Pacific Magazine > Magazine > January 1, 2008

Air And Sea

Air and Sea

Pacific Blue and Polynesian Blue airlines have raised their fuel surcharge on Pacific flights effective Feb. 1, 2008. The surcharge increases by A$10 to A$45 from that date.

The airline says it is “reluctantly” increasing the surcharge because of a continued rise in the cost of jet fuel.

Air Pacific says the Fiji coup of December 2006 cost the airline F$70 million in damages. And CEO John Campbell says continued military rule would pose a significant barrier to improved profitability.  In its annual report, Air Pacific also says revenue was affected by fuel costs, high airport fees and expensive bird strikes.  Campbell says the Fiji-Japan route in particular is struggling.  Meanwhile Fiji retailers are calling on the government to open up its airspace to more competition as it was concerned about the level of protection placed on Air Pacific. Over the Christmas period the airline and its passengers suffered a long series of delays, mechanical faults and setbacks. Eventually a team of Singapore Airlines specialist engineers were called to Fiji to carry out an internal review on the airline and mechanical standards.

Problems at Air Marshall Islands are continuing to affect Bikini Atoll’s internationally famous scuba diving program and tourism industry. At the end of 2007 there were reports the program could be forced to close its doors after 11 years of operations as the national airline hadn’t had its planes flying in more than two months. The collapse of Air Marshall Islands has also caused medical evacuation costs for patients from remote outer islands to double for the Ministry of Health and at least one patient has died coming into Majuro by ship for treatment. Air Marshall Islands officials confirmed that they need at least $700,000 to fix the two aircraft, but prospects for raising the money are scant because the cash-strapped government has refused to inject more funding into the ailing airline and the airline is already in default on an existing bank loan.

-Giff Johnson

Horizon Lines says it expects operating revenue of $310 - $315 million, earnings before interest expense, net, taxes, depreciation and amortization (EBITDA) of $35 - $38 million, and diluted earnings per share (EPS) of $.28 - $.35 for the 4^th quarter of 2007.

"The very rapid and steep rise in fuel costs has resulted in prices at unprecedented levels and significantly higher than anticipated when we most recently gave guidance on October 26th," says Chuck Raymond, Chairman, President and Chief Executive Officer. 

"Horizon Lines will still deliver very satisfactory results in 2007 despite an environment that was extraordinarily challenging in numerous, unforeseen ways.” Horizon Lines also provided financial guidance for 2008.  Based on current market conditions and forecasts, the Company projects full year 2008 operating revenue of $1,360 - $1,380 million, EBITDA of $175 - $185 million, diluted EPS of $1.94 - $2.18 and free cash flow of $115 - $125 million.  At the mid-ranges of the EPS guidance, 2008 results are projected to be up 53% from 2007 levels.

Vanuatu's national flag carrier Air Vanuatu has signed a deal with French plane manufacturer ATR for the purchase of its first 70-seater turbo-prop ATR-72. The new plane is expected to be delivered in 2009. "With the new ATR-72, Air Vanuatu will be in a position to address increasing demand on its regional network," Air Vanuatu CEO Terry Kerr was reported as saying. The company is contemplating extending its regional routes to such destinations as Fiji or the Solomon Islands. Meanwhile Malcolm Pryor has been appointed Manager, Australia for Air Vanuatu.

New Caledonia’s Chamber of Commerce has on Tuesday unveiled plans for what is scheduled to become New Caledonia’s upgraded international airport, at a revised cost of some US$120 million. CCI President André Desplats (which is tasked to manage the airport) says works are expected to begin in January 2008, last 36 months and should be completed early 2011. The upgrade project effectively doubles the surface of the current airport terminal from 11,000 to 22,000 square meters.

The Asian Development Bank (ADB) and its development partners are providing a financial assistance package totaling $108.25 million to expand Lae Port in Papua New Guinea. ADB is extending a $100 million loan for the Lae Port Development Project, which involves the construction of port facilities including a tidal basin, a multipurpose berth and terminal works including buildings, storage areas, roads, drainage, water, electricity and sewerage services.  Since 1995, the port has experienced an average annual increase in cargo of 131,000 tons, with containerized cargo growing more than 5% and general cargo by 2.5% annually. In 2005, the volume of cargo through Lae Port reached 2.4 million revenue tons, stretching it to the limit of its capacity. Frequent congestion at the port results in high costs for users and hampers international and domestic trade. The situation is expected to worsen as the country’s economic prospects remain strong. Some shipping companies have expanded their fleets and are demanding efficient and modern port infrastructure and management.