AIRLINE NEWS
Friday, June 20, 2008
British Airways Subsidiary Begins Paris-U.S. Flights
British Airways Plc began flights from France to the U.S. with a new airline division, taking advantage of an international treaty to add services across the north Atlantic, the world's most profitable aviation market.
The first plane operated by the U.K. carrier's OpenSkies subsidiary took off at 10:49 a.m. in Paris and is due to arrive at New York's John F. Kennedy airport at 1:25 p.m. eastern time.
British Airways is adding flights even as a slowing economy and surging oil prices cause the collapse of other carriers. Chief Executive Officer Willie Walsh said yesterday that the new airline's costs will be kept low through joint purchasing with its London based parent, Europe's third-largest airline.
"While the economic climate has worsened in recent months, we believe that OpenSkies can compete effectively," Walsh said in a statement. "It has a low cost base and support from British Airways in key areas such as sales and marketing. This differentiates it from some new airlines that have failed recently which were operating in isolation."
British Airways rose 0.25 pence, or 0.1 percent, to 226 pence, paring the stock's declines this year to 27 percent and valuing the company at 2.61 billion pounds ($5.15 billion).
Business Focus
OpenSkies will initially operate from Paris Orly airport using a single Boeing Co. 757s carrying as many as 82 passengers. The aircraft have 24 business-class berths that convert to beds, with 28 seats in premium economy and only 30 in economy. Upscale seating accounts for about half of British Airways' revenue.
OpenSkies is the only airline created specifically to take advantage of the U.S-European Union treaty of the same name, which allows carriers to fly between the U.S. and any of the bloc's nations instead of just their home countries.
At least 24 carriers have failed or entered bankruptcy this year, according to the International Air Transport Association, among them business-only carriers Silverjet Plc and Eos Airlines. The industry may report annual losses of $6.1 billion, the worst since 2003, hurt by slowing economies and a 50 percent jump in oil prices in six months, the trade body estimates.
"The timing's unfortunate but BA probably have one of the better brands in the U.S.," said Stephen Furlong, an analyst at Davy Stockbrokers in Dublin who has the U.K. airline on his focus list. "But ultimately they'll still have to generate a return."
Dale Moss, managing director of the new airline, said in a statement today that it aims to provide value, service and comfort that will "delight" customers.
Expansion Plans
OpenSkies plans to have six planes by the end of 2009, all from its parent's 757 fleet, and is considering flying to the U.S. from Amsterdam, Brussels, Frankfurt and Milan. British Airways has spent 17 million pounds on the unit, it disclosed in accounts for the year ended March 31. The new carrier got takeoff slots at Orly through an agreement with L'Avion, which also operates from the Parisian airport to New York and is the only remaining independent business-class carrier across the Atlantic.
Establishing a subsidiary in Paris is also a response to competition at British Airways' London Heathrow hub after the introduction of the Open Skies treaty in March ended a lock that it and three other carriers had on U.S-Heathrow services.
American carriers Delta Air Lines Inc., Continental Airlines Inc. and Northwest Airlines Inc. have begun Heathrow flights. The influx means capacity between the U.S. and Europe's busiest airport is up 21 percent this summer compared with a year earlier, according to London-based consultant Aviation Economics.
Defensive Move
"OpenSkies is a defensive move by British Airways," said Davy's Furlong. "It seems to be a case of "you came into my market, so I'll come into yours.""
British Airways is Heathrow's biggest carrier, with 41 percent of slots at an airport that's already operating at 99 percent of government-permitted flight capacity.
Air France-KLM Group, Europe's biggest airline, has begun flights from Heathrow to Los Angeles under the new treaty as part of a revenue-sharing partnership with Delta. Deutsche Lufthansa AG, the region's No. 2, bought a stake in JetBlue Airways Corp. in January, giving an additional partner to help steer U.S. customers to its trans-Atlantic flights. The German carrier also says it may exercise an option to buy BMI, the second biggest holder of slots at Heathrow, by the middle of next year.
Source: bloomberg.com
The first plane operated by the U.K. carrier's OpenSkies subsidiary took off at 10:49 a.m. in Paris and is due to arrive at New York's John F. Kennedy airport at 1:25 p.m. eastern time.
British Airways is adding flights even as a slowing economy and surging oil prices cause the collapse of other carriers. Chief Executive Officer Willie Walsh said yesterday that the new airline's costs will be kept low through joint purchasing with its London based parent, Europe's third-largest airline.
"While the economic climate has worsened in recent months, we believe that OpenSkies can compete effectively," Walsh said in a statement. "It has a low cost base and support from British Airways in key areas such as sales and marketing. This differentiates it from some new airlines that have failed recently which were operating in isolation."
British Airways rose 0.25 pence, or 0.1 percent, to 226 pence, paring the stock's declines this year to 27 percent and valuing the company at 2.61 billion pounds ($5.15 billion).
Business Focus
OpenSkies will initially operate from Paris Orly airport using a single Boeing Co. 757s carrying as many as 82 passengers. The aircraft have 24 business-class berths that convert to beds, with 28 seats in premium economy and only 30 in economy. Upscale seating accounts for about half of British Airways' revenue.
OpenSkies is the only airline created specifically to take advantage of the U.S-European Union treaty of the same name, which allows carriers to fly between the U.S. and any of the bloc's nations instead of just their home countries.
At least 24 carriers have failed or entered bankruptcy this year, according to the International Air Transport Association, among them business-only carriers Silverjet Plc and Eos Airlines. The industry may report annual losses of $6.1 billion, the worst since 2003, hurt by slowing economies and a 50 percent jump in oil prices in six months, the trade body estimates.
"The timing's unfortunate but BA probably have one of the better brands in the U.S.," said Stephen Furlong, an analyst at Davy Stockbrokers in Dublin who has the U.K. airline on his focus list. "But ultimately they'll still have to generate a return."
Dale Moss, managing director of the new airline, said in a statement today that it aims to provide value, service and comfort that will "delight" customers.
Expansion Plans
OpenSkies plans to have six planes by the end of 2009, all from its parent's 757 fleet, and is considering flying to the U.S. from Amsterdam, Brussels, Frankfurt and Milan. British Airways has spent 17 million pounds on the unit, it disclosed in accounts for the year ended March 31. The new carrier got takeoff slots at Orly through an agreement with L'Avion, which also operates from the Parisian airport to New York and is the only remaining independent business-class carrier across the Atlantic.
Establishing a subsidiary in Paris is also a response to competition at British Airways' London Heathrow hub after the introduction of the Open Skies treaty in March ended a lock that it and three other carriers had on U.S-Heathrow services.
American carriers Delta Air Lines Inc., Continental Airlines Inc. and Northwest Airlines Inc. have begun Heathrow flights. The influx means capacity between the U.S. and Europe's busiest airport is up 21 percent this summer compared with a year earlier, according to London-based consultant Aviation Economics.
Defensive Move
"OpenSkies is a defensive move by British Airways," said Davy's Furlong. "It seems to be a case of "you came into my market, so I'll come into yours.""
British Airways is Heathrow's biggest carrier, with 41 percent of slots at an airport that's already operating at 99 percent of government-permitted flight capacity.
Air France-KLM Group, Europe's biggest airline, has begun flights from Heathrow to Los Angeles under the new treaty as part of a revenue-sharing partnership with Delta. Deutsche Lufthansa AG, the region's No. 2, bought a stake in JetBlue Airways Corp. in January, giving an additional partner to help steer U.S. customers to its trans-Atlantic flights. The German carrier also says it may exercise an option to buy BMI, the second biggest holder of slots at Heathrow, by the middle of next year.
Source: bloomberg.com
Labels: British Airways, OpenSkies
