More cracks found in Airbus A380 wings

Airbus has insisted its A380 superjumbo is safe to fly, after the discovery of another set of cracks in the wings. It's the second time in a fortnight that hairline cracks have been found in the world's largest jetliner, which airlines began flying four years ago. The European planemaker says it will develop inspection programmes.

 And Reuters sources say European safety authorities will order airlines to inspect the most heavily-used A380s in the next few days. Airbus said the cracks were found on a number of "non-critical" brackets inside the wings of two aircraft, during routine two-year inspections - and similar faults showed up in five other aircraft in early January. But the aircraft aren't grounded, and Howard Wheeldon, Senior Strategist at BGC Partners says Airbus or the operating airlines wouldn't be flying the planes if they were unsafe.

Howard Wheeldon, Senior Strategist at BGC Partners, saying (English): "I don't think we should be worried at all because I think the commitment to the aircraft from the manufacturer and the words that they've used this week are supportive that this aircraft is very safe and should continue to fly." The A380 has had a bumpy ride due to development problems and the blowout of a Rolls Royce engine on this Qantas-operated A380 in November 2010. The news of the wing cracks hasn't had much impact on shares in Airbus' parent company EADS. But after Airbus had a record year in 2011, selling significantly more planes than rival Boeing, it will need to solve this issue quickly if it hopes to repeat its success this year.

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Around 40 airlines closed worldwide because of recession

The revenues of the industry are going to decline from US$525 billion (last year) to $455 b in 2009. The industry is already reeling under a $200 b debt

The International Air Transport Association (IATA), the world trade body representing the airline industry, has some 230 airlines as members, having 93 per cent of scheduled international air traffic. Giovanni Bisignani, who joined the IATA as director general and CEO in 2002 and is credited with reshaping and refocussing the organisation, spoke to B S Arun of Deccan Herald in New Delhi recently.
Excerpts:

The economic meltdown has taken a toll on Indian aviation industry. How badly is the industry across the world affected?

The revenues of the industry are going to decline from US$525 billion (last year) to $455 b in 2009. The industry is already reeling under a $200 b debt. Europe has suffered big losses to the tune of $3.8 b, Asia $3.6b and US $2.6 b. Our revised global financial forecast has predicted airline losses totalling $11 b in 2009. This is $2 b more than the previously projected $9 b loss due to rising fuel prices and exceptionally weak yields.

How long will it take for the recovery? Is the worst over?

After the 9/11 incident due to which the industry suffered losses of $20 b, it took three years for the sector to recover. Now the situation is worse. We don’t have a growing economy in most parts of the world. We feel the worst is over but it will take longer to recover, may be 3-4 years. The bottom line of this crisis is: the combined 2008-09 losses at $27.8 b is larger than the impact of 9/11.

How far has the industry taken the hit in India?

Indian carriers will lose $1.5 b in 2009, which includes Air India’s losses of over $1 b. India and China will see increase in losses.

What is the recessionary effect on passengers and cargo globally?

Passenger traffic is expected to decline by 4 per cent and cargo by 14 per cent for 2009. Yields are expected to fall by 12 per cent for passenger and 15 per cent for cargo. The fall in passenger yield is led by the 20 per cent drop in demand for premium travel. Cargo utilisation remains at less than 50 per cent despite the removal of 227 freighters from the global fleet. There is little hope for an early recovery in yields in either the passenger or cargo markets.

In addition to these, aviation turbine fuel prices are still ruling high adding to the costs. There is no justification for higher prices as oil prices have fallen. Worldwide, airlines have lost $11 b in fuel bill in 2009 and $16.8b in 2008.

How many airlines have been closed down because of losses due to recession?

At least 40 airlines have shut shop. They are distributed equally across continents.

What do you foresee for the industry in 2010?

IATA expects losses to continue into 2010 with the industry expected to report a $3.8 b net loss. Passenger demand is expected to contract by 8 per cent to 2.06 b travellers compared to 2.24 b in 2008.

What should the governments be doing in such crisis?

Governments need a wake-up call to create a policy framework that supports a competitive air transport sector capable of driving economic expansion. We don’t want bailouts. But we need governments to look more seriously at this sector by investing in efficient infrastructure; replacing the proliferation of environmental taxes with a global solution for the environment; and giving airlines normal commercial freedoms to merge where it makes sense and to access markets and global capital like any other business. We want to be treated as a normal industry.

What is your advice for India to come out of the mess?

India’s problems are high costs of infrastructure, fuel, high taxation at state and national level. This must come down.
IATA suggested recently that governments should ease flight operation rules such as air bilaterals.
Open sky is the rule of the game. Rules governing bilaterals between the two countries on air traffic should liberalise. There is no sense why we should go by a rule we framed in the 1945-46. It is not required now.

In one of your visits to India 2-3 years ago, you had decried the airport infrastructure. What is your view now? What about airport charges?

It has vastly improved. We would like to see more efficiency. As for the charges, they will now be looked into by the newly set-up Airport Economic Regulatory Authority. AERA should comprise of professionals.
Recently, an American carrier with military personnel was asked to land in Mumbai as it did not have permission to overfly India? What is your reaction to such acts of overflying without permission

How US was trying to come out of Recession

U.S. Airlines Emerging from Recession

With the global economy continuing to improve, there is steady improvement in demand for air travel as well as cargo since the beginning of 2010, after being badly affected by the economic downturn. Business travel, which is directly affected by the economic environment, plunged to an all-time low in 2009 as many corporations slashed travel budgets. Leisure travel as well as cargo also showed a remarkable decline.

With improving economic sentiment, business travel and demand for air cargo are gradually catching up. However, leisure demand is still low and is expected to take a greater time to reverse, since spending in this area is highly discretionary. We may not see a noticeable improvement in that segment until clear evidence of labor-market improvements take hold.

To combat the recessionary effects, the airlines have cut costs, slashed capacity and increased load factor. However, as travel demand catches up, the airlines can avoid additional capacity cuts. Conversely, airline capacity is expected to improve in 2010. This would help to keep fares in check, besides making it easier for travelers to book last-minute seats.

Though we think the worst is over, industry drivers all point to a slow recovery (at best) during the remainder of 2010. The economy is still far from healthy, with unemployment likely to remain high throughout the year. Growth in consumer spending is also expected to be sub-par as compared with the prior years. However, we expect faster growth in the next four years as the economy gathers momentum, consumers and business sentiments recover and spending increases.

Consolidation, the Only Viable Route

In a severely fragmented industry, consolidation is the writing on the wall, as the recent merger announcement between United Airlines and Continental Airlines shows. The 2009 recession and a drop in travel demand has been difficult for almost all air carriers, with small companies finding it hard to subsist, thus making consolidation imperative. This is the optimal way for the industry to deliver sustainable profitability, by gaining better efficiency, greater economies of scale and reduced operating costs.

On the consolidation front, a major development in 2008 was the merger between Delta and Northwest Airlines, which made Delta the world's largest airline. The merger provided significant cost advantages for the operation of both airlines. Further mergers and acquisitions appear likely, provided that some operators would inevitably find it harder to recover than others. Low-cost airlines, which have weathered the storm in 2009, stand in a more favorable position now, and may even end up purchasing some regional operators.

Oil Price Volatility

The airline industry is cyclical and sensitive to a number of key drivers, the most prominent of which is the world price of crude oil. The ATA estimates that for every dollar increase in the price of jet fuel -- a derivate product of crude oil -- both the domestic and international airline industry incurs an additional $445 million in fuel expenses. While prices have eased a bit recently, they remain significantly above year-earlier levels. This is of concern to the airline industry, as it will directly increase the cost of fuel purchase, shrinking profits. Oil prices are predicted to trend even higher in response to an increased demand as the world shakes off the recession.

However, in order to offset the loss from oil price volatility, the airlines are considering levying additional fees and charges. Hedging strategies are another profit protection tool, and will be more extensively undertaken.

OPPORTUNITIES

Though almost all carriers are expected to benefit from the improving economy, we favor United Airlines, a wholly owned subsidiary of UAL Corp. (UAUA) particularly, with a Zacks #1 Rank. The company has been reporting improving revenues, with its Corporate segment recording an increased demand from international markets. Pricing trends have also shown an improvement. UAL’s recently announced merger with Continental Airlines will make it the biggest airlines with an enhanced capacity and improved service.

Our next pick is Delta Air Lines Inc. (DAL - Analyst Report) with Zacks #2 Rank. Delta is uniquely positioned to benefit from its merger with Northwest Airlines, which has made it the world’s largest airline generating economies of scale. Moreover, Delta has recently seen a surge in business travel volumes and improved pricing, a trend which is expected to continue.

Others with a Neutral recommendation and a Zacks #3 Rank are AMR Corp. (AMR), Continental Airlines (CAL), Jetblue Airways (JBLU - Analyst Report) and Southwest Airlines (LUV - Analyst Report).

WEAKNESSES

Overall we view the industry to post strong growth in the coming years. However, near-term risks associated with the airlines shares are the fluctuations in the price of fuel, disease outbreaks, or concerns that the economy may slow down further.

We think Republic Airways Holdings (RJET - Snapshot Report) with a Zacks #4 Rank will be an Underperformer in the near term as it continues to face strong competition in Denver and Milwaukee, the main markets in which it operates. Moreover, fuel price volatility will continue to exert a downward pressure on the earnings.

Canadians think we’re in a recession, but economists don’t...so what's the reality

A surprising majority of Canadians — 70% of them — say the country is in the middle of a economic recession, even though economists will tell you Canada hasn’t been in one since 2009, and is nowhere close.

The results, from a new online survey sponsored by the Economic Club of Canada and conducted by Pollara Strategic Insights, highlight a growing disconnect between how financial professionals quantify and measure the health of the economy and how Canadians feel about their every day prospects.

Michael Marzolini, chairman of Pollara, called the results the most pessimistic in 16 years.

“Canadians are more self-centred. They believe themselves under siege,” he said at a breakfast presentation hosted by the Economic Club in Toronto that included top economists from Canada’s Big Five banks.

“Most Canadians have little knowledge of economics, but they are on the front lines of the economy. They can see, and feel, financial change, and they tend to act collectively,” he said. “Canadians, in aggregate, are remarkably canny about the economy.”

The survey of 2,878 Canadians found optimism towards the Canadian economy has dropped to 25%, compared with 54% in 2009. As well, 35% of Canadians expect employment to worsen this year, compared with only 25% a year ago.

Doug Porter, deputy chief economist with BMO Capital Markets, who was in attendance Thursday morning, said he was in some ways surprised by the stark negativity in the report while also acknowledging that Canadians have had to weather months of doom and gloom.

Even so, with unemployment levels far off historical highs, decent auto sales and a still-resilient housing market, the underlying indicators suggest that Canadians really should not be feeling so down about themselves.

“I think things were much worse three years ago. This situation doesn’t even compare,” he said. “By most definitions, we’re not even close to being in recession in Canada. It is somewhat baffling that Canadians are so dour. Maybe it reflects their personal situations.”

Ken Wong, a marketing and consumer behaviour professor with Queen’s University, said while economists focus on the macro, which has been fuelled by commodities at the expense of jobs-intensive manufacturing, everybody else focuses on the micro: their own jobs, broken-down pensions and battered investment portfolios.



“It’s all about the unit of analysis. What’s good for the economy has not been good for the consumer the past few years,” he said. “The recession didn’t affect everybody in the same way.”

Arguably the best-performing province at the moment is Saskatchewan, but with a small population compared with Ontario and Quebec, it is not surprising if their optimism is drowned out by the many more voices complaining in Canada’s hard-hit manufacturing centres, he said.

Part of the problem may also be that Canadians do not know the correct definition and usage of the word “recession” either: economists define a recession, generally, as at least two straight quarters of negative GDP growth. Even then, there is room for interpretation, Mr. Porter said.

“I think that’s more a rule of thumb than anything. A lot of it is in the eye of the beholder,” he said.

Certainly those watching Mr. Porter and other top economists Thursday present their forecasts for 2012 and beyond would get the sense that they were not exactly seeing sunshine and rainbows ahead for Canada, or anywhere else for that matter.

Craig Alexander, chief economist with TD Economics, warned that the many desperate fiscal decisions the United States has made over the past few years will truly come home to roost in 2013.

While the elimination of some tax cuts and other stimulus policies may drag the U.S. economy by as much as 1.5 percentage points in 2012, the impact of those automatic cuts could completely eliminate any economic growth the year after.

“If complete gridlock happens and nothing occurs in Washington, the fiscal drag in 2013 goes up to 2-2.5 percentage points. That’s the rate of growth we’re expecting for the U.S.,” he said. “Fiscal policy could derail the economic recovery.”

In Canada, expectations remain muted in 2012. Craig Wright, chief economist with RBC Economics, forecasts 2.5% growth in Canada, which he admits is on the high side.

“Usually a decade of excess is followed by a decade of stress and we’re in the midst of it right now,” he said.

“I wouldn’t necessarily tell people to cheer up, but maybe not buy into the pessimism,” Mr. Porter said. “Although, it is entirely possible that Canadians are seeing something that the broad numbers haven’t captured yet.”

Mahila Court convicts family for abetment of suicide of young woman, as they harassed her for additional dowry

Three persons of a family were sentenced to 10 years’ rigorous imprisonment by a Mahila Court here for abetting the suicide of a young woman, who was working in an IT company, by harassing her for dowry.

Vijayalakshmi, a graduate in computer applications, was working with Infosys in Hyderabad.

Later she shifted to its Chennai office after her marriage with S. Dineshkumar of Villivakkam in 2009. According to the prosecution, her parents gave the groom’s family 20 sovereigns of gold jewellery at the time of the marriage in Tirupur. Later, her husband, father-in-law and mother-in-law demanded five more sovereigns of gold and a car. In 2010, Vijayalakshmi committed suicide by hanging herself from the ceiling fan in her bedroom.

On a complaint by Leelavathi, her mother, the police charged Dineshkumar, his parents, S. Sampath and S. Vasanthi under Sections 498(A) (Husband or relative of husband of a woman subjecting her to cruelty) and 306(Abetment of Suicide) of the Indian Penal Code.

According to Leelavathi’s testimony, a few days before the suicide, her daughter had telephoned her to say the accused had taken her entire salary and that she had no money.

Thus, the accused were committing cruelty by demanding dowry. As Vijayalakshmi was telling her mother that her in-laws were threatening to kill her, the phone line got cut suddenly. Later, the girl’s family in Tirupur was informed about her death.

Convicting and sentencing the trio, Mahila Court Judge Meena Satheesh said, “The accused have harassed Vijayalakshmi and thereby induced her to commit suicide. Hence, this court is of the decided view that the offence of causing cruelty to deceased Vijayalakhmi and inducing her to commit suicide was proved by evidence.”

GovCloud: Cloud Computing for the Business of Government

Marketing is dead, long live marketing — Cloud Computing News By Barb Darrow In the era of cloud computing and big data, chief marketing officers can either sink or swim depending on their ability to recognize the importance of the consumer information available to them and ability to capture and put it to use. GigaOM

GovCloud: Cloud Computing for the Business of Government By noreply@blogger.com (Kevin Jackson) Personal comments and insight on cloud computing related technologies and their use in the public sector to support net-centric operations. ... Mary Lewin,Program Manager, Federal Cloud ComputingInitiative, Office of Citizens. Services and ... Cloud Musings by Kevin L. Jackson