Stop The Presses: There’s Good News For Canada’s Airlines
In an industry where the sky always seems to be falling, Canada’s airline sector is enjoying a period relatively free of turbulence.
As Reuters reported this week, shares in Air Canada and WestJet are both up by more than 20 per cent and analysts see more big gains on the horizon. It’s an impressive turnaround from last spring when Air Canada was on the brink of a second trip into bankruptcy and perennially-profitable WestJet was showing double-digit earnings declines. “Things are a lot better than a year ago. Demand has come back quite a bit in Canada and globally,” said Canaccord Genuity analyst David Tyerman. Even the highly lucrative first-and business-class travel is slowly making a comeback, which is critical for Air Canada, which makes most of its money from passengers in the front of the plane. At the same time, many consumers are still spending cautiously, which is good news for WestJet and its low-cost model. When analyst predictions are averaged, the expectation is that AC stock will reach $3.96 in the next 12 months, more than double the $1.92 its B shares closed at last week. The market expectations for WestJet are not as dramatic, largely because its stock was less battered during the recession as it was one of the few North American airlines to stay profitable throughout. On average, analysts expect WestJet’s stock to reach $16.59 in a year’s time, 29 per cent above its $12.85 close at the end of last week.
Full Steam Ahead Or Cruising For A Bruising?
The cruise industry is placing a very big bet that the global economy will recover. How big? Think billions, lots of billions. The shiny new Norwegian Epic is readying for its inaugural sailing this week. At a cost of $1.2-billion and a passenger capacity of 4,200, Epic is the most eagerly anticipated ship launch of the year, but certainly not the only one. In fact, more than a dozen large cruise ships will take to the water this year, after a similar number in 2009. Besides Epic, major launches this year include P&O’s Azura, Cunard’s Queen Elizabeth, Celebrity’s Eclipse and Royal Caribbean’s Allure of the Seas. In total, this year’s new ships will carry well over 25,000 passengers, who have to be replaced about once a week on average. Will the industry fill all these new berths? The cruise industry’s growth has been phenomenal over the past 20 years, average 7.4% growth each year. And as the market has matured in North America, cruise lines have been aggressive in seeking new markets, especially in the UK and Europe. But still, close to 80% of cruisers are from North America and not everyone is convinced that the North American economy – especially the U.S. portion – is heading back to health. As the Christian Science Monitor recently put it: “Ships are getting bigger and Americans are getting poorer.” The publication pointed to a forecast of 1.6-million personal bankruptcies in the U.S. this year, coupled with an unemployment rate near 10%. Those figures certainly encourage pause for thought, but so far the cruise business seems to have weathered the storm remarkably well – Carnival Cruise Corp. for one just posted a $250-million profit for the second quarter. And the industry continues to generate massive amounts of breathless press. Epic is all over the news this week and on Allure of the Seas, sister to world’s largest cruise ship Oasis of the Seas, made headlines recently when it announced that popular cartoon characters from DreamWorks will form a major part of onboard family entertainment is readying for its inaugural sailing this week Royal Caribbean obviously hopes the allure of cute cartoon Shrek and Donkey will keep the cruisers coming.
Big In Dubai: That’s The Way They Roll
In Dubai, it seems that small is just not an option. Take the Dubai World Central Al-Maktoum International airport: still under construction, the plan is to build the largest airport in the world with five runways, four terminal buildings and an annual capacity for 160 million passengers and 12 million tonnes of cargo. The airport will be ten times the size of the current Dubai International Airport, which ranked as the 15th busiest in the world in 2009, processing over 40 million passengers. Al-Maktoum saw its first test cargo flight land successfully this week, heralding the beginning of partial operations within a week or so. The airport is part of a $33-billion dollar Dubai World Central DWC project that will take the Emirate’s position as a global transport hub to a new level. The master plan includes six inter-related developments — the world’s largest airport, Dubai Logistics City, DWC Aviation City, DWC Residential City, DWC Commercial City and DWC Golf City. The names aren’t exactly compelling, but the scale of the projects is vast. As a point of comparison, the world’s busiest airport, Atlanta’s Hartsfield-Jackson, served close to 90 million passengers in 2009, while Canada’s largest airport, Toronto’s Pearson International, handled just over 30 million passengers in 2009.
By: Bruce Parkinson
Bruce Parkinson is a travel industry journalist and regular contributor to Takeoffeh.com as well as sister company, OpenJaw.com
Photo Credits: epic.ncl.com, en.wikipedia.org