star

United Airlines CCO Andrew Nocella does not think the international travel boom has run its course. Far from it. Instead, the Chicago-based carrier has doubled down on long-haul, international travel with a robust summer 2024 schedule and orders for hundreds of new Boeing 787s to drive growth later in the decade. “Ultimately, as you approach the end of this decade, the growth in the United States will be very much tied to GDP,” Nocella said at the Skift Aviation Forum in Fort Worth, Texas, Wednesday. That rate of economic activity-tied growth has long been true for mature aviation markets. “But growing overseas, we think there’s just a lot more opportunity,” Nocella continued. United saw record profits across both the Atlantic and Pacific in Q3. International yields, a rough proxy for airfares, as a whole increased 3.2% during the period; significantly better than the flat yields United saw systemwide. But many wonder if the international boom can continue. As US domestic yields came down this summer following their surge in 2022, some believe airlines could see the same on transatlantic flights next summer. That’s especially true given the industry-wide capacity increases in the market as players from American Airlines to Lufthansa and United grow by double digits. “The current cycle we expect to last a very long time,” Nocella said.<br/>

A technical glitch that cancelled all flights departing from Turkey's biggest city of Istanbul on Wednesday is now fixed and operations are returning gradually to normal, Turkey's flag-carrier Turkish Airlines spokesperson Yahya Ustun said on social media platform X. He denied speculation on social media that the issue had been caused by a cyber attack. "There is no cyber attack situation," he said. Reservation changes will be made free of charge and unused tickets will be refunded without any deductions due to the technical disruption, Turkish Airlines said in a statement on its website. "No-show penalty will not be charged to passengers who have not yet taken action even though their flight time has passed," the statement said.<br/>

Lufthansa Group has finalised the sale to private equity firm Aurelius Group of the remaining part of LSG Group, completing the divestment of its catering business. The Star Alliance carrier initially sold LSG Group’s European business activities to Gategroup in 2019 and then struck a preliminary agreement to sell the remainder of LSG to Aurelius in April this year. The sale, formally completed on 31 October, comprises all the group’s classic catering activities along with its on-board retail and food commerce businesses. It includes a total of around 19,000 employees worldwide and 36 joint ventures across the globe. LSG generated revenues of just under E2b in 2022. No purchase price has been disclosed for the deal. Lufthansa CFO Remco Steenbergen says: ”In the Aurelius Group they now have a new owner who can provide new input and ideas, and who will continue to invest in the catering business segment. And I am particularly delighted that, as our partner for our on-board product and our service concepts, the LSG Group will continue to play a vital role for the guests of our group’s member airlines.” The sale fits in with Lufthansa Group’s aim to focus on its primary air transport business. In June, it divested its specialist corporate travel payments subsidiary AirPlus Servicekarten to the Swedish financial institution SEB Kort Bank. “Following the agreements earlier this year on the sale of AirPlus and on our acquisition of an equity holding in ITA [Airways], this closing on the sale of the LSG Group is further confirmation that we are consistently pursuing our strategy and, in doing so, are driving our group’s transformation,” says Steenbergen.<br/>

The board of South Korea's Asiana Airlines is due to meet again on Thursday to decide whether to agree to sell its cargo service, which would help clear the way for a proposed merger with Korean Air Lines. Selling Asiana's air cargo business and divesting routes to some European Union cities is a remedy prepared by Korean Air, South Korea's biggest carrier, to gain EU antitrust approval for acquiring its rival. However, Korean Air's acquisition plan still needs approval from the EU, the United States and Japan. Asiana creditors, including state-run lender Korea Development Bank, have been looking for a new owner of the debt-laden carrier for several years. Korean Air agreed to acquire Asiana in 2020 during the COVID-19 pandemic. As of the first half of 2023, Asiana operated 11 cargo planes according to a company filing. The cargo service has 21 routes to 25 cities in 12 countries around the world, including the United States, Germany and Russia. It held a 20.7% share of South Korea's overseas cargo market.<br/>

Asiana Airlines is struggling with worsening finances, as the planned acquisition by Korean Air has hit a snag following an unexpected disruption in the cash-strapped airline’s recent board meeting. Given Asiana’s rising debt ratio, the firm’s financial structure is forecast to deteriorate further at a rapid pace if the acquisition plan continues to be protracted, according to data and experts, Wednesday. According to the Financial Supervisory Service (FSS), the debt ratio of Asiana came in at 1,386.7% as of 2019. But the figure soared to 2,097.5% at the end of June this year. The ratio refers to the portion of a debt against a firm’s total assets. The airline reported a net loss of 60b won ($44.19m) in the first half of this year mostly due to the mounting interest burden from its debt worth around 12t won. Industry insiders, therefore, argue that the company needs to merge with Korean Air at the earliest possible stage, so both airlines minimize spending on interest. In addition, Korean Air is on track to give up lucrative revenue streams that could be generated from the takeover of Asiana, in a bid to persuade overseas authorities concerned about possible monopoly issues after the acquisition of Asiana. In a remedied plan, Korean Air announced in a recent note to investors, that it plans to unload Asiana’s cargo business and support a potential remedy for four air routes from Korea to Europe. Experts said Asiana’s board has no choice but to accept the proposal by Korean Air despite the potential side effects.<br/>

While China’s three largest carriers are set to remain loss-making for 2023, a HSBC Global Research report predicts “record” profits in 2024 with the easing of several challenges such as overcapacity. The report, issued on 1 November, says lower oil prices, reduced Chinese Yuan depreciation pressure, as well as a restoration of international capacity will help push the ‘Big Three’ – comprising Air China, China Eastern Airlines and China Southern Airlines – firmly back to the black. In particular, the report says a “faster-than-expected” restoration of flights between the USA and China is a “key catalyst” for international recovery. This in turn will ease overcapacity on the airlines’ domestic networks. HSBC notes that while the three carriers’ domestic capacity now stands at 9% higher than pre-pandemic levels, passenger volumes are only 3% higher. “Going forward, a further ramp-up of international flights would dilute unit cost, tighten capacity and airfares in domestic routes, and thus boost EBIT margin for ‘Big Three’,” the HSBC report states. The report comes days after the ‘Big Three’ disclosed their earnings for the nine months to 30 September, which saw a dramatic narrowing of operating losses for Air China and China Eastern, as well as a return to profitability for China Southern. The three carriers cited strong travel demand, as well as higher airfares for an improvement in their earnings. However, the HSBC report points out that Q4 of the year will see weaker travel demand, and lowered airfares. It adds that a rise in oil prices and foreign exchange headwinds “underscores sequentially lower earnings” for the quarter.<br/>