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Monday, August 25, 2003

Briefs

  • Continental Airlines [NYSE: CAL] has announced plans to sell 15.6 percent of its shares in ExpressJet Holdings [NYSE: XJT] -- its regional airline partner. Market conditions changed so it won't sell 5 million shares, valued at $200 million, to the public as it had planned. Continental instead will still sell 8 percent of its holdings to ExpressJet for about $122 million. ExpressJet will issue $125 million in convertible notes to cover the deal. The sale closed on Aug. 4. Now, Continental controls 45 percent of ExpressJet stock.
  • Duo, a new UK-based carrier, said it plans to begin flying on Nov. 1, with a network of services from Birmingham to 11 destinations. The airline was formed in June through a management buyout of Birmingham-based Maersk Air, a former British Airways [NYSE: BAB] franchisee, which dissolved when BA completed a major restructuring and buyout of its franchisees. Maersk Air operated for more than 10 years as a BA franchise. Duo, which employs more than 300 people, is promising "affordable fares across Europe but with full service onboard." It maintains a fleet of eight CRJ200s and CRJ700s.
  • FMR, the parent company of Fidelity mutual funds, has acquired a 10.5 percent stake in Atlantic Coast Airlines Holdings [Nasdaq: ACAI], with beneficial ownership of 4.8 million common shares, Dow Jones reported. According to Schedule 13Gs filed Aug. 11 with the Securities and Exchange Commission, FMR also acquired a nearly 11 percent stake in Midwest Express Holdings [NYSE: MEH], whose regional airline partners include Skyway Airlines, with beneficial ownership of 1.7 million common shares. In all, FMR reported taking new stakes in 11 companies.
  • A French court has ruled that financial aid granted to European regional airline Ryanair [Nasdaq: RYAAY] by a local chamber of commerce to help establish a service between Strasbourg and London was illegal. Ryanair, based in Ireland, said it would appeal. The airline has been fending off accusations from competitors who claim it is benefiting from unfair deals at airports and running advertisements misrepresenting how close its hubs are to major European cities. The Bas-Rhin Chamber of Commerce and Industry, which manages Strasbourg airport in eastern France, promised in June 2002 to give the carrier �1.4 million euros (U.S. $1.6 million) to set up two daily round-trip flights between London's Stansted and the capital of the Alsace region in France. Brit Air, a subsidiary of French national carrier Air France [PNK: AIFRF.PK], was forced to cancel its London-Strasbourg route in the face of competition and launched an appeal, saying the aid distorted competition.
  • The U.S. government must consider at least a partial re-regulation of the airline industry to protect air service to small communities, Robert Nicholas, manager of Ithaca (N.Y.) Tompkins Regional Airport says. "It seems to me that de-regulation has been a tremendous benefit to large population areas but has worked in reverse for small communities. The critical mass that justifies service to small communities eventually does not warrant the kind of service being provided. This is very well illustrated at the Ithaca Tompkins Regional Airport by the drop in passengers, followed by the drop in airline operations, followed by a further drop in passengers. The costs of running an airport remain fairly constant, so as scheduled airline operations drop, and the size of aircraft decreases, airport rates and charges per passenger are going through the roof. In tough times this becomes yet another reason for airlines to withdraw service from small communities."
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