What will happen in 2008?

[EI-BUD]

Hello all,
With so much talk of airline merger and MOLs prediction of there only being a few mega carriers in the European Market within the next few years, What does anyone think the biggest moves will be particularly in the UK/Ireland Market in 2008?

We know already of some changes and it will def be an big year, eg T5 opening. SAS selling there share in BMi? Loganair is leaving BA franchise arrangement. BA Buying same? Euromanx?

Whats your top3 predictions? would be an interesting theme to reflect upon this time next year. WHo would have forseen that EZY would have acquired GB? I certainly didnt. However , I did think that there would be some consolidation this year within the LoCos. I thought we would see some changes in Eg Bmibaby, FLyglobespan, Jet2?

In addition, does anyone forsee any major acquisitons by EZY/FR. Surely if MOL says that FR will be one of only 4 mega carriers in Europe surely he must have some acquistion aspirations?

Regards
EI-BUD

[840]

1. EI to acquire a substantial stake in RE to provide capital for fleet expansion (including Jets) with a view to RE taking on a number of EI's UK destinations with a higher frequency than at present.

2. A Central European LoCo to go to the wall.

3. A worldwide economic slowdown to push a Western European flag carrier into a merger or out of business.

[aeulad]

Lufty to buy bmi and give us all jobs flying 340s from Heathrow to the likes of Hong Kong and LA!:D

Regards

Mike

[Snappybits]

another bunch of us wont have a job to go to:{:ugh:

[Confirmed Must Ride]

If the fuel prices keep the way they are and the US economy goes into recession as predicted, then I can see major consolidation with the US Legacy carriers.

Could even be testing times ahead for Jetblue etc

[dumdumbrain]

FR will buy Skyeurope

[eu01]

2. A Central European LoCo to go to the wall.
FR will buy Skyeurope
I do not know if FR were interested in acquiring Sky, but yes, SkyEurope is one of the weakests among the Central Europe's LCC's at present. Also Centralwings has its own problems, but Wizzair doesn't seem to be in troubles (although it's hard to get any financial data about them, they aren't obliged to make it public). Concerning FR... they'd be certainly delighted to see some more space for themselves - it doesn't necessarily mean acquiring anything, though.

[dumdumbrain]

The problem FR dont have the a/c to expand at the rate it wants, EMA was meant to get 2new a/c this winter but it didnt because of new bases. And easyJet now have more a/c :eek:, we neede to buy someone really to catch up, unless boeing speed up production

[airhumberside]

Why would FR buy SkyEurope when they could start a load of routes from new bases in Bratislava, Vienna and Prague and force them out of business? Surely a lot easier

[colegate]

While it is impossible to predict exactly who will merge with who, I think it is inevitable that there will be further consolidation. I was certain that GB would be merged with someone. But I got the wrong partner. I think in the end it was a matter of who would pay the highest price for Gatwick slots. Just look at what BA have done since then to confront the threat. Mainline is going to operate routes that were previously operated by GB. To use the LGW slots effectively EZY is going to have to do some rapid replanning. It all makes for a very dynamic environment.

In that environment you have to look at the strengths of the dominant players. There are only 2. RYR and EZY. They will have to acquire to go on growing. The best targets for them are companies who have no economics of scale but have regional specialisation. Jet 2, Globespan, Wizzair are obvious targets. I give these companies no more than 18 months of independent life.

I am sure that 2008 is going to be a year of huge change.

Akerosid please put in your own views.

[dumdumbrain]

Airhumberside, you can not start new routes and open new bases without a/c and Ryanair can not change how soon it gets them nice new a/c from boeing any sooner. So thats why it needs to buy another airline to play catch up, also is skyeurope does go tits up, it will be a nice cheap airline to buy as an on going concern from its creditors. Plus is will open up new routes into east european markets which Ryanair so far have not really tapped into.

p.s. i agree with you colegate, its time for change, and those with the huge cash funds will ride it out and become even stronger after it. However im totally sure about Jet2, yes the dart group does have a few issues, but how would the airline be intergrated into the likes of easyJet and Ryanair, brake the company into bits, cargo. . . ? I dont see Ryanair playing postman for Royal Mail or anyone come to that, only cargo it every carries is its own (base-base)

Lee

[Sean Dillon]

BMI Baby and BMI Regional to be "soaked" up by someone (FlyBe?)...???

Loganair - Scott Grier to sell completley (FlyBe, Eastern?) as he is over 60 now, I suspect waiting for his knighthood for services to Scottish aviation! Or to become another franchise partner (FlyBe, Eastern?)...???

No real sign of the likes of Jet2 or Globespan folding at all, they will continue to change routes, add new aircraft (B763?) dramatically as forced by the market conditions but will never become a major player. The changes will keep them a "bottom of the list" employer for pilots as they "play at it".

Summer 2008 will now see only 2 major charter carriers in the UK - Thomas Cook and whatever the branding is between Thomson and First Choice. I would not expect that much change in 2008 but expect severe shrinkage in 2009 with fleet evaluation and Peter Long trying to regain 5% profit margins - Thomsonfly LoCo days have to be numbered, first arrival of european 787 etc etc...but thats for this time next year!!!!!

Monarch/Astraeus/Excel will just continue doing what they do very well, with B787's coming at Monarch, B763 for Astraeus and A330's for Excel...kinda makes you think the charter market future is long haul only!!!!!!!

Late 2008 - easyJet to become UK's national carrier!!!!!;)

[DONTTELLTHEPAX]

FR will take over EI.
STN will see more longhaul expansion, Asia and USA.
A new longhaul low cost Airline will be set up in the UK/south.

[befree]

FR are not short of planes in the winter, they are short of hedged fuel. They hedged (i.e. bought in advance) 90% of what they needed at the equilalent to $65/barrel crude oil price. That allows them to run 90% of what they planned profitably. The last 10% costs around 50% more.

FR are very actively selling planes at a simular price it paid for them 6 years ago. They make a better return on selling planes than usining them at EMA this winter.

I see very few airlines going under in early 2008 but far more reductions in flying programmes outside the summer peaks. It is the winter 2008/9 when they will be having real problems.

Silverjet will run out of money next Spetember and be sold off cheap.

The crude oil price will hit $130/barrel next August in my view.

[airhumberside]

Airhumberside, you can not start new routes and open new bases without a/c and Ryanair can not change how soon it gets them nice new a/c from boeing any sooner. So thats why it needs to buy another airline to play catch up, also is skyeurope does go tits up, it will be a nice cheap airline to buy as an on going concern from its creditors. Plus is will open up new routes into east european markets which Ryanair so far have not really tapped into.
FR receive a number of new aircraft each season. If they focus expansion for that season on attacking SkyEurope (says 2 aircraft at Prague, 3 aircraft at Vienna and 2 at Bratislava) then they could considerably damage SkyEurope while not having an aircraft issue. Plus they can avoid integration issues. And this is exactly the sort of move I could see MOL doing, however bad it would be for the staff

B763 for Astraeus
Not seen this posted anywhere before. Is it for charters or scheduled? LGW based I presume?

[colegate]

dumdumbrain, The thing about Jet 2 is that is an almost impossible combination of bits of opportunity. If RYR or EZY wanted to buy it it would be for their LBA operation. LBA is the second largest conurbation in Britain. Jet 2 have a monoploy there. All monopolies attract predators. LBA covers a huge market and either RYR or EZY must move in there in order to maintain their growth. They would not care about the minor bits of the company. Post Office operations would be off loaded to other operators.

This take over at LBA is something waiting to happen. The only issue is what price Phillip Meeson is prepared to accept.

Let this thread keep on rolling.

[akerosid]

Thanks Colegate ...

I'm not at all optimistic about 2008; I hope I am wrong ...

I think we'll see a significant slowdown … economically, which will inevitably affect aviation; this will mainly be in the EU and US. Growth will continue in major Asian economies, led by India and China; travel/trade to these will grow; t/a traffic will level or fall off, notwithstanding Open Skies - (from an Irish perspective, another major danger for EI.) Airlines, like AY, LH, KL/AF, with good Asian links, will do well; those without, not so good - again, in Irish context, EI suffers here. EK will continue to grow, as will QR/EY, despite pressure from EU airlines like LH, to spike this. Unlikely to have much effect.

From an Irish perspective, particularly worried about EI. Don't see FR taking over, nor being allowed to. FR will be a big winner and will be in a position to "turn the screws" on what they perceive to be weaker carriers … among them EI, Sky Europe, Vueling.

US market will be particularly interesting to watch; one merger will lead to another. If I had to choose two names to disappear, it would be NW and US, into DL and possibly UA? Don't see UA/DL being particularly well matched. Noticed today, however, that UA's CEO, Tilton, has again gone on record about desirability of mergers, so something stirring.

Problem with upcoming slowdown is that oil price has a lot to do with it; as long as oil remains at or above $100 - and I see that being the case for the foreseeable future - then this could be a long recession, even depression.

Political issues: expect the US, even with new administration, to fight tooth and nail over inclusion of aviation in emissions trading. That could get very bitter; could also affect next round of EU/US bilateral talks.

Nastier still, M/E situation … effect of any action against Iran, which would close Straits of Hormuz … $100 a barrel may yet look like a bargain. Would see this is being more likely next year (although certainly - and hopefully - not inevitable), particularly as Iran moves towards nuclear weapons; Israel will want to act, but held back by cooler heads in US; Cheney and "hawks" will want them to go ahead. Don't hold out much hope for ME peace, since Hamaz/Hezbollah not involved; Iran will "activate" them if attacked by Israel, possibly drawing Syria in as well.

On positive side; slowdown will - if advantage taken of it by airports - allow infrastructure to catch up and be ready for next upturn.

[LGS6753]

Just look back in 12 months and check whether these 2008 predictions are realized:
Terminal 5 will open at Heathrow
EasyJet will acquire GB Airways and continue with most of its routes from Gatwick
EasyJet and Ryanair will continue to take delivery of A319s and B738s respectively
PPRuNe posters will still be hoping for new services between Carlisle and Norwich, Newquay and Exeter, and other selected routes.
Ryanair's CEO will continue to make a noise
MyTravel will merge with Thomas Cook and First Choice will merge with Thomsonfly
More questionable predictions:
Sky Europe and Euromanx will fail
Oil will remain at over $100/bbl
FlyBe will either buy another airline or be bought
No progress will be made on any UK airport "masterplans" except those owned by BAA
Coventry will handle fewer passengers than in 2007.
By December 2008, there will be at least 3 Pakistani airlines serving UK airports
We'll all be a year older...

[KeyPilot]

A very interesting thread, well done EI-BUD for getting the creative energies flowing!

The trouble is that it's very hard to predict what's going to happen in a definite time period. Most of the key themes mentioned already (FR acquire EI, CEE loco goes to the wall, retrenchment of UK charter industry, number of large EU airlines contracts to a mere handful, ...) most sensible and informed people would agree are likely in the long term. But the problem always is (i) how long will any given step take and (ii) where not specified, who will be victim/villain? Couple that with the power of external events to change the course of the industry. But we do live in interesting times, a general economic slowdown will bring many of the systemic issues facing the industry into sharp focus!

I will give it some thought and make my best guess predictions when I have some more time!

[FS01]

FlyBe to aquire (or attempt to) one of either BMI Regional, RE or WOW.
EuroManx to aquire two Dornier 328 and operate a slimmed down business
Flight Support to continue expanding around the UK
BA to 'suspend' MORE routes and BE to fill the gap
Eastern to lose a lot of business to FlyBe

[Whitehatter]

Here's one. FlyBE will take over Loganair and run it as FlyBE Scotland, plus BE will take over BA's Cityflyer operation as they already own some of the aircraft.

Biggest question is what will happen with the SQ holding in Virgin, and will teh Bearded One manage to buy it back? Can he afford it with his other shenanigans?

[EI-BUD]

Thanks for the compliment, I thought yesterday That i would get a lot of responses saying it was negative and no substance!! He he .

So much interesting info coming back. What do you all say to the following statements?

1. Flybe-if they have IPO will MOL buy stock? to make life hard?
2. Aer Arann- Will Flybe take over, 195s not a good idea-Padraid stick to Props and niche market stay out of Ryanairs way?
3. BMI Baby-too much competition, no fleet strategy. Bmibaby and Jet 2 will be snapped up by EZY/FR.
4.FLyglobespan- they will fold, did anyone see the bit on WHistleblowers on TV tonight?
5.Euromanx -Will disappear.
6.Aer Lingus will continue in existing ownership, will struggle to show good reasonable profits. will launch extra new base next year in BHX?

One common theme seems to be Flybe will BA back BE to buy up all the regional airlines around the place? Bmi Regional, Eastern, Aer Arann.

ALot of people would suggest that BE is the obviuos buyer for Aer Arann. What do you all think?

[840]

What chance Jet2 and BMI Baby getting together to form a sizeable third LoCo?

[fredtheanorak]

house prices tumble in uk and credit crunch means less trips to the sun:{

Jet 2 get bought by EZY after profits collapse.

Eastern retrench early and stick with there model

Loganair looks for buyer without success - MBO struggles

BE doesnt buy Eastern or Loganair

WOW sells out to BE

BACF grows at LCY

VLM gets bought by European carrier

Euromanx aren't around BE takes their routes

VLM fills Euromanx gap LCY IOM

BE closes lots of French routes next summer and consolidates in UK insted

FR have big fall out with BHD

Aer Lingus do well out of BFS

BMI & Baby are reorganised

Oil breaks $100bbl then collapses to $70 by autumn

Gordon Brown is no longer PM>:D

Heathrow is still the worst airport in the world for pax.:{

[KeyPilot]

EI-BUD - you're welcome!

To answer your predictions:

1. Don't know, is this a big issue?
2. Aer Arann have been living on borrowed time for years - I remember sitting in Thornton's in 2002 as some well-known figures in Irish aviation plotted their respose to its imminent demise - I was on the next table, they couldn't have known I was in the industry but just goes to show about loose lips and all that. Will they get wiped out in 2008 - dunno - but I would probably bet not
3. I predict 1 out of these 2 things will jhappen in 2008, the other in 2009 - I bet Jet2 to go first!
4. Fully agreed!
5. Again, this will happen - but in 2008? I'd say 50/50
6. Agreed, except bit about new base. I think BFS will be a bit of a headache, which may limit their expansionist ambitions

Overall an intereting and sensible set of predictions! Now if you could get a 6-horse accumulator, what odds would you get and how much would you put on?

[akerosid]

Good first post, bmibabyCSA and welcome on board!

Are you hearing rumours about this? I certainly think that a move to A319s should be considered (I thought WW was actively considering this), but it's a decent low cost brand as it is; moving to 319s would certainly improve punctuality and reliability, but (in my experience) that's about all they need to change.

[FlyboyUK]

Akeroskid

Whilst I agree a fleet replacement is needed, Baby is still no 2 in the lo-co airline punctuality tables http://www.flightontime.info/loco/loco.html

[eu01]

By the way; SkyEurope has improved its results! The carrier just announced the preliminary results for Q4 of the 2007 fiscal year, showing the fourth quarter operating profit of EUR 14.325 mln, from a loss of EUR 6.580 mln in Q4 2006.
"Full-year financial target guidancewill be achieved with a record Q4 EBIT profit of more than EUR 14.3 mln." - CEO Christian Mandl told a conference for investors today.
• Revenue increasing by 22.1% during Q4, passengers flown reaching 1.1 million up from 991,000 despite less average aircraft in the quarter, the revenue per available seat kilometre improves 15.7% in Q4 2007 and 11.5% on a YTD basis.
• Aircraft utilisation increases by 9.1% during the quarter to 12:25 hours (up from 11:23 hours in Q4 2006) with continued focus put on high asset utilisation.
• Steven Greenway (ex Virgin Blue) will be appointed as SkyEurope’s Chief Commercial Officer effective 1 December 2007.

New strategy pays off?

[Haven't a clue]

UK airline goes bust. Public reaction to their loss of cash for flights not flown (it's our money, not theirs) forces government review of monies paid in advance for services yet to be delivered. Legislation brought forward requiring such cash to be segregated from business cash until service (= flight) actually delivered. BA and other airlines huge cash balances disappear from their balance sheets. Financial mayhem! Serve the b*gg*rs right!:}

[Going loco]

Jet2 is owned by the Dart Group and about half the business is held privately by PM. Same business also runs a haulage company. Getting hold of Jet2 not going to be straight forward. bmi baby too has all the SMB issues.

[bmibaby.com]

bmibaby is not going to be rolled into bmi. The management team have not spent the last five years establishing the brand, getting our own AOC and slowly bringing more operations in house at Tiny Town - only for it all to be dissolved. Also, you have the issue of all baby crews being checked out on the 737, it would bring massive conversion costs to change this. Finally, is the bmi product really what EMA and BHX needs today?

[Paradism]

For those unaware, in the UK on 16 July 2008 EU OPS becomes effective. Anyone with any doubt about what this means should read CAA FODCOM 3/2007. There are serious implications for airlines who are not prepared, so this is just a gentle reminder.

[jongeman]

LBA is the second largest conurbation in Britain.
It's the fourth, after London, Birmingham and Manchester.:ok:

[finding_nema]

I too can't see bmi wanting to re-integrate bmibaby into the mainline or regional operations. The airline has spent years and a small fortune on entering the low-cost market, and considering that bmi is soon up for sale, the purchaser (most likely LH) is only going to be interested in LHR and the high-yielding regional business, not an airline who will shortly need an expensive fleet renewal and who operates predominantly low yielding routes from airports with big LCC competition. Also, bmibaby don't have a base at BFS, it's more of a focus city with flights from all bases. WW will probably be around for a while yet as a middle of the ground LCC, or will be sold off to fund longhaul and the new BMEDistan routes.

[Sean Dillon]

Can't really see any sense in easyjet buying Jet2, a B737/B757 operator! easyJet can hold there own in the competition stake, and the aircraft and crews wouldn't make sense, unlike buying GB!

A B737 operator such as FR on the other hand....

[dumdumbrain]

Ryanair and Jet2, not going to happen. Might be a 737 but the Ryanair crew are only trained for the 800, also the age of the a/c does not help. Also Jet2 does cargo, and Ryanair will not carry cargo, only its own from base to base, either company mail or a/c parts for its own needs.

Now someone like Skyeurope might be a better choice.

Lee

[Buster the Bear]

Whilst oil is $2 a barrel and the £1 buys $2, airlines might survive? Should any of the previous change for the worse, then consolidation will occur, or rather airlines will go bust as folk in the UK are strapped for cash whilst interest rates bite deep. Those that hedged early and deep will suffer least.

Both easyJet and Ryanair are spreading their exposure to this right across Europe with continental bases.

[eu01]

We all keep talking about some budget airlines that could go bust next year. However, we should mention also at least one "high-cost" airline that can spark some turbulence in Europe in some months or so. Namely, Alitalia. It still has some chances to be sold. But if it does not succeed, will the Italian government have a power needed to prop the carrier up once again? And the possible bankruptcy would have vast effects on the entire mrket, don't you think?

[840]

Alitalia was sort of who I was thinking of in my third point. Although, Olympic would be another candidate and you have a few more like SN Brussels or TAP that would make you wonder.

Agreed that Alitalia would have the biggest impact. I don't even know what would happen with SN Brussels. With Ryanair in Charleroi, Eurostar competing to London and Schiphol and CDG soon to be little over an hour away on high speed rail lines, I'm not sure how much take up there would be for flights out of Brussels if anything happened to them.

[tornadoken]

Most posts are too LCC/UK/EI-centric. If EU stops Italy giving AZ another "last" subsidy (and AZ's lucky suitor is about to be announced - where LH seems to be competing with its (Air One) self), so that Europe's residual parastatals face up to the end of Protection: then we are ready for the marketing alliances to move towards operations integration. From just painting up (?10%) of the joint fleet as Star Alliance, we will move towards the 1989 notion of Royal Ameripore Airlines (L.Gialloreto, Strategic Airline Management). It is plain daft for purchasing to continue to be fragmented: $100 fuel is still just, what, 25% of all procurement? Daft for long haul capacity to sit idle at, say LHR all day. If it takes a strike to change crew scope, then one patsy will take it for the team, so that, say BA can take a 5hr. LHR rotation on a lull OneWorld 747, for QF then to take it home. "Intelligent Misuse" of all ware, hard and warm, to improve utilisation.
.
If the incumbent BA and AA seniors, LH and UA, AF and DL, can stay in post after Open Skies and Chapter 11 emergences settle down - say, this time next year, then...they now know, and presumably may soon love, each other. I am stunned that (for example) KL and AF have not yet publicly got into a hissy fit - arrogance, leadership issues (imagine adding AZ!). The moment one of the Alliances decides to become one airline, then that gorilla will change the entire air transport game.

[groundhand]

Now let me see.....

2008 will see an economic downturn which will lead to a fall off in passenger numbers; both in business and leisure markets.

This will lead to;

BA struggle with new T5 operation and unforseen operating costs.

EZY become LGW premier carrier and take prime residency in North terminal, BA, operating far fewer flights, re-locate to South.

Iberia goes to the wall.

Alitalia survive as Italian government will not let it fold.

FR has major fall out with Boeing and places the largest Airbus order ever.


From earlier post;
EU legislate against advance full purchase of tickets forcing airlines re-think their reservation models for 2009.

Roll on 2008 and lets see what actually happens...
GH

[colegate]

akerosid, I have just seen your post of 28 Nov. I have been having further thoughts and have been looking at evidence. In the next two weeks we will see published plans for S08. Things are changing very fast. I think a major failure is imminent in Europe. In America I think Delta´s international expansion plans based on very old airplanes are unsustainable. No new aircraft orders from AA. UA DL spell disaster. You cannot compete if you have high costs. These dinosaur companies are about to implode. That is my thoughts anyway.

[Just a spotter]

FR sells their EI stake, share price plummets, EI bought out 100% by "European Major" or Mid-East fund (Irish government sells stake to help plug big hole in finances following collapse of Irish construction sector).

JAS

[mutualswap]

more b*llox to be posted on this website:E:mad::uhoh::{

[4567]

Do you think Loganair will go it alone or be bought by BMI or FLYBE ?

According to this article Fyglobespan are doing very well with there sales of flights for summer 2008 ! http://edinburghnews.scotsman.com/edinburgh/Sales-take-off-for-travellers.3629550.jp

Plus they have 3 boeing 767's off on lease making money for them surely this isn't there year for failing !