November 29, 2006
Takeover Mania and News Roundup
Over the past two weeks, the takeover bug appears to have bitten the airline industry hard. An interesting article from the investing website Motley Fool comments on the Air France-KLM / Alitalia merger talks and on other potential deals in the airline sector.
Below are resources discussing the latest developments regarding each of the proposed takeovers:
AF-KLM / Alitalia Merger Talks
Qantas Takeover Talks
US Airways - Delta Proposed Merger
Ryanair Bid For Aer Lingus
AA - Allied Pilots Association Dispute Over Potential China Route
According to an AP article today: "American Airlines has recently rebuffed a demand by its pilots’ union to immediately negotiate terms of the carriers’ proposed service between Dallas and China."
EU Emissions Trading Scheme - Impact On US-EU Open Skies Deal
According to a Dow Jones wire story: "The European Union’s plan to include airlines using European airports in its emissions trading scheme could unravel all free-trade benefits currently being negotiated in a U.S. - European air travel deal..."
ECJ Advocate General’s Opinion On Netherlands - US Bilateral
A recent AFX article mentioned that: "A top EU judge [found] that the Dutch government’s aviation agreement with the US runs counter to EU law."
- Full text of Advocate General’s opinion (click on Case C--523/04 when new window opens)
Canadian International Aviation Policy Document
A Globe and Mail story recently noted that: "Ottawa is taking a small step toward allowing more overseas flights to and from Canada, but the big breakthrough for Air Canada to fly point-to-point within the United States may be at least 10 years away."
EU-Russia Overflight Breakthrough
AFX reported that: "The Finnish EU presidency said the EU and Russia have reached an agreement to abolish the taxes paid to Russia by European airlines flying over Siberia, which cost 330 mln eur in 2006."
NWA - Flight Attendant Union Labor Dispute Appeal
The Minneapolis St. Paul Business Journal reported yesterday that: "Flight attendants at Northwest Airlines Corp. asked a federal appeals court to void a lower court ruling and allow them to strike while they are in contract mediation talks with the airline." We discussed earlier developments in this labor dispute in August and September blog postings.
DOT Inspector General Review Of Airline Customer Service
According to the USA Today: "The government should crack down on airlines that chronically operate flights late, and force carriers to make their frequent-flier plans more transparent, the official watchdog of at the U.S. Department of Transportation said in a report [last] Wednesday."
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Because of the way air services agreements work, international airlines generally need to take care that they remain "substantially owned and effectively controlled" by nationals of the country designating the airline, in this case Australia. With Qantas the protection to ensure that this remains the case can be found in the Qantas Sale Act 1992 (available at http://www.comlaw.gov.au - see in particular section 7), which inter alia requires that two thirds of the airline's board of directors is made up of Australian nationals. Two thirds of the Airline Partners Australia board will also be Australian nationals.
The bidders note that foreign ownership of Qantas would actually decline from 46% to 40% if their bid is successful.
Posted by: John Macilree | Dec 30, 2006 2:13:01 PM