Europe: May 2009 Archives

Our sister publication Air Transport Intelligence reports that TUI Travel's airline operations chief, Christoph Mueller, is to step down.

David Kaminski-Morrow writes that Mueller is stepping down from the board today and will leave the company on 31 October.

TUI Travel says Mueller considers that "it is the right time" for his departure and that he is to "pursue other interests".

The former head of German airline TUIfly, Mueller took on his current role two years ago as TUI Group merged its tour operation with the UK's First Choice Holidays to form TUI Travel.

In this position he oversaw not only TUIfly but the other TUI carriers in Europe. During his tenure TUIfly agreed a strategic partnership with Air Berlin, while reorganisation of UK services has helped to cut unprofitable routes.

Steve Ridgway (below) was not exactly effervescent on the radio this morning, talking about the fact that Virgin Atlantic had made a profit of £68 million in its last financial year, but he was clearly seriously chuffed about his airline's performance in such tough times, and his company's management foresight.

His mood was in sharp contrast to that a week ago when a doleful Willie Walsh, the chief executive of British Airways, talked of record losses.

A lot of Virgin's achievement is down to being conservative, which says something good about a brand that prides itself on bringing the fun back into flying, but clearly not at the expense of running a tight ship.

That conservatism meant it was beginning to trim back capacity and defer new aircraft deliveries long ago. It also meant it had a good fuel and currency hedging programme in place, meaning it did not get stung amid the extremely volatile fuel prices of the past year.

Contrast too Virgin's fortunes with those of that other UK based carrier bmi, which reported horrible losses recently and whose majority shareholder Sir Michael Bishop is in a wrangle with Lufthansa over the German carrier's plan to buy him out.

I wonder what the situation in the UK airline market will look like in a year. Today we have a seemingly healthy Virgin Atlantic, a stuttering BA and a chronically injured bmi.

Surely those who eventually see some kind of pairing of Virgin and bmi have been given greater fuel for their vision today.

Here is the analysis Victoria Moores wrote about the future of bmi in Airline Business.

The results were dire and the outlook is gloomy. British Airways dived to a record loss in modern times, a collosal turnaround of £1.2 billion over a year, and there was no evidence of recovery anywhere across its global network, a pessimistic chief executive Willie Walsh told BBC Radio 4's Today programme about an hour ago.

This is going to be the theme of the forthcoming IATA annual meeting coming up in Kuala Lumpur in a couple of weeks - where and when is the recovery going to start?

We will be doing our Airline Busines Daily at the event and producing video interviews for Flightglobal - what questions do you want us to put to these airline leaders?

Yesterday, at the launch of Air France-KLM's new transatlantic joint venture with Delta Air Lines, we caught up with KLM chief executive Peter Hartman.

In this three-minute video clip, he talks about the joint-venture and discusses a new long-haul 'economy extra' product, which KLM is planning to roll out in October 2009 to draw back business travellers.

Through 'economy extra', which is only a tentative name, KLM will charge passengers a premium for long-haul economy seats with a 35" (89cm) seat pitch. Unlike Air France's new long-haul premium-economy offering, it will not be a separate cabin. The new product is also likely to include on-ground extras, such as lounge access. 

BMI chairman and majority shareholder Sir Michael Bishop has gone public over the emerging tensions between him and Lufthansa, which is acquiring his shareholding.

Over recent days UK media reports pointed to a brewing spat between Bishop and Lufthansa over whether Bishop should have to recapitalise BMI.

But Bishop's shareholding company the BBW Partnership has today revealed it is taking Lufthansa to the High Court to force it to press on with the acquisition.

Read the latest news story and catch up with some of the background as the dispute emerged.

I took a day out to look at the business aviation industry yesterday at the EBACE exhibition - see this link for lots of information, news and views from the Flight and Flightglobal team.

The show was certainly busy but the orders were thin on the ground.

Celebrity watchers were pleased to see Spanish golf superstar Sergio Garcia at the Hawker Beechcraft stand who was signing autographs and getting his picture taken with plenty of fans. For those who don't know, Sergio is the guy in the middle of this shot.

Any snippet of information relating to the eagerly anticipated sale of UK carrier bmi to Lufthansa is welcome. So hats-off to Messers Marlow and O'Connell for this story - Lufthansa's bmi bid hit by cash row in yesterday's Sunday Times.

There will be plenty of this over the coming weeks and months as the deal for Lufthansa to take over bmi - at a price agreed a decade ago - comes to fruition.

Our recent coverage on bmi has included:

* bmi posts large loss for 2008.

* Victoria Moores investigated the future for bmi in Airline Business last year.

* We looked at Virgin's ambitions for bmi if it could get hold of it.

* What value does bmi put on its large slot portfolio at Heathrow?

The personal touch is often a feature of flying with regional airlines. So being asked by the Air Southwest flight attendant if I wanted a taxi booked on arrival in Plymouth was a practical and much appreciated gesture.

I didn't in fact because I was visiting Air Southwest chief executive Peter Davies, whose office overlooks the tiny apron at Plymouth City Airport, but for several of the other 27 passengers on the Bombardier Dash 8-300 this was an essential service, especially as the airport doesn't have a permanent taxi rank.

The mission of Air Southwest, which is only six years old, is described by Peter on this video.

It operates on routes linking travellers from Cornwall and Devon to London, Manchester, Leeds, Glasgow and Newcastle with a fleet of five Dash 8-300s. Air Southwest carried around 300,000 passengers in 2008.

The carrier is owned by the Sutton Harbour Group, which also owns marinas and fisheries and develops property.

One of the first things Peter has done is launch a new route between the southwest and London City Airport. This is taking on the train and offers a faster service at competitive prices.

Peter has only been at Air Southwest for a couple of months. His career has taken in leadership roles at Caribbean Airlines, SN Brussels Airlines and DHL.

The apron at Plymouth City Airport (seen below) - which is also owned by Sutton Harbour Group - has room for three Dash 8s. The airport has a short runway - the largest aircraft it can handle is a Dash 8 or an ATR-42.

Below: Leaving on Air Southwest flight number WOW 103 from London Gatwick to Plymouth. Note the huge walkway that connects a remote pier with the terminal.

EasyJet founder Sir Stelios Haji-Ioannou has served up a reminder of the boardroom split at the UK budget carrier, reiterating his view the carrier should postpone delivery of some of its Airbus aircraft on order.

"Stelios remains of the view that easyJet's current financial performance the outlook for the European economy requires a significantly more conservative approach to the biggest single issue facing the company, namely the Airbus order for an additional 91 aircraft," said a spokesman for Stelios. The comments came just as the carrier reported its first half results yesterday. "The company currently plans to buy too many new aircraft from Airbus too soon, and the passenger numbers are not keeping up with the aircraft numbers," the Stelios spokesman adds. "Stelios continues to advocate that the company should continue to postpone certain deliveries."

The strategic rift at the carrier first ingited last November when Stelios, who remains a shareholder in the airline, publicly outlined his concerns at the carrier's expansion plans given market developments. He also refused to sign off the airline's accounts at the time, in particular citing concerns at the company's valuation of London Gatwick slots picked up along with the acquisition of GB Airways.

EasyJet yesterday announced wider first half pre-tax losses of £116.5 million, but while cautious about the consumer economy, still expects to be profitable for the year.

For more on the recent boardroom moves at easyJet, check out my colleague Victoria Moores' recent blog here

EasyJet's senior management team is evolving at a rapid pace these days, with 2009 losses including chairman Sir Colin Chandler, group finance director Jeff Carr, procurement director Neil Mills and chief commercial officer Saad Hammad.

Picture credit: easyJet airline company ltd.

The latest of these departures, Carr and Mills, have been announced over the last week. Carr is leaving to take on the chief financial officer's role at UK transport firm FirstGroup and the search has begun for his successor. Andrew Lobbenberg of ABN AMRO believes Carr to be very highly regarded by investors, adding: "This news will and should be regarded as a loss to the company."

Procurement director Mills, who has gone to Middle East start-up budget carrier FlyDubai as chief financial officer, was with easyJet for 12 years and saw the airline evolve from just four aircraft. He left in early April and will be replaced by former Mandala Airlines chief Warwick Brady on 6 May.

Brady was chief of Indonesian carrier Mandala Airlines, chief operating officer of India's Air Deccan and he used to head Ryanair's London Stansted operations. Lobbenberg says he has a tough reputation as a cost manager.

The loss of Carr and Mills comes on top of the imminent retirement of chairman Sir Colin Chandler and the departure of chief commercial officer Saad Hammad, who left earlier this year to become managing director for operations, Europe, at private equity firm The Gores Group.

EasyJet has named Sir Michael Rake, who is chair of telecom company BT and a former chair of financial firm KPMG International, as deputy chairman. Senior independent director Sir David Michels will become interim chairman once Chandler leaves, until a permanent successor is named.

Last year there was conflict between easyJet founder Stelios Haji-Ioannou and the airline's board over the carrier's strategy. While expressing a like for easyJet's short- and long-term trading prospects, Lobbenberg says: "Management and board instability will weaken sentiment and offer sceptics more fertile ground for their views."