Airline Merger Mania; Upbeat Outlook at ASML; Banco Popular Profits Rise; Investment in Japan Drops; First Airbus for Singapore Air
British Airways PLC (BAY) - highly concerned about a joint venture announced yesterday (Wednesday) between Air France-KLM (AKH) and Delta Airlines Inc. (DAL) - is already looking at merger opportunities that would create a Transatlantic super-carrier, the London Times and Reuters reported early today (Thursday). Air France and Delta yesterday announced a transatlantic joint venture that will let the two airlines share routes between key U.S. and European cities. The partnership, which takes advantage of the new Open Skies agreement between the United States and Europe, will generate estimated annual revenue of $1.5 billion in its first phase and $8 billion in the second phase, the companies said in a statement. Air France shares rose 58 cents to close at $38.24, while Delta's stock rose 32 cents a share to close at $20.40 yesterday. News sources said British Airways is in talks with Michael Bishop, the controlling shareholder of British carrier BMI, and may look at a renewed attempt at merging with AMR Corp.'s (AMR) American Airlines. Two earlier efforts at merging with AMR were halted by regulatory issues.
Shares of Amsterdam based semiconductor equipment manufacturer ASML Holding NV (ASMLD) yesterday after the company announced a 2.3% drop in third quarter profits. Rather than focus on the loss, however, investors focused on the company's announcement that machine orders had picked up, meaning 2008 revenue will increase. Chief Executive Eric Meurice told The Associated Press that ASML expects fourth quarter unit orders to exceed those of the third quarter. Shares of ASML were up 7.94% to $34.81.
Spain's third largest bank, Banco Popular Espanol SA, announced yesterday that third quarter profits rose 9.1% - roughly in line with expectations. Bank officials said quarterly profits were $450.34 million, up from profits of $412.87 million a year ago, Dow Jones and Thomson Financial reported. Banco Popular Chief Executive Jose Maria Lucia warned that the growing global liquidity problems would begin to affect the bank's lending practices. He said the bank would "have to be more selective about who we are lending to and adjust our margins to the real risk. Clients will have to accept higher lending margins."
Foreign direct investment in Japan fell in 2006 for the first time since 1989, the United Nations Conference on Trade and Development reported. FDI inflows to Japan fell to minus $6.5 billion last year on a net basis, after an inflow of $2.8 billion in 2005. Although $2.3 billion in earnings was reinvested in Japan, it was overwhelmed by $8.6 billion in net equity unloading. Many large companies sold or disposed of Japanese ventures this year, including General Motors Corp. (GM), which sold most of its Suzuki Motors division, and Vodafone Group PLC's (VOD) exit from that country's mobile phone market.
Singapore Airlines LTD SIA (SINGF) on Monday took delivery of the world's largest commercial airliner. The first Airbus A380 superjumbo was delivered 18 months behind schedule. The airliner can seat 525 passengers but Singapore Airlines had its planes reconfigured to a reduced count of 471 to offer what they are calling "unprecedented comfort, space and luxury to customers." The plane has 12 Singapore Airlines suites, 60 business class seats, and 399 economy class seats on two decks. The crafts inaugural flight is on the Singapore to Sydney Route on October 10th. The seats for the flight were auctioned off and raised over $1.3 million, which was donated to Doctors without Borders and other charities in both Singapore and Sydney. Regularly scheduled service will begin October 28.