Earlier this month, Aar Corp. (AIR) entered into a series of related transactions with Mesa Air Group, Inc. (MESA).   AAR and Mesa amended their parts supply and maintenance agreements for Mesa's CRJ-200 and ERJ-145 aircraft fleet to provide Mesa with increased flexibility to respond to demand fluctuations in the 50-seat aircraft market. In consideration for these amendments AAR will receive a cash payment from Mesa along with 15 million shares of Mesa's common stock. AAR will return to Mesa $6.1 million aggregate principal amount at maturity of Mesa's 2023 notes.   AAR does not expect to increase its stock ownership in Mesa, and may sell down its position from time to time as market conditions permit. AAR has generated approximately $30 million in annual sales supporting Mesa's CRJ-200 and ERJ-145 fleets.   Management believes that such agreements will further increase its cash flow from operations.  ...

UAE-based budget carrier Air Arabia, the Arab world’s largest listed carrier, announced its intentions to build a new hub in Egypt that would offer connections to Europe, Africa and the Middle East, one month after formalizing a partnership with Egypt’s Travco Group, the Middle East’s largest travel and hospitality group.  “At a time when the global aviation industry is witnessing serious challenges as a consequence of the worldwide financial crisis, we continue to move forward with our strategic expansion strategy, as demonstrated by this important announcement,” said Air Arabia Chairman Sheikh Abdullah Bin Mohammed Al Thani.

Despite the airline industry’s overall close historical correlation with broad market indices, “budget travel” represents an industry subgroup that, from an investment standpoint, can be as good a defensive play as any medical and consumer product company, brewery or tobacco firm.  Air Arabia may be a case in point, having been named the

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On Friday, TAM S.A. (TAM) disclosed its operating data for September 2009. For the month, TAM gained 87.3% market share in the international market, representing 5.2% growth year on year. However, the domestic market share was 44.2%, down 8.7% compared to the same period in 2008.  The domestic market was strongly stimulated during the month of September as a result of the competitive dynamics. In this environment, TAM observed a growth of 8.6% in domestic demand, while domestic supply grew by 7.4% compared with the same period in 2008. With this, TAM's load factor increased by 0.8% compared to September 2008 and presented a strong recovery of 2.6% compared to the August of 2009, reaching 65.4%. In September, industry demand grew 29.9%, while supply increased 19.9%.  The competitive scenario for September impacted domestic yield for the quarter, so that it declined between 5% and 10% compared ...

This post provides links to a number of thought-provoking articles I have read over the past few days that you may also find of interest.

• Martin Wolf (Financial Times): The rumours of the dollar’s death are much exaggerated, October 13, 2009. Recent figures have proved that the dollar’s fall is a symptom of success, not of failure. All the same, the dollar-based global monetary system is defective. It would be good to start building alternative arrangements.

• E.S. Browning (The Wall Street Journal): Dow at 10000 as crisis ebbs, October 14, 2009. The Dow Jones Industrial Average surged to 10015.86, passing the symbolic 10000 level much faster than expected and racking up a 53% gain in just seven months. Wednesday’s trading marked the first time the Dow touched 10000 since October last year, when markets were unraveling after the collapse of Lehman Brothers

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AAR Corp. (AIR) has been selected to provide maintenance and operations for the U.S. Air Force as part of a Northrop Grumman team. The contract is worth $600 million for nine years. The announcement was made following U.S. Air Force's selection of Northrop Grumman as the prime contractor for comprehensive depot maintenance and logistics for the U.S. Air Force's fleet of 59 KC-10 air refueling aircraft.   The Northrop Grumman team will provide supply chain services and logistics support for the KC-10 extender, a tanker and cargo aircraft. AAR will provide a supply chain program to support maintenance and operations of the KC-10 program from facilities and air bases in the U.S. and overseas.   Management believes that a strategic partnership with Northrop Grumman will further increase its cash flow from operations.   During the first quarter of fiscal 2010, the company generated $34 million of cash flow ...

TAM S.A. (TAM) signed partnership agreements with two members of Star Alliance yesterday. It signed agreements with airline bmi (British Midland Airways Ltd.) and Austrian Airlines to allow members of the TAM Fidelidade program to accumulate and redeem points on flights operated by the British company and Austrian company respectively. The partnership benefits TAM's customers since Oct 1. Other members of Star Alliance include Thai Airlines, Shanghai Airlines and U.S. Airways.   Effective Nov 1, members of bmi's Diamond Club program will also be able to earn and redeem points on TAM flights. The agreement was signed with the strategy of integration into Star Alliance. With this, the company will establish partnerships with the main airline companies in the world, which will help in expanding the benefits to the clients.   The agreement will help clients by simplifying the flight reservation process, allowing convenient connection on one single airline

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Two Companies Profiting From the “Fuel of the Future”

by Louise Harris, Investment U Research

You don’t have to look far to find one of today’s big economic and market buzz phrases: Green investing.

From green clothing websites, to CNN headlines heralding biofuel, companies are trying their best to capitalize on growing consumer sensitivity to the environment.

However, like the dotcom era before it, some of the green craze is no more than a speculative bubble. But many of it is the real deal. And despite past debacles, biofuels fall into the latter category.

A Deal With Dow

Take start-up company Cavitation Technologies Inc. (OTC: CVAT), which develops equipment that turns vegetable products into viable fuel. Only established in 2006, it just entered into a long-term agreement with Dow Chemical Co. (NYSE: DOW)

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UAL Corp. (UAL), the parent company of United Airlines, has announced a new public offering of $19 million common stock and $175 million convertible senior notes due 2029. The issue has been made in an attempt to raise cash for operations for the coming winter season when demand for air travel remains subdued. The company is bolstering its liquidity by taking advantage of the sentiment that fundamentals in airline industry have improved. In the public offering, UAL Corp. intends to grant its underwriters an option to acquire an added 2.85 million shares. The company has given the underwriters an option of nearly $26.3 million in additional convertible senior notes. Proceeds from the stock and debt offers would be used for general purposes. J.P. Morgan  (JPM) Morgan Stanley (MS) and Goldman Sachs & Co. (GS) are acting as joint book-running managers of both offerings....

This Top-Performing Industry May Surprise You

Try this one out on your family and friends: ask them to name one of the top three best-performing industries of the past three months. You’ll likely get an assortment of answers, but we bet major airlines won’t feature in there too often.

But it’s true. The industry comes in at #3 over the past three months, with carriers like AMR Corp (NYSE: AMR), UAL Corp (NYSE: UAUA) and US Airways (NYSE: LCC) all racking up huge gains.

This is a far cry from the airlines’ “winter of discontent” in early 2009, as demand evaporated and credit froze up, extending the worst downturn in the industry’s history.

But new research from Morningstar shows that even the most battered of industries can still produce gains for investors. The firm tracked 10 funds with

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Yesterday, after market closed, AAR Corporation (AIR) posted discouraging results for the first quarter of FY2010 results. Revenue was $341.5 million, down from $359.9 million in the year ago quarter. Net income of $10.2 million was also down from $15.0 million in the second quarter of FY2009. Earnings were 27 cents down from 39 cents during the same period of FY2009. However, it was above the Zacks Consensus Estimate of 25 cents. Sales to defense and government customers represent 46% of total sales and sales to commercial customers responsible for the remaining. Sales to defense and government customers increased 4% year-over-year, while the later decreased 12% year-over-year, as airlines further reduced inventory levels and maintenance visits in response to weak economic conditions and tight credit markets. The company's consolidated gross profit margin was 15.8% compared to 18.7% in the same quarter ...