Friday, September 6, 2019

Alaska Airlines will adjust to allay passengers' fears over 737 Max flights

Alaska Airlines says passengers anxious about flying on Boeing 737 Max jets once the global grounding is lifted will be able to rebook flights on other aircraft.

The SeaTac-based airline, the largest carrier on the West Coast, shared some details of how it will handle passengers with 737 Max anxiety a day after rival United Airlines said any of its fearful passengers will be allowed to rebook flights free of charge.

"We have a plan and will absolutely take care of our guests who have concerns," Alaska Airlines spokeswoman Bobbie Egan told the Business Journal.

Alaska had anticipated the delivery of three Boeing 737 Max jets this year. But deliveries have been delayed since Boeing's newest single aisle jet was grounded in March following two crashes that killed 346 people in Ethiopia and Indonesia.

Now, Alaska says it may only get one of the 737 Max jets it ordered delivered in 2019, with the rest in 2020. The airline expects to announce further details about it's handling of Max flights, including whether it will charge fees for rebooking, later this year after it takes delivery of its first Max.

"Other airlines will be resuming service with the Max with many more of the aircraft than us. Since we’ll begin flying the Max with only one plane after we receive our first delivery, we will have flexibility in making sure our guests are comfortable," Egan said.

Last month, Alaska revealed it can also acquire 37 additional 737 Max aircraft, with deliveries from 2021 through 2024, under aircraft option agreements with Boeing.

Alaska's situation is different than United's and Southwest's, which have both received and ordered dozens of 737 Max jets.

At a Cowen and Company investor conference this week, United Airlines Chief Commercial Officer Andrew Nocella explained what the Chicago-based carrier's position will be when the Max resumes flying.

"If you get to the gate and it's not an airplane you want to fly on for whatever reason, if it's a Max, we'll put you on another flight," Nocella said.

CNN reported that Dallas-based Southwest would also offer passengers full flexibility and rebookings without charge.

American Airlines told CNN it hasn't finalized any policy for dealing with customers who don't want to fly the 737 Max, other than to explain to passengers that the airline and its pilots would not fly a plane they felt was unsafe.


(Andrew McIntosh - Puget Sound Business Journal)

Southwest performance in Hawaii exceeding company expectations

Southwest Airlines flights to Hawaii continue to perform "tremendously successful right out of the gate," according to one executive.

The Dallas-based airline has been hyping service to Hawaii for years, but the level at which the market has responded to Hawaii flights has surprised even the company.

"We are performing, I would say, actually ahead of our expectations," Tammy Romo, chief financial officer of Southwest Airlines, told a crowd at the Cowen Global Transportation Conference on Wednesday.

Chief Executive Gary Kelly said in the company's most recent earnings call that load factors for Hawaii flights are exceeding network averages, and he pointed out Southwest is seeing historic load factors across the network.

Southwest's rollout of Hawaii flights was years in the making and delayed at the finish line because of a partial government shutdown. Then, once Southwest announced it was getting Hawaii flights finally up and running, the Boeing 737 Max crisis began.

Southwest is the largest operator of the Max with 34 in its fleet at the time of its March grounding, and it was scheduled to have 68 of the aircraft by year end, Romo said. The grounding means Southwest was dealing with a smaller fleet than anticipated.

The company announced in July it was done waiting for the Max to return to service and instead was axing service to some locations to make room for more Hawaii expansion. Notably, the airline announced it would stop flying to Newark Liberty International Airport, and locally suspended three routes out of Dallas Love Field.

Some in the industry area worried recent legislation which took some Airbnbs off the market on the island of Oahu, where Honolulu sits, would negatively impact demand for Hawaii travel.

"We haven’t seen really an impact," Romo said. "We’ll keep an eye on it."
 

(Evan Hoopfer - Dallas Business Journal)

Monday, September 2, 2019

Norwegian Air asks for more time to pay off bonds

* Seeks up to two more years to pay $380 mln of outstanding bonds

* Offers London Gatwick airport slots as guarantee

* Says not planning to fly Boeing 737 MAX aircraft this year

* Shares pare losses to trade down 0.9% Norwegian Air is asking bondholders for up to two more years to pay back $380 million of outstanding debt, in the loss-making airline's latest attempt to shore up its finances.

The company said on Monday it would pledge lucrative take-off and landing slots at London's Gatwick Airport as security.

Norwegian Air is Europe's third-largest budget airline by passenger numbers after Ryanair and easyJet and has shaken up the market with cut-price transatlantic fares. But its rapid expansion has left it with hefty losses and high debt.

It was forced to raise 3 billion Norwegian crowns ($335 million) from shareholders this year, and said on Monday its working capital had decreased in 2019, partly due to tighter industry rules on advance ticket payments.

It also said the worldwide grounding of Boeing's 737 MAX plane was lasting longer than expected, dealing another blow to its finances. Norwegian has 18 of the aircraft.

The company's bonds, which mature in December 2019 and August 2020, will be extended to November 2021 and February 2022 if bondholders accept the revised terms. A bondholders' meeting will take place on Sept. 16.

"What we are doing now is to make sure that we have sufficient liquidity for the next twelve months," interim Chief Executive Geir Karlsen told Reuters, adding he expected to repay bondholders with cash on hand.

Norwegian's shares pared early losses to trade down 0.9% at 1130 GMT.

"On the one hand, it is a bad sign that the company's funds are drying up, but we knew by looking at the financials that this could be an issue," said Sydbank analyst Jacob Pedersen.

"But it's a good sign the company is doing everything it can to mitigate the issue and the financial troubles ... It is a fine solution to the issue. We have to see whether the bondholders will think the same."

Co-founder Bjoern Kjos stepped down as CEO in July in a move some analysts said could make it easier to sell the airline after talks about a deal with British Airways parent IAG fell through in January.

Shares in IAG, as well as those of Ryanair and Wizz Air , rose on Monday on speculation there could be more consolidation in a sector that has for months struggled with overcapacity, traders said.

In May, Ryanair boss Michael O'Leary predicted four or five European airlines were likely to emerge as industry winners.

BOEING

Another problem for Norwegian is the grounding of Boeing's 737 MAX jet since March following two deadly crashes.

"There is no visibility that we know of when the aircraft will be up in the air again. We are actually planning on not having the MAXs flying this year, in 2019," Karlsen said in the interview, echoing recent comments from peers.

Norwegian said in July it expected the grounding to end in October and to cost it 700 million crowns in 2019.

Overall, Norwegian's operating performance has improved since mid-July, but its working capital has decreased this year, the airline said on Monday.

It expects earnings before interest, taxation, depreciation, amortisation and aircraft ownership costs (EBITDAR) of 6-7 billion crowns ($670-$782 million) in 2019 and higher earnings in 2020, the company said.

"Right now it looks like we will end up in the middle of that window, which means we have doubled EBITDAR compared to 2018," Karlsen said. "So the underlying performance is definitely moving in the right direction."

Historically, the company has relied on advance ticket payments by credit card, but tightened industry terms have made this more difficult. It said working capital was down by about 4 billion crowns versus the second quarter of 2018 as a result.


(Terje Solsvik, Victoria Klesty, and Gwladys Fouche - Reuters)

Thursday, August 29, 2019

jetBlue Airbus A321-271NX Neo (c/n 8823) N2002J "David Neeleman"


Captured arriving at Long Beach Airport (LGB/KLGB) as "JBU801P" on August 28, 2019.

(Photos by Michael Carter / Aero Pacific Images)

Southwest Airlines doesn’t plan to rebrand Boeing 737 MAX

When the Boeing Co.’s 737 MAX does return to service, one of its largest customers will continue forward with the MAX name.

Officials from Southwest Airlines this week told FlightGlobal at the Boyd International Forecast Summit that Southwest would not change the name of the aircraft.

A company spokesperson confirmed that decision to the WBJ Wednesday morning.

“We do not have any plans to rebrand the 737 MAX when it returns to service,” Southwest’s Chris Mainz said via email. “Our philosophy is to be completely open and transparent with our customers, just as they’ve come to expect from Southwest.”

Boeing’s 737 MAX has been grounded since March following two deadly crashes of the jet.

The manufacturer is now hopeful its coming package of software upgrades and training enhancements will allow regulators, including the Federal Aviation Administration, to return the jet to service in the fourth quarter.

Southwest, which has an all-Boeing 737 fleet, currently has 34 of the new MAX variants and nearly 250 more on order.

Questions about the possibility of a rebrand either by Boeing or by individual customers have swirled around the industry in the wake of the grounding.

That’s included a tweet suggesting a rebrand from President Donald Trump in April and images captured in July of a Ryanair 737 MAX coming off Boeing’s production line that no longer included the MAX name.

Boeing has said that it also doesn’t plan to rename the aircraft.

Each MAX jet comes with heavy ties to Wichita, where Spirit AeroSystems Inc. builds around 70 percent of the structure on the jet.


While Boeing trimmed its output on the 737 line from 52 per month to 42 following the grounding — it is holding completed jets in storage for delivery after the return to service of the MAX — Spirit has continued to build at the rate of 52 as part of a staggered production agreement between the two companies.

The Wichita supplier is holding excess components in inventory until delivery is requested by Boeing. The company is still being paid for those components, including the aircraft's full fuselage, which it builds at its southwest Wichita plant.


(Daniel McCoy - Wichita Business Journal)

Monday, August 26, 2019

Friday, August 16, 2019

FedEx negotiates deal to increase presence at Alaska airport

FedEx is planning an expansion that could increase its overnight capacity in a place known for its midnight sun.

The State of Alaska, the Department of Transportation and Public Facilities, and Ted Stevens Anchorage International Airport proposed a land lease with FedEx Corp., according to a State public notice.

The lease is for 1.1 million square feet at the airport with a rental rate of $0.18 per square foot. The 30-year lease would have two, 10-year options to extend. The proposed value of the investment was listed at $57 million.

Under the proposed authorized uses the notice states:
“Develop, construct, operate and maintain an approximate 98,000 sq. ft. Domestic Operations Center, infrastructure and improvements to support applicant’s warehouse operations to include administrative offices and aircraft and vehicle parking.”

According to FedEx’s most recent 10-K filed with the U.S. Securities and Exchange Commission, FedEx Express currently leases 64 acres at the Anchorage airport from the State of Alaska Department of Transportation and Public Facilities. It occupies 332,000 square feet of space and has the capacity to sort 25,000 documents/packages per hour. That lease runs through 2023.

FedEx’s uses Anchorage to handle international express packages and freight shipments to and from Asia, Europe, and North America.

When asked about the expansion, Sederia Gray with FedEx’s Global Media Relations team provided the following statement:

“As a matter of corporate policy, we do not publicly disclose information about planned projects until agreements are finalized.”

FedEx recently announced an additional $450 million investment at the Memphis World Hub at Memphis International Airport, bringing that modernization total to $1.5 billion. Those updates are projected to be finished in 2025.


(Meagan Nichols - Memphis Business Journal)

Tuesday, July 30, 2019

Air France-KLM buys smallest Airbus, retires largest

Air France-KLM agreed to order 60 of Airbus's new A220 jets on Tuesday while announcing the retirement of the planemaker's A380 superjumbo from its fleet, as the Franco-Dutch airline group moves to improve fuel efficiency and costs.

In a boost for the A220 programme acquired by Airbus from Bombardier last year, Air France-KLM's board approved 30 options and 30 purchase rights in addition to the firm orders worth an estimated $5.5 billion at 2018 list prices. Airbus no longer publishes prices. The order was first reported by French daily La Tribune.

The company said the 150-seater A220 would "improve Air France's environmental footprint" as it gradually replaces its older A318 and A319 models at the smaller end of its fleet, starting in 2021.

Air France-KLM will also drop the A380 superjumbo entirely by the following year, the company said, adding that the current competitive environment "limits the markets on which the A380 can be operated profitably". Air France had previous disclosed plans to retire three of its 10 superjumbos.

The move comes five months after Airbus announced it was scrapping production of the world's largest airliner in response to lacklustre sales.

With two decks of spacious cabins and room for 544 people in standard layout, the A380 was designed to challenge Boeing's legendary 747 but failed to take hold as airlines backed a new generation of smaller, more nimble jets.

Air France-KLM will "examine the possible options for the replacement of these planes with new-generation aircraft now available on the market," the company said.

Following the A380's demise, Airbus's arch-rival Boeing is hoping its new twin-aisle 777X jet may scoop up more orders as it prepares to enter service next year.


(Laurence Frost - Reuters)

Thursday, July 25, 2019

Gulfstream G550 (c/n 5185) P4-GVV ex N185GN

Operated by Caimito Enterprises, this lovely G550 rolls for takeoff on Rwy 30 at Long Beach Airport (LGB/KLGB) on July 23, 2019.

(Photo by Michael Carter / Aero Pacific Images)

Wednesday, July 24, 2019

EgyptAir's new Boeing 787 Dreamliner takes off for history-making biofuel flight

An EgyptAir 787-9 widebody jet is parked at a gate at Boeing's Everett delivery center, waiting for dignitaries and crew to take the aircraft a historic 13 hour flight home to Cairo, the longest ever powered in part by sustainable aviation biofuel.
(Anthony Bolante - PSBJ)

The EgyptAir 787-9 Dreamliner that took off from Boeing's Everett delivery center made history Tuesday when it embarked on the longest-ever commercial flight powered by biofuel.

Two EgyptAir captains shared the duties for the 13-hour flight, joined by a group of 50 people from Cairo, including the airline's two vice chairmen.

"It's a special flight because of the biofuel. It's history making and record-breaking," Capt. Abdelhady Mostafa Elshakankiry, who was at the controls, said in a pre-flight interview.

EgyptAir is leasing six Dreamliners long-term from AerCap, a Dublin-based company. Tuesday's delivery to Egypt's flagship airline was the fifth in as many months and the sixth will be handed over in August under a 2017 deal with Aercap, Boeing's biggest 787 Dreamliner customer.

Elshakankiry, also president of EgyptAir's training academy, said the carrier aims to acquire 10 Dreamliners.

The first flight of the new aircraft, bearing a "Clean to Fly" moniker on its fuselage, comes as jet makers and airlines around the world battle a growing chorus of criticism that global air travel causes greater emissions that are suspected of causing global warming.

Against that backdrop, Boeing is positioning its Dreamliner as the widebody jet of choice for airlines to help cut fuel use and emissions by up to 25 percent.

But the battle is far from over. France this month introduced legislation to tax flights to fund other forms of travel.

Criticism of flight is building so much that International Air Transport Association CEO Alexandre de Juniac defended air travel in a recent blog post.

“Flying is freedom. Confining people’s horizons to train distances or boat speeds back-steps on a century of worldwide progress," he wrote. "Relying on virtual meetings to make global connections ignores the feelings and sensations that make us human.”

Sustainable aviation biofuel is a blend: 70 percent traditional aviation biofuel and 30 percent biofuel.

Sheila Remes, vice president of strategy for Boeing Commercial Airplanes, said World Energy of California refines biofuel used for its flights, using California agricultural waste.

"Through these partnerships, we are able to demonstrate the viability of sustainable aviation fuels to the world," Remes said.

Epic Fuels distributes fuel to Boeing's aircraft delivery centers in Everett, Renton, and Charleston, South Carolina.

Dale Smith, Boeing airplanes' regional director of environmental strategy, said when Boeing offered to deliver new aircraft with biofuel blends, two companies stepped up to be the first: Alaska Airlines and EgyptAir.

In January, Etihad Airways flew a jet to Amsterdam with a Boeing Drealiner 787-9 for 6.5 hours using fuel from plants grown in salt water.


(Andrew McIntosh - Puget Sound Business Journal)

JetBlue Blames Airbus Jet Delays for Slowing Its Growth

JetBlue Airways will curb its growth for the next 18 months and slow its interior retrofit program on existing jets because Airbus is significantly behind on delivering a new fuel efficient airplane, executives said Tuesday on their second quarter earnings call.

Airbus and the engine manufacturer, Pratt & Whitney, have struggled with manufacturing and design problems, leading to production delays on the Airbus A320neo family of airplanes. Neo stands for “new engine option.”

JetBlue is the latest airline to complain publicly. After International Airlines Group unexpectedly signed a letter of intent in June for 200 Boeing 737 Max aircraft, Willie Walsh, its CEO, told reporters it “should be an indication not just to Airbus but to everybody that we’re unhappy with their performance.”

JetBlue, which hasn’t placed a non-Airbus order since 2003, didn’t go so far in its criticism of the manufacturer, but Chief Financial Officer Steve Priest said the airline is not pleased. JetBlue has received just one new airplane, he said, and by the end of this year, it will have no more than six, or seven fewer than expected. Next year, JetBlue planned to take 15, but Airbus has said it can deliver no more than 14.

Executives warned the delivery schedules are fluid, and subject to change.

“We’re very disappointed with the continued delays to our A321neo program, as a result of the Airbus production issues, including a further delay that we’ve received in the last 1.5 weeks,” Priest said.

Priest is irritated, but probably not surprised. Airbus and Pratt & Whitney have had reliability issues for several years, and in 2017, with trouble mounting, JetBlue pushed off its first Neo deliveries. JetBlue had expected to take some Neos last year, but decided instead to take only older-technology jets, with the first delivery Neo coming this year.


Slowing Growth

With fewer airplanes, JetBlue can’t fly as many flights. For this year, the company said, it will grow capacity by 5.5 to 6.5 percent, a little less than the 5 to 7 percent the company had planned.

Next year the airline also plans to grow capacity by 2 percentage points less than expected, executives said. They had planned to grow next year in the “mid-to-high single digits,” CEO Robin Hayes said.

JetBlue executives acknowledged slower growth has some advantages. In fact, the airline had already planned less-than-usual growth for later this year so it could “protect” its margins. With fewer seats to sell, JetBlue is theoretically able to charge more for each one because of the law of supply and demand.


Retrofit Program

As is typical when an airline is short aircraft, JetBlue is slowing plans to retrofit interiors of its 130 Airbus A320, some of which are nearly 20 years old and showing their age. JetBlue doesn’t want to pull them from service during busy travel periods.

The airline has made a big deal of marketing the new interiors, which have new seats with movable headrests, high-definition television screens, and in-seat power. JetBlue has completed 28 airplanes. Even though they have denser seating — the airline added 12 seats on each plane — net promoter scores from travelers are about seven points higher on completed planes than old ones, President Joanna Geraghty said.

JetBlue still expects to have all the aircraft done by the end of next year, but in the short term, the program will move slower than planned, she said.

“We’ve made adjustments to our restyling campaign so that we could save some [capacity] associated with restyling to make up for the loss for the Neo delays, Geraghty said.

JetBlue is considerably behind its original schedule for retrofits. Aviation analyst Seth Miller noted that in late 2016, JetBlue planned to be more than 80 percent done with retrofits by the end of this year. Over time, the schedule slipped. 


Europe Still On

JetBlue plans to fly from New York and Boston to London in 2021 using a longer-range model of the Airbus A321neo, and that plan is on target, Priest said.

“We don’t anticipate any impact to our 2021 European plans with the Neo delays,” he said.

It is possible JetBlue will tweak other plans. The Airbus A321neo can fly 500 more nautical miles than JetBlue’s existing A321s, and executives have said they plan to take advantage of the added range with new flights in the Americas. In December the airline plans to fly its longest-ever route, from New York to Guayaquil, Ecuador, using the new jet.

That route is on, and JetBlue should have the aircraft for it. But it is possible the airline would like to announce more South America routes, pending aircraft availability.


Financial Results

In the second quarter, JetBlue reported net income of $179 million on total revenues of $2.1 billion. Revenue per available seat mile, an industry metric measuring how much money an airline makes for each seat flown one mile, increased 3.1 percent.

JetBlue is still predominantly a leisure airline, and it gets a boost whenever Easter and Passover fall firmly in the second quarter. Last year the Easter and Passover holiday weekends both began in March and ended in April, so some of the associated revenue fell in the first quarter. This year both weekends were fully in the second quarter, which helped revenue comparisons.

JetBlue has promised investors it will achieve between $2.50 and $3 in earnings per share by 2020. Despite the Neo problems, executives said they still expect they will reach their target.

Still, not all analysts have been persuaded. Rajeev Lalwani, an analyst with Morgan Stanley, asked Hayes whether the airline has considered “evaluating strategic alternatives as a “Plan B,” in case JetBlue falls short. Another analyst, Hunter Keay of Wolfe Research, has asked if JetBlue could be a takeover target if it misses its goals.

Hayes declined to answer the question directly, saying, “We’re very focused on the $2.50 to $3,” before adding, “we’re not distracted by anything else.”
 

(Brian Sumers - Skift)

Monday, July 22, 2019

Qantas set to launch longest flight ever from Chicago

American Airlines and Qantas, Australia’s flagship airline, have successfully completed final step in the long process of launching nonstop service between Chicago’s O’Hare International Airport (ORD) and Qantas’ new hub for international service in Brisbane, Australia (BNE).

The United States Department of Transportation (DOT) gave its final approval to the proposed joint business agreement between Qantas and American Airlines, the world’s largest carrier. Both airlines are members of the OneWorld global airline alliance.

That DOT final approval clears the way for Qantas and American to jointly orchestrate the launch of new routes between Australia and the United States.

As a Qantas spokeswoman previously indicated, one of the first new routes to launch will be a nonstop flight from ORD to BNE, which would instantly become the longest flight ever from Chicago. The second new route would be from San Francisco to Brisbane.

The ORD-BNE launch will be a watershed moment for Qantas. The airline will then have a new United States gateway in the Midwest, making it easier and faster for tens of thousands of travelers from the immediate region and the nation’s East Coast to access Australia.

It was previously revealed that the new ORD-BNE service is expected to launch by April of 2020, and a Qantas spokeswoman reached on Monday said the exact launch date will be revealed "in a matter of days," adding "there are a lot of moving parts related to this announcement."

An American Airlines spokeswoman on Monday signaled it will be up to Qantas to set the ORD-BNE launch date, as a Qantas plane, most likely a wide-body Boeing 787-9 Dreamliner, will fly the new longest-route-ever from Chicago.

AA CEO Doug Parker clearly is eager to see the historic new ORD-BNE route happen.

"We now have the opportunity to launch new routes and provide enhanced service with better schedules, additional frequent flyer benefits and continued investments in the overall customer experience," Parker said. "We look forward to working closely with our valued partner Qantas."

American Airlines has its third-largest hub at O’Hare Airport.
 

(Lewis Lazare - Chicago Business Journal)

Saturday, July 20, 2019

China Southern Airlines to receive $4 billion capital injection

China Southern Airlines will carry out an equity diversification plan that will involve the injection of 30 billion yuan ($4.36 billion) of capital from three investors, the firm announced on Saturday.

The Guangdong Hengjian Investment Holding Corporation, the Guangzhou Urban Construction Investment Group and the Shenzhen Penghang Equity Investment Fund will each inject 10 billion yuan into the airline, as part of the country's efforts to diversify ownership structures among state-owned firms.

The move will significantly improve the company's debt-to-asset ratio, generate funds for its growth and help modernise its decision-making mechanisms, the announcement said.

It will also use the funds to serve its main air transportation business, pay for construction related to China's Belt and Road Initiative and support aviation development in cities in the southern province of Guangdong.

China Southern is one of 96 enterprises owned and administered directly by the central government. Its profits slumped nearly 50% last year as a result of rising fuel costs and a weak yuan currency.

($1 = 6.8812 yuan)


(David Stanway - Reuters)

American Airlines-Qantas joint venture wins final U.S. approval

The U.S. Department of Transportation (DOT) on Friday granted American Airlines Group Inc and Qantas Airways Ltd final approval to operate a joint venture after a prior effort was rejected in 2016.

The department last month had issued an order tentatively approving the agreement and granting antitrust immunity to the airlines covering international service.

U.S. Transportation Secretary Elaine Chao announced the approval on Friday afternoon, noting it was the first completed review of an airline joint venture proposal during the Trump administration.

Reuters was the first to report on the planned announcement earlier on Friday.

An application for a joint venture covering the United States, Australia and New Zealand was rejected in November 2016 by former President Barack Obama's DOT. It tentatively concluded after a 17-month review that the venture "would reduce competition and consumer choice."

The deal will allow the airlines to coordinate planning, pricing, sales and frequent flyer programs, with new options and customer service improvements. The two OneWorld alliance carriers are planning up to three new routes within the first two years as well as increased capacity on existing routes, the department has said.

American Airlines did not immediately comment on Friday, but Chief Executive Doug Parker said last month the joint venture would also create new jobs in the airlines and industries.

In June, JetBlue Airways Corp told the DOT that it took no position on the alliance, but said it would "substantially reduce competition in relevant markets and concentrate a huge level of market share and power in the hands of immunized alliances."

It also said the three major global airline alliances - OneWorld, SkyTeam and StarAlliance - will control 86% of the U.S.-Australia market.

U.S. regulators in 2001 approved similar joint venture agreements for United Airlines and Air New Zealand Ltd, and in 2011 for Delta Air Lines Inc and Virgin Australia.

The U.S. DOT is, however, requiring American and Qantas to perform a self-assessment of the venture's impact on competition seven years after it takes effect and report their findings to the government.

Regulators in Australia and New Zealand approved the first application for the joint venture before it was initially rejected by the U.S. DOT.

American and Qantas in February 2018 made a second attempt to gain U.S. regulatory permission under President Donald Trump's administration for a venture that would let them coordinate prices and schedules. They threatened to cancel services if it was rejected and argued it could "unlock" up to $310 million annually in consumer benefits.

The revised application made significant changes, including removing a provision that would have barred either carrier from code-sharing with other carriers. Code-sharing allows two or more carriers to publish and advertise a single flight under their own flight number.

The airlines argued in their 2018 application that the venture would lead to lower fares and higher capacity as a "more viable third competitor," and drive other carriers to improve quality, schedules and prices.

Qantas said last year the joint venture would allow the two airlines to "significantly improve service" and "stimulate demand."

The airlines said the agreement could generate up to 180,000 new trips between the United States and Australia and New Zealand annually. 


(David Shepardson - Reuters)

Trump meets with airline CEOs over Qatar subsidy accusations

U.S. President Donald Trump met on Thursday with the chief executives of major American airlines to discuss their accusations that subsidies by Qatar and United Arab Emirates are costing jobs in the United States.

The meeting between Trump and the CEOs of American Airlines , United Airlines , JetBlue Airways Corp , FedEx Corp and Atlas Air included Vice President Mike Pence, the White House said.

The meeting also included the CEO of state-owned Qatar Airways, Akbar al-Baker, who was also at the White House last week to tout its decision in June to buy five new Boeing 777 freighters.

The White House did not immediately provide details of the meeting.

Since 2015 the largest U.S. carriers - Delta Air Lines , American and United Airlines - have argued their Gulf rivals are being unfairly subsidized by their governments, distorting competition and costing U.S. jobs - something the Gulf carriers deny.

The Partnership for Open & Fair Skies, a group representing Delta, American, United and aviation unions, said it had a "productive meeting" with Trump.

"The president shares our concerns and instructed us to keep working with the U.S. Department of Transportation, which we plan to do," Scott Reed, the group's managing partner, said in a statement.

The CEOs of JetBlue, FedEx and Atlas Air have warned that restricting the rights of Qatar Airways could lead to retaliation against U.S. carriers and added, in an April letter, it could lead to "a rapid unraveling of hard-fought aviation rights around the world when other governments take similar action to shield their state-owned airlines from competition."

Last week, the CEOs of Delta, United and American wrote a joint USA Today op-ed urging the White House to act "decisively to hold Qatar and the UAE accountable." They suggested that failing to respond would "signal to other countries that they too are free to exploit American workers."

In April, Secretary of State Mike Pompeo said the administration was scrutinizing Qatar Airways' acquisition of a 49% stake in Air Italy, which has been flying to U.S. destinations since 2018 in a move seen by U.S. lawmakers as flouting a deal not to add new flights to the domestic market.

Both Republicans and Democrats in Congress have said they were concerned that the deal with the Italian carrier contravened an understanding Qatar Airways reached with the United States in early 2018.

Qatar Airways acquired the 49% of Italian airline Meridiana in 2017, rebranded it Air Italy and transformed it into a carrier with five announced nonstop U.S. destinations from Milan.

The Qatari government said in 2018 it was unaware of any plans to launch flights from Qatar to U.S. destinations via stops in Europe known as "Fifth Freedom" flights.


(Steve Holland, David Shepardson and Jeff Mason - Reuters)

Tuesday, July 16, 2019

Aeroflot to add Airbus A320neos, remains firm on Boeing 737 MAX

Russia’s national carrier, Aeroflot, is to expand its Airbus fleet with plans to introduce nine A320neo Family jets in a deal worth over $870 million. But the flag carrier is lagging behind with the introduction of the “neo” compared to some other Russian airlines, and has so far expressed no interest in the Boeing 737 MAX, while its low-cost subsidiary awaits deliveries of the planes by year’s end.

According to state procurement documents, Aeroflot will order six medium-haul A320neos (A320-251N) from the European manufacturer. The two-part bidding process, launched on July 15, 2019, includes leasing six aircraft for a 12 year-term. Both contracts are worth $566.4 million total.

Earlier in the month, on July 5, 2019, Aeroflot announced a tender for three A321neo jets (A321-251NX), planning to lease the aircraft for 12 years in a deal worth $304.2 million, Russian Aviation Insider reports. This takes the airline’s current orders for the type to nine jets for a total sum of $870.6 million. All nine A321neo planes are to be delivered in 2020.

The new planes will be an addition to Aeroflot’s already substantial Airbus fleet, which does not include the new generation A320 Family jets. The only Russian carrier currently operating the “neo” is S7 Airlines, one of the largest airlines in the country. The carrier received its first A320neo in 2017 and now flies both the A320neo and A321neo variants.

As for Aeroflot, the airline currently operates 78 A320ceo as well as 35 A321ceo jets. The flag carrier also flies 17 long-haul A330-300 planes, according to Airbus orders and deliveries log (as of June 30, 2019). Aside of these, Aeroflot operates Boeing 777-300ER and 737-800 airliners, but does not have any 737 MAX planes on order, as Boeing’s order book (through June 2019) shows.
 

The ‘MAX’ issue

Back in March 2019, in the wake of the MAX groundings following a second deadly crash involving the aircraft, RT news channel reported that contracts for the purchase of several dozen of aircraft by Russian airlines, including Aeroflot’s low-cost subsidiary Pobeda, S7 Airlines, Ural Airlines and UTair, had been suspended indefinitely. Aeroflot’s CEO Vitaly Savelyev had gone as far as to say that the company would refuse operating MAX planes ordered by Pobeda.

Pobeda is expecting delivery of its first Boeing 737 MAX in November 2019, latest information by Reuters indicates. State news agency Interfax has recently reported that Ural Airlines is expecting to receive its first MAX in December 2019, and is also awaiting delivery of its first A320neo this August, with four more of the type to be received by the end of the year. Meanwhile, UTair Aviation has 28 unfilled orders for the MAX, Boeing’s log indicates. S7 Airlines states it was the first carrier in Russia to receive the MAX in autumn of 2018.

‘Made in Russia’

Earlier this year, state-owned Aeroflot received formal approval by the Russian government to acquire up to 100 Boeing and Airbus aircraft, to be delivered from 2019 to 2023. The national carrier was hence allowed to purchase 22 long-haul A350s together with 74 Airbus and Boeing aircraft of unspecified types, Russian Aviation Insider reported in April 2019. Airbus’ latest order summary shows the state carrier has 14 A350-900 planes on order.

Despite this interest in Western-manufactured aircraft, according to its new strategy, Aeroflot plans to increase the number of Russian-built planes in its mainline fleet by up to 190 jets by 2023, Russian Aviation Insider added. This includes an order for 100 Russian-made Sukhoi Superjet 100 aircraft, in addition to the 49 SSJ100s the airline already has in its mainline fleet, as well as 50 of the medium-haul MC-21 passenger jets.

To make things even more interesting, the Boeing 737 is the main competitor to the Airbus A320 Family, and both types are considered as direct competitors to the in-development MC-21.


(Rūta Burbaitė - AeroTime News) 

Thursday, July 11, 2019

Norwegian Air CEO and co-founder steps down

Bjoern Kjos, CEO of Norwegian Air Shuttle ASA, attends a press conference presenting quarterly report of the company, in Oslo.

Norwegian Air's Bjoern Kjos stepped down on Thursday as chief executive of the airline he co-founded and turned into Europe's third-biggest budget carrier by passenger numbers.

The airline has shaken up the long-haul market with cut-price transatlantic fares, but its rapid expansion has left it with hefty losses and high debts and it had to raise 3 billion crowns ($350 million) from shareholders earlier this year.

"I am way overdue," Kjos, 72, laughing, told a news conference, announcing his plans to quit the top job. A former fighter pilot, Kjos helped to expand what was a tiny Norwegian airline housed in pre-fabricated barracks on the edge of Oslo airport.

He will have a new role as an adviser to the chairman.

"Bjorn has been the driving force behind the business – the big question now is whether Norwegian Air can maintain momentum as he takes a less active role," Bernstein said in a note to clients.

The airline also said it expected its 18 grounded Boeing 737 MAX aircraft to return to service in October, compared with its previous view that they would return to service in August.

The jets have been grounded worldwide since March following two fatal crashes and Norwegian Air has said the disruption could scupper its plans to return to profitability this year.

The company reported second-quarter earnings that beat expectations on Thursday.

Its net profit came in at 82.8 million Norwegian crowns ($9.7 million), down from 300.3 million in the same period last year, but ahead of the average forecast of 76.2 million from five analysts compiled by Refinitiv.

The company cut its target for passenger carrying capacity growth to 0-5%, compared with the previous guidance for 5-10%.

It said earnings before interest, tax, depreciation and amortisation and restructuring or rent costs (EBITDAR), excluding "other" losses or gains for items such as foreign currency contracts and forward fuel contracts, were expected to reach 6–7 billion crowns in 2019, up from 3.2 billion in 2018.


(Victoria Klesty and Gwladys Fouche - Reuters)

Ryanair sees risk to 2020 growth if 737 MAX grounded beyond November

The boss of Europe's Ryanair warned on Wednesday the impact of the prolonged grounding of Boeing's 737 MAX on the airline's growth plans may start to spill over to next summer if the airplane is not flying again by November.

Europe's largest budget carrier needs up to eight months to take delivery of some 50 newly built planes left at the factory by the grounding crisis, so it may have to trim its capacity growth plans for summer 2020 if 737 MAX flights have not resumed by November, Chief Executive Michael O'Leary told Reuters.

"Boeing are telling us at the moment they expect to be back flying by the end of September," O'Leary said in an interview on the sidelines of a meeting of the European airlines lobby A4E, which he also chairs.

"I think it will fly before the end of this year. I am not sure they will meet the end of September date, but I take comfort from the fact that it seems that now the American, European, Brazilian and Canadian regulators are working together," he added.

In May, O'Leary predicted a return to service by July but the U.S. Federal Aviation Administration has since reported a new potential safety risk that it says must be addressed first.

"We are continuing to engage with global regulators and providing information to them as we work towards the safe return to service for the MAX," a Boeing spokesman said by email.

Boeing's top-selling jet was grounded in March in the wake of crashes in Ethiopia and Indonesia which killed 346 people. The planemaker is working on a software fix that people familiar with the matter have said Boeing hopes to present to regulators in September.

"The challenge for us is that we need to see the plane back flying by the end of September, October, November at the latest, so as not to disrupt our growth for the summer of 2020," O'Leary said.

Ryanair can take delivery of no more than six to eight planes a month because of the complexity of the delivery process and the availability of trained MAX pilots.

"PRESSURE" ON BOEING AFTER IAG DEAL

O'Leary also responded to a surprise move by British Airways owner IAG to buy 200 MAX jets at what analysts say must have been very attractive prices as the grounding drags on.

He described the preliminary order, which gave the 737 MAX a boost at last month's Paris Airshow, as a "great move" by IAG Chief Executive Willie Walsh, even though at this stage the deal is only a letter of intent (LOI).

"Let's see what happens with that. I suspect it certainly puts more pressure on Airbus. And we, as a result of IAG’s LOI, are putting much more pressure on Boeing."

Ryanair benefits from a clause in its contract guaranteeing it lower prices than its competitors, echoing a similar arrangement for Southwest in the United States, analysts say.

Asked whether Ryanair could take advantage of the IAG deal to expand its order for 135 MAX on even better terms, O'Leary said any new deal would be unlikely during the grounding but could be up for discussion once the jet was back in service.

"You could do that in September or October this year when the aircraft is back flying. We will stick close to Boeing on it and we are also talking to Airbus about the possibility of aircraft for Laudamotion."

O'Leary told Reuters in March, shortly before the second crash that triggered a worldwide grounding of the 737 MAX 8 and 9 models, that Ryanair was interested in Boeing's larger 737 MAX 10 "at the right price" as well as at least 100 Airbus A321 for recently acquired Austrian unit Laudamotion.

O'Leary said in May Ryanair was also talking to Boeing about compensation for the grounding, but that it had to be determined whether this would be paid in cash or as lower aircraft prices.


 (Reporting by Tim Hepher - Reuters)

Boeing's 737 program leader to retire

The head of the Boeing Co.’s troubled 737 jet program will retire from the company in the coming weeks.

Eric Lindblad, who has led the 737 program for less than 12 months — brought in last year to lead it when the company's biggest concern was ironing out supply chain issues — will depart after 34 years with Boeing.

Those concerns were soon overshadowed, however, by two deadly crashes of the jet in five months.

The CEO of Boeing Commercial Airplanes, Kevin McAllister, notified employees of the change in a memo provided to the WBJ by the company following initial media reports Wednesday afternoon.

“I have admired Eric’s resolve and drive, and we are grateful for his service and dedication,” McAllister said, adding that Lindblad had already expressed a desire to retire last year.

The 737 MAX, Boeing’s fastest-selling aircraft ever, has been grounded since the middle of March.

Lindblad will be succeeded as the head of the 737 program by Mark Jenks, who had previously been leading the company’s development efforts of a potential new mid-market airplane (NMA).

“He will work closely with Eric over the next several weeks to ensure a seamless transition as we approach the safe return to service of the 737 MAX,” McAllister said.

Mike Sinnett, vice president of product strategy and future airplane programs for Boeing, will take the lead on NMA.

Wichita’s largest employer, Spirit AeroSystems Inc., builds around 70 percent of the structure on the 737.

While Spirit continues to build on the program at the rate of 52 aircraft per month, Boeing has trimmed its own monthly output on the 737 to 42 jets. Spirit is holding the excess components in inventory and still being paid by Boeing for the work.

Not all of the 737s still being delivered are MAXs, though the new variant was expected to account for around 90 percent of program deliveries this year.

Boeing has halted its own MAX deliveries to airline customers amid the grounding, which stretches on without a known timeline for when regulators expect to sign off on Boeing’s proposed upgrades and return the jet to service.

Company CEO Dennis Muilenburg confirmed last month at the Aspen Ideas Festival that some employees had either been fired or reassigned due to the MAX crisis, though he declined to elaborate beyond describing them as “personnel changes” in an on-stage interview with Axios.


(Daniel McCoy - Wichita Business Journal)

Air China plans to buy 20 A350-900 aircraft from Airbus

Air China, China's flagship carrier, will buy 20 A350-900 jets from Airbus worth $6.54 billion based on list prices, the carrier said on Thursday.

Air China, which has 10 of the fuel-efficient widebody aircraft in its fleet already, said the deliveries were scheduled from 2020 to 2022.

It was not immediately clear if the order would bolster the Airbus order book or if it had previously been attributed to an unidentified customer. Airbus did not respond immediately to requests for comment.

A fresh order would help Airbus narrow a deficit in wide-body orders against Boeing as trade tensions persist between the United States and China.

Boeing won a positive total of 61 wide-body orders in the first half this year against Airbus' negative tally of 35 jets, meaning the European company had more cancellations than orders for twin aisle aircraft in the period.

Air China said it has the right to swap 5 out of 20 jets for the larger A350-1000.


 (Stella Qiu and Se Young Lee and Tim Hepher - Reuters / Yahoo Finance)