In 2003, Royal Brunai Airlines announced plans for growth and development.
A sign should answer the question "Where am I going and how do I get there?" as well as much more.
A small selection of airlines we have worked with over the last twenty years.
23/02/2012
EU ETS opponents agree counter measures
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Countries opposed to the European Union law that forces the world's airlines to pay for their emissions have agreed a basket of retaliatory measures but will leave it up to each country to choose among them, Russia's deputy Transport Minister said on Wednesday.
Each country has the options of barring its airlines from participating in the European Union's carbon scheme, lodging a formal complaint with the UN's International Civil Aviation Organisation (ICAO), ceasing talks with European carriers on new routes and imposing retaliatory levies on EU airlines.
"Every state will choose the most effective and reliable measures that will help to cancel or postpone the implementation of the EU ETS (Emissions Trading System)," Valery Okulov, whose ministry hosted the meeting of 26 nations, told a news conference.
Since the start of this year, all airlines using EU airports are required to buy permits under the ETS, which has prompted international objections and threats of a trade war. Russia hosted a two-day meeting of countries opposed to the EU scheme, which ended on Wednesday.
Some countries including Russia had suggested the conflict could be deferred to the ICAO for a global compromise solution agreed with the European Union.
But the Russians appeared to have hardened their stance in comments this week.
"We have demonstrated our determination to ask for a cancellation or postponement of the EU ETS" in regard to airlines, Okulov said.
On Tuesday Russian Transport Minister Igor Levitin told national transportation officials and representatives from ICAO and from the International Air Transport Association assembled in Moscow that Russia would consider a ban on ETS participation.
China's central government State Council, or cabinet, earlier this month said all airlines were barred from taking part - unless they received government approval to do so.
Okulov said Saudi Arabia would organise the next meeting of the so-called "coalition of the unwilling" in the summer.
Associated Press
22/02/2012
India's state bank to bail out Kingfisher
India's State Bank of India has decided on a INR16.5 billion rupee (USD$334.62 million) loan package to help troubled Kingfisher Airlines overcome a cash crunch, the Hindustan Times newspaper reported on Wednesday.
The newspaper quoted an unidentified source as saying the state-controlled bank had decided to extend a new line of credit, that included INR7 billion rupees in short-term working capital and INR5 billion in bank guarantees.
It has also decided to extend the tenure of current loans to the airline worth about INR2.5 million - INR3 billion rupees that would have been due next year, the newspaper said.
State Bank or another government bank, Punjab National Bank, could offer bank guarantees of INR1.6 million - INR2 billion rupees to tax authorities, it said.
The airline has become one of the main casualties of high fuel costs and a fierce price war between a handful of budget carriers which, between them, have ordered hundreds of aircraft for delivery over the next decade in an ambitious bet on the future.
Kingfisher shares dropped nearly 20 percent in intra-day trade on Tuesday but recovered to close 0.4 percent up as rumours of the bank bailout spread. India's aviation regulator said the airline had given an assurance that bank funding was on the way.
Reuters
21/02/2012
Gulf Air says Oman owes it over USD$310 mln
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Bahrain's cash-strapped national airline Gulf Air, which is seeking government funds to continue operations, said the Omani government owes the carrier BHD117 million dinars.
Gulf Air said on Tuesday that it is in talks with the sultanate for the amount which has been due since 2007.
"There is a residual amount of BHD117 million dinars that remains outstanding from the Sultanate of Oman from the time it withdrew as a shareholder of the airline," the airline said in an emailed statement on Tuesday.
"This continues to be a matter of discussion amongst concerned parties."
There was no immediate public comment by Oman on the matter.
Gulf Air has struggled to find a niche after previous owners Oman, Qatar and Abu Dhabi gave up their stakes partly to establish their own carriers.
The airline was hit by falling passenger numbers in 2011 as anti-government protesters continue to clash regularly with riot police in the island kingdom.
Last week the carrier cancelled its service to Damascus, Athens, Milan and Kuala Lumpur. This follows ending services to Entebbe and Geneva earlier in the month.
A government delegation briefed parliament in January and called for a restructuring of the company for "effective operational requirements", state media reported.
The airline said in May it had laid off 200 employees and that bookings were down by a quarter following the Arab Spring uprisings in the region.
Financial Times
20/02/2012
Virgin's IAG/BMI deal complaint
Virgin Atlantic has made a formal complaint to the European Commission about IAG's purchase of Lufthansa's British unit bmi, saying competition on some European routes would diminish and that fares would increase.
Late last year, British Airways owner IAG agreed to buy bmi for GBP£172.5 million (USD$271 million), seeing off rival bidder Virgin in the race to grab loss-making bmi's coveted runway slots at London's Heathrow airport.
In its submission Virgin Atlantic said that if the deal was approved, three key domestic routes -- Aberdeen, Edinburgh and Manchester -- to and from Heathrow would become a BA monopoly.
It added competition would be eradicated to some popular European destinations and that BA would have the opportunity and the means to increase fares and reduce flights on these routes.
"When BA was left the only operator on the Glasgow to Heathrow route in 2011, fares paid by Scottish travellers rocketed by 34 percent in six months," Virgin Atlantic president Richard Branson said in a statement.
"This deal will see BA holding more than half of take-off and landing slots at the UK's only major international hub -- an airport that has had much needed growth plans forcibly frozen."
The all-cash deal, which requires regulatory approval, would give IAG about 53 percent of take-off and landing slots at Heathrow, -- Europe's busiest airport -- which is operating at capacity after plans to build a third runway were scrapped.
IAG currently holds 43.1 percent of the slots at Heathrow.
"Our planned purchase of bmi is being reviewed by the regulatory authorities and we're confident they will approve the deal," IAG said in a statement.
"Bmi is a massively loss making airline. Selling it to IAG offers the best solution for British consumers and UK plc, securing more jobs than if the airline was broken up and sold-off for its Heathrow slots."
IAG added that it was committed to keeping services from Belfast to Heathrow and increasing flights to Scotland.
Associated Press
19/02/2012
How to pay for a US$22bn order
How do you find the money for a USD$22 billion aircraft order?
The answer in the case of Indonesia's Lion Air, which completed a record order with Boeing this week, is typical of many mega-aircraft deals: with a little help from the taxpayer.
The US government is offering loan guarantees to help the low-cost carrier buy 230 jets, under a system operating on both sides of the Atlantic to promote exports of strategic goods such as the jets built by Boeing or rival Airbus.
In theory, it means US taxpayers could pick up part of the tab if the deal falls through.
Bankers and officials involved in such transactions say experience suggests this is unlikely to happen, or any losses could be recouped by recovering assets.
Indonesian entrepreneur and Lion Air co-founder Rusdi Kirana blazed a trail at the Singapore Air Show, signing deals for 259 aircraft worth USD$23 billion this week, including Boeing and Hawker Beechcraft jets and ATR turboprops.
The three-day spending spree left some wondering how an airline little known internationally, and banned in Europe over safety concerns, could afford to pay for the planes. (Lion Air says its inclusion in a ban on several Indonesian carriers is unfair).
Similar questions swirled in 2005 when Lion Air placed what was then considered a huge order for 60 aircraft. This has since propelled its growth to become Indonesia's top domestic airline.
A senior US official familiar with the deal dismissed concerns about the airline's ability to pay.
"We believe Lion Air has a good business model and a management team that is successfully implementing it," Robert Morin, vice-president of the transport division at the Ex-Im Bank said.
"Rusdi Kirana won't have trouble financing Lion Air's new big order because the deliveries are stretched over several years and he will probably tap a variety of sources of financing".
The methods cannot be verified in detail, because Lion Air has declined to open up its finances. US airlines says deals involving US backing should be more transparent.
"We are the custodians of US taxpayers' money and we take that role very seriously," Morin said. "Rest assured, Ex-Im Bank does its homework."
In practice, industry sources say only a fraction of the USD$22 billion touted for the Boeing deal will be paid any time soon.
So how does it work?
PRICE DISCOUNTS
It is no secret that airlines often get discounts. But Boeing and Airbus never comment on them and buyers are sworn to secrecy over their deals, so their size is hard to determine.
Classified documents released by WikiLeaks gave glimpses of aircraft deals as seen by US diplomats, and spoke of discounts as high as 50 percent, though industry sources dismiss this.
Lion Air can expect a hefty discount for two reasons: it has placed the largest commercial order ever received by Boeing and it is a launch customer for the revamped Boeing 737 MAX 9.
On the other hand, airline industry sources say, launch pricing can mean airlines get a less generous support package.
One person familiar with industry practices speculated the discount for part of the Lion Air order could reach 40 percent, but acknowledged the real amount was anyone's guess.
BUY NOW, PAY LATER
Airlines mainly pay for aircraft when they take delivery, not when they order them. Deliveries won't start until 2017.
By the time the later planes are delivered, some of the previously ordered ones may be coming up for retirement, which means they can be parked, scrapped or sold, potentially releasing equity to go back into the purchase of later planes.
Kirana said he would take delivery of 30-40 planes a year.
DEPOSIT
Initially, all Lion Air is likely to have to pay is a deposit to secure slots on the production line.
Deposits are typically 5 percent or more, experts say.
PRE-DELIVERY PAYMENTS
Airlines have to make further down-payments as the clock ticks down to delivery, especially from about 24 months out.
However, some banks offer financing products even for these "pre-delivery payments" (PDPs).
By delivery day, an airline has typically paid 20 percent of the aircraft's net value but this can be as high as 50 percent.
Since they eat into cash flow, PDPs are an important item for the health of an airline. "More than one airline has gone bankrupt just because of PDPs," an industry banker said.
D-DAY
Each aircraft is fully paid for on delivery.
Usually airlines have financing in place for some 80 percent of the price. Some sell the aircraft simultaneously to a leasing company and rent it back, a process called sale-and-leaseback.
Others take a commercial loan or go to the capital markets, but the latter option is little used outside the US.
EXPORT CREDITS
Many commercial loans are backed by guarantees given by Ex-Im bank, France's Coface and others. Ex-Im Bank covered about half the fleet already ordered by Lion Air, and is expected to step up for a similar proportion of the new deal.
The agency rarely loans from its own balance sheet. It issues a guarantee against which commercial banks lend funds. It charges for the guarantee and says it has only lost on one deal.
The cost of such finance is rising after a pact between OECD member countries last year. The agency typically guarantees up to 85 percent of the value of the US content of the aircraft.
Reuters
18/02/2012
Ethiopian orders Q400 NextGens
Canada's Bombardier Aerospace said Ethiopian Airlines was the buyer of five Q400 NextGen aircraft in a USD$160 million deal that was announced on Monday.
Bombardier had earlier said the buyer had requested to remain unidentified.
The company said two of the five aircraft will be operated by Ethiopian Airlines and three by its affiliate, ASKY Airlines of Togo.
The order will increase the number of Q400 NextGen airliners purchased by Ethiopian Airlines to 13, Bombardier said.
Reuters
17/02/2012
Moscow talks to discuss ETS
A meeting in Moscow next week of nations opposed to the EU law that forces all airlines to buy carbon permits will debate a "basket of counter-measures" to the European Union scheme, a draft agenda seen by reporters on Friday showed.
The agenda also refers to the formal dispute procedure under the Chicago Convention on International Civil Aviation, although some airline representatives and analysts have said the meeting would be unlikely to decide on whether to invoke that for now.
Nations, including China, the United States, India and Russia, have all expressed opposition to EU legislation requiring carriers using EU airports to acquire allowances under the EU Emissions Trading Scheme (ETS).
China's central government State Council, or cabinet, earlier this month said all airlines were barred from taking part - unless they received government approval to do so.
The so-called "coalition of the unwilling" - bringing together 26 nations - has held a series of meetings.
At its two-day Moscow gathering beginning on Tuesday, Russian Transport Minister Igor Levitin is expected to open the "follow-up international conference" on coordinating activities to opposing the inclusion of aviation in the EU ETS.
Other agenda items refer to a letter to EU member states and "application aspects of the article 84 of the Chicago Convention", again without explanation.
Article 84 covers a formal dispute procedure at the UN's International Civil Aviation Organisation (ICAO).
Airline representatives and analysts have said it would be unwise to opt for the extremely lengthy formal dispute procedure before ICAO has had another chance to find a global market-based solution to airline emissions.
Associated Press
16/02/2012
JAL ups 787 order despite delays
Japan Airlines, said on Wednesday it will order 10 additional 787s despite a recent problem that has delayed deliveries of its first Dreamliners, underscoring its role as one of Boeing's most loyal customers.
The Japanese flag carrier is investing JPY¥478 billion yen (USD$6.1 billion) in new aircraft to revamp its fleet over five years.
It is relying on the fuel-efficient 787 as it emerges from a government backed bailout to battle for business in an aviation market struggling to cope with weak demand, high fuel prices and the emergence of low cost carriers.
"We aim to enhance the JAL brand as a full-service carrier that clearly distinguishes itself from LCC brands," Yoshiharu Ueki, JAL's new president said at a news conference in Tokyo.
Apart from a handful of smaller regional jets, which Boeing doesn't build, JAL has only ever bought aircraft from the US company and its new business plan means most of the fleet investment will be spent at Boeing again.
The US company accounts for around 90 percent of commercial plane sales in Japan, the biggest market share it has in any major aviation market.
But a fresh glitch at Boeing's assembly plant has meant JAL now expects to get only one 787 by the end of March when it had expected four.
Boeing insists that the problem, it described as "incorrect shimming" in support structures in the aft fuselage of some planes won't push back a production schedule to build 10 787s per month by the end of next year.
JAL's home rival All Nippon Airways is planning to buy 55 of the carbon-composite jet.
Boeing has tallied 870 orders for the 787, but has been plagued by development and production delays, including a shortage of nuts and bolts in 2007, a 58-day strike in 2008 and a fire on a 787 test flight in 2010.
After failing in 2010, JAL is set to re-emerge as a traded company in a public offering as early as September that could raise more than JPY¥500 billion (USD$6.4 billion), sources have said.
The government's Enterprise Turnaround Initiative of Japan, which oversaw the airline's restructuring, including 16,000 job losses, the closure of money-losing routes and cuts to pension benefits, is aiming to recoup JPY¥350 billion from the offer.
Reuters
15/02/2012
Boeing signs record Lion Air order
Boeing said on Tuesday it signed its largest-ever commercial aircraft order with Indonesia's Lion Air in a deal worth USD$22.4 billion.
Boeing said Lion Air, Indonesia's largest carrier by passenger volume, has ordered 230 planes, including 201 737 MAXs and 29 next-generation 737-900ERs.
Lion Air will also acquire purchase rights for an additional 150 planes, Boeing said.
The announcement was made in a statement at the Singapore Airshow.
In November, Lion Air announced the original massive order during US President Barack Obama's Asia-Pacific tour. Europe's Airbus had accused the United States of applying political pressure to secure the deal.
Wall Street Journal
14/02/2012
Lion Air delays flotation, slams EU
Low-cost Indonesia carrier Lion Air has postponed plans for a 2012 flotation worth more than USD$1 billion, its chief executive and co-founder said, bowing to uncertainty over the readiness of Asian investors to back new share offerings in volatile markets.
Lion Air, Indonesia's biggest carrier by passenger volume, has ambitious plans for expansion as the archipelago nation expands its poorly served air corridors, and has placed a record provisional order for more than 200 Boeing jets.
"We can't do it this year because the situation with the financial crisis is not so good," CEO Rusdi Kirana said in an interview on the eve of the Singapore Airshow.
He said Lion Air had a domestic airline market share of 51 percent and aimed to go public when this reached 60 percent, something he estimated would happen "in the next two years".
Shares in flag carrier Garuda Indonesia had a weak debut last year and have traded below their flotation price -- a sign that IPO investors remain cautious despite Indonesia's economy being relatively shielded from Europe's debt crisis.
Kirana, who branched out from the travel business to start the airline with his brother Kusnan in June 2000, insisted Lion Air did not need the funds it would have raised from the IPO to pay for deliveries of aircraft on order from Boeing.
The airline grabbed attention in November by placing what was Boeing's biggest-ever commercial order, worth USD$21.7 billion at list prices. Airbus has accused the United States of applying political pressure to secure the deal.
The provisional order for 230 short-haul jets, signed in the presence of President Barack Obama, takes Lion Air's order book to more than 400 planes, which it aims to use to fly across an Asia-Pacific region still seeing robust passenger growth.
Lion's fleet of 92 aircraft also includes European ATR-72 turbo-props built jointly by Airbus parent EADS and Italy's Finmeccanica. Demand to feed traffic from Indonesia's 17,000 sometimes-remote islands which spans three timezones is expected to grow.
With a poor rail and road infrastructure, air travel is the only way for the world's 12th busiest domestic market to tap its potential and there is plentiful margin for growth, Kirana said.
Indonesia is the world's fourth most populous nation with 230 million people, but has barely half the domestic traffic generated by Malaysia's 28 million people. Indonesia's average annual passenger growth is 21 percent, according to the airline.
Lion Air, whose competitors include Malaysia's AirAsia, says low costs allow it to offer tickets for USD$40-$60.
Kirana however rebuffed criticism of the airline's lean operating model and European Union concerns over its safety.
Two pilots have been arrested over drugs in recent weeks.
SAFETY CONCERNS DISMISSED
"Rumours said my pilots work too hard so they use drink and drugs... People make up stories to discredit us. We came to see the drugs agency and we asked them to check everybody," he said, adding he was also building 1,000 homes for the airline's staff.
Kirana also told a group of European journalists he could not understand why Lion Air remained on a blacklist of airlines banned in the EU, while Garuda and five others now had waivers.
The black list of carriers banned from the 27-nation EU over alleged shortfalls in safely standards has included Lion Air since 2007 and originally included all Indonesian carriers.
Indonesia had 33 aircraft accidents between 2005 and 2010 which accounted for 1.4 percent of global traffic but 4 percent of accidents in 2010, according to IATA, which last year urged Jakarta to pay attention to safety oversight.
Lion Air has had only one fatal accident, in which 25 were killed when a McDonnell-Douglas MD-82 overran a runway in 2004, Kirana said.
The airline has stopped flying those jets. Kirana said a handful of other occurrences had been classified as "incidents".
The UN's aviation agency ICAO defines an air accident mainly as something causing death or injury and an incident as a weaker type of event that could still affect safe operation.
"I don't care if the EU wants to blacklist me. Indonesia is my market, but I want fair treatment," Kirana said.
Regional specialists say the issue overshadows Airbus's prospects of selling to Lion Air, but Kirana said the EADS subsidiary was in the race for business worth USD$2 billion.
He said Lion Air was in talks to buy 10 long-haul Airbus A330 jets or Boeing 787 Dreamliners. The aircraft would be used to open up routes to Japan and China from the minerals-rich east of the country, which is attracting foreign mining investment.
