Regulator extends consideration of Qantas’s Alliance acquisition
October 31, 2022
The Australian Competition and Consumer Commission (ACCC) has extended the timeframe to consider competition concerns regarding Qantas's proposed acquisition of Alliance Airlines. The competition regulator on 28 October deferred the provisional date to announce its findings to 1 December "to allow the parties more time to provide information", according to its register on the transaction on its website. The ACCC in mid-August outlined preliminary competition concerns regarding the acquisition and had set a closing date of 1 September for submissions from interested parties to these concerns and 17 November for a final decision. It has since delayed the deadline to deliver its findings since August, and this extends the date for ACCC's final decision to 20 March. In a statement today, Qantas expressed its disappointment in the ACCC's decision "to delay its findings on the airline’s acquisition of Alliance Aviation Services for a third time". The flag carrier highlights that it "has been clear about its intension to fully acquire Alliance" since it acquired a 19% stake in the charter services operator in February 2019. It argues that the ACCC "took three years to investigate that minority holding and made no findings that it lessened competition", adding that it also "had the benefit of over two years of closely monitoring the domestic aviation industry". Commenting on the new timeline for the ACCC's decision to next March, Qantas asserts "this would make it one of the longest processes for informal clearance in recent times", comparing it with the "11 days it took for the ACCC to decide it didn’t need to conduct a public review of Rex’s acquisition of National Jet Express from Cobham in July this year". "Qantas is a firm believer in regulation and due process, and has cooperated fully with information requests from the ACCC, but also believes such regulation needs to be timely and efficient to maintain confidence in the process." The flag carrier in early May announced that it had reached an agreement to fully acquire Australia's Alliance Aviation Services, which would see it acquiring the remaining 80% stake in Alliance through a scheme of arrangement. The ACCC on 18 May began a formal review of the acquisition under the informal merger review process guidelines.
Airbus sticks to deliveries target despite supply-chain squeeze
October 31, 2022
Airbus has described its fourth-quarter commercial aircraft deliveries target as "challenging but doable" despites its expectation that the supply chain will take "up to the middle of 2023" to normalise. Chief executive Guillaume Faury said during a 28 October earnings call that third-quarter deliveries has been "not so strong", resulting in "a significantly backloaded end of the year" in which the airframer aims to deliver "close to 265 planes". Faury says Airbus is "less dependent on supply-chain deliveries" as it closes in on November compared with one to two months prior. "This gives us more visibility on what we can do from a supply-chain perspective, but it is a lot of planes to deliver in the last two months. It is now mainly on Airbus's shoulders to a very large extent. Engine makers are delivering against their previous commitments. So on one hand, we have more visibility on the supply chain, but on the other, we know the challenges that are about to come," he says. Airbus has maintained its delivery target of "around 700 commercial aircraft" for 2022. Across the first three quarters of the year, it delivered a total of 437 aircraft, versus 424 in the same period of 2021. "As of today, the supply chain remains fragile, resulting from the cumulative impact of Covid-19, the war in Ukraine, energy supply issues and constrained labour markets," says Faury. "We expect it will take up to the middle of next year to normalise, therefore 2023 is expected to be another backloaded year." Despite some signs of the situation "potentially getting better", Faury highlights that things overall "remain very difficult". He observes that while managing resources "quite adequately on the blue-collar side", Airbus is finding it "quite challenging on the white collar [front]". "Mid-sized and smaller companies in other regions of the world continue to experience a lot of difficulties to recruit in numbers and in specific skills. So this will continue to be a headwind for the ramp-up [in production], and I think it will take time before it gets better, especially on the labour markets," he adds.
Canada raises antitrust concerns with WestJet bid for Sunwing
October 28, 2022
Canada's federal Competition Bureau has warned that the proposed merger of WestJet and Sunwing Airlines "would likely result in increased prices, less choice and decreases in service for Canadians", as a government review of the transaction moves to the next stage. The regulatory report published on 25 October will inform Transport Canada's public interest assessment, due on 5 December. The transaction would create a powerhouse of leisure travel to destinations in Central America and the Caribbean. Calgary-based WestJet in March proposed the merger of WestJet Vacations and Sunwing Vacations, which would operate as a new business unit, spearheaded by Sunwing chief executive Stephen Hunter and with a Toronto headquarters supplemented by a Quebec office in Laval. The bureau states that the combination would "result in a substantial lessening or prevention of competition in the sale of vacation packages to Canadians" on 31 routes from the country to Mexico or the Caribbean. "The transaction also represents a merger of the only two integrated airlines and tour operators offering nonstop service on 16 of these routes," the bureau adds. "It would also likely result in a significant reduction in travel by Canadians on a variety of routes where their existing travel networks overlap." Canada's third-largest carrier Air Transat has also expressed concern about the proposed deal. Final regulatory approval will be decided by Canada's Governor in Council based on the forthcoming recommendation of transport minister Marc Garneau. WestJet is Canada’s second-largest airline, while Toronto-based Sunwing is fourth based on capacity scheduled for March, Data shows. WestJet and Sunwing in 2019 operated around 50% of capacity to sun destinations from Canada. Flag carrier Air Canada is more than twice the size of WestJet, which has agreed to codeshares with Transat and other airlines in a bid to compete against its larger rival.