We are moving through an odd period at this time. 2012 has seen the most impressive bull run on the markets that many of us can remember but this is due to a fixed mentality that every dip is a buying opportunity, or at least that is what the algorithm parameters have been re-programed to operate within and it is this which is driving the bull run along with US figures that are showing a move to growth. Oil is being driven not primarily by Chinese growth as was the case in 2005-2007 but this time by the very same speculators who jumped-in during early 2007 to drive the prices sky high by hiring tankers and holding them in port. Also let us not forget that the US, not China, remains the centre of the financial universe and this market is far stronger than it was in 2007 so there is $15 a barrel there alone for this factor. Our contacts in the know would factor-in about the same ($15) for speculation activity at this time. Increased car ownership in India and China along with greater use of heating oil is doing the rest. So we can assume that oil still has a way to go as demand is sure to increase in Brazil, India and China so long as infrastructure projects can keep pace. The mighty car market is once again growing at pace. But has anyone spotted an increase in refining capacity of late? The reality is that there is not nearly enough new refining capacity coming on line and this will without doubt send aviation fuel ever higher and increase the crack spread.
It is against this backdrop that Japan Airlines is coming to market with its initial public offering, which this news service has already given over quite a word count to over the past six months. There is rumour in the press that Japan Airlines is trying to tap Oneworld partners Qantas, IAG and others to invest in their IPO which is slated to raise a minimum of 500 billion yen ($6bn) in a relisting of its shares in Tokyo that is planned for September. This fits perfectly with the Japan Airlines strategy of being part of a global fully integrated alliance. The problem will IAG and Qantas have the funds to invest when the time comes? Willie Walsh has made no secret of the fact that he is interested. Banks on the other hand will look to fuel and worry, especially after being burned by JAL last time around.
We look at the IPO and the rest of Japan Airlines’ strategy in the March/April 2012 issue of Airline Economics, which includes questions put directly to the Japan Airlines Chairman, Masaru Onishi and Yoshihiko Miyauchi, Director, Representative Executive Officer, Chairman and Chief Executive Officer of Orix Group in a face to face meeting earlier this month in Tokyo. Do not miss it – subscribe today for £29 per annum for subscribers based in UK/EMEA/US/Canada and £42 for those in the rest of the world (charge to cover the increased price of oil affecting our annual paper and postal costs only). Also included in the next issue an extensive look at the engine market including the engine investors survey result, leasing and financing, remarketing, maintenance considerations (with a customer survey), Plus we have FX considerations, the fuel survey results and a hedging update, AND views directly from a very large investor on what he is interested in and demographic outlook information that all need to consider. The issue is a forward-looking cracker crammed with data and as much information as we can manage.
JAL IPO will not be an easy affair
