MAC1
Topic Author
Posts: 21
Joined: Fri Oct 22, 2004 1:47 am

Criticism SCT (MEX)

Sat Oct 23, 2004 6:34 am

Seems that recently the head boys of the SCT were grilled by the senate committee on communication and transportation.

Main points (besides state of road infrastructure and telephone monopoly):

1. Maintenance issues Mexican airlines
2. Lack of investments by concession holders privatized airport groups (specifically GAP).
3. Uncertainty sale of CINTRA

http://www.criterios.com/nac/oct/20/042004_11.htm
 
ghost77
Posts: 4461
Joined: Wed Mar 01, 2000 2:07 pm

RE: Criticism SCT (MEX)

Sun Oct 24, 2004 4:56 am

It was about time!

1. We need to put pressure on our airlines! Specially on JR... some people might like it, others won't agree but they need to renew their fleet A.S.A.P.! Their average fleet of 34.71 years its just too much!

2. IMHO, SCT should revoke GAP's concession license! GDL, TIJ, SJD and other airports controlled by GAP deserve more!

3. I think we here have discussed a lot of CINTRA lately! I won't go again into the topic, I think we here are all tired precisely of the uncertainty shown by CINTRA, Gasca Neri, Flores and Romano's understandable movements!

Ricardo APM

Ricardo Morales - flyAPM - ¡No es que maneje rapido, solo estoy volando lento!
 
MAC1
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Posts: 21
Joined: Fri Oct 22, 2004 1:47 am

RE: Criticism SCT (MEX)

Sun Oct 24, 2004 6:33 am

I believe it entirely possible that 2005 will see the light at the end of a dark tunnel as far as a true liberal air political regime in Mexico is concerned. This is of course contingent on the sale of CINTRA (which I believe will be sold as a 'package') where Iberia might become a contender. A couple of days ago a statement was made by Iberia's management that increasingly they are focusing on Latin America and will not rule out minority or majority equity investments in other airlines. With the demise of their hub in Miami, Mexico might have become a more interesting option to them. Clearly the LA market is their bread and butter and gives them serious leverage within One World. Don't rule out Iberia as a possible investor when (and if) CINTRA officially becomes a 'bride'...
 
ghost77
Posts: 4461
Joined: Wed Mar 01, 2000 2:07 pm

RE: Criticism SCT (MEX)

Tue Oct 26, 2004 8:57 am

Hopefully we might see the light of this dark tunnel that for years has never end in the next months! I don't think Mexico has become an option for IB and their MIA hub. If that was the case, IB instead of serving Central America from MAD they could have done it via CUN and then a few MX buses could have been deployed for routes to C.A. but that was not the case! IB decided to do it by their own and with their own metal. So I think they really didn't consider Mexico nor Mexicana as an option to reach the Southern Mexican border. I won't rule out IB, but given the current status of US Carrier IB might be a big chance!


Ricardo APM

Ricardo Morales - flyAPM - ¡No es que maneje rapido, solo estoy volando lento!
 
MAC1
Topic Author
Posts: 21
Joined: Fri Oct 22, 2004 1:47 am

RE: Criticism SCT (MEX)

Tue Oct 26, 2004 10:57 am

Here is why I see IB as a main contender in case of a CINTRA sale:

1. With the European consolidation taking hold in the next couple of years, IB needs to strenghten its position. Options: (1) within Europe - (2) within LA. European options are limited (considering cash available, balance strenght, and cultural issues) whereas LA options will give more bang for the buck (assuming it or they will be properly managed).

2. Results within the European market are under pressure - largely due the LCC effect. At the same time, although IB's long-haul operation 'only' generates 13% of total passengers it contributes 31% to total turnover (approximately 75% to/from LA).

2. CINTRA as a whole will probably be valued somewhere between USD 300-600 million ('buy when market is down') and be walked down the isle with attractive curves and a pretty face (i.e. large degree of forgiven debt as a dowdry).

3. Considering the cash balance of IB at the end of 2003 of Euro 940 million and their long term debt/total assets ratio of 9% they will have some realistic financing options. Even with full debt financing their Equity/Total assets ratio will stay above the - normally - demanded 25% by financial institutions.

4. With a possible change in the bilateral agreement between Mexico and the US announced in December 2004 and a future 'open skies' agreement between EU and US a lot of commercial (and strategic) opportunities will become available.

With a possible CINTRA (or at least MX - due to route and fleet issues) acquisition, IB might - in my opinion - smartly enhance its strategic importance within OW and enhance shareholders value. In addition it might seriously frustrate ST's position (when sold as a whole). It is possible that the recent remarks by IB's CEO were intended to 'test the waters.'

Who else is in a position and would have the resources to take advantage of this opportunity??

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