Thomas Cook reviews future of its airline

Thomas Cook reviews future of its airline

By Phil Davies

Thomas Cook reviews future of its airlineThe future of Thomas Cook’s airline business is under review as part of chef executive Harriet Green’s turnaround plans for the loss-making group.

The disclosure came in the wake of moves to dispose of unspecified non-core assets to bring in as much as £150 million.

Green yesterday announced an additional £50 million of cost savings, taking the total to £350 million by 2015. This helped lift Cook shares almost 16% to 100.75p.

Part of those savings include £65 million from bringing its four airlines, which have 86 aircraft and employ 6,500 people, into one group.

Green would not rule out the disposal of all or part of the airline business.

“Does Thomas Cook need to have an airline in the future?” she told the Financial Times. “We have options. We are reviewing whether we should continue with the airlines that we have.”

The group had “over-complicated the business” through a series of acquisitions, including airlines, said Green.

“In essence, it is not a complex business that shouldn’t demand huge amounts of debt,” she said.

Green believed the group had become weak in its city break and winter sun offers, and would start to offer new products pitched at women and children.

The restructuring includes the closure of 195 high street agencies, contributing to the loss of 2,500 jobs.

New targets include 50% online sales and an earnings before interest and tax margin of 5%, both by 2015.

Cook earns about one-third of its revenues from online sales and the remainder from its outlets, according to the FT.

The group confirmed that a review of its capital structure could result in a future share placing.

“When that review is complete we will decide on what action we should take, if any, including whether to raise new debt and/or equity capital and the amount and structure of any such capital raising,” the company said.

Wyn Ellis, analyst with Numis, told the newspaper: “We wait to see how it progresses: a lot of hard work needs to be done if it is to succeed with its ‘high-tech, high-touch’ approach.”

James Hollins, analyst at Investec, said: “There is no update on a potential equity issue or refinancing…Current trading is stated to be ‘progressing well’ for the key summer period and the full-year 2013 outlook is ‘encouraging’.”

Airlines work to improve speed and availability of in-flight WiFi

By Kate Rice
031113WiFiRoundUpAirlines and their in-flight WiFi service providers are upgrading their technologies — both terrestrial- and satellite-based — in an attempt to provide more robust service to a greater number of passengers.

The challenge with in-flight WiFi is that passengers who go online in flight are sharing a finite amount of bandwidth. Moreover, they’re sharing that bandwidth not just with other passengers on that flight.

In some cases, they are sharing it with passengers on other planes being flown at the same time by the same airline, who can be accessing the Internet from the same terrestrial towers or satellites.

Simply having more than 25% of passengers on any single plane online at the same time can seriously degrade WiFi service.

But it appears that is about to change. Airlines are adding capacity to satellite-based WiFi or upgrading their air-to-ground (ATG) services.

Gogo, which has the bulk of the aviation market, currently provides WiFi service to 1,800 planes. It is upgrading from its original ATG technology to an improved version known as ATG-4, which it says will enable up to half the passengers on a plane to be online simultaneously without degrading the quality of service.

At the same time, Gogo is adding satellite-based WiFi to its menu of offerings.
Until now, the company has relied on air-to-ground technology, having built out its own network of data transmission towers across the U.S.

ATG-4 increases speeds by adding a second modem and doubling the number of antennas on planes from two to four. Increasing speed basically means more people can be online without degrading the experience, according to a Gogo official.

So far, the company has installed ATG-4 on 100 aircraft, including one flown by Virgin America. As for satellite-based WiFi, Gogo is also outfitting more than 400 planes flown by several airlines with that technology.

The industry’s two other major players are Row 44, whose biggest U.S. customer is Southwest Airlines, and Panasonic Avionics, which provides WiFi service to several U.S. carriers. Both use satellite-based technologies.

Southwest uses Row 44 technology for both in-flight WiFi and on-demand TV shows and movies, which customers view on their own portable or mobile devices. This means that it can offer WiFi on its new Caribbean service to San Juan.

Some airlines are offering passengers a choice of speeds. United Airlines, for example, which has said it should have 300 mainline aircraft equipped with satellite-based WiFi by the end of this year, is offering its customers a choice of two speeds: Standard speed, which initially will be priced between $3.99 and $14.99 depending on the duration of the flight, and Accelerated speed, priced initially between $5.99 and $19.99.

JetBlue Airways is beginning the installation and certification process for its satellite-based in-flight WiFi. However, it must go through extensive testing and certification by the FAA before customers start using it, according to an airline spokeswoman.

While overall uptake of in-flight WiFi is currently small — under 6% overall, according to documents Gogo has filed with the Securities and Exchange Commission — usage can vary widely from one flight to another.

Virgin America, for example, has a huge uptake on its flights because it attracts a younger, more technically sophisticated demographic.

Across brands, there tends to be more WiFi usage on transcontinental flights because longer flights increase the demand for in-flight entertainment.
Major business routes tend to have greater uptake, as well.