A compensation claims backlog is starting to build in the UK, as we stated it would at the turn of the year if the Jet2 case was lost.
No less than four major law firms who have until recently been concentrating on PPI claims against banks are now turning staff over to airline compensation claims, targeting those denied payouts over recent years and reviewing their cases.
We understand that Monarch and Thomas Cook are set to be heavily targeted, perhaps more than most, not because they are always late, but because the package holiday traveler is the segment of the market being targeted by law firms, continue to watch this space.
Meanwhile, in the general airline share price check of the past week or so all should take note of FastJet which has seen its shares fall in value by over 90% over the past 12 months. At the same time gold is on the rise once again indicating that investors are moving back to the usual safe haven of choice during uncertain times.
Also the A380 interior problems are causing many headaches, first Skymark and now Qatar has had to delay putting A380s into service because of “interior specification errors”.
Against all of this IATA released its 1Q airline financial update for 2014, which showed an overall operating profit of US$451m from a loss of US$29m for the same quarter last year.
North American airline operating profit was up 258% for the quarter at US$1.5bn, while Asia Pacific posted an operating loss of US$557m from a profit of US$498m. Europe remained fairly flat, posting a loss of US$1.732bn from a UJS$1.768bn loss for the quarter in 2013.
Latin American airline operating profit was up 11.7% at US$353m while the rest of the world was up 75.5% at US$890m. Overall net profit was 1.42bn from a near 2.48bn loss for the same period last year.
So IATA 1Q figures show that airlines are indeed continuing to improve margins, particularly at the operating level but the APAC region is providing a drag on figures through local currency weakness, which looks set to get worse before it gets better in 2014.
Etihad Airways President and CEO, James Hogan has told African press that the Air Berlin and Alitalia networks will be integrated and they will look to continue working with Air France-KLM if possible. Of course Wizz is now in a tricky position following its IPO withdrawal as it does not have the funds it wanted to expand into Israel. Wizz needs to come up with other options to fund/facilitate expansion before the Air Berlin/Alitalia/Air Serbia networks align to provide renewed competition in the central and Eastern European low cost market.
All the while Capitol Hill once again rings with the voices of opposition to the US Export Import Bank which critics say is providing corporate welfare. Ex-Im Bank funding expires on the September 30, 2014 and many leading Republicans in the House of Representatives are already gearing-up to have the bank disbanded.
This time around Ex-Im critics have jobs figures turned towards their argument as they state that “The Bank of Boeing” is actually destroying more jobs than it is creating by supporting overseas airline expansion while it is using suppliers from outside the US to build aircraft.
This for the first time is providing a credible argument to those against Ex-Im and it is set to be a very public debate during the summer months with a far closer vote this time around on Capitol Hill. Without Ex-Im Bank support, Boeing would find it challenging to keep pace with Airbus sales, which would continue to be supported by the European Export Credit Agencies, and in all this it should also be noted that the Ex-Im bank default rate is less than 1% even though it underwrites the risk that many banks would not touch – The bank does good business.
We all know full well that Ex-Im and other ECAs kept the market rolling during the financial crisis and for that reason among many others the Ex-Im debate is central to the growth of the aviation sector and the debate around the same will cause a degree of uncertainty this summer.