements in the new generation. “If you have something that is 15% cheaper, you just want that thing, you don’t want anything else.”

STIFF COMPETITION

Embraer is banking on the fuel efficiency of this new generation, to the point it has marketed its E195-E2 to customers as the “profit hunter,” painting the jet with livery resembling a shark in the plane’s nose.

But for now, Embraer has struggled to compete directly with Airbus. Carriers and plane lessors had placed 551 orders for the Airbus A220 family as of June, but Embraer had racked up only 168 for its new family of E2 jets, down from 200 in 2014.

Part of Embraer’s struggles stem from its smaller E175-E2 plane, which has been a hard sell to U.S. regional airlines due to labor contract restrictions. Embraer dropped 100 of those planes from its order book after resistance from pilots made it unclear if buyer Skywest <SKYW> would be able to fly them.

“We didn’t design an aircraft just for the U.S. market,” Slattery said, adding that he hopes his company will secure an order from a customer somewhere else in the world this year. Currently they have none, although Slattery said Skywest remains committed, if pilots allow it.

JetBlue also dealt a blow to Embraer last year when it decided to replace its old Embraer fleet with Airbus A220s, a decade after Neeleman left the company.

JetBlue cited the advantages of A220’s longer range, as well as a broader package with Airbus including larger planes — the kind of arrangement that Boeing could offer with Embraer’s jets in its portfolio.

(Reporting my Marcelo Rochabrun in Sao Jose dos Campos, Brazil; Additional reporting by Allison Lampert in Montreal; Editing by Alistair Bell and Marguerita Choy)

Cathay Pacific Shares Fall Nearly 4% After Chairman Resigns

September 4, 2019 / WIL BALDWIN

Slosar attends a news conference in Hong Kong

HONG KONG (Reuters) – Shares in Cathay Pacific Airways Ltd fell nearly 4% in early trade on Thursday following the resignation of its chairman after the market closed on the previous day.

The departure of John Slosar was announced less than three weeks after mounting Chinese regulatory scrutiny led to the shock exit of its chief executive, Rupert Hogg.

Cathay shares had closed 7.2% higher on Wednesday as the Hong Kong market was lifted by reports of the withdrawal of a controversial extradition bill, which was officially announced after the market closed.

Long-serving Swire Pacific Ltd executive Patrick Healy was appointed as Cathay’s new chairman on Wednesday following the resignation of Slosar, who had served in the role since 2014.

“As John would have retired soon anyway it’s not really a huge setback as a business,” an analyst said of Slosar’s departure. “However it’s always awful to see when politics dictate like this.”

The analyst, who was not authorised to speak publicly about personnel changes, said he believed if the political situation in Hong Kong stabilised, the situation at Cathay should as well.

Daiwa Capital Markets analyst Kelvin Lau said the extradition bill’s withdrawal was positive for Cathay, even though protests were not expected to end immediately.

“We expect this to be a turning point where the situation would at least not worsen,” he said in a note to clients, adding that recent personnel changes at the airline should satisfy the requirements of the Chinese regulator and were likely to instill confidence among customers.

China’s aviation regulator last month said crew who engaged in the anti-government protests in Hong Kong posed a threat to safety and should be suspended from staffing flights to the mainland and over its airspace.

(Reporting by Donny Kwok and Jamie Freed, writing by Jamie Freed, editing by Richard Pullin)

BOC Aviation Expects Delivery Delay of up to 30 Jets

July 29, 2019 / WIL BALDWIN

SINGAPORE (Reuters) – Aircraft lessor BOC Aviation Ltd said on Tuesday it expected up to 30 Boeing Co <BA> and Airbus SE <EADSY> jets that had been scheduled to arrive this year could be delayed, primarily due to the Boeing 737 MAX grounding.

BOC said 18 jets that had been due in the first half had been delayed, including 12 A320neo’s due primarily to industrial constraints and 6 737 MAX’s as a result of the grounding.

For the full year, up to 7 A320neo’s and 23 737 MAX’s could be delayed, including three for which an airline customer has the right to acquire upon delivery, Asia’s second-biggest aircraft lessor said in a statement.

BOC said it was working with Boeing on a revised delivery timeframe.

Boeing last week estimated a return to service for the jet would begin early in the fourth quarter, but it did not rule out further reducing or temporarily shutting down production of the plane if that forecast needed to be revised.

U.S. carrier Southwest Airlines Co <LU V> last week removed the 737 MAX from its schedules until Jan. 5, 2020, saying it would need one to two months following regulatory approval to train pilots and prepare the jets for fresh commercial service.

(Reporting by Jamie Freed; Editing by Stephen Coates)

WestJet, Delta Air Lines Obtain Clearance for Joint Venture

June 27, 2019 / WIL BALDWIN

WestJet and Delta Air Lines today announced that their proposed U.S. – Canada transborder joint venture has received clearance under Canada’s Competition Act from the Canadian Competition Bureau. The CCB issued a no-action letter confirming that it does not intend to challenge the proposed joint venture agreement between WestJet and Delta Air Lines.

“Today’s clearance by the CCB is an important step towards satisfying the conditions necessary to implement the proposed WestJet-Delta transborder joint venture,” said Ed Sims, WestJet President and CEO. “We thank the CCB for its timely and thorough review. The joint venture will lead to more consumer choice, connectivity, and economic benefits on both sides of the border by growing U.S.-Canada business and tourism travel.”

Ed Bastian, Delta’s CEO, said, “This significant achievement brings us closer to implementing a joint venture that provides a world-class experience for customers travelling between the U.S. and Canada. The joint venture between Delta and WestJet will create an expanded network with more frequencies and destinations, improved airport connections and significantly enhanced frequent flyer benefits.”

The proposed joint venture between the two airlines is still subject to regulatory approval from the U.S. Department of Transportation.

Upon receipt of all regulatory clearances or approvals in the U.S., the new joint venture will enable Delta and WestJet to deepen their existing partnership with expanded codesharing, reciprocal elite frequent flyer benefits, optimized growth across the U.S.-Canada transborder networks, and co-location at key hubs with initiatives designed to deliver a more seamless guest experience. The partners will also begin implementing joint sales and marketing activities and increase belly cargo cooperation.

Further information about WestJet and Delta Air Lines is available at westjet.com and delta.com.

Delta Equity Investment Deepens Ties With Partner Korean Air

June 20, 2019 / WIL BALDWIN

Korean Air joint venture provides a strong platform for Delta growth, world-class customer benefits and revenue generation across one of the most comprehensive route networks in the trans-Pacific.
Delta has acquired a 4.3 percent equity stake in Hanjin-KAL.

Delta has acquired a 4.3 percent equity stake in Hanjin-KAL, the largest shareholder of Korean Air. The investment demonstrates Delta’s commitment to the success of its joint venture with Korean Air and the customer benefits, market positioning and growth opportunities the partnership enables. Delta intends to increase its equity stake to 10 percent over time, after receiving regulatory approval.

“Together with the team at Korean Air, we have a vision to deliver the world’s leading trans-Pacific joint venture for our shared customers, offering the strongest network, the best service and the finest experience connecting the U.S. with Asia,” said Delta CEO Ed Bastian. “This is already one of our fastest-integrating and most successful partnerships, and experience tells us this investment will further strengthen our relationship as we continue to build on the value of the joint venture.”

Delta and Korean Air operate the industry’s most robust trans-Pacific joint venture, providing customers with seamless access to more than 290 destinations in the U.S. and over 80 destinations in Asia, including the partnership’s award-winning hub at Seoul-Incheon (ICN).

Since launching in May 2018, Delta and Korean Air have strengthened cooperation by expanding joint operations in the trans-Pacific to include more than 1,400 codeshare flights, including connections throughout Asia and the U.S. Teams at both airlines have also worked closely together to provide the best travel experience for customers between the U.S. and Asia, integrate sales and marketing activities, and enhance loyalty program benefits, such as the ability to earn more miles on both loyalty programs and redeem them on a wider range of flights. Additionally, Korean Air and Delta have launched cargo cooperation across one of the most comprehensive route networks in the trans-Pacific market.

The partnership is contributing to Delta’s first year-over-year growth in the Asia Pacific region since 2012, with new service launched earlier this year between Minneapolis/St. Paul and Seoul, as well as Seattle and Osaka, operated in partnership with Korean Air. Additionally, Korean Air has launched new service linking Boston with Seoul.

The joint venture builds on nearly two decades of close partnership between Korean Air and Delta, both founding members of the SkyTeam airline alliance.

Delta is growing its international footprint and leveraging partnerships with key airlines in regions around the world, including through joint ventures and equity investments. These investments improve alignment between Delta and its partners, creating a more stable environment for growth amid an increasingly dynamic global landscape.

Embraer and Boeing Welcome Brazilian Government Approval

January 11, 2019 / WIL BALDWIN

São Paulo and Chicago, January, 10, 2019 – Embraer [B3: EMBR3, NYSE: ERJ] and Boeing [NYSE: BA] have welcomed approval by Government of Brazil of the strategic partnership that will position both companies to accelerate growth in global aerospace markets.

The government’s approval comes after the two companies last month approved terms for the joint venture that will be made up of the commercial aircraft and services operations of Embraer. Boeing will hold an 80 percent ownership stake in the new company and Embraer will hold the remaining 20 percent.

The companies have also agreed to the terms of another joint venture to promote and develop new markets for the multi-mission medium airlift KC-390. Under the terms of this proposed partnership, Embraer will own a 51 percent stake in the joint venture, with Boeing owning the remaining 49 percent.

Once Embraer’s Board of Directors ratifies its prior approval, the two companies will then execute definitive transaction documents. The closing of the transaction will be subject to shareholder and regulatory approvals and customary closing conditions. Assuming the approvals are received in a timely manner, the transaction is intended to close by the end of 2019.

Forward-Looking Information Is Subject to Risk and Uncertainty Certain statements in this release may be “forward-looking” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the proposed terms of the transaction, the ability of the parties to satisfy the conditions to executing or closing the transaction and the timing thereof, and the benefits and synergies of the proposed transaction, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on current assumptions about future events that may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties and changes in circumstances that are difficult to predict. Many factors could cause actual results to differ materially from these forward-looking statements. As a result, these statements speak only as of the date they are made and neither party undertakes an obligation to update or revise any forward-looking statement, except as required by law. Specific factors that could cause actual results to differ materially from these forward-looking statements include the effect of global economic conditions, the ability of the parties to reach final agreement on a transaction, consummate such a transaction and realize anticipated synergies, and other important factors disclosed previously and from time to time in the filings of The Boeing Company and/or Embraer with the Securities and Exchange Commission.

Story and image from http://embraer.com

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