With the impact of the global financial
crisis, aviation sector players can no longer count on cheap financing or fuel.
Equally challenging – no one can say with any certainty where the next sources
of long-term economic growth will be. Even as growth stagnates in mature
markets, it’s not obvious which of the emerging markets might be net source of
growth.
Airlines have been capital-destructive for
their shareholders or so is the word on the street. The perception is not wrong
as airlines globally have historically made returns well below the cost of
capital to owners and still are generating only a small net-profit margin of
approximately 1.8% on a combined turnover of $5 billion. However the landscape
and maturity of the regional airline industry appears to be at a cross-roads
Perhaps a relatively less known commodity is
the actual aircraft the passengers fly on, which are the work horses of any
airline. The Global trend is for investors to look more closely at the aircraft
as collateral versus the operator of the equipment. According to Ascend, a
highly regarded aviation consultancy, commercial aircraft have over the past twenty
years returned on average 6.2 percent on an unlevered basis to aircraft owners
with the lowest standard deviation on return volatility compared with airline
or other market indices such as shipping or the S&P500; In other words if
you had invested $100 in a portfolio of commercial aircraft in 1991, your
portfolio would be worth $376 currently, while sleeping well at night.
Jazz Aviation LP, operating as Jazz is a
Canadian regional airline based at Halifax Stanfield International Airport in
Enfield and Halifax International Airport, and is a wholly owned subsidiary of
Chorus Aviation It is Canada’s second-largest airline (in terms of fleet size)
operating in 79 destinations in Canada and the United Stated, under a Capacity
Purchase Agreement, a legal document for transferring transmission capacity for
a defined period. Air Canada sets the Jazz route network and light schedule,
and purchases all of Jazz’s seat capacity based on predetermined rates. Its
main base is Halifax Stanfield International Airport with hubs at Toronto
Pearson International Airport and Calgary International Airport. It has
approximately 740 departures per weekday to 54 destinations in Canada and 25
destinations in the United States. It also offers charter services under the
Jazz brand through two aircraft for sports teams, fishing lodges, oil and gas
companies, forestry ministries, musical groups and corporate clients. In
addition the company provides passenger and ad hoc services. As of December 31,
2013 it operated a fleet of 127 aircraft, comprising 42 regional jets and 85
turboprop aircraft. Chorus Aviation Inc. (CHR/B: Toronto) stock is traded for
C$3.84 which is -3.33% lower than it last month’s average.
Chautauqua Airlines, Inc. is a regional
airline and a subsidiary of Republic Airways holdings based in Indianapolis,
Indiana, USA. Based on 2009 published flight schedules, it operates scheduled
passenger services on more than 700 flights daily to 98 airports in 31 states.
Republic Airways Holdings, Inc. is a Delaware holding company organized in 1996
that offers scheduled passenger services through the wholly-owned air-carrier
subsidiaries: Chautauqua Airlines, Inc., Shuttle America Corp. and Republic
Airline Inc. Republic Airways Holdings Inc. shares are traded at NASDAQ for
$9.67 up 3.2% percent.
Hawaiian Holdings, Inc. is a holdings company
whose primary asset is Hawaiian Airlines Inc. HA is engaged in the scheduled
air transportation of passengers and cargo among the Hawaiian Islands and
certain cities in the western United States. It is the largest Hawaiian based
airline with the number one market share in inter-island flight between the
Hawaiian Islands and number one in the market share to/from Hawaii. Ha has had
ten consecutive quarters as of Q4 2010 without negative earnings. As of
December 31, 2009, Ha’s fleet consists of 15 Boeing 717-200 aircraft for its
inter-island routs and 18 Boeing 767 – 300 aircraft for its transpacific
flights. HA competes with Alaska Air, Delta Airlines, and Republic Airways. The
company has a very conservative capital structure compared to its competitors.
Its Debt to Equity ratio has been decreasing for the past three years going
from 4.86 to 1.44 to 0.68 (2008-2010). Hawaiian Holdings, Inc. is currently
sold at $15.24 per share, that’s up 1.14%. If you are interested more on stocks
and other insights about this industry, look no further than Bidnessetc.com
where you can find analysis of Airline based companies like American Airline stocks
