News items. Stories on JAL, China Eastern, Air Scotland,Novair, Air Canada, LOT.

JAL have painted up the first CRJ in the new livery…

————————————————————————————

China Eastern have recived their first 767.

http://www.jetphotos.net/viewphoto.php?id=71860
————————————————————————————

New airline sacks plane suppliers

SCOTLAND’S newest low-cost airline has parted company with its aircraft supplier less than a month after launching services from Glasgow, Aberdeen and Edinburgh to Spanish holiday destinations.

Air-Scotland yesterday terminated its contract with Electra Airlines, saying the standards of service and support offered by the company were not acceptable.

In its first few weeks of operating since 29 March there have been a number of flight delays which Air-Scotland has blamed on Electra failing to have its Boeing 757-200 aircraft ready on time. It has signed a new agreement with Air Holland to handle all its 11 weekly scheduled services to European airports.

The company chairman, Dhia al-Ani, said: “We regret that we have been forced to end our agreement with Electra, but their standards of service and support were no longer acceptable. We must be able to offer customers reliable, first-class quality service, and that means taking off on time. “

http://news.scotsman.com/index.cfm?id=475462003
————————————————————————————

Novair have planned to apply a new livery to all of its fleet…

————————————————————————————

Bondholders could kill Air Canada

The men in robes return to a Toronto courtroom today to continue bashing out the future of Air Canada. Every major group attached to the insolvent airline — employees, the airports, the banks, the leaseholders of its planes — is already sending its lawyers into full rhetorical flight, arguing the case why they should accept less pain than the next guy.

Every group, that is, except one: the bondholders.

Much of the company’s $4-billion in bonds are held by individual investors. No one is certain how many there are, but some on Bay Street estimate there are more than 25,000 people holding Air Canada debt in their portfolios. God knows what they were thinking when they bought it, but no matter: soon, they will be asked to trade their near-worthless paper for an equity stake in the remade Air Canada.

Aviation history is littered with airlines that got into trouble and restructured their debts, only to make the same mistakes and wind up insolvent again. The bondholders have a huge stake in making sure the same doesn’t happen to Air Canada — which means they can’t remain silent for long. They must demand a rational business plan from the airline’s management. And as it turns out, somebody has already done the work for them.

Strategic Analysis Corp., a Toronto-based investment research firm, argues in a report that Air Canada’s restructuring can’t stop with cutting its debt and renegotiating its union contract. What the airline needs , the authors say, is a complete change in mindset — and a policy of flying only routes where it can make money. No more leaving the ground with half-empty planes.

“What this translates into is a new Air Canada flying international routes, trans-border routes, and premium long-haul domestic routes where passengers are prepared to pay for amenities not generally offered on the [discount] airlines,” the report says. “It cannot serve all domestic and international markets with multiple aircraft types and a hub-and-spoke strategy, and compete effectively with low-cost airlines.”

Strategic Analysis has a bias; WestJet Airlines Ltd. is one of its corporate clients, and would be the big beneficiary if Air Canada stepped away from its current strategy of competing on every flight, everywhere. Even so, the idea makes a lot of sense. But it would be a tough strategy for Air Canada management to swallow, since they would be voluntarily reducing their company’s prominence, and their own importance.

So why should they go along with it? Strategic Analysis argues that if they don’t, the bondholders have the power — and maybe even the incentive — to do the unthinkable, and kill the airline.

“Our conclusion is that the $4-billion in unsecured bonds is now worth close to zero under virtually any scenario, except one. Ironically, the one scenario which maximizes value is the real threat of liquidation,” the report says.

Here’s the theory. The bondholders have already been essentially wiped out; the only hope of salvaging part their investment is a profitable Air Canada with a rising share price. But some of the other parties — especially the employees and leaseholders — have an incentive to keep the airline as big and bloated as possible, regardless of how profitable it is.

The coming bankruptcy negotiation will be a tussle over money, yes, but also of what the new airline will look and act like. The bondholders, with little to lose and much to gain, can threaten to vote against any restructuring plan that allows Air Canada to repeat its mistakes. And if they are as numerous as believed, they might have the power to defeat it.

“Brinkmanship diplomacy, abrasive behaviour, ‘take it or leave it’ negotiating tactics now belong in the domain of the bondholders, not Air Canada,” the report says. “After all, bondholders do not have much to lose. Zero is zero under any scenario.”

http://www.nationalpost.com/financialpost/story.html?id=95DEF89B-6EA6-42CA-A25D-293C8489CA3C
————————————————————————————

LOT Has now confirmed a previously announced order in which the airline signed for 10 Embraer 170s along with options on 11 additional aircraft that could include the ERJ190 and/or ERJ195 as well. From the 10 confirmed aircraft 6 are bought directly from the manufacturer and 4 are leased from GECAS with 6 to be delivered in 2004 and 5 in 2005.
————————————————————————————