Mineta Sparks, Grinstein Quells DL/NW Merger Talk
U.S. Department of Transportation Secretary Norman Mineta during a speech in Shanghai this month said he was "just thinking out loud" when he spoke of a potential merger between Delta Air Lines and Northwest Airlines—further fueling merger speculation initiated when both carriers filed near-simultaneous bankruptcies in September. Delta Air Lines CEO Gerald Grinstein last week quelled the speculation when he told the Atlanta Journal-Constitution, "We are not in merger discussions with anybody. Our aim is to remain a stand-alone, independent airline." However, the possibility of more M&A activity in the airline industry this year remains. "I would expect at least one major merger proposal in 2006," said Air Transport Association vice president and chief economist John Heimlich. "I also expect to see continued new-entry competition, although perhaps on more rational terms given the reality of fuel prices."
E.U. Maintains Air Passenger Compensation Ruling
Europe-based carriers this month failed in their appeal to strike down last year's European Union law that mandates airlines compensate passengers for delayed or canceled flights. As such, air passengers in Europe are entitled to up to E600 if a carrier is responsible for canceling a flight or bumping a passenger. The International Air Transport Association and European carriers said they were disappointed with the ruling, adding that the industry stands to lose $700 million in costs. "IATA maintains that the regulation conflicts with the Montreal Convention, the global standard for passenger compensation, by making airlines liable to provide assistance to passengers even in cases that are completely outside airline control—such as delays due to inclement weather or air traffic control strikes or capacity limitations," IATA said in a statement, adding that it will continue to lobby.
Worldspan, KLM Sign Distribution Deal; Eos Loads Fares
Global distribution system vendor Worldspan and KLM Royal Dutch Airlines this month announced a full-content agreement, which offers Worldspan and its customers "the same fares and availability of content offered through KLM's direct sales channels, including its Web site and reservation agents, without surcharges." Meanwhile, Eos Airlines—the transatlantic all-business-class upstart—has added its flight schedules and fares to the Sabre global distribution system under the airline code EO. "The fact that Sabre can provide us with outstanding access to the high-yield corporate traveler was of great interest to us," said Christopher Frawley, vice president of distribution at Eos. "This is a terrific match for our corporate-focused product.
Geac Acquisition Gains Approval
Shareholders of Geac Computer Corp.—the Canada-based software provider and acquirer of expense reporting company Extensity—last week approved its acquisition by Golden Gate Capital. The deal, which the Ministry of Industry of Canada already has approved, awaits final court approval on Jan. 30 and is expected to close by March 16. Geac said that 98 percent of all votes cast during a shareholder's meeting last week were in favor of the acquisition, which has been valued at $1 billion. When the two companies signed the agreement in November, David Dominik, managing director of Golden Gate Capital, said in a statement that a Golden Gate Capital executive said Geac will be split into two separate companies. One company will sell and operate industry-specific software and services, while the other—which includes the expense reporting component—will comprise a "financial applications" business. Following its acquisition of Extensity, initiated in the fall of 2002, Geac integrated the company with other offerings in its Performance Management suite and rebranded the Extensity component Geac Expense Reports.
Indian Airlines Launches Electronic Ticketing
Indian Airlines partnered with Amadeus and IBM to implement the first electronic ticketing solution in India with global reach on Jan.19. Amadeus Electronic Ticket Server will manage and distribute Indian's traditional and interlining e-tickets. Integrating Indian's reservations and departure control systems with Amadeus ETS gives the carrier the opportunity to cement commercial interlining agreements with the 70 airlines Amadeus hosts in its database. IBM is responsible for upgrading the carrier's processes and systems to meet International Air Transport Association e-ticketing standards. Indian expects to comply with IATA's 100 percent paperless air travel initiative by 2007.