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Monday, January 2, 2006

Quick Takes

  • The sale of privately held Regions- Air to Viva International [VIVA] still has not closed, even though the $6 million transaction was to close on Nov. 15. Since the deal was announced in mid-October, the two firms were to have consolidated operations pending the finalization of the deal. According to a statement from Viva, BAe Systems has not signed off on the deal. Regions-Air leases its Jetstream 32s from BAe. As part of the purchase deal, Regions- Air has been seeking lower lease terms on the aircraft. Viva had announced its intent to place Saab 340s with RegionsAir. Viva, which owns a charter carrier, Eastern Caribbean Air, based in San Juan, Puerto Rico, had earlier noted that it needed to sell $10 million in a private offering of its stock so it would have working capital for aircraft acquisitions and $3 million to immediately buy back part of a $6 million note it would issue to RegionsAir's private investors. Neither Viva nor RegionsAir officials could be reached for direct comment.
  • The U.S. Department of Transportation (DOT) last month granted broad code-sharing rights to the six member of the SkyTeam alliance. The action means that Delta and bankrupt Northwest Airlines [NWACQ] can place their codes on each other's flights. As one solution to each carrier's bankruptcy, it had been suggested that the two make greater use of code-sharing each other's mainline flights, which could reduce the need to fly regional aircraft to some destinations. By petition, DOT has historically granted regional carriers the ability to use international codes on stateside flights.
  • A proposed DOT rule change for the network carriers might have a trickled down impact on the regionals. DOT is considering a rule change that would permit air carriers to break out fuel surcharges from the total ticket price. The agency has proposed four alternatives and it wants all comments before Feb. 13 before it composes an official draft of the rule changes. One suggestion is to publish only one lump sum price of all variables, including fuel surcharges and government fees and taxes. At the opposite extreme, the rule would strike the requirements to advertise all fee elements, but instead simply require carriers to tell ticket buyers what the total sum is as they purchase the tickets. Comments can be submitted to the DOT docket at OST-2005-23194.
  • Alaska Air Group [ALK] recently sold 5.7 million additional shares. The parent of Horizon Air netted about $200 million in the secondary offering. Some of the proceeds will be used for aircraft acquisition. The offering was priced at $36.55 per share.
  • The European Commission (EC) last month cleared Lufthansa to gain control of Eurowings, the parent of Germanwings, a budget carrier operating regional aircraft. Lufthansa already owns 49 percent of the carrier. In a deal with the controlling shareholder, Lufthansa will gain operational control without purchasing additional equity. The EC stipulated that the two carriers give up some slots in Stuttgart, Germany, and Vienna, Austria.
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