InsideTrack - 2005-03-21

Lufthansa In Swiss Acquisition Talks
Lufthansa German Airlines is in discussions to buy Swiss International Air Lines, the two companies confirmed last week (BTNonline, March 14). If cemented, the long-expected deal would advance European airline consolidation, following the formation of Air France-KLM Group one year ago. Based on a "jointly developed business plan," the agreement would maintain the Swiss brand and traffic infrastructure "to the extent possible." It also could lead to integrated corporate and agency programs, such as those offered by Air France-KLM (BTN, June 7, 2004). The transaction requires various approvals, which some press reports said could come this week.

Walsh Named British Airways CEO
British Airways named former Aer Lingus CEO Willie Walsh its next leader, effective in September upon Rod Eddington's retirement. BA chairman Martin Broughton in a statement hailed Walsh "for the way in which he transformed Aer Lingus from a high-cost underperforming carrier into a successful and profitable entity." Walsh officially joins BA May 3 as CEO designate and will focus on "quality service and value for money." Eddington has been credited for transforming British Airways' business and returning it to profitability during his five-year tenure. BTN named him as one of the industry's 25 most influential executives in January 2003.

EC Questions IATA Tariff Conferences
The European Commission last week began seeking comment on a recently published consultation paper questioning whether the International Air Transport Association passenger tariff conferences should remain exempt from the EC's ban on restrictive business practices. The EC is trying to determine if a primary consumer benefit of such conferences—airline cooperation on multi-carrier interline fares—can be achieved without providing a forum for carriers to reduce price competition. The current block exemption on interline fare agreements expires June 30. An earlier consultation paper published last summer drew mixed responses from the industry. "While airlines favor a prolongation of existing exemptions, corporate customers and travel agents do not," the EC said in a statement. New comments must be submitted by April 1.

US Air Preps Ch. 11 Exit, Delta Desperately Avoids Court
Bankrupt US Airways now has until April 15 to present a restructuring plan, following an agreement with primary financial backer GE Capital Aviation Services. The earlier deadline had been March 15. US Airways announced the extension last week, in conjunction with a second financing deal reached with a regional jet operator (BTNonline, March 15). The deal is contingent on bankruptcy court approval and would represent another step toward the carrier's planned emergence from Chapter 11 by the end of June. Delta Air Lines, meanwhile, in a recent financial filing again warned of more "significant losses" and a possible bankruptcy filing, unless costs are further reduced. The carrier said a Chapter 11 restructuring "may be particularly difficult because we pledged substantially all of our remaining unencumbered collateral in connection with transactions we completed in the December 2004 quarter (BTNonline, Oct. 26, 2004)."

Travel Institute Offers New Industry Certification
The Travel Institute has introduced a professional certification for travel executives and mid- to upper-level management. The Certified Travel Industry Executive certification program addresses business challenges for non-retail oriented corporate leaders through the Executive Institute, a two-day interactive, educational conference, said Guida Ferreira, coordinator of training solutions for the Travel Institute. Certification, contingent on successful completion of a white paper and the CTIE test, is open to those who have at least 10 years of professional experience, five of which must be in the travel industry, and possess a CTC or CTA designation. Ferreira estimated the first crop of CTIE designates in January 2005 included more than 60 travel professionals.

Airport Hotels Show Jump In Bookings
The rebound in the lodging industry has caught up to airport hotels, a segment that in recent months lagged the revenue gains of larger, more visible downtown hotels. Citigroup Smith Barney analyst Michael Rietbrock singled out the segment this month for scoring double-digit percentage year-over-year increases in revenue per available room. In markets where availability of full-service rooms midweek is scarce, buyers often direct travelers to airport properties as a backup.