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LATAM CEO expects further airline capacity reductions if the fuel crisis persists
LATAM Airlines' Chief Executive?Roberto Alvo warned that the industry could be forced to reduce capacity if fuel prices continue to rise into 2027. He also said there would be increasing pressure on airlines. Alvo said in an interview at the International Air Transport Association annual meeting in Rio. "At the end, that's the only thing you can do to try and balance the equation in the industry." Alvo said that airlines with stronger balance sheets, and more premium passengers were better positioned to absorb the fuel shock. He said that carriers with weaker finances, or those who are more exposed to customers who are price sensitive, like ultra-low cost carriers, will face greater challenges. He stated that the higher borrowing costs for airlines are already reflected in bond prices, as investors react to the fuel price shock. Alvo stated that if the effects of the war continue, "it won't get any better." Alvo says that LATAM’s fuel hedges do not protect the airline fully because current prices are higher than those covered by these contracts. Hedging can smooth out margins, but it cannot protect an airline against a sudden spike in fuel prices, Alvo said. Alvo predicted that 'aircraft and engine supply-chain' problems would continue to be a problem for at least two to three years. This will force airlines to maintain older planes in service longer. He said that engine and airframe manufacturers had "not been able to meet their commitments". Alvo said that engine manufacturers had benefited from the shortages by gaining pricing power, while airlines were absorbing the costs of delayed planes and engines. He said, "We must absorb the problem of not being able to get the engines for the aircraft we bought and that our suppliers had promised." Reporting by Rajesh Kumar Singh in Rio de Janeiro and Gabriel Araujo, edited by Manuela Andréoni
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In a bus accident and fire near Nassiriya, at least 21 Iraqis were killed and 19 injured
Police and health officials reported that at least 21 Iraqis were killed and 19 injured when a passenger?bus crashed and caught fire?near Nassiriya, a southern?city?. Officials?stated that the accident happened after the driver lost the control of the vehicle on a highway near Nassiriya. The vehicle then flipped over and erupted in flames. His office reported that Iraqi Prime Minister Ali al-Zaidi had ordered an investigation to determine the cause of the crash. He also instructed authorities to submit a report detailing the circumstances of the accident. Officials from the police and medical services confirmed that 21 people died at the scene, and 19 more were injured. Health officials reported that the majority of those injured were in a critical condition, and had suffered?severe? burns. Police said that the cause of this crash is still being investigated. Speeding, poor roads conditions, and inadequate enforcement of traffic laws are all factors that contribute to road accidents in Iraq. Reporting by Ahmed Rasheed, Editing by Chris Reese
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Iran rejects the idea of using assets to pay US allies damages
Iran's deputy foreign minister Kazem Gharibabadi stated on Sunday that regional governments "were not in a position" to demand restitution. He was responding to reports that the U.S. might use?Iranian resources to compensate regional allies for war-related damage. Gharibabadi said in a 'post' on X that Iran assets are "neither spoils of war for Washington, nor a fund to pay its allies". According to a report on Saturday, which cited a source with knowledge of the issue, the United States will make Iranian assets accessible to Gulf allies in order to help rebuild and repair future damages caused by Iran. The United States would 'also consider using these assets to support repair for past damages. This source added that U.S. Treasury Sec. Scott Bessent had instructed a team of experts to assess the costs of damage Iran has already caused to Gulf allies. During the war, Iran launched drone and missile attacks on several Gulf nations, claiming to be targeting U.S. interests and Israelis in the region. The?Iran claimed that it launched ballistic missiles on Saturday at U.S. bases located in Kuwait and Bahrain. The?U.S. The?U.S. According to a Rystad Energy report published in April, the Middle East conflict may cost up to $58 billion for repairs of energy infrastructure. Gharibabadi stated that any seizure or transfer of Iranian assets without the consent of Iran's government would be "a new international wrongful act". This would place the U.S. in a position of responsibility, at a moment when Washington is claiming to seek a negotiated agreement with Tehran. He said that such a move could also trigger an "appropriate" response from Iran, without going into further detail. Iran is asking the U.S. to release a portion its confiscated funds under the framework of the negotiations between the two countries to end the Iran War. Gharibabadi stated that some regional governments had "placed their territory and facilities at the service of aggressive action against Iran", and therefore were not in a place to demand reparations. He said that these governments should compensate Iran for all damages. Tehran's demands for a?end to the war? include the release of billions of US dollars in frozen assets as well as lifting of U.S. sanctions and international sanctions, and recognition of Tehran's sway over Strait of Hormuz. Reporting by Eman Aboushassira, Editing by Mark Potter & Edmund Klamann
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Oman Air orders jets to transform into profit
Oman Air will order 'jets' to replace its aging planes, and to serve more routes, according to CEO Con Korfiatis. Korfiatis did not reveal a timeline for the deal or the number of aircraft, but he said that he was interested in narrowbody jets equipped with lay-flat mattresses, which appeal to premium travelers and are able to carry fewer passengers on long-haul flights, such as Kuala Lumpur, and Istanbul. He said, "We've been doing long-haul flights on narrowbody aircraft in the past couple of years that we didn't do before." "We see a market opportunity with this product." In March, Oman and Saudi Arabia 'offered alternate travel routes for tens thousands of Gulf residents trying to flee Iranian airstrikes after the U.S./Israeli war against Iran. Oman Air had to accommodate four to five time the usual number of passengers in the event of a crisis. The carrier is expecting to fly at least as many flights in 2026 compared to last year. Korfiatis stated that "having so many people cross the border to fly was a challenge in ways we have never seen before." "We've not seen our airport this full." He explained that in certain cases, customers would need to buy their tickets before crossing the border. He said that some people at the border didn't own a vehicle, so he set up bussing services. The airline's plan to transform from a losing airline may allow passengers who waited in Oman before departing the Gulf to return. He said that "generally, people who come to Oman come back." (Reporting by Allison Lampert, Rio de Janeiro; editing by Manuela andreoni and Chris Reese).
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Cathay Pacific CEO: More aircraft to be ordered across the fleet
Ronald Lam, the Chief Executive Officer of Cathay Pacific, said that it is looking at placing additional orders for widebody aircraft, 'narrowbody aircraft and freighter planes as part of its plans to expand rapidly in the next decade. Lam said this could include new orders as well as exercising options to expand previous orders. Cathay has already ordered more than 100 'new aircraft, including the long-delayed Boeing 777X, Airbus A350 cargo planes?and smaller Airbus A320neo passengers jets for HK Express, its low-cost subsidiary. Lam told reporters at an aviation summit held in Rio de Janeiro that "there will be more orders." Lam said that the next 10 years are a 'golden opportunity' for Cathay Group to expand, citing an increase in flights on Hong 'Kong's third runway. Lam stated that HK Express 'would only maintain an Airbus fleet,' excluding the purchase of rival Boeing short-haul aircraft. He said that Cathay Pacific will not cut flight capacity further despite the soaring fuel prices caused by the 'Iran war' and that the airline is on track to reach 10% capacity growth in this year. (Reporting and editing by Manuela Andréoni).
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Embraer, Brazil's Embraer, sees China as the ultimate breakthrough for E2 jets
A senior executive at Brazilian planemaker Embraer said on Sunday that the company expects its E2 'jets' to be brought into China eventually, as the aircraft will play a part in the development of domestic models. Arjan Meijer, CEO of Embraer Commercial Aviation, said that the team is working day-to-day in China. He was speaking on the sidelines a global meeting of top airline executives held in Rio de Janeiro. He added, "We think the E2 family will be the perfect complement to the indigenous products from China." Meijer stated that the E190E2 and E195E2 jets could 'fit between China’s smaller C909 aircraft and the larger C919 aircraft, giving airlines the flexibility to connect cities throughout the country. The executive stated that Embraer was in talks with potential customers. He also noted that the E2 family had been certified by local authorities. Since the closure of an executive jet joint-venture in Harbin in 2016, Embraer has had difficulty finding new business in China. It announced in 2023 a deal in Lanzhou to convert passenger planes into freighters, disappointing those in the industry hoping for a sale to an airline. "China faces its own challenges. So we're in discussions. We do believe that we will be able to find the right moment to introduce the E2 to China. But we need to wait. Meijer stated that we are not yet there. Meijer also said that Embraer is not yet ready to develop a larger aircraft, despite the growing interest from customers. He said that the firm is still focused on its core jet segment, which seats up to 150 passengers. It competes with Airbus’?A220 Family, but it falls below Airbus and Boeing’s most popular A320 and A737 families. It's no secret that our customers want a larger aircraft. But that's a huge?decision, especially for a company such as Embraer. We are not there. Meijer stated that they are "very satisfied" with the segment of 150 seats and up. (Reporting by Gabriel Araujo in Rio de Janeiro, editing by Manuela Andreoni)
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United Airlines CEO: Big merger unlikely following American's rejection, but asset purchases are possible
United Airlines is open to purchasing airport slots, gates, or other assets, if higher fuel prices place weaker competitors under pressure. However, it will not pursue a large consolidation 'deal' after its failed approach to American Airlines. Kirby stated in April that American refused to engage with him after he approached them about a merger. This was an idea he reportedly raised in February with U.S. president Donald Trump. Robert Isom, the CEO of American, rejected a merger as being anti-competitive for customers and unprofitable. Kirby stated in an interview conducted on the sidelines the International Air Transport Association annual meeting held in Rio de Janeiro, "I don't think United will consolidate." "That does not mean that we will not still be in the marketplace to buy assets. But consolidation is a very low probability." Merger Needs Management Support Kirby said he thought the deal with American would have been beneficial to consumers. He said that a deal so large and unusual could not have been completed without the support of?American's Management. United's chief executive said that he thought labor groups, shareholders and clients would have supported this deal. He said that the public opposition of American management made it impossible to complete the deal. Kirby stated that the management team could not publicly state it was anticompetitive. When asked if United had abandoned American or if it could come back to the idea in the future, Kirby said that any deal would need "a willing partner." He denied that United and the Trump administration had discussed giving the U.S. Government a golden stake as part of any merger proposals. Fuel prices are increasing and putting pressure on airline margins. This is causing a widening gap between the larger airlines with better brands and their weaker competitors with lower pricing power. Kirby stated that United believes it will be able to recover the full cost of fuel surging prices by the end of the year, despite the rising ticket price. This shows the carrier's faith in the demand for tickets despite the increasing prices. He said that demand has remained strong, but United expects the higher fares to eventually have an impact. BRAND-LOYAL AIRLINES PULL AHEAD Fuel shock has been cited by several airline executives as a factor in separating the stronger from the weaker carriers. Kirby described the division as being between airlines that have a loyal customer base and those who compete primarily on price. Willie Walsh of the International Air Transport Association criticized him for saying that large U.S. Carriers are eliminating 'competition. Kirby stated that United and Delta Air Lines have won because they invested in brands and services that travelers value. Kirby stated that "customers are concerned about technology, service, reliability and the product." "They want a great experience." They want more than a seat. Kirby said United’s advantage was less about its balance sheets than?its operating profits, which allowed the airline to continue investing while other similar sized competitors are barely breaking even. Kirby was asked if JetBlue Airways' cash and assets would make it more attractive to United in the event that JetBlue entered Chapter?11 - a financial restructuring procedure. He said, "that scenario is unlikely", citing JetBlue’s unencumbered funds. He also dismissed fuel hedging, claiming that it was "ineffective" if the company lost money. Kirby acknowledged that Delta's refinery helps it to survive in the current market, but he said United was not interested in buying a refinery like its U.S. competitor. (Reporting and editing by Edmund Klamann, Rajesh Kumar Singh, Joe Brock)
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Copa Airlines maintains its no-hedge policy as fuel shock tests airlines
Copa Airlines does not plan to hedge fuel despite recent price spikes linked to the war with 'Iran. CEO Pedro Heilbron said that the airline is confident its strong 'balance sheet' and pricing adjustments can absorb the shock. He said that the Panamanian airline hasn't hedged fuel for over a decade, and doesn't intend to change its course. Heilbron explained, "We are just covering the costs." "Yields were adjusted, but not 100%. "It's only a partial effect." The global airline industry has raised fares to compensate for higher fuel costs, but the increases have been constrained by demand and competition. The executive stated that the industry is relying on fuel prices to gradually ease. Heilbron said Copa's conservative balance sheet and strong liquidity provide flexibility to weather volatility. He said that this gave Copa?room to maneuver, and also to be resilient. The demand in Latin America is still strong, Heilbron reported, thanks to the stronger currencies on key markets like Brazil. Copa, a hub-model airline that operates from Panama and flies Boeing 737s, continues to grow along with the planemaker's deliveries. The airline recently agreed to purchase up to 60 737 MAX aircraft, which will allow for both fleet renewal and expansion. "There is a high demand for new aircraft from both Boeing and Airbus. If you don't place your order early enough then you will be left without delivery. This 'new order' is for 2030-2034", he explained. The order includes flexibility for MAX variants as well as options for the MAX 10 which is yet to be certified. Copa is reviewing its fleet mix and hasn't made a final decision yet. Boeing's CEO stated that the company has been delivering on schedule or slightly earlier than expected. Gabriel Araujo in Rio de Janeiro and Luciana Magnalhaes, editor Manuela Andreoni.
Chairman: Fuel prices will not derail TAP privatization
The rising fuel costs in aviation won't derail the privatization process of Portugal's flag carrier TAP. It could select a strategic partner by the end of the year, said Carlos Oliveira, chairman of TAP. He spoke on the sidelines at the IATA Annual General Meeting held in Rio de Janeiro, on Sunday.
Oliveira stated that "we are in a process which is very transparent and well defined, as it was set up by the shareholder -?the Portuguese state".
Oliveira stated that the airline will be waiting for binding proposals by the end of July. He added that fuel "will not have an impact" since it is applicable to the entire industry.
Air France-KLM, Germany's Lufthansa and British Airways owner IAG were the only airlines that submitted a?non binding bid for a majority stake in TAP after IAG initially showed interest but then opted out.
Portugal wants to sell 49.9% stake in the airline, while a 5% share is reserved for its employees.
Oliveira stated that although the final decision is made by the Portuguese government, TAP's Board will be involved in reviewing the strategic plans of each bidder.
TAP is looking for a partner who can offer access to wider, more structured networks and fleet synergies as well as maintenance and engineering collaboration. This is in the midst of a wave consolidation that has swept through European aviation.
Oliveira stated that "we?want to ensure that TAP has a partner that helps it amplify this growth."
TAP is also?doubling down? on Brazil where it expects?to serve 15 destinations, 10 exclusively by the end of this year, Oliveira stated.
Two new routes will be launched by the airline from Portugal to Brazil, one in July to Curitiba and another starting in October to Sao Luis. Reporting by Luciana Araujo and Gabriel Magalhaes in Rio de Janeiro. Editing by Manuela Andréoni.
(source: Reuters)