Wirraway
1st Dec 2004, 14:44
Thurs "Sydney Morning Herald"
Airline group tips year of losses
By Scott Rochfort
December 2, 2004
The "breakneck" growth in airline passenger traffic across the globe has failed to temper warnings from the International Air Transport Association that the aviation industry is again headed for a year of huge losses.
In another sign that the effects of SARS, the Iraq war and the September 11 terrorist attacks have receded, IATA reported that international passenger numbers in October were up 10.8 per cent on October 2003.
"Despite a negative economic environment and continued uncertainty in the price of oil, international traffic is growing at breakneck speed," IATA director general Giovanni Bisignani said in a statement.
But the IATA, which represents 270 airlines, said it still expected the industry to rack up more than $US4 billion ($5.2 billion) in losses in 2004, thanks to more competition from low-cost airlines and "unpredictable economic factors" such as higher oil prices. Still, the latest forecast is sizeably lower than the $US5 billion loss IATA predicted in October.
There is also little sign the turmoil afflicting airlines overseas, particularly in the US, is bothering Qantas and Virgin Blue.
Goldman Sachs JBWere yesterday raised its earnings forecasts for Qantas for the next three years, tipping the airline to report three consecutive record profits, starting with $681 million net in 2004-05. The broker raised its valuation on Qantas shares from $3.89 to $3.96.
With Qantas being helped by a rising Australian currency, Goldman also noted that Qantas now had 70 per cent of its second-half fuel costs hedged at $US38.25 per barrel of crude. This compares to the current spot price for crude of $US50 a barrel.
After hitting a 14-month high on Tuesday, Qantas shares fell 5c to $3.53. Virgin Blue shares rose 2c to $2.08 as the airline continued to talk down speculation it was about to announce the launch of an airline in Macau.
"There's nothing new from my point of view," said the airline's head of communication, David Huttner. "There are many possibilities in Asia. There's nothing firm at this stage."
But Mr Huttner's repeated comments failed to quell speculation Virgin could start a Macau-based carrier before the end of 2004.
The talk in aviation circles is that Virgin could hold a 15 to 30 per cent stake in the new airline, China National Aviation Corp a majority stake and Stanley Ho's Hong Kong investment group, Shun Tak, the rest.
But excitement about this prospect has been tempered by reports that the new airline would not be able to compete head-to-head on Air Macau's nine routes into China for three years. This would mean it would initially be barred from servicing key routes such as Beijing and Shanghai.
Air Macau, majority owned by CNAC and Shun Tak, has waived its right to operate as the territory's sole home-based carrier.
Talk of a potential Virgin deal was heightened last month after Macau was granted more access to the Chinese aviation market.
The new agreement increased the number of Chinese destinations serviceable from Macau from 31 to 37 and boosted the quota on services by 82 per cent to 539 flights a week.
Air Macau has made no comment on whether it intends to boost services into China.
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Airline group tips year of losses
By Scott Rochfort
December 2, 2004
The "breakneck" growth in airline passenger traffic across the globe has failed to temper warnings from the International Air Transport Association that the aviation industry is again headed for a year of huge losses.
In another sign that the effects of SARS, the Iraq war and the September 11 terrorist attacks have receded, IATA reported that international passenger numbers in October were up 10.8 per cent on October 2003.
"Despite a negative economic environment and continued uncertainty in the price of oil, international traffic is growing at breakneck speed," IATA director general Giovanni Bisignani said in a statement.
But the IATA, which represents 270 airlines, said it still expected the industry to rack up more than $US4 billion ($5.2 billion) in losses in 2004, thanks to more competition from low-cost airlines and "unpredictable economic factors" such as higher oil prices. Still, the latest forecast is sizeably lower than the $US5 billion loss IATA predicted in October.
There is also little sign the turmoil afflicting airlines overseas, particularly in the US, is bothering Qantas and Virgin Blue.
Goldman Sachs JBWere yesterday raised its earnings forecasts for Qantas for the next three years, tipping the airline to report three consecutive record profits, starting with $681 million net in 2004-05. The broker raised its valuation on Qantas shares from $3.89 to $3.96.
With Qantas being helped by a rising Australian currency, Goldman also noted that Qantas now had 70 per cent of its second-half fuel costs hedged at $US38.25 per barrel of crude. This compares to the current spot price for crude of $US50 a barrel.
After hitting a 14-month high on Tuesday, Qantas shares fell 5c to $3.53. Virgin Blue shares rose 2c to $2.08 as the airline continued to talk down speculation it was about to announce the launch of an airline in Macau.
"There's nothing new from my point of view," said the airline's head of communication, David Huttner. "There are many possibilities in Asia. There's nothing firm at this stage."
But Mr Huttner's repeated comments failed to quell speculation Virgin could start a Macau-based carrier before the end of 2004.
The talk in aviation circles is that Virgin could hold a 15 to 30 per cent stake in the new airline, China National Aviation Corp a majority stake and Stanley Ho's Hong Kong investment group, Shun Tak, the rest.
But excitement about this prospect has been tempered by reports that the new airline would not be able to compete head-to-head on Air Macau's nine routes into China for three years. This would mean it would initially be barred from servicing key routes such as Beijing and Shanghai.
Air Macau, majority owned by CNAC and Shun Tak, has waived its right to operate as the territory's sole home-based carrier.
Talk of a potential Virgin deal was heightened last month after Macau was granted more access to the Chinese aviation market.
The new agreement increased the number of Chinese destinations serviceable from Macau from 31 to 37 and boosted the quota on services by 82 per cent to 539 flights a week.
Air Macau has made no comment on whether it intends to boost services into China.
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