Monday, June 18, 2018

JetBlue's founder is reportedly raising $100 million to start a new low-cost airline

David Neeleman, the founder of JetBlue, WestJet, and Azul. 
(Associated Press)

JetBlue's founder, David Neeleman, is reportedly launching another low-cost airline in the US. According to the trade publication Airline Weekly, Neeleman's new venture is to be called Moxy and will be aimed at smaller secondary airports.

Moxy has already placed orders for 60 Bombardier CS300 airliners and is working to raise $100 million, Airline Weekly reported, citing people familiar with the venture.

Funding for the new airline is expected to come from several sources including the former Air Canada CEO Robert Milton, the former ILFC CEO Henri Courpron, and Neeleman himself.

Neeleman was not immediately available for comment.

Bombardier CS300.

According to the trade journal, Moxy plans to commence service in 2020 when Bombardier is to deliver the first of its new airliners. All 60 Bombardier jets are expected to be delivered by 2024.

Moxy will target smaller, lower-cost, secondary airports located near major metropolitan transportation hubs. These include the Stewart and Republic airports near New York City as well as airports in Milwaukee and Gary, Indiana, to service Chicago. Baltimore and Trenton, New Jersey, are also prospective destinations.

Should Moxy get off the ground, it would be latest in a long line of airline endeavors for the Brazilian-American serial entrepreneur. Neeleman helped found a series of successful airlines over the past three decades including Morris Air, which was sold to Southwest Airlines; WestJet; JetBlue; and Azul. He's also running Portugal's national airline, TAP. 

(Benjamin Zhang - Business Insider)

Sunday, June 17, 2018

Southwest Airlines Boeing 737-7H4 (32533/2294) N280WN "Missouri One"

Delivered to Southwest Airlines on June 20, 2007, the aircraft wore the "Penguin One" livery from June 2013 - April 2015 when due to negative publicity issues at Sea World the aircraft was immediately repainted to it's current "Missouri One" livery in April 2015.

The aircraft is seen on short final to Rwy 24R at Los Angeles International Airport (LAX/KLAX) on December 13, 2017.

(Photo by Michael Carter)

Westjet Boeing 737-8CT(WL) (37158/2841) C-GWSV

Caught on final to Rwy 24R at Los Angeles International Airport (LAX/KLAX) on January 11, 2018 sporting the carriers "Walt Disney World - Frozen" livery celebrating the Walt Disney movie. 

The aircraft was delivered to Westjet on March 20, 2009.

(Photo by Michael Carter)

Sun Country Airlines Boeing 737-8Q8 (30689/908) N804SY "Lake of the Woods"

Seen on short final to Rwy 25L at Los Angeles International Airport (LAX/KLAX) on November 20, 2017. This lovely aircraft was delivered factory fresh to the carrier on August 7, 2001.

(Photo by Michael Carter)

Air Canada Airbus A321-211 (c/n 1691) C-FJNX

Captured at Los Angeles International Airport (LAX/KLAX) sporting the carriers new livery on September 22, 2017.

This aircraft was originally delivered to Air France as F-GTAL on March 4, 2002 and served with the carrier until being WFU on November 1, 2015. Air Canada leased the aircraft from Apollo Aviation on January 13, 2016 entering service with the carrier on April 14, 2016.

(Photo by Michael Carter)

Spirit Airlines Airbus A319-132 (c/n 2983) N528NK

Delivered to the carrier on January 19, 2007 the aircraft is captured on short final to Rwy 25L at Los Angeles International Airport (LAX/KLAX) on September 22, 2017 sporting one of the three liveries currently worn by the companies aircraft.

(Photo by Michael Carter)

Frontier Airlines Airbus A320-251N (c/n 7824) N316FR "Shelly The Sea Turtle"

Taxies from Rwy 25L at Los Angeles International Airport (LAX/KLAX) following it's arrival from Denver International Airport (DEN/KDEN) on December 5, 2017.

(Photo by Michael Carter)

Saturday, June 16, 2018

Volaris Airbus A319-132 (c/n 3463) N502VL "Ana"

Arriving at Los Angeles International Airport (LAX/KLAX) on December 13, 2017 an absolutely gorgeous day in SoCal and little did I know but this would be the last time I would see this aircraft.

Delivered to Volaris on April 14, 2008 (XA-VOM - NTU) it operated with the carrier until early this year (2018) when it was WFU and returned to AerCap Leasing. The aircraft now serves with Cambodian carrier Lanmei Airlines as XU-963.

(Photo by Michael Carter)

Aeromexico Connect Embraer ERJ-190LR (c/n 19000673) XA-GAK

Captured on short final to Rwy 25L at Los Angeles International Airport (LAX/KLAX) on December 13, 2017. The aircraft was delivered to the carrier on July 7, 2014 ex-Embraer PR-EGV.

(Photo by Michael Carter)

Interjet Airbus A320-214 (c/n 3123) XA-ILY

Seen on short final to Rwy 25L at Los Angeles International Airport (LAX/KLAX) on December 13, 2017. Originally delivered to Mexicana as N213MX, ex-Airbus F-WWBE on May 24, 2007 the aircraft found its way to Interjet on October 13, 2010 following the demise of Mexicana.

(Photo by Michael Carter)

Friday, June 15, 2018

Airbus delivers first US - Built A321neo to Hawaiian Airlines

Airbus delivered its first American-built A321-271N (c/n 8129) N212HA this week handing the aircraft over to Hawaiian Airlines on June 11. It is also the first new engine option (PW1133G) aircraft to be completed at the Airbus’ US manufacturing facility in Mobile, Alabama.

Hawaiian flies larger Airbus A330 jets between Hawaii and Seattle-Tacoma International Airport. The airline just placed an order for 10 Boeing 787-9 Dreamliners, picking the long-haul jets over new Airbus A330 wide-bodies.

Hawaiian (owned by parent company Hawaiian Holdings) already had three European-made A321neo jets, using the aircraft for daily nonstop flights between Honolulu and Portland, Oregon, and Long Beach, California.

The jets will fly between San Diego and Kahului, Maui; Portland and Honolulu and Kahului; Oakland and Honolulu, Kahului and Līhu‘e, Kauai; and Los Angeles and Līhu‘e and Kona on the Island of Hawaii.

The airline is taking 17 more aircraft through 2020 and said it will announce new routes between the West Coast and Hawaii using the new jets.

Hawaiian's A321neo jets have room for 189 passengers: 16 in first class, 44 in premium economy seats and 129 in economy. Flights have wireless internet, USB outlets, wireless streaming in-flight entertainment and complimentary meals.

Airbus said the A321neo operates 15 percent more efficiently than the A321ceo (current engine option) aircraft.

SeaTac-based Alaska Air Group also has Airbus A321neo jets in its fleet, inheriting them from Virgin America.

Three of those jets have been painted with Alaska color schemes. Alaska said last year that all 10 of the new aircraft would be in service by the third quarter of 2018.

(Jim Hammerand - Puget Sound Business Journal)

Thursday, June 14, 2018

Etihad Airways in talks to cancel, defer Boeing 777X orders

Etihad Airways is exploring options with Boeing to cancel or defer orders for 777X jets worth billions of dollars in a fresh sign of the carrier's financial strains and potentially squeezing Boeing's newest model, four sources familiar with the matter said.

Etihad, owned by Abu Dhabi, has been reviewing its fleet plans as part of a strategy overhaul launched after a nearly $2 billion loss in 2016.

The airline's management believes it no longer needs all of the 25 777X twin-engined jets and may be willing to incur penalties for cancellations rather than be saddled with future recurring losses stemming from overcapacity, the sources said. 

Etihad and Boeing declined to comment.

Etihad is a launch customer of the 777X: an upgrade to Boeing's successful mini-jumbo series that includes plans for the world's largest twin-engined jetliner, the 406-seat 777-9 which is due to enter service in 2020.

Cancelling or deferring orders for jets earmarked for production at such an early stage of the ambitious new program could create a headache for Boeing as it switches to the new model.

Although twinjets like the 777X have prevailed over larger and less-efficient four-engined aircraft like the A380 and Boeing 747, analysts say demand for such aircraft remains relatively thin due to cost and size. The 777-9 version has a list price of $426 million.


Finding alternative airlines to fill Etihad's production slots in time for the launch phase may not be easy, they say, though Boeing has said it is confident in demand for the 777X and that development of the plane is on schedule.

Rivals Emirates and Qatar Airways are also launch customers of the 777X, whose features include a sleek new wing with folding wingtips to allow it to fit in parking stands.

Other buyers include Cathay Pacific, Lufthansa , Japan's ANA, Singapore Airlines, and Turkish Airlines has also expressed interest.

Few details of the fleet review have been made public but Etihad's new Group Chief Executive Tony Douglas said in April it aimed to develop in "a sustainable way".

The airline has been shrinking its business, including cutting routes and retiring some aircraft without replacements.

Reuters reported in May that planemakers were preparing for possible changes to dozens of plane orders from Etihad as it pressed ahead with its review.

It remains unclear to what extent suppliers will be willing to accommodate such requests, with the Gulf making up a significant portion of wide-body jet demand.

Etihad has outstanding orders worth tens of billions of dollars for over 160 Airbus and Boeing aircraft, including the new 777Xs.

The bulk of the aircraft were ordered when Etihad was pursuing an aggressive expansion strategy to keep pace with Emirates and Qatar Airways.

Etihad said then that under the agreements with Airbus and Boeing it could transfer orders to airlines it had invested in.

But the airline investment strategy seemingly collapsed last year when minority-owned Air Berlin and Alitalia filed for insolvency. Etihad currently holds stakes in four other airlines, half as many as it once held.

(Alexander Cornwell and Stanley Carvalho - Reuters) 

Tuesday, June 12, 2018

Bombardier BD700 Global 6000 (c/n 9561) N979CB

Operated by Design Air Professionals LLC, this lovely aircraft is captured climbing from Rwy 25L at Los Angeles International Airport (LAX/KLAX) on December 8, 2017.

(Photo by Michael Carter)

Southwest wants to be 'Milwaukee's hometown airline' as Midwest Express revival looms

Before 2009, Southwest Airlines didn't even fly out of General Mitchell International Airport.

But by 2017, the Dallas-based airline held a 43 percent market share at Milwaukee's airport, and with 23 direct flight destinations, has a veritable stranglehold on the market. When Ryan Green, Southwest's vice president and chief marketing officer, addressed the Greater Milwaukee Committee Monday, he made it clear that the airline has prioritized the Milwaukee market and hopes to continue its regional dominance.

"I want to be clear with you all," Green said. "We want to be Milwaukee's hometown airline. It's really important to us for you all to consider us your hometown carrier. That is why we do the things that we do to not only serve the market, and hopefully do so profitably, but also to be really ingrained and be a deep part of the community."

That comment is particularly noteworthy given that in late May, Midwest Express, formerly known as "Milwaukee's hometown airline," filed a private stock offering with the Securities and Exchange Commission, signaling its intentions to return service to General Mitchell International Airport in the coming years.

Green also referenced Midwest directly during his Monday comments.

"I started coming to Milwaukee a few years ago, and one of the things that I heard a lot about was a chocolate chip cookie," Green said, alluding to Midwest's signature in-flight snack. "It was a beloved chocolate chip cookie, and all that came with Midwest."

He made those comments while showing the room a graphic that illustrated how Southwest, by the end of 2017, was bigger at General Mitchell International Airport than the prior incarnation of Midwest was at its peak in 2007. Midwest Airlines, the successor to Midwest Express, was acquired by Republic Airways Holdings Inc. in 2009 and was merged into Frontier Airlines in 2010.

"Today, Southwest Airlines brings more people to and from Milwaukee than any of the other airlines that have served Milwaukee at the past at their peak," Green said.

And if anything, Green's comments indicated that Southwest plans to push its market share at Mitchell International toward the 50 percent mark.

"We feel good about the growth in this market," Green said. "We've served Milwaukee for less than 10 years, and we hope that you keep choosing to fly out of Milwaukee and the demand is there and we can continue to grow together."

(Patrick Leary - Milwaukee Business Journal) 

Monday, June 11, 2018

The votes are in: Sun Country Airlines' new paint scheme is ...

Last week, Sun Country Airlines asked employees to vote on their preference for a new paint scheme that will eventually adorn the carrier’s airplanes. Now the results are in.

Sun Country employees picked the design labeled “Team A” in a “landslide” vote.

The company announced the winning design via social media, noting that it introduces new elements while keeping some older ones. The Minnesota-based carrier also noted that Lake Minnetonka – one of the Twin Cites' many lakes – served as inspiration for some of the new livery.

Via its Facebook page, Sun Country said:
This is the new 'livery' that Sun Country employees voted to put on the carrier's aircraft.
(Photo: Sun Country Airlines)

“This livery reflects our brand in several ways. As you can see, the compass logo on the tail mirrors the tail of our current livery, keeping us connected with our wonderful passengers we’ve come to know throughout the years. Second, the introduction of Minnetonka’s depth chart as our new ‘lakes’ design element demonstrates our continued commitment to our home state and local customers. Lastly, the refreshed bold use of orange symbolizes our bold vision for a bright future serving leisure travelers ahead. See you in the skies!”

When the vote was first announced, Brian Davis – Sun Country’s Senior Vice President, Commercial – described it as a way to give employees a voice in Sun Country’s transformation from a traditional low-cost carrier into a more of a no-frills, budget-oriented outfit.

“It is important to me that as we build, we build together,” Davis said in a note to workers ahead of the vote. “It is imperative that we not only listen to the feedback of our customers, but also the expertise and input of our most valued asset – you!”

Sun Country says all new planes coming into its fleet will bear the new livery, including some new aircraft due to arrive by the end of the year. The airline also will update its existing fleet of about 20 aircraft, though planes will get the new scheme only when it’s time for their next regularly scheduled repaintings. Sun Country’s aircraft typically get repainted about once every seven years, though the schedule may vary by individual plane, according to spokeswoman Jessica Wheeler.

(Ben Mutzabaugh - Today In The Sky / USAToday)

No sacred cows': South African Airways boss plans deep cuts

Six months into the job of running loss-making South African Airways, Vuyani Jarana is mapping out a punishing austerity plan.

Jarana, who faces the daunting task of turning the flag carrier around, said layoffs and other cuts were unavoidable as he contends with a draining cost-to-income ratio of 108 percent.

"SAA cannot carry the same workforce, whether it is pilots, cabin crew or administration," he told Reuters. "We have to make some tough decisions to save the airline. There cannot be sacred cows when it comes to SAA."

He declined to put a number to the job losses, but two sources familiar with his plan said the state-owned carrier was likely to cut between 1,000 and 1,500 people via a combination of layoffs and voluntary redundancies to bring its employee-per-aircraft ratio in line with regional competitors.

The numbers include roughly 300 flight attendants, according to one of the sources. Some of the carrier's 700 pilots, encouraged to look for jobs elsewhere, have drafted their own severance pay offer to SAA, the second source said.

In a dramatic fall from grace over the past decade, SAA has lost its place as Africa's biggest airline and a symbol of patriotic pride to become a source of frustration for taxpayers who have forked out more than 30 billion rand ($2.3 billion) since 2012 to keep it in the air.

SAA's woes are emblematic of the struggles of traditional flag carriers around the world, such as Malaysia Airlines, Air India and Air France-KLM. These airlines are contending with low-cost rivals and a spike in oil prices, which puts pressure on those with the highest labour and other non-fuel costs.

The problems are also an illustration of the malaise afflicting the airline industry in Africa, whose airlines have the weakest finances and emptiest planes of any region of the world.

Jarana told Reuters he was also setting up other moves to reduce the airline's 33.5 billion rand operating costs. They include squeezing suppliers for better deals and cutting back on its number of flights to London from twice to once a day.

The carrier makes its biggest losses on the London route because it faces fierce competition that expose its inefficiencies.

"My view is that the starting point to getting out of the hole is to stop digging, you stop doing the things that sink you deeper into trouble," Jarana said in his office near O.R. Tambo International Airport in Johannesburg.


Although the global industry is looking at another profitable year in 2018, much of the money is in the United States where legacy carriers have been through years of restructuring.

Africa is the weakest region of all, with airlines struggling to improve load factors - percentage of seats filled - from the world's lowest level of 61.5 percent in 2018, compared with 81.7 percent globally, according to International Air Transport Association forecasts.

SAA employs just over 10,000 people and has 64 aircraft, putting its employee-per-plane ratio at 160. That compares with just over 130 employees per aircraft for Ethiopian Airlines , which has overtaken SAA to be become the biggest airline by revenue and profit in recent years.

However, the ratio is below 190 employees per aircraft at Air India, a debt-laden and loss-making carrier that last month failed to attract a single bidder for the government's 76 percent stake.

Despite carrying roughly the same number of passengers annually - around 10 million - Ethiopian Airlines makes more than $200 million annual profit while SAA extended its losing streak to the sixth year in 2017 when it suffered a hefty $400 million loss.

Ethiopian Airlines has bucked the African trend and has been expanding fast, thanks in part to a geographical position that enables it to serve as a hub in competition with Gulf carriers and to a young, modern fleet.


While investors are likely to welcome Jarana's blueprint, it could put him on a collision course with politicians a year before the national elections.

South African President Cyril Ramaphosa faces a dilemma.

He wants to wean SAA off its state support, which is a major risk to South Africa's credit rating, and burnish his economic reformist credentials. Yet mass layoffs could prove politically unpalatable in a country where a quarter of adults are unemployed.

However BNP Paribas South Africa senior economist Jeff Schultz said the government had little choice but to take the political hit at the polls from turnaround plans at inefficient state firms like SAA and power utility Eskom.

"Large cuts to state-owned companies' workforces are probably unavoidable and necessary at this juncture, even as the ruling African National Congress is going into an election year," he said.

To cushion the blows, however, Jarana said he had been talking to other airlines about offloading some pilots and flight attendants to them, without naming the carriers.

The plan comes at a time when there is a growing shortage of pilots across the airline industry.

"We have got excess pilots and we are signing up contracts for them so that they are not put out on the street," said Jarana, a former executive at telecom company Vodacom. "That is what we have been working on in the past five months."


Sunday, June 10, 2018

American Airlines CEO Doug Parker Is Deep in a Mess of His Own Making

It can't be fun to be American Airlines CEO Doug Parker right now. His company has experienced massive nonfuel cost increases over the past few years. Now that the carrier is finally reining in controllable costs, fuel prices have surged, creating a new headache. Meanwhile, American has the weakest balance sheet of any major U.S. airline.

At a major industry event last week, Parker reiterated his stance that industry capacity growth will slow and airfares will rise to offset the increase in fuel costs. However, he acknowledged that this process wasn't likely to play out right away.

Indeed, Parker's protege Scott Kirby -- now the president of United Continental is pushing ahead with an aggressive growth plan despite recent fuel price increases. The threat from United's growth will make it hard for American Airlines to fully offset its rising fuel bill.

United Continental changes course

For many years after the United Airlines-Continental Airlines merger, United was arguably the strongest proponent of "capacity discipline" in the U.S. airline industry. As fuel prices rocketed higher after the Great Recession, United Airlines maintained a very slow growth rate to ensure that it could pass its rising costs through to customers. Even when fuel prices plunged in 2014 and 2015, United continued to grow at a very modest rate.

Everything changed after United Airlines poached Kirby from American. Kirby believes that in the long run, United must regain its "natural" market share -- particularly in smaller cities, where airfares are high -- to improve its profitability and competitiveness.

As a result, United plans to increase its capacity by about 5% in 2018, with a similar growth rate in 2019 and 2020. That's more than three times United's growth rate for the 2015-2016 period. Much of this growth will be focused in the carrier's three main mid-continent hubs of Chicago, Houston, and Denver.

No good choices for American Airlines

Thus far, Kirby hasn't shown any inclination to scale back United's growth, even though the price of jet fuel has risen by more than $0.20 per gallon since he first revealed the carrier's aggressive growth plan in January. That's putting American Airlines in quite a bind.

On the one hand, American Airlines would probably like to cut capacity to help it push fares higher. After all, its adjusted pre-tax margin fell to 9.1% last year from 12.6% a year earlier and it is on track to post another substantial margin decline in 2018 due to rising fuel costs.

On the other hand, cutting capacity would play right into United's hands. American Airlines competes directly with United Airlines in Chicago, and its Dallas-Fort Worth hub competes for much of the same connecting traffic that United is targeting in Houston. Capacity cuts by American would help United Airlines gain market share and become a more formidable rival.

As a result, American Airlines has been forced to err on the side of leaving too much capacity in the market and absorbing the hit to its profit margin. This is probably the right move in the long run, but that doesn't make it any less painful.

American Airlines needs more flexibility

American's massive debt load could become a big problem if the competitive battle with United Airlines continues unabated through 2020. American Airlines frittered away billions of dollars on share buybacks over the past few years, causing its debt to swell to an unhealthy level.

As of the end of 2017, American Airlines had more than $25 billion of debt and capital lease obligations. Its pension plan was also underfunded by $7.5 billion. To make matters worse, nearly half of its debt matures by 2021.

Right now, the economy is booming. This has allowed American Airlines to remain decently profitable despite its woes. It has also had no trouble rolling over its debt this year.

However, if there is a recession in the next few years and United opts to keep growing, American would likely be forced to cede market share to its rival to protect its profitability and ensure that it can meet its debt and pension obligations. That's exactly the kind of trade-off that management has been trying to avoid. Unfortunately, the company's reckless capital allocation decisions of the past few years could put it in a bind during the next downturn.

(Adam Levine-Weinberg - The Motley Fool) 

Friday, June 8, 2018

Gulfstream G-IVSP (c/n 1193) N608CL

Operated by Cassandra Lee Flight Operations LLC, this lovely G-IVSP arrives at Long Beach Airport (LGB/KLGB) at 08:42 PST as "KAI58" from Oakland International (OAK/KOAK) and parked at Ross Aviation.

(Photo by Michael Carter)

Gulfstream G650 (c/n 6316) N316GA

June 8, 2018 (Top)
May 31, 2018 (Bottom)
Captured on pre-delivery test flights a week apart at Long Beach Airport (LGB/KLGB).

(Photos by Michael Carter)

Gulfstream G650 (c/n 6307) N307GA tbr N518KA

Departs from Rwy 30 at Long Beach Airport (LGB/KLGB) on May 25, 2018. (Above)

Short final and touchdown at Long Beach following a successful pre-delivery test sortie.

(Photos by Michael Carter)