Friday, November 16, 2018

Alaska Airlines adds more flights to Paine Field after Southwest pulls out

Alaska Airlines plans to launch commercial airline service at the new Paine Field air terminal in Everett on Feb. 11, after a one month delay beyond its control, the airline said.

Alaska has begun ticket sales for Paine Field flights to eight West Coast cities, and the airline has added five extra flights a day after acquiring landing gate slots from Southwest Airlines.

Southwest has decided to delay its Paine Field flights "indefinitely" and transferred its slots to Alaska, said Brett Smith, chief executive officer of Propeller Airports, which is building and operating the passenger air terminal for Snohomish County.

"It's not our decision, but all in all, it makes it easier for us to operate, so I'm not unhappy about it," Smith said.

The extra slots acquired from Southwest mean more flights to several of the previously announced destinations Alaska will serve from Paine Field, including: Las Vegas; Los Angeles; Orange County, California; Phoenix; Portland; San Diego; San Francisco; and San Jose, California.

Alaska is offering a two-day sale on fares to and from Paine Field to celebrate the new airport's launch.

The flights will start slowly at Paine and increase over time as the operation gets up to full speed to ensure smooth flight operations. Only Las Vegas will be served the first day, and only Los Angeles and San Jose served the second day.

The full details on flight schedules in the first month can be seen here.

Alaska also said its Mileage Plan members who fly on all nonstop flight to and from Paine Field through March 31, 2019, will earn double miles after they register for the promotion.

The service from Paine Field will be provided by Horizon Air flying the Embraer 175 regional jet aircraft featuring both first class and economy cabins and onboard entertainment.

"We're tremendously honored to be a part of this historic moment with the opening of a brand new commercial airport," Andrew Harrison, Alaska Airlines' chief commercial officer, said on the airline's blog.

(Andrew McIntosh - Puget Sound Business Journal)

Thursday, November 15, 2018

China Southern is leaving SkyTeam alliance 2019

China Southern Airlines Boeing 777-31B(ER) (43225/1358) B-2049 departs Los Angeles International Airport (LAX/KLAX) on December 25, 2016 sporting the carriers SkyTeam livery.
(Photo by Michael Carter)

China Southern Airlines announced on November 15, 2018, that it would leave SkyTeam alliance. The Chinese airline decided not to renew its contract with the alliance to align with “the company’s development strategy”.

This decision will come into effect on January 1, 2019. Both SkyTeam and China Southern Airlines declared they would ensure a “seamless transition for all customers and partners”.

As for the reasons behind the decision to leave, there are China Southern’s “strategic development, the changing trends of the global aviation industry and the evolution of alliances,” according to SkyTeam. "The airline puts it even more bluntly: besides strategic development needs, it wants to “better align with the new trend of cooperation model in the global aviation industry”.

A move that SkyTeam say they understand. "We recognize that the airline industry has matured since China Southern joined SkyTeam in 2007, especially in China," said a spokesperson of the alliance to AeroTime. "Against that background, China Southern is evaluating its strategic opportunities."

The carrier said it would now seek partnership with “advanced airlines” outside the alliance.

The decision does not come as a surprise, as China Southern is closely linked to American Airlines a oneworld alliance member. In fact, back in August 2017, American Airlines acquired 2.68% of China Southern Airlines shares.

Now, the chinese carrier is reportedly considering joining Oneworld alliance, but “has not yet made a decision” according to a source cited by Reuters. If it was to do so, China Southern would become the first Chinese airline to be part of Oneworld. For its part, SkyTeam still includes Xiamen Airlines and China Eastern Airlines.

(Clément Charpentreau - AeroTime News) 

FAA, Boeing study need for 737 MAX software changes after crash

The U.S. Federal Aviation Administration and Boeing Co are evaluating the need for software or design changes to 737 MAX jets in the wake of last month's deadly Lion Air crash in Indonesia, the regulator said on Tuesday.

Boeing shares fell 2.1 percent on Tuesday on concerns related to the first crash of the newest version of the plane-maker's best-selling jet, in which all 189 people on board were killed when it dived into the sea.

Indonesian investigators said on Monday a system designed to deal with the accident scenario was not described in the flight manual. They called for more training for 737 MAX pilots.

U.S. pilot unions later said they were not aware of the new anti-stall system.

Operating procedures and training for the 737 MAX could also change as the FAA and Boeing learn more from the investigation, the regulator said in a statement.

Investigators are preparing to publish their preliminary report on the crash on Nov. 28 or Nov. 29, one month after the Lion Air jet crashed at high speed into the Java Sea.

Until now, public attention has focused mainly on potential maintenance problems including a faulty sensor for the 'angle of attack,' a vital piece of data needed to help the aircraft fly at the right angle to the currents of air and prevent a stall.

The focus of the investigation appears to be expanding to the clarity of U.S.-approved procedures to help pilots prevent the 737 MAX from over-reacting to such a data loss, and methods for training them.

Information recovered from the jet's data recorder last week led the FAA to issue an emergency directive warning pilots that a computer on the 737 MAX could force the plane to descend sharply for up to 10 seconds even in manual flight, making it difficult for a pilot to control the aircraft.

Pilots can stop this automated response by pressing two buttons if the system behaves unexpectedly, the directive said.

But questions have been raised about how well pilots are prepared for such an automatic reaction and how much time they have to respond.

Boeing Chief Executive Dennis Muilenburg told Fox Business Network on Tuesday that Boeing provides "all of the information that's needed to safely fly our airplanes" and that the 737 MAX was a "very safe" airplane.

"This comes out of thousands of hours of testing and evaluating and simulating and providing the information that our pilots need to operate our airplanes safely," Muilenburg said.

"In certain failure modes, if there's an inaccurate angle of attack sensor feeding information to the airplane, there's a procedure to handle that," he added.

The FAA on Tuesday denied a report that it had launched a new probe into the safety analyses carried out by Boeing on the 737 MAX.

Boeing, the world's largest plane-maker, said earlier on Tuesday it delivered 43 of its 737 aircraft last month, up from 37 a year ago, helped by a booming global market.

The number of 737 deliveries was down slightly from the 61 delivered in September due to lingering supplier problems, flagged by a Boeing executive last week.

          (David Shepardson in Washington, Sanjana Shivdas in Bengaluru and Eric M. Johnson in Seattle)

Boeing Stock Drops After Continued Bad News for Its 737 Jets

Boeing dropped after weak deliveries for its 737 jetliner compounded a troubling report about a safety feature linked to a deadly crash in Indonesia last month.

Low October shipments of the 737 put Boeing at risk of missing annual delivery targets for its largest source of profit as the plane-maker works to ease parts shortages that have snarled production. The company has been relying on revenue gains from faster output of the narrow-body jet to help ease financial strain from introducing its newest wide-body aircraft, the 777X.

Boeing will need to deliver 72 of its single-aisle workhorse in November and again in December to reach its planned build rate, Bloomberg Intelligence analyst George Ferguson said in a report to clients Tuesday. Boeing shipped just 43 last month. The company also needs to speed deliveries of its high-margin Max planes, “which affect profit disproportionately,” Ferguson said.

The shares dropped 2.4 percent to $348.63 at 3:26 p.m. in New York, the most in the Dow Jones Industrial Average. The stock had climbed 21 percent this year through Monday.

The Max has accounted for 37 percent of all 737 deliveries this year, trailing Boeing’s goal of 40 to 45 percent. The company had warned of a weak October performance, saying deliveries would pick up in the rest of the year.

New System

The deliveries data came a day after Bloomberg News reported that U.S. pilot unions said they hadn’t been notified or properly trained on a new safety system for the Max. The system, which wasn’t on earlier versions of the popular 737, is a focal point of investigators probing the Oct. 29 crash of Lion Air Flight 610. That plane plunged into the Java Sea, killing 189 people.

“The bottom line here is the 737 Max is safe,” Boeing Chief Executive Officer Dennis Muilenburg said Tuesday on Fox Business Network. “This airplane went through thousands of hours of tests and evaluations, certification, working with the pilots, and we’ve been very transparent on providing information and being fully cooperative on the investigative activity.”

A union bulletin to pilots at American Airlines Group Inc. said the company hadn’t provided details about the system with its documentation about the plane. “This is the first description you, as 737 pilots, have seen,” the Allied Pilots Association dispatch said. Southwest Airlines Co. pilots expressed similar concerns.

The Maneuvering Characteristics Augmentation System in limited instances will lower the nose of the 737 Max if the airplane is close to an aerodynamic stall even if pilots are manually operating controls. Indonesian authorities suspect faulty sensor readings may have caused the Lion Air jet’s computers to repeatedly press its nose downward before the plane accelerated into a final dive into the sea.

Key Information

“The crew may have been hampered in their efforts to understand the airplane’s behavior, and regain control, by the fact that they were missing a key piece of information -- the existence of an automatic system that could adjust the trim, even when the airplane’s autopilot was switched off,” Douglas Harned, an analyst at Bernstein Research, said in a note to clients.

Boeing and regulators have underscored the steps pilot can take to disable the pitch-trim system, as it’s known, in bulletins to 737 Max operators over the past week. Because the safety system is software-based, it could be updated relatively easily if regulators and the manufacturer determine that’s the best course.

Such a fix would be much less disruptive for airlines and Boeing than the three-month grounding that halted the plane-maker’s 787 Dreamliner flights in 2013.

“Because the Max is a derivative aircraft, we doubt that this is a difficult-to-correct technical issue as the battery fire early in the 787’s life, appeared to be,” Cowen analyst Cai von Rumohr said in a note.

(Julie Johnsson - Bloomberg)

Saudi's flyadeal to pick Airbus or Boeing jets by end of month

Saudi Arabian budget airline flyadeal aims to decide whether to order Airbus or Boeing narrow-body jets by the end of this month, its chief executive said on Wednesday.

Flyadeal, a subsidiary of state-owned Saudi Arabian Airlines, had been due to decide on the order for 30 Airbus A320neos or Boeing 737 MAXs in the second quarter but held off to further assess the performance of the revamped models.

"We want some evidence because we're committing a huge chunk of capital," Con Korfiatis told Reuters at a Dubai conference, adding that the plane-makers had competed "very vigorously".

Flyadeal is a pure low cost airline, with passengers charged for meals and checked luggage, a model that has so far not had major success in the Middle East beyond United Arab Emirates-headquartered Air Arabia.

The order for the planes, which are the latest versions of world's most used jets and typically employed for short to medium haul flights, would be worth more than $3 billion at current list prices, although industry sources say discounts of around 50 percent are common on such large orders.

Although the world’s two largest plane-makers say they are mostly sold out of the jets until 2024, the order will give flyadeal a pipeline allowing it to plan for long-term growth.

The airline, which plans to add around 10 aircraft a year to its fleet from 2020, will next year start leasing the model of jet it orders until it receives its first aircraft from the production line, Korfiatis said.

Flyadeal operates a fleet of eight leased Airbus A320ceos and will add another three by early January 2019, allowing it to expand from 10 to 14 domestic destinations.

The airline, which launched in September 2017, has carried more than 2 million passengers so far and expects to carry more than 3.5 million in 2019, Korfiatis said.

It is also planning to launch its first international flight next year which will likely be to Egypt, Turkey, or to other Gulf Arab countries.

(Alexander Cornwell - Reuters)

Wednesday, November 14, 2018

Hawaiian Airlines Raises Bag Fees to Match Rivals

Since late August, U.S. airlines have raised their checked bag fees one after the other. By the end of October, Hawaiian Holdings subsidiary Hawaiian Airlines was one of the last remaining holdouts -- with the notable exception of Southwest Airlines, which is sticking with its popular "bags fly free" policy.

For a while, it seemed like Hawaiian might be reluctant to raise its baggage fees due to the impending arrival of Southwest Airlines in Hawaii. However, Hawaiian Airlines announced this week that it is matching its other rivals' bag fee increases on mainland-Hawaii routes. 

A new standard for baggage fees

Until recently, most U.S. airlines charged $25 for the first checked bag and $35 for a second checked bag on domestic routes. However, over the span of a month beginning in late August, four of the top six U.S. airlines raised their checked bag fees to $30 for the first bag and $40 for the second.

Aside from Southwest Airlines, Alaska Air was the only one of the six largest carriers that hadn't adjusted its bag pricing as of the end of September. That made it hard for Hawaiian Airlines to raise its baggage fees, because Alaska is arguably its closest competitor. Indeed, Alaska Airlines flies to Hawaii from eight of Hawaiian's 12 mainland gateway cities: Seattle, Portland, Sacramento, Oakland, San Francisco, San Jose, Los Angeles, and San Diego.

However, in mid-October, Alaska Airlines matched the legacy carriers' $5 bag fee increases, effective Dec. 5. That paved the way for Hawaiian Airlines to follow suit.

Hawaiian Airlines announces new baggage fees

On Tuesday, Hawaiian Airlines increased its first bag fee to $30 and its second bag fee to $40 for mainland-Hawaii routes. (Unlike Alaska Airlines, it is implementing the new fees immediately.) This harmonizes Hawaiian's pricing for checked baggage with that of its major rivals.

Elite-level frequent fliers and holders of Hawaiian Airlines' co-branded credit cards will continue to receive special baggage allowances. Additionally, customers on Hawaiian's international flights will still be allowed to check two bags free of charge.

More interestingly, Hawaiian Airlines is maintaining its special baggage pricing for inter-island flights. Members of the carrier's (free) frequent flyer program pay just $15 for the first checked bag and $20 for the second checked bag. First and second checked bag fees for non-members will stay at $25 and $35, respectively.

A small way to bolster unit revenue

Once all of its larger peers -- other than Southwest -- had decided to raise their checked bag fees, there wasn't much point to Hawaiian Airlines standing pat. Travelers who care a lot about baggage fees are going to gravitate toward Southwest Airlines when it starts flying to Hawaii, regardless of whether Hawaiian charges $25 or $30 to check a bag. For all other travelers, Hawaiian would be leaving money on the table by charging below-market checked bag fees.

Higher baggage fees may help Hawaiian Airlines reverse a string of recent unit revenue declines in the mainland-Hawaii market. Last quarter, Hawaiian's revenue per available seat mile plunged about 10% on those routes due to overcapacity.

Of course, the unit revenue impact of higher baggage fees alone will be fairly modest. An extra $5 isn't much compared to the fares Hawaiian charges for mainland-Hawaii flights, which are typically more than $200 one-way. However, Hawaiian Airlines can use all the help it can get. Furthermore, bag fees are a stable source of revenue that isn't subject to big swings based on competitive dynamics.

Fortunately, Hawaiian Airlines will face easier year-over-year comparisons next year, and the completion of its ongoing fleet transition should also help stabilize unit revenue. And with unit costs trending in the right direction and oil prices finally pulling back, 2019 is shaping up to be another solid year for Hawaiian Holdings.

(Adam Levine-Weinberg - The Motley Fool)

Airbus likely sold 10 A330neo jets to Delta

U.S. carrier Delta Air Lines has emerged as the probable buyer for 10 Airbus A330neo jets worth $3 billion, industry sources said, in a boost for the becalmed European model.

Airbus announced an order for 10 of the 300-seat aircraft in its latest monthly order update on Friday, but withheld the name of the buyer for the Oct. 30 deal.

Two industry sources, asking not to be named, said Delta was the buyer. A third said Delta had been looking to expand an existing order for 25 A330neo aircraft.

Airbus declined comment. Delta was not immediately available for comment.

If confirmed, the deal would mark the second order for the slow-selling A330neo in as many weeks after Kuwait Airways ordered eight of the long-haul planes in mid-October.

Airbus is aggressively seeking more orders for the latest version of its profitable A330 franchise after sales of the engine-upgraded A330neo model fell short of expectations in the face of heavy competition from the newer Boeing 787.

However, industry sources have questioned how far recent orders represent net new sales for the European giant, saying they could replace at least some earlier orders for the A350.

The new-generation A350 is a longer-term bet for Airbus and competes with the 787 and Boeing 777. But one market source said Airbus was willing to give up some orders for the newer plane in order to keep the A330neo afloat and prevent production cuts.

Airbus has given cautious signals that it is prepared to be flexible in both directions when offering combinations of the A330 and A350, sources said, though it cannot afford to lose too many orders or customers for the more strategic A350 plane.

The wide-body A330neo is part of a pair of upgraded aircraft - the other being the strong-selling A321neo narrow-body - that strategists say Airbus is trying to push into the market to reduce the space for a new 220-260 seat, mid-sized jet being studied by Boeing. A decision on that project is due next year.

Airbus is especially keen to continue A330-series production because it has been a major source of profits and cash.

Airbus also needs an aircraft like the 250-300 seat A330 to offer airlines a step-up into the wide-body market from its largest narrow-body, the A321neo, which holds up to 240 people.

Without it, Airbus's smallest wide-body would be the 315-seat A350-900, which leaves a large gap in Airbus's portfolio above the A321neo for rival Boeing to exploit.

(Tim Hepher and Tracy Rucinski - Reuters)

Monday, October 29, 2018

El Al Israel Airlines 787-9 (63394/735) 4X-EDF "Rehovot"

Climbs from Rwy 24L at Los Angeles International Airport (LAX/KLAX) as she departs on the carriers inaugural 787 service between LAX and Ben Gurion International Airport (TLV/LLBG) Tel Aviv, Israel as "El Al 6" (ELY6 / LY6) this afternoon (October 28, 2018).

She was off the deck at 14:28pst, 12 minutes early and sports the carriers "70th Anniversary" Retro Livery.

(Photos by Michael Carter)

Sunday, October 28, 2018

Lufthansa Cargo McDonnell Douglas MD-11F (48784/628) D-ALCD

Arrives at Los Angeles International Airport (LAX/KLAX) on October 26, 2018 sporting the carriers new livery.
(Photos by Michael Carter)

Southwest Airlines' 2019 Hawaii Plans Become a Bit Clearer

Ever since Southwest Airlines announced in October 2017 that it intended to start flying to Hawaii, U.S. air travelers and investors have both been eager to learn more about its plans. Over the past year, there has been a slow trickle of information, but the carrier still hasn't confirmed exactly which routes it will operate, how often it will serve them, and when the flights will start.

However, during its recent third-quarter earnings call, Southwest Airlines provided the most detail yet on its Hawaii plans. What Southwest said could have important implications for Hawaiian Holdings and Alaska Air, which will be its two main competitors in the West Coast-Hawaii air travel market.

Getting closer to launch

The main reason why it is taking so long for Southwest Airlines to launch its Hawaii flights is that it needs to receive FAA approval for long over-water flights. This "ETOPS certification" process -- which entails defining and documenting safety procedures, training flight crews, and then demonstrating the effectiveness of those procedures -- typically takes 12 to 18 months.

According to COO Mike Van de Ven, Southwest Airlines has completed the documentation phase of the certification process. It still needs to do simulations for the FAA and then operate validation flights to receive the final regulatory sign-off.

This suggests that Southwest is at least a few weeks away from achieving ETOPS certification. Yet it does expect to complete the process before year-end. The first half of December now seems like the most likely time frame for receiving ETOPS approval.

Southwest Airlines plans to publish schedules and begin selling tickets for Hawaii flights just a few days after that. Moreover, the first flight could occur as soon as a few weeks after ticket sales begin, which is a much shorter interval than normal. Nevertheless, all signs point to Southwest Airlines' Hawaii flights beginning in early 2019.

Southwest hints at its capacity plans

Back in the spring, Southwest Airlines revealed that it plans to fly to Hawaii from four mainland cities next year, all in California: Oakland, Sacramento, San Diego, and San Jose. It also said that it will serve four airports in Hawaii: Honolulu, Kahului, Kona, and Lihue.

From that description, it was clear that Alaska Airlines and Hawaiian Airlines faced the biggest threat from the first phase of Southwest's expansion. Excluding the big hubs of Los Angeles and San Francisco, Alaska and Hawaiian currently dominate the market for travel between California and Hawaii.

During Southwest's recent Q3 earnings call, CEO Gary Kelly stated that the carrier expects to grow its available seat miles (ASMs) no more than 5% in 2019, with about half of that growth coming on Hawaii routes. That makes it possible to estimate how many Hawaii flights the low-fare airline plans to operate next year.

Southwest Airlines is on track to offer approximately 160 billion ASMs in 2018. Thus, it plans for up to 8 billion ASMs of capacity growth next year, with up to 4 billion ASMs of growth targeted at the Hawaii market. Based on a roundtrip distance of about 5,000 miles and 175 seats per aircraft, that implies an average of about 12.5 daily roundtrips to Hawaii during 2019.

Of course, the Hawaii flights aren't likely to start on Jan. 1, and Southwest will probably allow for a bit of a ramp-up period. Thus, a more reasonable expectation might be for an average of no more than 10 flights a day during the first quarter, rising to as many as 15 flights a day by June. This would allow Southwest Airlines to connect most of the potential city-pairs between its four Hawaii destinations and its four California gateway cities while operating multiple daily flights on the most popular routes.

What does it mean for Alaska Airlines and Hawaiian Airlines?

If Southwest Airlines actually reached a schedule of 15 daily flights by the summer peak season, that would give it about 80,000 monthly seats to Hawaii. By itself, that would represent a roughly 10% increase in industry capacity to Hawaii compared to 2018, based on Hawaii Tourism Authority data.

That's enough extra capacity to have a significant impact on the overall supply demand balance. Furthermore, it would represent growth of about 70% on average across Southwest's four planned gateway cities in California.

Yet the news isn't necessarily as bleak as it may seem. For one thing, Southwest has a massive base of loyal customers, and there have been rumors about Southwest Airlines flights to Hawaii for years. Thus, the launch of Southwest flights next year will probably unlock quite a bit of "new" pent-up demand -- both from people who have been waiting to cash in Rapid Rewards points and from Southwest loyalists who simply want to fly their favorite airline to Hawaii.

Additionally, industry capacity between the West Coast and Hawaii surged nearly 12% in the first eight months of 2018, so this level of growth is not unprecedented. Scheduled capacity for the rest of the industry to Hawaii is roughly flat for the first part of 2019 as of now -- and if anything, other carriers are likely to trim capacity as the year progresses.

Alaska Airlines and Hawaiian Airlines will surely have to make some adjustments as Southwest's Hawaii expansion plays out. But while Alaska in particular may have to cut some flights due to the additional competition, both carriers should continue to enjoy plenty of success in the West Coast-Hawaii market during the years ahead.

(Adam Levine-Weinberg - The Motley Fool)

Friday, October 26, 2018

Apex Oil Company Gulfstream G-IV (c/n 1111) N511PA

Rolls for takeoff on Rwy 30 at Long Beach Airport (LGB/KLGB) in June 2002.

(Photo by Michael Carter)
(Kodachrome K64 Slide)

Thursday, October 25, 2018

JetBlue’s A321 Fleet Central To Plan To Boost Margins

jetBlue Airbus A321-231(SL) (c/n 7855) N987JT "Sky's The LiMint" on short final to Rwy 24R at Los Angeles International Airport (LAX/KLAX) on December 7, 2017.
(Photo by Michael Carter)

jetBlue executives sang the praises of the Airbus A321 for its margin-boosting capability during the company’s third-quarter earnings call on Tuesday, as the New York-based airline addressed the challenges of a 37-percent increase in fuel costs compared with a year earlier.

While its 130 A320s still account for the bulk of jetBlue’s fleet, since 2014 another 60 A321s have proven themselves as the best-performing models in terms of profit generation, both in their 200-seat standard cabin layout and the so-called Mint configuration, which features 16 lie-flat business class seats and 143 economy seats.

Next year jetBlue plans to take delivery of its first of 25 A321neos ordered as conversions from its original commitment for A320neos. Holding delivery positions on a total of 85 A321neos, jetBlue now plans to take 13 next year, 15 in 2020, 16 in 2021, 15 in 2022, 14 in 2023, and 12 in 2024.

“[The A321] is a fantastic aircraft both in the Mint configuration and the high-density configuration,” said jetBlue president and COO Joanna Geraghty. “They have done remarkably well from a margin perspective. Now as we look to the best and highest use of that asset we’re looking at the higher-density version and the margins on that...are actually exceeding that on our Mint routes.”

Geraghty’s comments came as jetBlue embarks on an effort to improve margins overall in 2019 through fare and ancillary revenue increases along with what CEO Robin Hayes referred to as five pillars of cost control. The company also expects see earnings benefits next year as its recently announced network reallocation takes full effect, said Hayes.

The series of network changes will see jetBlue shift fleet resources from what it considers under performing cities and accelerate its focus-city growth strategy in Boston and Fort Lauderdale. The service reallocation will also result in a new jetBlue destination in Ecuador, new service between current jetBlue cities and more flights on popular routes.

Cities slated to lose service starting January 8 include Daytona Beach International Airport from New York JFK airport and from San Juan to Saint Croix. jetBlue also plans to eliminate daily service to Washington Dulles Airport from New York JFK and Boston. Elsewhere on its route map, the airline plans to cut flying on a number of other under performing routes and frequencies in January, including certain flights serving Baltimore, Detroit, Pittsburgh, and Santiago, in the Dominican Republic.

(Gregory Polek - AINOnline News)  

United Airlines Studies A321LR for Transatlantic Service

EASA and the FAA recently certified the A321LR to operate with up to three underfloor auxiliary center tanks, including on flights operating under 180-minute Etops rules.
(Photo: Airbus)

United Airlines has recently priced a proposal to acquire Airbus A321LR single-aisle aircraft as replacements for the RB.211-535E4-powered Boeing 757-200s it operates on transatlantic routes, according to UK-based aviation technical consulting firm IBA Group.

The proposal studied by United specifically centered on A321LRs fitted with 16 Polaris business-class seats, 72 Economy Plus extra-legroom seats and 90 economy seats, IBA Group head of advisory Paul Lyons said during a webinar on low-cost long-haul airlines the company held recently. Each of the 757-200s United now operates on transatlantic services carries 169 passengers: 16 in Polaris business class, 45 in Economy Plus and 108 in the economy cabin.

While Lyons and Mike Yeomans, the firm’s head of valuations, recognized that the A321neo “has been receiving a lot of attention” and noted the interest various carriers have shown in the type's latest Airbus Cabin Flex (ACF) version, they questioned whether the 240-seat maximum capacity of the A321neo ACF (at the A321LR’s 97-tonne maximum takeoff weight) would suit airlines’ longer-haul service needs.

In a 240-seat cabin configuration, all A321LR seat rows would provide a seat pitch of just 28 inches; the second doors on the left and right sides of the aircraft’s fuselage would be removed and therefore unavailable for potential emergency evacuations. Yeomans questioned whether a 28-inch seat pitch would provide enough passenger comfort for any A321neo service of more than five hours in duration. “It’s something we’ve identified, or noted, as perhaps happening with the Wow Air and Norwegian situations,” said Yeomans. Norwegian doesn’t operate A321neos or A321LRs yet, but in 2019 the carrier plans to take the first eight of 30 A321LRs it has ordered and operate them on routes to the U.S. from European cities such as Berlin, Brussels, Budapest, and Prague.

Wow Air already operates A321neos (though not yet ACF-configured A321LRs) configured for 220 seats at mixed 30- and 31-inch pitches on routes from Iceland to North America—all of which extend at least five hours in flight duration. Although Norwegian has yet to receive its first A321LR, it operates 189-seat Boeing 737 Max 8s configured to seat 189 passengers on transatlantic services. So Norwegian could conceivably configure its A321LRs to offer a 29-inch seat pitch.

Lyons also noted that the A321LR’s cruise speed of Mach 0.78 is “relatively low … compared to some of its competitors” such as the Mach 0.85-cruising Boeing 787, possibly producing a negative “knock-on effect for utilization on some of the shorter-length but still long-haul sectors” operated by the A321LR.

However, IBA Group does not doubt that the A321LR, fitted with a third auxiliary center fuel tank, will offer sufficient range for even longer-haul transatlantic services. Lyons pointed out the Airbus had flown an A321neo a distance of 4,750 nm in that configuration non-stop from Mahé in the Seychelles to Toulouse with the aircraft’s weight configured for the test flight to represent 162 passengers and with 11 technicians and five crew-members aboard.

(Chris Kjelgaard - AINOnline News)

PAL set to permanently retire A340s as A350 gains traction

Philippine Airlines Airbus A340-313 (c/n 474) RP-C3441 rotates off Rwy 25L at Los Angeles International Airport (LAX/KLAX) on March 12, 2018.
(Photo by Michael Carter)

Philippine Airlines (PAL) is on the verge of permanently retiring the Airbus A340-300, as its A350-900s get up to speed on long-haul routes.

The carrier has one A340-300 that can be put in use should there be a technical issue with another aircraft, says Jose Perez, vice-president of corporate communications at PAL.

He says that recent unsourced reports that the type has been permanently retired are “close to the truth.”

“We actually made a decision to retire them sooner rather than later,” he says. “We might have an announcement to make at some point. There is one aircraft we can use if [there are] technical difficulties with one of our 777s or A350s.”

“Utilization is very low. It may fly to Los Angeles or San Francisco, and then be parked again. Right now, we're reviewing that. We might have to make a decision at a certain point to ground all the aircraft.”

The permanent retirement of the type will mark the end of A340 operations in the Asia-Pacific.

Perez made the remarks in an interview with FlightGlobal at the Association of Asia Pacific Airlines (AAPA) Assembly of Presidents, which was held recently on the resort island of Jeju, South Korea.

Perez adds that the carrier’s four A350-900s have enjoyed a smooth service entry. The type is used on non-stop services from Manila to London-Heathrow and Los Angeles. A four-times-weekly services to New York JFK will commence on 29 October. This will go to five-times weekly on 6 December.

Perez says that the aircraft will be able to operate a full payload in both directions to New York, although there could be restrictions in the winter months. This flight will replace the existing Manila-Vancouver-New York flight. Manila-Vancouver will then be operated by Boeing 777-300ERs as a direct turnaround service.

The carrier will receive two additional A350s in 2019 and is considering additional USA services, either to Chicago or Seattle.

On other types, Perez says the carrier’s four new A321neos have performed well, especially to longer-haul destinations such as Sapporo, Brisbane, and Sydney. He says customer feedback has been positive and notes that the A321neo product resembles that of a wide-body, with full-flat seats in business class, a good seat pitch in economy, and seatback inflight entertainment.

Flight Fleets Analyzer shows that PAL’s A321neos have 168 seats, with 156 in economy and 12 in business. PAL has an additional 17 A321neos on order, with deliveries to run to 2023. Airbus has proposed the A321neoLR variant of the narrow body type, but Perez says that PAL is still assessing the business case for this.

(Greg Waldron - FlightGlobal News) 

Thai Airways delays wide-body retirements to ease capacity issues

Thai Airways is postponing retiring some of its oldest wide-body aircraft to cover delays in its fleet acquisition plans and a capacity crunch caused by Boeing 787 groundings for unscheduled engine maintenance.

The Thailand flag carrier had planned to retire its remaining Boeing 747-400s over the next few years, VP-alliances and commercial strategy Krittaphon Chantalitanon said. However, it has extended the phaseout “for another year or so,” he told ATW’s sister publication Aviation Daily on the sidelines of the Association of Asia Pacific Airlines assembly in Jeju, South Korea on Oct. 19.

Thai has six passenger 747-400s remaining in service after retiring two earlier this year. Of the remainder, one will be phased out in 2019, one in 2020, two in 2021 and two in 2022.

Thai may also have to keep some older Boeing 777s in its fleet longer than planned. The carrier must either delay their retirement or phase them out, bringing in leased or used aircraft to provide short-term capacity, Chantalitanon said.

Thai is one of the many airlines that must progressively ground its Rolls-Royce Trent 1000-powered 787s for unscheduled engine maintenance.

As of Oct. 19, four of Thai’s eight 787s were grounded for engine work, Chantalitanon said. The carrier hopes the number of aircraft grounded at once can be reduced, but it will still have some 787s out of action for the short term at least.

Thai has not yet had to adjust its schedule or cut flights because of the 787 engine issues as other airlines have done. However, the airline has operated a “very tight schedule” because of the groundings, and there have been many flight delays, Chantalitanon said.

Another reason for keeping the 747s and 777s longer is that no new aircraft deliveries are arriving. The last new delivery received was its 12th Airbus A350 earlier this year, and there are no more outstanding orders.

The carrier intends to place more orders, but this process has been delayed because of a government request for the airline to conduct another review of its acquisition plan and growth strategy. This review is likely to be completed by the end of this year, said Chantalitanon. However, even if an order is placed soon, it would still be at least a few years before new aircraft arrive.

When the acquisition plan was initially submitted to the government, it included the purchase of 23 aircraft. The government has asked for this plan to be resubmitted with more details about whether the aircraft are for growth or replacement, and what its expansion plans include.

The 23 aircraft in the submission were to be two-thirds wide-bodies and one-third narrow-bodies, Chantalitanon said. However, the total and mix may change slightly as a result of the review. No specific models have been selected yet, and if the plan is approved, an order would likely be placed in the first half of 2019, Chantalitanon said.

Thai cannot afford to postpone its fleet expansion plans for too much longer, Chantalitanon said. The carrier’s rivals are upgrading their fleets, and Thai must do the same to remain competitive with its premium product. The lack of fleet growth also means the carrier is focused more on consolidating its existing markets than adding new routes.

While the airline is not adding aircraft, it is taking steps to refresh its existing fleet. Thai is progressively upgrading the cabins on its Airbus A330s—three of 15 aircraft have been completed so far, he said. Five more are scheduled to be finished next year. One of the main features of the upgrade will be the introduction of a lie-flat seat in business class on the A330s.

(Adrian Schofield - ATWOnline News)

Hawaiian’s 3Q net income up 31%; A321neo deliveries ‘back on track’

Hawaiian Airlines Airbus A321-271N (c/n 8157) N214HA "Kului" on short final to Rwy 30 at Long Beach Airport (LGB/KLGB) on October 18, 2018.
(Photo by Michael Carter)

Hawaiian Airlines reported a 3Q net profit of $93.5 million, up 31% compared to net profit of $71.6 million in the same period a year earlier.

Hawaiian CEO Peter Ingram described this as a “solid” performance, but still short of expectations mainly because of severe weather events in Hawaii and Japan that affected operations. Operating profit fell 31.5% to $115.8 million.

Revenue for the quarter was up 6% to $759 million, with passenger revenue up 4.3%. Operating costs rose 17.6% to $643.3 million. Hawaiian’s capacity increased by 8.1% in the third quarter, with yield down 1.7% and passenger unit revenue dropping 3.6%.

The carrier expects fourth-quarter capacity to be up 4.5%-6.5%, and full-year capacity is forecast to grow by 5.5%-6.5%. For next year, capacity growth is expected to be less than in 2018.

Hawaiian said its A321neo deliveries have caught up to their planned timetable following delays earlier this year, which will allow the airline to phase out its remaining Boeing 767s in early 2019.

A321neo deliveries are now “substantially back on track,” Ingram said during the carrier’s 3Q earnings call Oct. 23. The airline expects to have 11 of these aircraft by the end of this year, which was its target before delays occurred in the first half of the year. Hawaiian currently has nine A321neos.

The delivery slowdown was caused by issues with the Pratt & Whitney geared turbofan engine that also affected other airlines. However, Ingram said the carrier now has “a lot more confidence” in the reliability of the delivery timetable. Delivery dates are typically moving by just a few days or a week, a major improvement from the uncertainty in the first quarter.

Hawaiian has grown its A321neo fleet to the point that it will be able to retire all its 767s soon after the Christmas/New Year holiday peak, Ingram said. This will mean the airline has simplified its fleet to three types—the A321neos, A330s and Boeing 717s. The Hawaiian fleet is now “better positioned now than at any time in the past decade,” Ingram said.

Regarding Hawaiian’s application for antitrust approval for a joint venture with Japan Airlines, Ingram said the “working expectation” is that a decision will come in early 2019. This would open the way for the joint venture to be implemented later next year.

(Adrian Schofield - ATWOnline News)

JetBlue posts $50 million 3Q profit as fares, ancillary revenues rise

New York-based LCC JetBlue Airways, reacting to a 37% year-over-year (YOY) increase in fuel prices, doubled down on its plan to “improve our earnings, particularly in the areas we can control,” CEO Robin Hayes said in a third-quarter earnings call Oct. 23.

“We are taking actions to recapture higher fuel costs through price, both with fare increases over recent months and through higher ancillary revenue initiatives,” Hayes said. “We are on track to hit our 2018 CASM ex-fuel guidance, despite pulling capacity in both the third and fourth quarters to adjust to higher fuel prices.”

JetBlue EVP-commercial & panning Marty St. George said the airline’s flown capacity for the third quarter grew by 8.7% and fourth quarter capacity growth is expected to be between 7.5% and 9.5%. “Given the 2.9 points of lost capacity from hurricanes in the fourth quarter of 2017, our schedule-to-schedule capacity growth is approximately 6% for the fourth quarter of 2018,” St. George said. “[It] includes a previously announced 2 point ASM growth reduction to mitigate the impact of higher oil, [which] follows the 0.5 point reduction related to the third quarter.”

The airline posted a $50 million net profit for the third quarter, down 72.1% from a $181 million net profit in the 3Q 2017. While total revenues increased 10.5% to $2 billion, JetBlue’s operating expenses rose 28.1%, to $1.9 billion, with fuel and related taxes rising 48.4% YOY, from $347 million to $515 million. The carrier paid $2.32 per gallon, a 36.6% increase over the 3Q 2017 cost. The airline will hedge about 7.7% of its fuel for the 2018 fourth quarter and first quarter of 2019—32 million gallons total—and expects its 4Q per-gallon price to be between $2.25-$2.45.

JetBlue reported $83 million in operating income for the quarter, down 73.6 % YOY. Its operating margin was 4.1%, a 13.2-point drop from a 17.3% operating margin in the year-ago quarter.

Passenger traffic increased 9.7% YOY to 13.4 billion RPMs, as capacity grew 8.7% to 15.6 billion ASMs, producing an 85.9% load factor for the quarter, up 0.8 point YOY. The carrier’s 3Q RASM was 12.91 cents, up 1.7%, while CASM-ex was 8.27 cents, up 3.2% YOY. Yield increased 1% YOY to 14.53 cents.

In the fourth quarter, JetBlue’s Airbus A320s will fly 53% of available ASMs, with its A321 Mint-configured aircraft next at 20%, followed by its “all-core” A321s at 16%, and its Embraer E190s at 11%. Three A321ceos are expected for delivery by year-end; at which point JetBlue’s fleet will comprise 253 aircraft: 130 A320s, 35 Mint-configured A321s, 28 high-density A321s, and 60 E190s.

A significant step in JetBlue’s strategy to increase margins came Oct. 9, when the airline announced network reallocations set for early 2019 that will fortify networks in its three primary focus cities, Boston, New York-JFK and Fort Lauderdale.

“We’re relocating underperforming routes … and expect revenue benefits of $100 million to $120 million by 2020,” St. George said. “We will be closing three cities, Washington Dulles, St. Croix and Daytona Beach. We plan to convert a fourth city, Portland, Maine, to seasonal service. And we are reducing frequencies to Mexico City from both Fort Lauderdale and Orlando. We do not take these changes lightly, as we know these relocations impact a number of our crew members.”

“With the uptick in fuel in the second half of the year, I think JetBlue has been very proactive on capacity reductions,” Hayes said, when an asked about expectations for margin expansion in 2019. “We’ve been very proactive on fare increases, we’ve been very proactive on ancillary revenue changes … wherever we can [to] mitigate the cost of higher fuel.”

Hayes emphasized the company has the network building blocks and structural cost programs in place to reach its $2.50-$3.00 EPS goals by 2020. “Many of those start to kick in, in early 2019,” Hayes said. “We are very confident that we will see absolute margin expansion in 2019, even if fuel was to rise from here.” 

(Mark Nensel - ATWOnline News)

Qatar’s cargo operations goes transpacific

Qatar Airways Cargo Boeing 777-FDZ (62085/1410) A7-BFJ on short final to Rwy 25L at Los Angeles International Airport (LAX/KLAX) on November 20, 2017.
(Photo by Michael Carter)

Fast-expanding Qatar Airways Cargo has begun operating services to Macau and onward to North America.

Macau is the airline’s fourth freighter destination in Greater China, with the 2X-weekly services to the southern Chinese city acting as a hopping-off point across the Pacific. The service will be operated by a Boeing 777F.

China and the Americas are key markets for Qatar Airways Cargo, with many of the major industrial and manufacturing centers in the Guangdong province of China located on the Macau side of the Pearl River Delta. Electronics, garments and e-commerce goods are major exports from Macau, while imports into the former Portuguese colony consist primarily of consumer goods.

“We have launched our newest freighter destination, Macau, just in time for the holiday season when air freight demand is high and the market is strong,” Qatar Airways chief officer cargo Guillaume Halleux said. The airline said its cargo arm is now the second-largest dedicated freighter company in the world.

“The new services will connect manufacturing industries and exporters from the region to North America directly and quickly, without requiring a stopover at our hub in Doha,” Halleux added.

In North America, the carrier has a network of nine freighter destinations and 11 belly-hold cargo destinations.

From Macau, the new service operates to Los Angeles and Mexico City. On the return leg, the freighter flies over the Atlantic to Liege, Belgium, before arriving at the carrier’s hub in Doha. One hundred tonnes of cargo capacity is offered on each flight leg.

(Alan Dron - ATWOnline News)

Al Baker says Qatar Airways could leave oneworld in 2019

Qatar Airways Group CEO Akbar Al Baker told members of the media Oct. 18 in New York that its Oneworld membership is in question and the Doha-based carrier could leave the alliance in 2019.

Even though he stressed the importance of the airline’s position in Oneworld—describing it as one of the most important tools for collective action in serving customer needs—he suggested some alliance members, especially the US Big Three carriers—Dallas/Fort Worth-based American Airlines, Atlanta-based Delta Air Lines and Chicago-based United Airlines—were not on good terms with the Middle Eastern carrier.

“In June 2013, we joined the Oneworld [alliance]. We were invited by American Airlines and [UK-based] British Airways together. Unfortunately, the same airline that invited us is now talking against Qatar Airways,” Al Baker said at the media briefing.

Al Baker added there are a lot of bad feelings with the three US airlines, despite Qatar’s agreement not to exercise fifth freedom flights into the US.

Al Baker said that while one of the principal purposes of an alliance is for members to feed passengers to each other, Qatar is now getting more passengers from non-Oneworld airlines.

He said he could see Qatar withdrawing from Oneworld, possibly next year, and said the carrier would privatize in the next decade.

“As in most families, there are times where members of our alliance have differences on specific points from time to time. We hope these can be resolved quickly so the carriers can focus on providing great service to our customers,” Oneworld VP-corporate affairs Michael Blunt told ATW.

In an Oct. 20 statement, Al Baker further emphasized how the beneficial exchange of culture and commerce made possible by the US-Qatar Open Skies agreement must not be blocked merely because of Qatar Airways’ decision to serve markets that others have ignored.

Qatar operates a fleet of more than 200 aircraft to over 150 destinations.

(Kurt Hofmann - ATWOnline News)

Why Southwest Airlines Is Falling 8% Today

What happened

After the company reported third-quarter financial results that beat industry watchers' top- and bottom-line forecasts, shares in Southwest Airlines are trading 8.2% lower at 2:15 p.m. EDT today.
So what

Southwest Airlines' second-quarter performance was dragged down by promotions to drive passenger volume following an accident in April. Its sales only grew 0.2% to $5.74 billion in Q2 because its average load factor fell 90 basis points to 84.7%, despite average fares declining 4% to $151.94.

The third-quarter performance was better, though. Sales were $5.58 billion, up 5.3% from the same quarter last year, in part because an average fare increase of 2.5% to $153.40 offset a 0.9% decline in its load factor to 83.9%. Net income was $614 million and earnings per share were $1.08 in the quarter, up from $528 million, or $0.88 per share one year ago.

Revenue was $10 million better than analysts were looking for, and earnings per share clocked in $0.02 ahead of estimates, so investors' disappointment may be related to the declining load factor, which may suggest Southwest's capacity isn't in line with demand. As a reminder, load factor is calculated by dividing revenue passenger miles by available seat miles.

Investors may also be nervous about headwinds due to higher jet fuel prices, and guidance that costs excluding fuel and oil expense and profit-sharing will increase by at least 3% in 2019 because of investments to support future growth.

Now what

The airline industry is capital-intensive, and demand tends to track the economic cycle. In recent years, Southwest Airlines and its peers have done better at controlling capacity and costs to avoid steep price cuts, but risks could emerge if inflation continues to negatively impact the bottom line and demand slows because of slowing economic growth due to higher interest rates.

Nevertheless, Southwest Airlines has historically been among the most profitable airlines, and next year, its first-half results will go up against easier year-over-year comparisons. As a result, this decline in share price may offer airline investors a buying opportunity.

One big investor whose buying and selling ought to be watched closely following these results, though, is Warren Buffett. In Q2, he increased Berkshire Hathaway's stake in Southwest Airlines by 20% to roughly 57 million shares, making it the airline's second-largest owner. Unquestionably, it will be important to see what Buffett did with his Southwest Airlines shares in the third quarter, but we'll have to wait a few more weeks until Berkshire's 13-F is filed with the SEC to find that out.

(Todd Campbell - The Motley Fool)