Last week United announced its deal to take a stake in Azul. This follows an earlier move by Delta to take a stake in GOL. What do these deals mean? Let’s start with the following table. Continue reading
With the US airline industry consolidated, we would expect at least a short term discipline as the oligopoly finds its “natural” equilibrium. As we have said before over the long term, there is always going to be a breakdown because of cheating. Look at any oligopoly (i.e. OPEC) and we see that sooner or later the natural equilibrium isn’t enough. Greed sets in and once one player cheats – and cheating is defined not by that player, but by the others – the system breaks down. Continue reading
Skymark is bankrupt and is a case study for an airline’s eyes being too big for its stomach. We were not alone in finding this airline’s order of A380s – especially six of them – to be over the top. Airbus, of course, grabbed the order because they need every one. Plus, breaking into Japan was irresistible to Airbus before it won the JAL campaign.
But here we are, Skymark is in deep trouble. In Toulouse last week we noticed a new Skymark A330 on the stand, seemingly ready for delivery. That’s clearly not going to happen. Intrepid Aviation leased a number of A330s to the airline. Apparently Intrepid Aviation is owed ¥100bn by Skymark which is about one third of its total debt of ¥320bn. But being on the hook for an A330 is a “relative breeze” – as these aircraft sell easily as the market loves them –… Continue reading
There have been many 737 operators, but few with the attachment to the 737 like Southwest Airlines. The following chart shows how attached they have become to each other. The recent bump in growth came with absorbing the 737 fleet from AirTran. Another airline closely associated with the 737 is Ryanair – but its fleet size is about half that of Southwest. Continue reading