Saturday, February 6, 2016

High pay, job security and profit-sharing -- and Southwest pilots are picketing?

For the first time ever, pilots at Southwest Airlines gathered on the picket line this week. And when they said, predictably, that the protest wasn’t about the money, they were right.
 
It’s about the guaranteed money.
 
For Southwest, that makes all the difference — in corporate culture, productivity and a business model that let it become one of the great innovators and disrupters.
 
Herb Kelleher had a folksy way of keeping Southwest on track: “We manage in good times so that we’ll do well in bad times,” the former CEO often said.
 
One way that played out was in labor contracts. They were usually heavier on variable pay, including profit-sharing, and lighter on work rules. There was an emphasis on fast turns at airports and more hours in the air, and that produced sky-high productivity and a rare business double-play: Southwest could be both a low-cost leader and a generous employer.
 
Southwest workers often are the highest-paid in the industry, but only when productivity and profit merit it. In 2014, Southwest pilots had the highest average salary in the business: almost $198,000, according to the MIT Airline Data Project.
 
But here’s something more impressive: “We’ve never had a layoff. We’ve never had a furlough. We’ve never had a pay cut. We’ve never cut benefits.”
 
That was Gary Kelly, Southwest CEO, speaking at a conference in December. And he was drawing a contrast between Southwest and the legacy airlines that were unable to withstand recessions, terrorism and other global events.
 
In the five years after 9/11, U.S. airlines eliminated 134,000 full-time jobs and steadily slashed pay and dropped pensions. Many carriers eventually went bankrupt. In 2000, seven airlines paid their pilots more than Southwest. By 2005, none did.
 
An analyst asked Kelly about his disappointment that pilots and flight attendants had soundly rejected tentative agreements last year. How would he get them to understand that Southwest’s low-fare brand is so crucial?
 
“We just have to make sure that we are rewarding our people in a way that also allows their company to remain strong,” Kelly said.
Southwest has never been stronger. It earned over $4 billion in operating profit last year, 85 percent more than 2014. Its market cap, near $23 billion, has tripled in three years.

Its annual profit streak now spans over four decades, and with fuel prices low and planes carrying record loads, money is pouring in.

Pilots, who’ve been negotiating a contract since 2012, want their share.
 
“We’re roughly 20 percent more productive, and we want to be rewarded for it,” said Jon Weaks, president of the Southwest Airlines Pilots’ Association and a company pilot since 1990. “We want to keep the company agile and competitive. But we’re not gonna work more and make the same” as other pilots.
 
Last fall, Southwest agreed to industry-leading pay on the pilots’ hourly rate, passing American’s 2015 contract figure by a nickel an hour, Weaks said.

(Since then, United has raised the bar further.) Southwest also agreed to lift the company match on retirement from 9.3 percent to 10 percent.
 
The tentative agreement reached last fall would have boosted pilot pay by 17.6 percent over the life of the contract, through 2019, the union said. Yet members rejected it almost 2-to-1 and then replaced the union leadership and negotiators.
 
There was disagreement over the value of back pay. But the retirement match is the big hang-up. At American and United, 16 percent of pay is put into retirement and pilots don’t have to contribute anything.
 
At Southwest, the match would have gone to 10 percent, and it’s contingent on pilots contributing a like amount.

Then Southwest kicks in a profit-sharing payment, a variable amount added to retirement. Historically, that’s been a healthy bump for Southwest employees.
 
In 2014, the profit share was 9.5 percent of pay, added to the company match. But in 2009, during the recession, Southwest profit-sharing was just 1.3 percent.
 
That spread provides a lot of flexibility for Southwest. If a much higher match were guaranteed, it would be that much tougher to cope with a fuel price spike or a contracting economy.
 
Southwest already faces a balancing act. In June, for the first time, its labor costs became the highest among U.S. carriers, said consultant Oliver Wyman. In two years, Southwest labor costs increased 16.4 percent, much more than any large rival, according to the firm’s report, Airline Economic Analysis.
 
Yet Southwest continues to have lower total costs. In June, it had an edge over Delta, American, United and JetBlue despite spending a higher amount on labor.

How does Southwest manage to have the highest labor expense and still lead many on total costs? Credit employee productivity and structural advantages, such as using a single plane type and secondary airports.

Kelleher used to say that preparing for bad times was prudent, because at least two crises would strike the industry every decade. So far, Southwest has been able to work through recessions and 9/11 without betraying employees. But if it locks in higher costs, what happens when the cycle turns?

The union chief said not to worry.

Demand for travel seems insatiable and airlines, post-consolidation, are disciplined about expansion, he said. And Southwest will keep finding ways to get more efficient, from adding modern planes to a new reservations system.

“This is not your father’s legacy carrier,” Weaks said.

If fixed costs get high enough, it’ll look like one.

( - The Dallas Morning News)

Wednesday, February 3, 2016

Boeing could make Super Hornets in India if purchased

Boeing F/A-18F Super Hornet "Rhino" (c/n F219) 166889 / 144 captured at NAF El Centro (NJK/KNJK) on January 28, 2016.
(Photo by Michael Carter)

Boeing says it could invest "billions of dollars" in India if Super Hornet sale materializes.

Boeing is in talks to manufacture its F/A-18 Super Hornet fighter jet in India as part of the country's Make In India initiative if it agrees to procure the aircraft.

Make In India is a government program launched by Prime Minister Narendra Modi, which aims to encourage multinational and domestic companies to invest in the country by building products there. Boeing CEO Dennis Muilenburg says building the fighter jet used by the U.S. Navy in India will be boon to the program.

"We see Super Hornet as an opportunity to do that to tie directly into the 'Make in India' strategy," Muilenburg told Hindustan Times in an interview.

The Super Hornet was considered as a replacement for the Indian Air Force's aging fleet, but lost to the Dassault Aviation-made Rafale in the procurement process. The $9 billion deal to procure 36 of the planes has been stalled over price negotiations, however, and Indian Defense Minister Manohar Parrikar has stated his government is open to other options.

"We think there is a great opportunity for us to bring Super Hornet to India that will fulfil an operational need, but even more importantly think about it as a capability investment and architect it as a broad industrial investment, build up a supply chain that has industrial capability, not only to design but also to manufacture for the full lifecycle of the products," Muilenburg said, noting the company was planning major investment in the country.

"Ultimately it will be measured in billions of dollars," he said. Boeing has yet to extend an official offer to build the planes in India, however.

"This is a conversation we are having with interested parties right now," Muilenburg said.

"It requires government-to-government agreement. It requires a customer here who makes a decision on projects it wants to pursue. In terms of our ability to execute on the project, to ramp up supply chain and skills base, that is something we can move up on fairly quickly," he said.

The F/A-18 Super Hornet is a twin-engine, multirole attack and fighter aircraft designed to takeoff from an aircraft carrier.

(Ryan Maass - UPI)

Boeing focuses on early 737 MAX delivery - CFO

Boeing said on Wednesday it was working to deliver its new 737 MAX single-aisle aircraft ahead of schedule next year, provided the company can complete testing on time and customers are ready to receive it.

"It's a little early to raise the victory flag at this point on early deliveries," Boeing Chief Financial Officer Greg Smith told an investor conference organized by Cowen and Co. "But we are focused on that. And if we can do it, and our customers can accommodate it, we will."

Boeing completed the first flight of the 737 MAX last week, raising the prospect that the updated version of its best-selling plane could be ready for delivery to its first airline customer, Southwest Airlines Co, earlier than the target of the third quarter of 2017.

Boeing is on track to lift production of its 737 Dreamliner to 12 a month this year and to increase the output of larger 787-9 aircraft towards 70 percent of the total, with 30 percent made up of smaller 787-8s, Smith said. The 787-9 is more profitable than the 787-8.

Smith said 2016 will be a "transition year" as Boeing delivers fewer 737 aircraft and cuts 747-8 production to six a year from 12 a year to account for flagging demand. Smith said Boeing will build up 737 MAX jets in inventory until the plane is certified in 2017, which allows it to deliver the planes to customers.

It also will build up inventory of 767 planes for delivery in 2017. His remarks reiterated points he and Chief Executive Dennis Muilenburg made last week in announcing fourth-quarter earnings.

Smith also said that Boeing sees continuing strong demand for aircraft despite low fuel prices, falling prices for used aircraft and weakening global growth that have raised concerns among investors that the aircraft cycle is peaking and helped send its stock down sharply last week.

Smith noted that Boeing's board recent authorized the company to return $14 billion in cash to shareholders in the next two or three years.
 
"We think we're significantly undervalued, especially right now, and considering the fundamentals of the backlog and the fundamentals of the business," Smith said.

(Reuters)

This Is Why No Airline Will Ever Dominate LAX

American and Delta would each like to be Los Angeles’s “hometown” airline, but LAX is a different bird.

It’s a battle for Los Angeles that may never have a clear winner.

American Airlines Group Inc. and Delta Air Lines Inc. are fighting to be the biggest airlines at Los Angeles International, the largest airport in one of the world’s most lucrative air travel markets.

Earlier this month, American said it will build two gates at LAX to allow 20 new daily flights, bringing its total to 220 flights and 70 destinations. It comes after Delta celebrated the completion last summer of a $229 million renovation of LAX’s Terminal 5, at which it operates, including a private entrance for celebrities and other elite travelers.

Delta says it has doubled its nonstop destinations from LA, to nearly 60 since 2012, and has doubled its seat count since 2009. With 15.4 percent of passenger share, Delta still trails American, which has 17.8 percent, as well as both United Continental Holdings Inc. and Southwest Airlines Co., according to the latest federal statistics.

“Right now it’s a race between us and Delta to be the biggest at LAX, but we feel good about our chances of winning that race,” said Doug Parker, American Airlines’ chief executive officer, on Jan. 13 in an employee newsletter. Almost 75 million passengers went through LAX in 2015, the second record set in as many years.

Despite the terminal renovations and flight expansions, it’s unlikely that LAX will ever be a true “fortress hub” like Atlanta (Delta), Dallas-Fort Worth (American), or Newark, N.J. (United), in which a single airline can command as much as 75 percent of the traffic.

For one thing, LAX isn’t the only game in town. It splits air traffic with four other airports within 55 miles, all with more than one airline offering service. An additional influential factor is how popular Los Angeles is as a tourist and business destination.

Most dominant hubs are skewed toward connecting service, with only about one-third of passengers starting or ending there, noted Andrew Nocella, American’s chief marketing officer. “In LA, you see almost the reverse,” he said.

This dynamic is also evident in such other major cities as New York and Washington, which haven’t evolved into dominant hubs. At Chicago O’Hare, United and American have hubs and split passenger share.


LAWA
Geography also plays a part. The fact that LAX is perched on the Pacific means it’s not as useful as a connection hub for east-west domestic flyers. Most of the connecting flows at LAX today are to and from Hawaii and Asia. “LA is just in a different set of circumstances,” Nocella said. “We’d like to go significantly higher, but we don’t anticipate LA would be a hub the size of a Dallas or Charlotte.”

Big airports also like to have as wide an array of airlines as possible to help stoke competition, curb fares, and expand destinations, said Michael Sikes, Southwest’s senior manager of network planning and performance. “If you’re an airport, I think you probably like a diversification of carriers.”
 
Delta and Los Angeles World Airports, the city department that manages LAX, recently signed a non-binding letter of intent to negotiate a lease for Delta to relocate to Terminals 2 and 3. A variety of international airlines use Terminal 2, while 3 is home to Frontier Airlines, JetBlue Airways Corp., Virgin America Airlines, Spirit Airlines Inc., and a few others.

American is spread among four terminals; any Delta relocation could be a catalyst for American to consolidate its far-flung real estate and improve passenger experience. Delta spokeswoman Elizabeth Wolf declined to comment further on the airline’s effort to relocate.

The other battlefront will be for corporate sponsorships, which can help secure business travelers and good publicity when celebrities are customers. American has signed up the Hollywood Bowl, the LA Clippers NBA team, Universal Music Group Inc., and others. Delta boasts the LA Lakers, the Grammy Awards, and the NHL’s LA Kings.

Even though LAX is unlikely to ever be a true airline hub, it has something even more important to carriers focused on landing high-value customers: Hollywood’s elite.

(Justin Bachma - Bloomberg Business News)

Monday, February 1, 2016

CargoLogicAir reveals fleet plans

(CargoLogicAir)

New UK-based all-cargo airline CargoLogicAir (CLA) has revealed it hopes to operate a fleet of five Boeing 747 freighters in 2018.
 
The much speculated-upon airline today confirmed it had been awarded an Air Operator Certificate (AOC) by the UK Civil Aviation Authority.
 
CLA has taken delivery of its first Boeing 747-400 freighter from Air Castle and will add a second 747F to its fleet in July 2016. CLA expects to have a fleet of five Boeing 747Fs by April 2018.

It said it would announce routes and an operations schedule in due course.

The Stansted-headquartered airline said it aimed to become a leader in the European air cargo market offering cargo services on scheduled and charter flights.

The airline aims to take a “strong position in the segment of all-cargo and outsize logistics solutions.”

Although many appointments were known due to LinkedIn profile updates, the airline also confirmed Dmitry Grishin, formerly vice president sales at Ruslan International, as its newly-appointed chief executive.

He is joined by Peter van de Pas in the role of chief operating officer & accountable manager, who previously held senior positions at KLM and Cargolux.

Steve Harvey is CLA’s chief commercial officer, having joined the airline from his previous post of regional charter sales manager EMEA of Atlas Air.
 
Grishin thanked all involved in the airline gaining its AOC and said: “Our aim now is to become a leader in the European air cargo market by earning a strong reputation for the highest levels of service, safety and efficiency.

“We believe that the all-cargo airline business model has its place on the market and that we can achieve sustainable growth by specialising in outsize and flexible solutions for our customers.

“We are open to cooperation with all who share the same passion for cargo as we do.
 
“We are also very grateful for the help we have received so far from partners such as Boeing, Stansted Airport and Aeropeople, who have supported us in building the company and its capabilities.” Harvey added: “We believe this is the right time to launch a new UK cargo airline.

“We created the company in the UK, which has a rich heritage of all-cargo specialist carriers including big names like HeavyLift, AirFoyle and others.

“The UK is the second largest air cargo market in the EU and its economy is growing. Using our knowledge, we plan to make a strong contribution to putting the UK back on the map of global all-cargo leaders.

“We have been extremely encouraged by the level of interest from our customers and expect this to result in us attracting the level of business we need to support our growth strategy over the next 3-5 years.”

Market speculation regarding the launch of the airline has been rife over the last few months, while the company itself did not want to talk to the press until it was ready for launch.

Video footage emerged of an aircraft in the livery of CargoLogicAir (see below) and a website emerged in November.
 
The website states that CLA aims to “become the leader in the European air cargo market offering cargo services on scheduled and charter flights, and with the freedom to explore growth opportunities with freight forwarders and other airlines that provide new opportunities for us and our customers.”
 
“Our team combines the highest levels of operational and commercial expertise, while our Boeing 747-400F with its 110 tonnes payload is one of the world’s most efficient and capable cargo aircraft,” it adds.
 
The website said that the airline will provide both schedule and charter services, with a network offering to customers extended to other major cities in Europe, North America and Asia Pacific through interline agreements and will be continually increased as partnerships are approved with other high quality cargo operators.
 
In January, flight tracking websites began to record the aircraft’s movements, with flights to Bari, Munich and Frankfurt being carried out.

A Companies House listing names Alexey Isaykin, Volga-Dnepr’s president, as the sole director of Cargo Logic Holding. In turn, CLA lists Cargo Logic Holding as its majority shareholder.

However, the airline stressed it is "an independent airline with its own executive and management team and fleet."

(AirCargo News)

Saturday, January 30, 2016

Failure To Launch: The Legacy of the McDonnell Douglas MD-12 Program

(McDonnell Douglas / Boeing)

Was the proposed MD-12 Jumbo way ahead of its time or just a ‘Hail Mary’ attempt to keep airlines interested in an ailing company?

McDonnell Douglas surprised the world in 1992 by unveiling a full double decker airliner program.

Although certainly not as majestic as the 747, the MD-12 would have looked much like the A380 should have looked. Without that hideous nose and a more streamlined body, the MD-12 could have actually been an attractive giant that would have given the Queen of the Skies a run for her money. Some uncharitably say they never really intended to build it at all.

Unveiled in April 1992, by a financially ailing McDonnell Douglas, they also announced first delivery of the 511 passenger, four-engine, full double-decker would be just five years. Officially it was a strategic move to leap-frog Boeing’s 747-400 and the Airbus 380 – Boeing had been exploring an all new, double-deck, four engine, airliner seating over 500 which was uncreatively named, the NLA – “New Large Aircraft.”

The press seemed to love the MD-12, but skeptics said it was just a ploy to get Boeing to pay more for the company.

At the time McDonnell Douglas was very sick financially, creaking under tremendous debt, and this project, although conservative in its design, would need lots of cash the company just didn’t have.

Reality or Wall Street subterfuge, it was planned in at least four variants – the MD-12 ST (Stretch), MD-12 HC (High Capacity), MD-12 LR (Long Range) and a two-engine MD-12 Twin.

But it was never to be.

Hindsight is 20/20. The market has proven barely large enough to support the A380 and the late-to-the-party 747-8. Both aircraft are still struggling to gain orders today.

Other paper jumbos like the Sukhoi KR-860 (SKD-717) (which by the way, had it been built, would have been the world’s largest, widest, and heaviest airliner, beating the world’s current heavy-weight champion, the AN-225 by 50 tons of max weight) never got off the drawing board. The MD-12 would remain only a concept as one of aviation’s fallen flags.

What happened? Why did a struggling McDonnell Douglas even propose such a bold aircraft? Let’s explore.

Born Out Of A Failing MD-11 Program

Ironically initial concept for the MD-12 had been smaller, a three-engine derivative of its MD-11 which itself wasn’t attract sufficient orders.

This idea morphed into the four engine, two pilot MD-12 with huge wingspan of over 200 feet, a fuselage 31 feet longer than the current MD11 and range of 8320 nautical miles.

300px-Md-12
(Wikipedia Images)

In its long-range configuration carrying 430 passengers (3-class) and high-capacity 511 passengers (3-class) it was aimed directly at potential customers for the 747-400 that entered service in 1989.

The MD-12 with a maximum take-off weight of 949,000 pounds would have easily beaten the 747-400’s 875,000 pounds and the current maximum weight of the 747-400ERF cargo’s 910,000 pounds.

Remember the scramble as airport built new gates to accommodate the A380 when it finally rolled out? The A380-800 has a wingspan of 261.6 feet. The MD-12’s 213 foot wingspan would have been comfortably slipped into the existing 747 airport gates. The current generation 747-400 has wingspan of 211 feet 5 inches.

McDonnell Douglas went as far as putting together a new company with a consortium of Taiwanese companies to build much of the MD-12, although final assembly was probably to have been in the US.

In the end the MD-12 would go down, not just as the first fully double decked commercial jumbo never to materialize, but also as the last new commercial aircraft designed by McDonnell Douglas before the company was sucked into Boeing in a US $13 billion stock swap in August of 1997.

The MD-12 Legacy Survives (Sort of)

The MD-12 program wasn’t a complete bust. Twenty five years later, you can still find reminders of the MD-12.

winglet

Boeing’s AT Winglet that will be featured on the new 737MAX.

Boeing is now busily stirring vestiges of the MD-12 design into the wing of the next version 777 with folding wings and the advanced 737 MAX winglet, the “dual feather.”

We can’t help but wonder if those two innovations on modern airliners were first seeded in the minds of ex-MDC engineers from the failed jumbo program. The engines that would have hung on MD-12’s, General Electric’s CF6-80C2 high-bypass turbofans, later powered versions of the 747, 767 and A330.

And in one last irony, a number of those airlines interested in the MD-12 ultimately became customers for the ugly A380.

(Bransom Bean - Avgeekery)

Three types of C-17s That Never Took Off

When the last C-17A was built, it ended a storied history at the Long Beach plant where thousands of  Douglas aircraft were manufactured. While the Southern California plant produced only the C-17A and the C-17A-ER (extended range), at least three other variants were offered. We’ll explore three other C-17 models that never made it off the drawing board.

A tough start but a smooth finish

The C-17 program had a rocky start. The jet was almost cancelled in the early 1990s as delays mounted and performance targets fell well short of expectations. However, the program eventually recovered with a total of 279 deliveries made to the United States and its allies. Even more impressive is the fact that 277 are still in service today over 20 years after the first flight back in 1993.

Today, the C-17 has met and exceeded most expectations. The jet can carry outsize cargo up to 170,000 lbs, fly halfway around the world with an air refueling or two and land on as little as 3,500 feet of runway. It was the backbone of heavy airlift during the wars in Iraq and Afghanistan. The C-17 has participated in nearly every major humanitarian relief effort throughout the world.  With such unique capabilities, Boeing made three major efforts to expand the product line.

The BC-17X Commercial Derivative. 
(Boeing Image)

While the capabilities of the C-17 are impressive, the efficiency of the aircraft has never been its strong point. With a blunt nose and a high lift wing, the operating costs of the jet are extremely high for a jet roughly the size of a Boeing 767. A C-17 burns about ¾ as much fuel per hour as a 747-400 but can carry only about half the pallets of its larger cargo carrying cousin.
  
McDonnell Douglas first pitched a commercial derivative in 1997. When Boeing acquired McDonnell Douglas, they renamed the project the BC-17. The BC-17 had a couple of false starts with Boeing sending out press releases that they were close to launching the commercial version. Unfortunately, demand never materialized. A creative plan to provide the jets to commercial operators under a CRAF-like contract where they could be recalled during times of war never gained traction either.


Boeing C-17B model as seen at airshows and conferences.
(Photo: c2.staticflickr.com)

Another potential derivative was the Boeing C-17B. If you ever attended an airlift convention or airshow, you might have even seen a model of the upgraded Globemaster III. The C-17B was pitched as a way to allow landings at truly austere fields in locations where the “A” model couldn’t go. The C-17B  featured a center-truck gear, self-deflating tires and double-slotted flaps to allow landing on even shorter distances. 

This variant was proposed a few times by Boeing in an attempt to extend the production line, the last time publicly in 2008. The “B” model never caught on though. The C-17 was already an expensive plane to operate and by 2008, congress started to reign in the massive defense budget that would have been necessary to fund this new variant.

The War on Terror showed off the capabilities of the C-17 but it also exemplified that performance beyond its current capabilities were not required. Most missions did not require landing on a short or unimproved field. Even in poor nations like Afghanistan, most of the cargo could be delivered to a few established fields and transloaded to smaller aircraft like C-130s and/or convoyed to the final destination.

A C-17FE featuring modified flaps, winglets, lighter gear, and narrower fuselage.
(Boeing)

Boeing’s final attempt to grow the Globemaster family came in the form of a shrunken version of the airlifter. The C-17FE was like a Globemaster on a SlimFast diet.  Instead of carrying 18 pallets, the “FE” version could only carry 13 in a single row.

The C-17FE was said to be large enough to carry two Stryker vehicles. Strangely, the C-17FE looked similar in size and carrying capacity to the C-141B.

The paper-jet was said to maintain 80% commonality with its larger brother. Boeing offered upgraded engines, improved economics, and added aerodynamic efficiencies.

The aerodynamic efficiencies were mainly derived from a narrower profile and blended winglets similar to the 737NG and 757. A revised wing was also reportedly under consideration.  The C-17FE was first discussed publicly in 2010. No serious interest ever materialized.

(Avgeekery)

Friday, January 29, 2016

Successful takeoff and first flight for Boeing 737 Max despite dreary Seattle weather

(Anthony Bolante - Puget Sound Business Journal)

Boeing’s first 737 Max took off from Renton Field Friday, an important step for the company’s most sought-after aircraft.
 
The sky was dark and murky, and Boeing moved the takeoff up from the originally scheduled 10 a.m. time to get ahead of the worsening Seattle-area weather.
 
The jet’s twin engines spun up with an audible whine, and the plane accelerated to the north down the wet runway, then lifted off over Lake Washington.
 
The successful takeoff – after what has been a smooth and on-schedule journey to production – has vindicated the Boeing’s efforts to prove that its delays with the 787 were an anomaly.
 
The new Boeing 737 Max, primarily an upgrade with new engines, has sold more before first delivery of any Boeing aircraft, with 3,072 on order at the time of takeoff. The first airplane, which took off Friday, will eventually be delivered to Southwest Airlines as launch customer.
 
Boeing is ramping up 737 production at the Renton plant to 57 planes per month to keep up with the incredible demand for the planes. Of the current 737 backlog, 70 percent are for the new re-engined 737 Max.
 
Thousands of employees from the adjacent Boeing Renton assembly plant, where the Max is built, were lined along the west edge of the airfield for an event that attracted journalists from around the nation.
 
VIPs, including Boeing Commercial Airplanes CEO Ray Conner, were in a nearby tent.
 
The airplane, with white blue and white Boeing 737 Max colors, was a mid-sized 737 Max 8.
 
(Steve Wilhelm - Puget Sound Business Journal)

United Airlines to Start Only U.S.-Singapore Non-Stop Flight

United Airlines Boeing 787-9 (37814/297) N38955 caught on short final to Rwy 25L on December 8, 2015.
(Photo by Michael Carter)

United Airlines will start flying non-stop daily between San Francisco and Singapore this year in the longest direct service by a U.S. carrier as falling fuel costs allow more airlines to offer longer flights.

United will fly Boeing Co.’s 787-9 aircraft for the route which starts June 1, the airline said in a statement Thursday. The flight will take about 16 hours 20 minutes to Singapore, saving about four hours of travel time compared with the airline’s current services via Japan’s Narita airport.

The U.S. carrier joins Emirates and Qantas Airways Ltd. among airlines offering non-stop flights as new aircraft technology introduced by Airbus Group SE and Boeing, as well as lower fuel costs, make it possible to offer longer direct services. Singapore Airlines Ltd. plans to revive the world’s longest flight to New York in 2018 using the A350 ultra-long range plane.

The 252-seat flight, the only non-stop service to the U.S. from Singapore, will include 48 United “BusinessFirst” and 88 economy plus seats, with economy making up the rest, United said.

Singapore Airlines discontinued the world’s longest non-stop service, from Singapore to New York, in 2013 and also stopped flying direct to Los Angeles that year.

Emirates will overtake Qantas in February in offering the world’s longest direct flight, to Panama City from Dubai, using a Boeing 777-200LR aircraft. The Australian carrier’s Sydney-Dallas route is currently the world’s longest.

(Kyunghee Park - Bloomberg Business News)

Airbus A380 Gets Vital Boost as Iran, Japan Deals Extend Backlog

Iran’s surprise agreement for Airbus Group SE’s A380 marks the second new deal for the superjumbo in three weeks and will help the company paper over the cracks in its flagship project -- for now.

Iran’s outline deal for 12 A380s, announced Thursday, and the sale of three planes to Japan’s All Nippon Airways Co., disclosed in order data on Jan. 12 and confirmed Friday, provide some cheer for Airbus after the double-decker failed to find a single new airline buyer in three years.

Moreover, the 15 jets, worth $6.5 billion at list prices, will provide at least six months of work for the A380 line. Airbus is currently producing close to 30 of the aircraft a year to break even on a per-plane basis and is seeking to reduce costs enough to drop the rate to 25 or fewer.

The latest deals provide vital breathing space as the Toulouse, France-based manufacturer seeks to drum up further orders and determine whether a life-extending upgrade of the model sought by leading buyer Emirates is viable. The superjumbo’s current backlog is only sufficient to support production until about 2018.

Japan Breakthrough

The Iranian commitment, likely to be for flag-carrier Iran Air, is especially welcome since Airbus has been seeking to sell the A380 to companies beyond the best-known first-tier operators for years, with only limited success. The last new airline buyer, No. 2 Russian carrier Transaero, collapsed last year after agreeing to buy four planes.

Confirmation of Japan’s ANA deal also comes as a coup, with the Asian nation not only a long-established customer for Boeing Co. but also a leading market for the 747 jumbo, which remains in production as the 747-8 Intercontinental. A bid to penetrate Japan in the past failed when Skymark Airlines Inc. went in to bankruptcy protection with six A380s on order.

While two new orders won’t by themselves save the world’s biggest commercial aircraft, the deal signed by Iranian President Hassan Rouhani opens up a new opportunity. Airbus will now likely step up sales campaigns in other Muslim nations, both for their own network needs and as mass transport during the Haj pilgrimage.

Denser Layout

PT Garuda Indonesia is seen as a prime candidate, as is Turkish Airlines. Saudi Arabia could be targeted with a higher-density version of the plane that Airbus has begun offering. Iran’s seating plans haven’t been revealed, though it’s likely to configure its A380s with more than the standard 550 berths, helping to reinforce the model’s credentials as an industry workhorse.

The A380 has also received a recent vote of confidence from British Airways owner IAG SA. The carrier, which already has 12 A380s in operation or on order, said last week it was evaluating whether to add a batch of five or six used planes.

While Airbus would prefer to sell new superjumbos, such a move would be valuable in establishing a second-hand market for the plane. That’s something the manufacturer is keen to do given that the oldest examples in service with Singapore Airlines Ltd. and Emirates could become available as early as next year.

Ultimately, though, Airbus needs hundreds of new A380 orders if the plane is to remain in production for another decade or longer. By that time, the company reckons more crowded airports will create a much bigger market. Bridging that gap means securing a deal from Emirates for 150 or even 200 more aircraft -- something the Gulf carrier says must be accompanied by a costly makeover that includes new engines.

(Andrea Rothman - Bloomberg Business News)

Wednesday, January 27, 2016

HondaJet HA-420 (c/n 42000015) N420AZ







Seen at Long Beach Airport (LGB/KLGB) this morning as she departs on then returns from a demo flight on a gloomy SoCal day.
 
(Photos by Michael Carter) 

For the first time ever, Southwest pilots plan to picket carrier’s home base, Dallas Love Field

Southwest Airlines pilots plan to picket the carrier at its home base — Dallas Love Field — one week from today.

According to the announcement from the Southwest Airlines Pilots’ Association, this will be mark their “first-ever informational picket” at the city-owned airport.

This has been a long time in the making. Back in May the SWAPA announced that it was ramping up a so-called “Strike Preparedness Committee,” as negotiations with the Dallas-based carrier dragged on since 2012.

Said Captain Paul Jackson — who, at the time, was the union’s president — “while a strike is certainly not in either side’s best interest, the Railway Labor Act clearly defines the procedure for protracted negotiations which can lead to a lock out by management or a suspension of service by our pilots.”

In a media release that went out Wednesday, the union said that “after nearly four years in negotiations toward a new contract, SWAPA has decided to demonstrate their collective displeasure to management, the flying public, and Southwest shareholders.

Four years, particularly during a time of record profits, is far too long for a company known for its ‘LUV’ to not provide a worthy contract offer to its operational front line leaders — the pilots.”

It’s a bold move for pilots to picket at Love. But March is the four-year anniversary since negotiations began, and the pilots say they’ve waited long enough — especially after American Airlines and United Airlines pilots have approved contracts.

“Shared sacrifice and shared success have been historical tenets of Southwest,” says SWAPA’s recently re-elected president, Captain Jon Weaks. “We are approaching four years of negotiations and we have sacrificed much during this period to contribute to the company’s record-breaking financial success.

We are long past overdue for our company to share that success with the hard-working professional pilots of SWAPA. After nearly four years of protracted negotiations, SWAPA has decided that it is time to publicly demonstrate our collective dissatisfaction and unified resolve to management, the flying public, and Southwest shareholders.”

“During four years of protracted negotiations, we have sacrificed much to contribute to the company’s success,” Weaks said in a statement last week. “We are long past overdue for our company to share that success with the hard-working pilots on whose backs the airline continues to soar.”

The union and airline are scheduled to meet — separately — with federal mediators on Feb. 2.

According to Bloomberg news earlier this month, the carrier’s senior vice president of air operations said via a spokeswoman that the company is “hopeful” of reaching an agreement with pilots this year.

Southwest said late Wednesday it’s “eager to resume negotiations so that we can reward our pilots for their service and professionalism.”

In a statement sent to The Dallas Morning News Southwest spokesman Brad Hawkins, the carrier added, “While our pilots are free to conduct informational picketing, our steadfast commitment to and 45-year history of serving our employees and customers continues as strong as ever.

The company’s negotiators and leadership are focused on resuming negotiations to reach an agreement that meets the collective needs of our people, our company and our common future.”

(Robert Wilonsky - The Dallas Morning News)

Boeing trims 777 production, expects to make Everett job reductions

American Airlines Boeing 777-323(ER) (33524/1270) N733AR / 7LT on short final to Rwy 25L at Los Angeles International Airport (LAX/KLAX) on January 26, 2016.
(Photo by Michael Carter)

Boeing will be dialing back production of its workhorse 777 wide-body jet in 2017 from the current record 8.3 planes per month to seven.
 
The long-anticipated move – which for years Boeing executives have said they could avoid until the new 777X enters production in 2020 – is still less severe than the cut to five monthly some analysts had predicted.
 
Boeing CEO Dennis Muilenburg announced the reduction of Everett's production Wednesday morning during the company’s fourth-quarter earnings call.
 
In a statement immediately following the call, Boeing said the slowdown will result in job cuts, but declined to say by how many.
 
“As a result of the rate change, we expect some impact on employment and will do our best to mitigate that by placing employees in other jobs across Boeing,” the statement said. “We are still studying how many roles may be impacted.”
 
While the 777 line will see cuts, the Renton-based 737 is ramping up, so some Boeing workers may be transferred there.
 
During his comments Muilenburg said production for current model 777s is “sold out” for 2016, and the order book is 80 percent filled for 2017 at the rate of seven planes per month.
 
“We feel good about customer demand to fill the remaining slots, given the airplane’s unique and recognized value proposition,” he said.
 
But the market is more dubious about this and other long-term Boeing prospects, and Boeing stock plunged nearly 9 percent Wednesday, to a two-year low of $116.58 at market close.
 
The problem for Boeing has been finding buyers for the older 777s, while at the same time winning orders for the new re-engined 777X. The problems has been heightened by a wave of used 777s coming off lease and entering the market, giving customers good deals on similar aircraft.
 
The first 777X aircraft won’t be delivered until 2020, and even then production will initially be slow, as Boeing learns how to build and incorporate the new wings.
 
Muilenburg expressed confidence about order prospects for the 777X during the call. The model, with new carbon composite wings as well as new engines, will be more fuel efficient than the current 777.
 
“Demand also remains strong for the 777X with a backlog of 306 aircraft, from six customers,” he said.
 
Of the current 524 model 777s on order, 58 percent are for 777X models.
 
The difficulty Boeing has had in bridging the gap between new models and old has been exacerbated by the recent trend toward re-engining current models.
 
Boeing has been trying to increase demand for the current 777-300ER model, and the 777F freighter, with many tweaks.
 
“We want to be sure we have a product people want to buy as we transition to 777X,” said Elizabeth Lund, vice president and 777 program manager, during briefings before the Paris Air Show last June.
 
These include streamlining to reduce drag, and a 1,200-pound cut in weight, that are offering customers a 5 percent fuel burn reduction per seat.
 
(Steve Wilhelm - Puget Sound Business Journal)

Emirates to Take $14.5 Billion New Jets; 21 Airbus Superjumbos

Emirates Airbus A380-861 (c/n 141) A6-EEQ arrives at Los Angeles International Airport (LAX/KLAX) on October 21, 2014.
(Photo by Michael Carter)

Emirates, the world’s biggest long-haul airline, plans to add 37 new planes to its fleet in the fiscal year beginning April as it expands operations in Asia with new destinations.

The airline will receive 21 Airbus Group SE A380 superjumbos and 16 Boeing Co. 777s in the year ending March 2017, Chief Commercial Officer Thierry Antinori said Wednesday in Singapore. The aircraft are worth $14.5 billion at list prices. 

Emirates already serves about 150 destinations in about 80 countries using the industry’s biggest wide-body fleet. The Dubai-based airline will begin operations to Panama in February in what will be the longest nonstop commercial flight by any carrier, overtaking Qantas Airways Ltd.’s service to Dallas from Sydney.

“We will continue to grow,” Antinori said. “We will continue to invest, innovate, have a younger fleet. It’s about creating new markets.”

Emirates also plans to retire 26 airplanes, including some A330s and A340s, from its fleet, Antinori said. The airline is studying an order for Airbus’s A350-900 and -1000 variants along with Boeing’s 787-9 and -10 models.

Emirates has said it will fly to new destinations this year, including Cebu in the Philippines and two cities in China. The carrier had 247 aircraft in operations as of Jan. 17, with 257 on order.

Singapore Airlines Ltd. plans to operate A350-900ULR to restart the world’s longest non-stop flight to New York in 2018. Emirates canceled an order for 70 A350s in 2014 and is currently reevaluating its requirement for the model.

(Kyunghee Park - Bloomberg Business News)

Boeing reveals plan to keep the 747 alive

Cathay Pacific Cargo Boeing 747-867F/SCD (39243/1447) B-LJF climbs from Rwy 25L at Los Angeles International Airport (LAX/KLAX) on December 22, 2011.
(Photo by Michael Carter) 

CEO Dennis Muilenburg laid out the Boeing strategy for the struggling 747 jet on Wednesday.
Boeing announced last week that the company is reducing 747-8 production to a new low as it copes with the fact that it has just 20 of the four-engine jets on order. Of those, only seven are freighters.
 
On Wednesday Muilenburg faced questions about that rate cut and whether whether it’s economically viable to run the Everett assembly line at one aircraft every two months during the company’s fourth-quarter conference call.
 
“That is a sustainable rate position for that line to bridge us to 2019 replacement cycle,” Muilenburg said. About 45 percent of the current 747 freighters in use will need to be replaced by 2019, he said.
 
That said, even at six planes a year, the company doesn’t have enough orders to keep the production line breathing until 2019.
“We’re watching it closely. Between this time frame and 2019, we obviously have got to get orders during that period,” he said. “We have a robust pipeline the team is working on, obviously we’re staying with it very closely.”
 
The market is more dubious about this and other long-term Boeing prospects. Boeing stock plunged nearly 9 percent Wednesday, to a two-year low of $116.58 at market close.
 
Muilenburg's jumbo jet plan was specific and he argued that 240 large airborne freighters now flying will be over 20 years old by 2019 and ready for replacement.Several things are in Boeing’s favor for this long wait.
 
One is that Boeing has nothing else it needs to make room for in the western end of the Boeing Everett factory where workers put together 747s.  This means that the financial cost is relatively low compared to a situation where the space could be used for some other production.
 
In addition, the 747-8F has unique qualities that Airbus can’t match. The Boeing plane can carry 138 tons of cargo, and it can load large objects, such as vehicles, through the nose door. Airbus’ comparable A380, with its two decks, is so ill-suited to cargo that the company doesn’t even offer a cargo option.
 
“The 747 is a niche market but an important niche market, and one that we think that is sustainable,” Muilenburg said. “This is a great airplane in a tough cargo market. We expect that to recover and we have a perfect asset to align to that recovery.”
 
(Steve Wilhelm - Puget Sound Business Journal)

Cathay Said to Delay Airbus A350 Delivery as Seats Not Ready

Cathay Pacific Airways Ltd. has pushed back the expected delivery of its first Airbus Group SE A350 model toward the middle of the year because business-class seats aren’t ready for installation, according to two people familiar with the matter.

The airline, scheduled to get the wide-body jet by February, will now receive it closer to the end of the first half, the people said Wednesday, asking not to be named as the information isn’t public. The A350’s business berths are made by Zodiac Aerospace, which has been struggling to meet delivery schedules.

Cathay Pacific, Asia’s biggest international airline, has ordered more fuel-efficient planes including the A350 and Boeing Co. 777X’s as the Hong Kong-based company competes with carriers including Singapore Airlines Ltd. amid a surge in passenger traffic within the region and on inter-continental routes.

Cathay Pacific said in an e-mailed response to questions that the first of 22 A350-900s it has on order should be delivered “in early 2016.” The carrier is also taking 26 larger -1000 variants.

Airbus, whose Chief Executive Officer Fabrice Bregier has singled out Zodiac as causing difficulties on the A350, saying it won’t be invited to bid on the re-engined A330neo, said in an e-mail that the first plane destined for Cathay “is at an advanced stage of production” and that talks are underway to “finalize the delivery time-line.”

Zodiac said it couldn’t immediately comment on the Cathay Pacific situation.

Airbus has also experienced unrelated difficulties in delivering its latest A320neo model, postponing the initial handover due in December to Qatar Airways Ltd. after the carrier expressed concern about engine issues. Deutsche Lufthansa AG took its first jet this month and has another due mid-February, though Qatar has yet to receive an aircraft.

(Bloomberg Business News)

America's 'everything' fighter jet is a total disaster

F-35A Lightning IIs
 (U.S. Air Force photo/Master Sgt. Donald R. Allen)

The F-35 is an absolute disaster, and it needs to go. The scandals around it are legion.

The supersonic stealth plane called the F-35 Joint Strike Fighter was supposed to be the greatest and best military plane the world has ever seen. While the United States' stealthy F-22 is an "air superiority" plane, ensuring the country's dominance over the skies, which is why exporting it is illegal, the F-35 was supposed to be able to do everything, and be the standard fighter-bomber of the U.S. and most countries with which the U.S. has friendly relations.

It was supposed to be stealthy, to be able take off and land vertically, and to know everything about everything thanks to its amazing software and sensors. It can't do any of those things so far.

The program has cost $1.3 trillion so far. By comparison, the Apollo Program, which actually sent people to the moon, cost about $170 billion in 2005 dollars. The F-35 is literally the most expensive military project in history. By 2014, the program was $163 billion over budget, and seven years behind schedule.

From the beginning the F-35 was practically designed to be a horrendous boondoggle. First, there was the idea to make just one plane that would fit every service branch's needs. The Marines wanted a vertical takeoff and landing plane that could bomb things on the ground. The Navy wanted a carrier-borne plane. The Air Force wanted a plane that could shoot other planes.

The original "Joint Strike Fighter" program, from which the F-35 grew, started out in the early 1990s. The goal was to replace most of the country's Cold War era fighters and bombers, including the F-16, the F-18, the A-10, and the AV-8B. The problem with this approach is that it lead to design by committee and design by wish-lists. It turned out that trying to make a plane to do everything meant that it did everything poorly.

The project has suffered endless delays and cost overruns, and, still, the thing is half-baked. The latest problem is that the plane's software — absolutely essential for a 21st century plane — doesn't work. Former RAND author John Stillion has written that the F-35 "can't turn, can't climb, can't run." It's heavy, bulky, and doesn't carry that many weapons. It even has safety issues.

Every time the F-35 project it goes beyond schedule, every time it costs more than anticipated, every time something doesn't work, Americans are told it's just a bug, it's just a minor problem. Enough is enough.

There's a well-known trick by defense contractors to make sure a project is never killed and becomes a goose that lays golden eggs: spread the production of the thing over as many congressional districts as possible. But this time, the program took this old trick global.

It's even better if you put as many countries in on the action as possible, because if by any chance one government balks, the others will carry it on. Lockheed Martin, which makes the F-35, is expertly practiced in the art of milking the U.S. government for cash.

It's time to end it. The only reason left not to do it is sunk costs — which is exactly the reason why it should be ended. Sunk costs are gone. Many defense experts agree that an air force would be better off using current F-16s and F-18s than the fantastically expensive F-35.

U.S. defense specialist Winslow T. Wheeler and aircraft designer Pierre Sprey have written that given the F-35's astronomical costs and design flaws, any air force would be better off maintaining its fleets of F-16s and F/A-18s.

What about the United States' vaunted air dominance, and the need to have super 21st century planes because of China? Well, we might have had that plane, but we don't. The best incentive for defense contractors to produce good products is to show that Washington has the political will to shoot down a $1.3 trillion program in mid-air when it doesn't work.

Does Washington have that political will?

(Pascal-Emmanuel Gobry - The Week)