Which Airlines Are Deemed To Be Most At Risk Of Going Bust?

codger

dklunan wrote: »

Word on the street is that Globespan and Jet2 are both unlikely to see christmas apparently

Ah, the street, the street!!

I've encountered all kinds of folk in mine.

But, so far, not a single aviation industry insider.

If you bump into whoever it is who happens to be going along your street imparting such insightful information, mention to 'em:

(1) http://www.jet2.com/News.aspx?id=504

and this:

(2) http://www.caa.co.uk/application.aspx?catid=490&pagetype=65&appid=2&mode=authorisations&licHoldID=4506

Jet2's results are those of its parent company. Jet2 is currently picking up a lot of slack left by the demise of XL. Jet2's external commercial contracts are going nicely too, thank you. Jet2's parent company's road transport division is contributing substantially to group profits, too.

Flyglobespan's volume bookings will further increase due to the demise of XL. Flyglobespan's 85% load factor for all flights in the past year was probably the highest of any operator. Flyglobespan's diversification, in much the same way as Jet2's diversification, represents sound strategic thinking.

The problem with whoever it is who happens to be out there on the street, spreading the inside word, is that their actual grasp of words is such that they wouldn't know an ATOL from an atoll nor a CAA from the CIA.

dklunan

Well Jet 2 has cancelled most of it's winter routes and will be sitting with many aircraft parked doing nothing over xmas.

It has an old inneficient fleet and it's passenger numbers are amongst the lowest at the airport where my source works.

Globespan doesn't really have much of a place in the current market or doesn't really seem to know what it's place in the market is. It's low passenger numbers, poor maintenance records mean that it is in real trouble and is struggling big time according to my source.

I don't want to reveal who my source is or exactly what his position is and how he is privvy to such commercially sensitive information but I believe him to be telling the truth. He knew more about XL than was available on here and in other mainstream media before their collapse.

Likewise he has assured me that companies such as flybe, VLM, finnair, KLM, SAS, etc are all as ok as you could expect in the current environment.

Of course I'm just someone on tinternet and i'm passing on 2nd hand information so take everything I say with a pinch of salt but I would obviously recommend that if you book with the above carriers make sure you are sufficiently protected. Of course this goes for any flights these days.

I hope I'm wrong as I've flown with Globespan before and I actually thought they were good value and provided a decent service.

dklunan

Forgot to add that Jet2 did well to post those profits as they did something that apparently the majority of airlines did not.

They bought all their fuel for the past season at the previous seasons prices meaning they were not stung by the rise in fuel prices that affected other airlines. Unfortunately they will not be able to do so again.

paddypuma

dklunan wrote: »

Well Jet 2 has cancelled most of it's winter routes and will be sitting with many aircraft parked doing nothing over xmas.

It has an old inneficient fleet and it's passenger numbers are amongst the lowest at the airport where my source works.

Globespan doesn't really have much of a place in the current market or doesn't really seem to know what it's place in the market is. It's low passenger numbers, poor maintenance records mean that it is in real trouble and is struggling big time according to my source.

I don't want to reveal who my source is or exactly what his position is and how he is privvy to such commercially sensitive information but I believe him to be telling the truth. He knew more about XL than was available on here and in other mainstream media before their collapse.

Likewise he has assured me that companies such as flybe, VLM, finnair, KLM, SAS, etc are all as ok as you could expect in the current environment.

Of course I'm just someone on tinternet and i'm passing on 2nd hand information so take everything I say with a pinch of salt but I would obviously recommend that if you book with the above carriers make sure you are sufficiently protected. Of course this goes for any flights these days.

I hope I'm wrong as I've flown with Globespan before and I actually thought they were good value and provided a decent service.

Your source is wrong this time. Globespan aren't 'struggling' and they haven't showed any signs that they will be.

Also, i'm confused by these comments about the 'poor maintenance records' where is the evidence that this is the case for the whole Globespan fleet? (not including the planes Globespan leased from Iceland Air, as they were not owned by Globespan)

codger

dklunan wrote: »

Forgot to add that Jet2 did well to post those profits as they did something that apparently the majority of airlines did not.

They bought all their fuel for the past season at the previous seasons prices meaning they were not stung by the rise in fuel prices that affected other airlines. Unfortunately they will not be able to do so again.

Which, er, tends to suggest Jet2 is better managed, better organised, and better funded than all those other operators who were insufficiently capitalised to strike fuel price deals before the costs rocketed.

Currently Jet2 is one of the "rescue" airlines called on by the CAA to get stranded XL passengers home. The CAA tends not to recruit as a rescuer an operator which itself is about to go belly-up. . .

Currently Jet2 is, like other operators, picking up the slack from XL customers who now have to find alternative means of getting to their destinations over the autumn / winter period. Currently Jet2, like Flyglobespan, is running highly profitable air freight contracts out of LBA, not to mention a Royal Mail contract that is the envy of many another airline.

If the source of your info is based at LBA, I'm a little surprised he / she seems to be so inadequately informed. If the source is based at Manchester, I'm also surprised they haven't grasped that Jet2 has already withdrawn services where loading was too low to be commercially sustainable.

If your source has a problem with "old" aircraft, then that's nothing to the problem other airlines have with, perhaps, slightly newer aircraft which they don't own and whose leasing deals are subject to the vagaries of the international finance market. Jet2 owns its fleet. It isn't in hoc to anyone else.

As for "parking up aircraft", the practice is quite common, and especially amongst airlines that aren't looking at fortunes ebbing away on leasing deals for aircraft which have to fly to finance those deals. This, too, has a bearing on investment: an operator is unlikely to be able to draw down additional funding when its books disclose that the money coming in isn't sufficient to even service the lease costs: would you lend to someone on the basis of assets which aren't even theirs?

Finally: neither the Flyglobespan, nor Jet2 business model, resemble the defunct XL's, an outfit which many industry observers -- without benefit of hindsight -- wondered how long could stay airborne, and especially after not one but two successive years of horrendous £multi-million losses.

I hold no brief for Jet2 nor FlyGlobespan, and have no connection with either.

I wouldn't touch FlyGlobespan with a barge-pole, but that's a personal opinion, drawn from personal experience, and unaffected by any consideration of FlyGlobespan's liquidity or otherwise. FlyGlobespan's record for customer service -- and customer complaint handling -- was, arguably, the worst in the industry, but if new management is learning from that, then that's very good news, and if the airline can go from strength to strength, that's entirely in the consumer's interest because without choice there's no competition. So, too, with Jet2. And any other operator: it's in my interest that they keep flying.

That aside, though, the truth of the matter is that regardless of what I may post here, or anyone else posts, the only definitive guidance about the short-term prospects for any airline to appear on this or any other MSE thread will be posted by the outgoing Finance Director of the airline concerned.

As such is unlikely ever to happen, then "inside information" from any other source about an airline's financial state, no matter how well intentioned, is no more than whistling in the dark -- and, if alarmist of content, about as counter-productive to a consumer's interest as it's possible to get.

mrposhman

dklunan wrote: »

Forgot to add that Jet2 did well to post those profits as they did something that apparently the majority of airlines did not.

They bought all their fuel for the past season at the previous seasons prices meaning they were not stung by the rise in fuel prices that affected other airlines. Unfortunately they will not be able to do so again.

Sorry but this post shows how little you know about financial decisions. Just because a company pays for something up front doesn't mean it takes the entire cost to the P&L. It can be accrued as a prepayment asset on the balance sheet and drip fed to the P&L in line with its use. In fact this is the correct accounting treatment hence the reason why this is impacted.

Obviously this would have reduced their ST cashflow but clearly hasn't caused a problem and would enable more of the cash received after this fuel purchase to be held as available cash meaning that bills can be paid as and when they come in.

Its not a lack of profits that kill a business its a lack of cash!!

XL went as they weren't receiving as much cash (sales were falling, their sales are also structured for people to pay in installements, coupled with higher fuel payments, the time of year is when airport fees are paid and to top it off, barclays recalled their loan). All in all, they didn't have the cash to pay for this and half to apply for administration.

If profits killed businesses then Alitalia would have disappeared 10 years ago.

whatusername

A good article in my local paper (Daily Record) suggests Globespan are ready to post a profit for 2008 and are running at 94% capacity and potentially looking to pick up a few new planes over the winter. Granted this is based on a report from Tom Dalrymple their CE.

Downside Paddy Power has them at 6/4 which is doing nothing for customer confidence.

mrposhman

Like I said above

CASH IS KING, profits mean nothing when your talking about companies in financial difficulty.

If you want to check their most recent declared cash flows, have a look on their site and download either they final or interim financial accounts. They should provide cash flows in their which you may be able to work forwards (using estimates) to see where their cash flow may be moving. If its cash flow is negative but they have large reserves, then theres no problem. If its negative with smaller amounts of reserves and no access to credit then they would be high contenders for possibly coming into some sort of financial troubles.

This is very basic, theres a lot of other tests you can do but I wouldn't want to bore you with them here.

dexterlevi

Anyone aware of any problems facing Air Berlin. I keep regular check on their press releases and tend to see the opposite with increase in passeger numbers being regularly reported.

than4

dont know about going bust, but the AirFrance flight my OH was on today had 9 people on it.
I'm surprised they didn't cancel the flight.
No way they would have even covered thier fuel costs on that one.