NEWS WESTJET UPDATE – CON’T SHARES AGREEMENT WITH UNDERWRITERS WestJet and a syndicate of underwriters led by CIBC entered into a shares agreement on 9 September 2009. The agreement states that the underwriters must purchase from WestJet and sell to the public an aggregate of 13,390,000 common and voting variable shares at a price of $11.20 per share. Gross proceeds from the sale of the shares are expected to raise $150 million. There is also an over-allotment option of 2,008,500 shares which could raise an additional $22.5 million for the airline.
U.S. AIRLINES
SOUTHWEST OFFERS LINE CUTTING OPTION
As of 2 September 2009, travellers flying with Southwest can jump to the front of the boarding line by paying a $10 fee.
FRONTIER TO EXITS CHAPTER 11
Frontier exited Chapter 11 bankruptcy protection on 2 October 2009 as a wholly owned unit of Republic Airways Holdings Inc. Citing reorganization costs of US$10.5 million; the airline won court approval of its bankruptcy plan on 10 September 2009.
UNITED AND ASIANA DISCUSS CODESHARE POTENTIAL
U.S DOT APPROVES GRENADA SERVICE
On 8 September 2009, the U.S. Department of Transportation approved Delta’s application to offer service between the U.S. and Grenada. The approval takes effect on 12 December 2009.
DELTA EXPECTS A 3%-4% OPERTING MARGIN IN 3rd QUARTER In an investor report issued on 14 September 2009, Delta stated that it expects to report a 3 -4% operating margin for the 3rd quarter, and a breakeven for the full year. This is due to lower jet fuel prices than previously anticipated. In July 2009, Delta had projected a 1 – 3 % operating margin for the 3rd quarter, based on a jet fuel price of $2.17/gallon. Current jet fuel prices are now expected to be $2.14/gallon, with Delta projecting the final fuel cost to average out at $2.13/gallon for 2009.
DELTA’S CODE SHARING STATUS On 1 September 2009, the U.S. DOT approved code sharing for Delta and Virgin Blue. However, The U.S. DOT will not approve code Page 8 September 2009
sharing between Delta and Virgin Blue’s V Australia or Pacific Blue until Delta completes safety audits with those carriers.
On 31 August 2009, United and Asiana announced their interest to codeshare on routes between South Korea and the U.S.
AIRTRAN TO EXPAND INTO THE CARIBBEAN MARKET AirTran is awaiting approval from the U.S. DOT to operate flights out of Orlando International Airport to Nassau, Montego Bay and Aruba. The carrier is hoping to begin service at the end of 2009 or early 2010.
INTERNATIONAL AIRLINES JAPAN AIRLINES SEEKS TO STABILIZE ¥ 99 BILLION LOSS
Between April-June 2009, Japan Airlines lost ¥ 99 billion (US$1 billion), and is currently considering capital investments from Air France-KLM, American Airlines, travel agencies, trading groups, business partners and financial investors to stabilize its financial losses.
InterVISTAS’ Canadian Aviation Intelligence Report Copyright ©2009 InterVISTAS Consulting Inc., all rights reserved.