Founder & Managing Director, AIR Control Tower, AIR Control Tower

Neil Glynn

Founder & Managing Director, AIR Control Tower

AIR Control Tower

AIR Control Tower is an independent research and analysis platform. Its mission is to provide impactful insight and analysis across the global airline industry at a company and market level via detailed financial models to aid decision making for key stake holders at a time when risks have seldom, if ever, been higher and the global sector grapples with the imperative of funding de-carbonisation. Unique analysis forecasting global carrier-level earnings/cash flows, and restructuring/de-leveraging prospects, is designed to dynamically assess the health of the industry, predict surprises and identify potential requirements for third party support.

Insights on the global airline industry

Equity Bottom-Up

<ul>
<li>The US Department of Transport (DOT) has ordered the termination of Delta and Aeromexico's joint venture from October 2024 due to access restrictions in Mexico City.</li>
<li>This follows the (unrelated) US blocking of JetBlue's planned acquisition of Spirit Airlines on the grounds that it would negatively impact consumers.</li>
<li>Each case is different, but the US has previously voiced concerns regarding Korean Air's planned merger with Asiana, and the bar continues to rise for M&amp;A/JV approval globally.</li>
</ul>


The US Department of Transport (DOT) has ordered the termination of Delta and Aeromexico's joint venture from October 2024 due to access restrictions in Mexico City.
This follows the (unrelated) US blocking of JetBlue's planned acquisition of Spirit Airlines on the grounds that it would negatively impact consumers.
Each case is different, but the US has previously voiced concerns regarding Korean Air's planned merger with Asiana, and the bar continues to rise for M&amp;A/JV approval globally.


Korean Air - Another US Example Of A Ruling Against Consolidation Raises Asiana Merger Questions

<ul>
<li>The US Supreme Court has just blocked JetBlue's planned acquisition of Spirit Airlines, ruling on the side of the US DOJ, which had sued to block the proposed deal.</li>
<li>Reuters has reported that the European Commission should approve Korean Air/Asiana imminently following analysis of concessions provided. However, the US and Japan also need to approve the deal.</li>
<li>In "Korean Air - Plan B should Asiana merger fail to gain approval" on 26 October 2023, we highlighted Korean Air is well positioned to continue as a standalone entity.</li>
</ul>


The US Supreme Court has just blocked JetBlue's planned acquisition of Spirit Airlines, ruling on the side of the US DOJ, which had sued to block the proposed deal.
Reuters has reported that the European Commission should approve Korean Air/Asiana imminently following analysis of concessions provided. However, the US and Japan also need to approve the deal.
In "Korean Air - Plan B should Asiana merger fail to gain approval" on 26 October 2023, we highlighted Korean Air is well positioned to continue as a standalone entity.


Korean Air - US Blocking of JetBlue/Spirit Continues Trend of M&A Opposition

<ul>
<li>Reuters reported on the Friday that the European Commission is to accept concessions of four European route divestitures and the sale of Asiana's cargo business.</li>
<li>The EC had set a preliminary decision deadline of 14 February.</li>
<li>US and Japanese approvals are still required, while it remains to be seen who might acquire Asiana Cargo.</li>
</ul>


Reuters reported on the Friday that the European Commission is to accept concessions of four European route divestitures and the sale of Asiana's cargo business.
The EC had set a preliminary decision deadline of 14 February.
US and Japanese approvals are still required, while it remains to be seen who might acquire Asiana Cargo.


Korean Air: European Approval for Asiana Merger Reportedly Imminent

<ul>
<li>We forecast EBITDAR of KRW3.35trn for Korean Air in 2023 (KRW3.8trn previously) with EBITDAR/ATK up 50% on 2019/32% on 2018. We remain at KRW2.9trn in 2024 (EBITDAR/ATK +28% vs 2019).</li>
<li>Unwinding cargo yields may fully eliminate earnings gains but cost management safeguards future prospects despite Asiana merger uncertainty.</li>
<li>Cost inflation management inflected negatively in 3Q as labour costs rose – control crucial as market conditions normalize and low cost competitors expand.</li>
</ul>


We forecast EBITDAR of KRW3.35trn for Korean Air in 2023 (KRW3.8trn previously) with EBITDAR/ATK up 50% on 2019/32% on 2018. We remain at KRW2.9trn in 2024 (EBITDAR/ATK +28% vs 2019).
Unwinding cargo yields may fully eliminate earnings gains but cost management safeguards future prospects despite Asiana merger uncertainty.
Cost inflation management inflected negatively in 3Q as labour costs rose – control crucial as market conditions normalize and low cost competitors expand.


Korean Air: Earnings Remain Elevated but Premium May Continue to Unwind as Cargo Yields Re-Set

APAC IPOs & Placements, Aequitas Research

Ethan Aw

APAC IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/cirrus-aircraft" target="_blank" data-smartkarma-citation="entities:39858:1" rel="noopener">Cirrus Aircraft (0153126D US)</a> is looking to raise up to US$200m in its upcoming HK IPO.</li>
<li>Cirrus Aircraft designs, develops, manufactures, and sells premium aircrafts. Its two aircraft product lines, the SR2X Series and the Vision Jet, are currently certified and validated in over 60 countries.</li>
<li>We had covered the company’s performance in our earlier notes. In this note, we talk about its PHIP updates.</li>
</ul>



Cirrus Aircraft (0153126D US) is looking to raise up to US$200m in its upcoming HK IPO.
Cirrus Aircraft designs, develops, manufactures, and sells premium aircrafts. Its two aircraft product lines, the SR2X Series and the Vision Jet, are currently certified and validated in over 60 countries.
We had covered the company’s performance in our earlier notes. In this note, we talk about its PHIP updates.


Cirrus Aircraft Pre-IPO - PHIP Updates - Increased Customer Demand Continues to Drive Growth

South Korea

Asiana Airlines, Inc. provides air cargo and passenger transportation services throughout South Korea and overseas.  The Company also offers airline catering and on-flight duty free shopping services and operates aircraft leasing business.

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Asiana Airlines (020560 KS)

Korean Air - Another US Example Of A Ruling Against Consolidation Raises Asiana Merger Questions

New perspective on the US's approach to considering M&A/joint ventures which is relevant to consider the US's ultimate verdict on Korean Air/Asiana...

Neil Glynn

Korean Air - US Blocking of JetBlue/Spirit Continues Trend of M&A Opposition

Relevant global insight important for Korean Air/Asiana regulatory approval prospects - the US blocking JetBlue/Spirit raises the question as to...

Neil Glynn

Korean Air: European Approval for Asiana Merger Reportedly Imminent

The Korean Air-Asiana merger saga continues but Europe is reportedly set to provide its approval. The US and Japan also need to approve the deal,...

Neil Glynn

Korean Air: Earnings Remain Elevated but Premium May Continue to Unwind as Cargo Yields Re-Set

Detailed earnings recovery and cost inflation management analysis which inform future earnings and cash flow prospects as Korean Air awaits a...

Neil Glynn

Cirrus Aircraft Pre-IPO - PHIP Updates - Increased Customer Demand Continues to Drive Growth

Cirrus Aircraft (0153126D US) is looking to raise up to US$200m in its upcoming HK IPO. We had covered the company’s performance in our earlier...

Ethan Aw

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