Thursday, October 31, 2013

Boeing to ramp up 737 production to 47 per month by 2017

Boeing plans to speed the monthly production tempo of its best-selling 737 jets by 24 percent to 47 a month by 2017, the highest rate ever for the world’s largest planemaker.
Boeing, based in Chicago, is on a production tear. Last week, the company announced plans to speed production of its 787 Dreamliner to 14 a month by the end of the decade. The 737 program announced today will build more than 560 of its narrow-body jetliner a year, increasing output by about 50 percent since 2010. It’s also ramped up production on the wide-bodied 777.
The faster production tempo will help Boeing more quickly reap the cash benefits of a large backlog of jet orders. The planemaker currently has more than 3,400 unfilled orders for 737 models that include its Next Generation series and the new Max variants expected to debut by 2017.
“We’re taking this step to make sure our airplanes get into the hands of our customers when they need them,” Beverly Wyse, a Boeing vice president and general manager of the 737 program, said in a statement.

Boeing said it currently builds 737s at rate of 38 planes a month at its factory in Renton, Washington, and is in the process of increasing production to 42 a month by the first half of 2014.

(Julie Johnsson - Bloomberg)

FAA relaxes electronic device use during flight

Government safety rules are changing to let airline passengers use most electronic devices from gate-to-gate.

The change will let passengers read, work, play games, watch movies and listen to music — but not make cellphone calls.

The Federal Aviation Administration says airlines can allow passengers to use the devices during takeoffs and landings on planes that meet certain criteria for protecting aircraft systems from electronic interference.

Most new airliners are expected to meet the criteria, but changes won't happen immediately. Timing will depend upon the airline.

Connections to the Internet to surf, exchange emails, text or download data will still be prohibited below 10,000 feet. Heavier devices like laptops will have to be stowed. Passengers will be told to switch their smartphones, tablets and other devices to airplane mode.

Cellphone calls will still be prohibited.

A travel industry group welcomed the changes, calling them common-sense accommodations for a traveling public now bristling with technology. "We're pleased the FAA recognizes that an enjoyable passenger experience is not incompatible with safety and security," said Roger Dow, CEO of the U.S. Travel Association.

(Joan Lowy - Associated Press)

Wednesday, October 30, 2013

Another new G550 at Long Beach

Gulfstream G550 (c/n 5451) N351GA arrived at Long Beach Airport (LGB/KLGB) from Savannah-Hilton Head International Airport (SAV/KSAV) as "GLF58" at 16:03 pst yesterday, October 29, 2013. 
(Photos by Michael Carter)

Boeing hopes for big 777X sales at the Dubai Airshow next month

Boeing Co. is in talks with four airlines on orders for its redesigned 777X jetliner valued at as much as $87 billion ahead of next month’s Dubai Airshow, people familiar with the matter said.
The 255 planes under discussion include as many as 100 to 150 for Dubai-based Emirates, about 50 for Qatar Airways Ltd. and as many as 30 for Etihad Airways, said the people, who asked not to be identified as the negotiations are private.               
Cathay Pacific Airways is weighing as many as 25 of the aircraft in a transaction that probably would come before the Dubai event, one of the people said. The expo runs Nov. 17-21 and is often a showcase for long-haul jets like the 777.
An order haul in Dubai for the 777X would be a boost for Boeing years ahead of the jet’s commercial debut, now targeted for decade’s end.

Boeing is betting that it can keep Airbus SAS at bay in the market for the biggest twin-engine jets by upgrading the current 777, not by building an all-new plane as its French rival is doing with the A350.
“This kind of order would definitely be a huge vote of confidence in the aircraft,” said Siyi Lim, a Singapore-based analyst at OCBC Investment Research. “The 777 is already a proven aircraft and most airlines already fly them.”


A purchase of 100 or more of the new 777s by Emirates would be Boeing’s largest-ever initial tally, surpassing the 50-jet order valued at $6 billion from Japan’s ANA Holdings Inc. to introduce the 787 Dreamliner in 2004, when the plane was still known as the 7E7.
Success with the 777X comes after Boeing’s troubles earlier this year with the 787 Dreamliner. The global fleet of 787s, Boeing’s most modern aircraft, was grounded for more than three months following the melting of lithium-ion batteries.

The grounding was the longest on a large commercial aircraft by U.S. and Japanese regulators since jets were introduced in the 1950s.
“Boeing sucked up a lot of costs associated with the 787, having significant delays, cost overruns and teething problem,” said Timothy Ross, Singapore-based transportation analyst at Credit Suisse Group AG. “They are probably keener to develop on an existing and successful variants rather than start from a complete blank piece of paper.”
Boeing shares fell 0.2 percent to $129.66 yesterday. The stock has surged 72 percent this year.

Boeing’s Response
“We don’t comment on possible negotiations,” Marc Birtel, a spokesman for Chicago-based Boeing, said in a telephone interview.
Marco Larsen, a Qatar Airways spokesman at Public New York City, said he couldn’t immediately comment. Etihad said it had no comment, and Arielle Himy, an Emirates spokeswoman at MSL Group, said she couldn’t immediately comment on the orders.
“We do not comment on market rumors,” Elin Wong, a spokeswoman for Hong Kong-based Cathay Pacific, said in an e-mail. “We will continue to evaluate all available aircraft models for our fleet needs.”
Shares of Cathay, which has also ordered Airbus’s A350-1000, rose 1.1 percent to HK$15.38 in Hong Kong. The stock has gained 8.2 percent this year.
For the 777X, Boeing is adding 50 more seats to the largest current 777 variant so it can seat as many as 400 people. The redesigned plane will feature the biggest engines ever and a wider, fuel-saving wingspan that can be shortened by having the tips fold up after landing.

Japan Dominance
Fresh 777X sales would build on Boeing’s momentum after Deutsche Lufthansa AG (LHA) agreed last month to buy 34 of the planes. While the 777X’s list price hasn’t been made public, the Lufthansa order implied a retail price of about $340 million, according to Peter Arment, a New York-based analyst with Sterne, Agee & Leach Inc. Buyers typically get a discount.
Earlier this month, Boeing’s decades-long dominance in jetliner sales to Japan cracked as Airbus won its first order from Japan Airlines Co., a deal for A350 type aircraft worth $9.5 billion.
“Boeing is banking on the new variant of the 777 to defend its market share from Airbus’s A350 series,” said Kelvin Lau, a Hong Kong-based analyst at Daiwa Securities Group Inc.

Airbus plans to hand over its first A350 to Qatar Airways toward the end of 2014. The aircraft had won 756 orders at the end of September from 38 customers.

First Operator
Emirates is likely to be the so-called launch customer, Robert Stallard, an RBC Capital Markets analyst, wrote in an Oct. 28 note. The term refers to the first buyer to fly a new plane.
Emirates President Tim Clark has been urging Boeing to deliver the new plane as early as possible. Lufthansa said in September it would get its own first 777X in 2020.
“The scale of what we are contemplating is enormous,” Clark said in an Oct. 1 interview, while declining to elaborate on the potential purchase size. He said the airline, the largest operator of the current 777, intends to replace 175 of those aircraft with the new model.
The airline is studying “ways and means” to accommodate an order for 30 more Airbus A380 superjumbos, Clark said in an interview in January. The carrier is also the No. 1 operator of the world’s biggest commercial jet.

Emirates has a history of unveiling eye-popping deals at the marquee aerospace event hosted during odd-numbered years in its home city.

Show Orders
During the last such show in 2011, Emirates unveiled an order for 50 of the 777-300ER model, valued at about $18 billion at list prices, and options for 20 more. At the time, it was the largest order by dollar value in Boeing’s history. Indonesia’s Lion Air surpassed it days later with a $22.4 billion agreement to buy 230 Boeing narrow-bodies.
Some descriptions of the new 777X orders have begun circulating ahead of the show. The Financial Times reported this week that Emirates was considering an order valued at $30 billion or more. People familiar with the Etihad sale discussed that transaction last week.
The 777X will boast the biggest engines ever from General Electric Co., and the first model, the 777-9X, will be able to fly as far as 8,000 nautical miles (14,800 kilometers) with more than 400 passengers while burning 20 percent less fuel than the current 777.
A second variant, carrying about 350 people, will push past 9,400 nautical miles, enough to go nonstop from New York to Singapore.

(Julie Johnsson, Andrea Rothman & Tim Catts - Bloomberg) 

Tuesday, October 29, 2013

Qatar Airways, will they or won't they order the 777X

Qatar Airways’ CEO said Tuesday he is not interested in the newest version of the Boeing 787 Dreamliner, the -10, but was coy on the question of whether he might acquire the soon-to-be launched Boeing 777X.
Speaking to media in Doha during ceremonies for Qatar’s joining of the oneworld global alliance, CEO Akbar Al Baker said about the possibility of ordering the 777X, “the answer is X. We have to wait for when the time is right.”

 Al Baker has previously acknowledged he has been in talks about the 777X and there is speculation that the program—a next-generation 777—could be launched at the Dubai Air Show in November.

On Tuesday, Al Baker said, “We will place an order [at the Dubai Air Show], but I won’t tell you what.”

Al Baker was more definite on where he stood with the 787-10, however. “We are not interested. The size and economics of the dash 10 are very similar to the [Airbus] A350-9, plus it sits slightly over,” he said.

Boeing launched the 787-10, the largest version of the Dreamliner, at the Paris Air Show in June with 102 firm commitments from three major airlines and two leasing companies.

Qatar is the launch customer for the A350 with 80 A350s on order—43 -900s and 37 -1000s. Al Baker said the first A350 is contractually scheduled to be delivered in the second half of 2014 and that he was confident that would be the case.

“I think [Airbus] will surely deliver it at that time. They don’t have any lithium batteries on their plane,” he said in a dig at the Boeing 787, which is experiencing delivery delays as a result of issues with its lithium battery system.

The A350 was originally designed to also have a lithium battery system, but Airbus switched to conventional batteries after the 787 battery-related issues.

Qatar also has 10 Airbus A380s on order plus three options. The first A380 is scheduled to be delivered in April 2014, Al Baker said.

(Karen Walker - ATWOnline News)

jetBlue reports profitable 3rd quarter

JetBlue Airways has reported third-quarter net income of $71 million, up 57.8% over a net profit of $45 million in the prior-year period and its 14th profitable quarter in a row.                                                                        Third-quarter revenue rose 10.4% year-over-year to $1.44 billion.

The earnings results were released as the New York-based low-cost carrier (LCC) announced a new order for 20 Airbus A321neos and 15 A321ceos. The carrier also said Tuesday it has reached an agreement with Embraer to defer 24 E-190s from delivery in the 2014-2018 timeframe to delivery between 2020 and 2022.

“We believe these fleet changes will provide increased ability to match capacity and demand throughout our network and reduce costs,” JetBlue president and CEO Dave Barger said.
The carrier will keep its E-190 fleet at “approximately 60 aircraft in the near term,” it said in a statement. Barger explained, “While the E-190 is critical to our continued success in Boston and San Juan [Puerto Rico], we are now at the point where our network growth calls for larger gauge aircraft.”

JetBlue’s third-quarter operating expenses increased 8.1% year-over-year to $1.29 billion and operating profit was $152 million, up 34.8%.

Operating margin was 10.5%, up 1.9 points from the 2012 September quarter. The airline’s third-quarter traffic rose 5.4% to 9.56 billion RPMs on a 5.1% lift in capacity to 11.25 billion ASMs, producing a load factor of 85%, up 0.2 point. Passenger yield increased 5.1% to 13.83 cents.

(Aaron Karp - ATWOnline News)

jetBlue places new Airbus order

jetBlue A320-232 (c/n 5287) N834JB "Keep Blue And Carry On" smokes the mains on Rwy 25L at Las Vegas McCarran International Airport (LAS/KLAS) on October 23, 2013.
(Photo by Michael Carter)

JetBlue Airways has placed a new order for 20 A321neos and 15 A321ceos and is also converting existing orders for eight A320ceo and 10 A320neo aircraft to eight A321ceos and 10 A321neos. 
Airbus said the deal marks the 10,000th order for an A320 family aircraft.

“We are pleased to convert some of our A320 positions to A321s, and order additional A321s to better match capacity with demand,” JetBlue president and CEO Dave Barger said. “The A321 is the ideal aircraft for our high density markets.

In addition, a subfleet of the A321s will power our Mint premium service on the New York-Los Angeles and New York-San Francisco markets. It is the right aircraft for JetBlue's lucrative routes.”

The order also marks the launch of the sharklet retrofit program, which allows airlines operating A320ceos the option of optimizing their aircraft’s performance with the addition of sharklet winglets.

JetBlue will be the first airline to take delivery of an aircraft from Airbus’ new assembly facility being built in Mobile, Ala. Deliveries at the Mobile facility will begin in 2016. Airbus anticipates the facility will produce between 40 and 50 aircraft per year by 2018.

(Karen Walker - ATWOnline News)

Qatar Airways joins the "Oneworld" alliance

Qatar Airways on Tuesday became the 13th member of oneworld and the first major Gulf carrier to join a global alliance.

In a signing ceremony in Doha, Qatar Airways’ CEO Akbar Al Baker said oneworld membership is a win for the alliance, for Qatar and for the carrier’s customers.

“We are convinced that the time is right to join a global alliance group and oneworld is clearly the best,” Al Baker said.

Qatar, which is just 16 years old, adds 21 new cities to oneworld, bringing the alliance’s number of destinations to more than 900. It will increase oneworld’s total RPKs by 3.3% and RPKs in the Middle East region by 90%.

British Airways was the sponsor for Qatar’s membership and the induction process was completed within one year, the quickest ever. IAG CEO Willie Walsh said Qatar’s membership was “without question the most significant and positive event in oneworld for a long time.”

Al Baker said that as a young carrier, he wanted to wait and be sure to select the best alliance for Qatar and the alliance for which Qatar could bring the most benefit. “We wanted to be a part of a high-class alliance so when we were invited [to join oneworld] we very quickly accepted and we assured our oneworld partners that we will never fail them,” he said.

Qatar’s membership comes at an interesting time for oneworld and the major Gulf carriers. Qantas, a oneworld founding member, has formed a five-year alliance with Emirates. Airberlin joined oneworld March 2012 and has a strategic alliance with Etihad, which has a 29% stake in the German carrier.

Oneworld CEO Bruce Ashby said Tuesday that one of the reasons the alliance is now growing so fast is because it does not believe in preventing its members from forging their own bilateral relationships. “Oneworld has adopted a flexible approach to bilateral relationships,” he said. “We believe that an alliance that prevents its customers from doing what’s best for their business should go the way of the dinosaur.”

Ashby added, “Qantas is very much a member of oneworld and will continue to be so.”

The signing ceremonies were held at Doha’s new $15.5 billion Hamad International Airport, which has capacity for 28 million passengers a year and an approved plan to grow that to 50 million.

Although the airport looks ready for service, an opening date has not yet been given.

(Karen Walker - ATWOnline News)

Friday, October 25, 2013

Boeing 747 to progress abit more slowly into future skies

Lufthansa 747-830 (37829/1453) D-ABYD on short final to Rwy 25L at Los Angeles International Airport (LAX/KLAX) on January 18, 2013.
(Photo by Michael Carter)

For decades, the Boeing 747 was the Queen of the Skies. But the glamorous double-decker jumbo jet that revolutionized air travel and shrunk the globe could be nearing the end of the line.

Boeing has cut its production target twice in six months. Just 18 will be produced in each of the next two years. Counting cancellations, it hasn't sold a single 747 this year. Some brand-new 747s go into storage as soon as they leave the plant.

Boeing says it's committed to the 747, and sees a market for it in regions like Asia. But most airlines simply don't want big, four-engine planes anymore. They prefer newer two-engine jets that fly the same distance while burning less fuel.

"We had four engines when jet engine technology wasn't advanced," Delta Air Lines CEO Richard Anderson said at a recent conference. "Now jet engines are amazing, amazing machines and you only need two of them."

Delta inherited 16 747s when it bought Northwest Airlines in 2008. Northwest last ordered a 747 in 2001, according to Flightglobal's Ascend Online Fleets.

Seats to fill

Part of the problem is all those seats. A 747 can seat from 380 to 560 people, depending on how an airline sets it up. A full one is a moneymaker. But an airline that can't fill all the seats has to spread the cost of 63,000 gallons of jet fuel - roughly $200,000 - among fewer passengers.

They're also too big for most markets. There aren't enough passengers who want to fly each day between Atlanta and Paris, for example, to justify several jumbo jet flights. And business travelers want more than one flight to choose from. So airlines fly smaller planes several times a day instead.

"No one wants the extra capacity" that comes with jumbo jets like the 747 and the Airbus A380, said Teal Group aviation consultant Richard Aboulafia.

The game changer

The 747 once stood alone, with more seats than any other jet and a range of 6,000 miles, longer than any other plane.

The plane was massive: six stories tall and longer than the distance the Wright Brothers traveled on their first flight.

On the early planes, the distinctive bulbous upper deck was a lounge, so it had just six windows. The plane epitomized the modern age of international jet travel.

"Everyone on the flight was dressed up," recalls passenger Thomas Lee, who was 17 when he took the inaugural passenger flight on Pan Am from New York to London in 1970. "After all, it was still back in the day when the romance of flight was alive and thriving."

International travel was mostly limited to those who could afford the pricy flights. The 747 changed that. The first 747s could seat twice as many passengers as the preferred international jet of the time, the Boeing 707.

Long flights became more economical for the airlines. Ticket prices fell and soon a summer vacation in Europe was no longer just for the wealthy.

The plane's profile was enhanced by its role as Air Force One and by flying the space shuttle - piggyback - across the country. The 747 became the world's most recognizable aircraft.

Boeing began building 747s in the late 1960s. Production peaked at 122 in 1990. Overall, Boeing sold a total of 1,418 747s before redesigning the plane in 2011.

The 747's success helped put Boeing ahead of U.S. competitors Lockheed, which left the passenger jet business in 1983, and McDonnell Douglas, which Boeing acquired in 1997.

But technology eventually caught up with the 747.

As engines became more powerful and reliable, the government in 1988 started allowing certain planes with just two engines to fly over the ocean, as far as three hours away from the nearest airport. Within a decade, twin-engine planes like the Airbus A330 and the Boeing 777 began to dominate long-haul routes.

Passenger airlines have ordered 31 747-8s, the current version of the plane. By comparison, airlines have ordered 979 of its smaller but ultra-fuel-efficient 787 Dreamliner.

The cost is a factor. The 747 is Boeing's most expensive plane with a list price of around $350 million, compared with $320 million for Boeing's biggest 777.

"Several" brand-new 747s have gone into storage, the company said, "to balance production and delivery rates."

Air Force One, the sequel

At least the President of the United States still prefers to fly around in a jumbo jet.

Air Force One is the world's most visible airplane. The two modified Boeing 747-200s that do the job now will be 30 years old in 2017. The Air Force is seeking a four-engine replacement, making the Pentagon one of the last airplane shoppers eager to buy fuel for four engines instead of two. Boeing and Airbus are the only Western jetmakers with such a plane.

Boeing has said it wants the job and has responded to a U.S. Air Force request for information. Airbus has not. The European company was widely assumed to be at a disadvantage against an American planemaker.

It's also possible that another company would buy planes and modify them to be used as Air Force One. An Air Force spokesman confirmed on Monday that it received multiple responses, but no date has been set for discussing the project with potential bidders.

Impact on Boeing

Boeing says that slowing 747 production won't have a significant financial impact.

Boeing's stock hit an all-time high of $129.99 on Wednesday. It has gained 74 percent so far this year, more than four times the gain in the Dow Jones industrial average.

Boeing has a backlog of some 4,787 planes, most of that orders for the best-selling 737. It has sped up production of the 737, as well as the 777, and plans to boost its output of 787s in 2016. Boeing gets the bulk of the money from a new plane upon delivery, so faster deliveries mean better cash flow.

Boeing is expected to begin offering customers a new version of the 777 by year end. With about 400 seats, that plane is widely expected to kill off demand for the 747 from passenger airlines, although the freighter version may survive longer.

Boeing isn't giving up on its iconic airplane. Marketing chief Randy Tinseth says the economic downturn of the past five years has hurt 747 sales.

Still, he says, "We think that market will come around."

Even if it doesn't, 747 fans can take heart. Most planes last three decades or more, so there will be some 747s in the skies for a long time.

(Joshua Freed and Scott Mayerowitz - Associated Press)

Southwest Airlines moving quickly to complete AirTran Airways integration

On Thursday, Southwest Airlines joined the chorus of U.S. airlines reporting record third-quarter results. Adjusted earnings per share more than doubled year over year from $0.13 to $0.34. Unit revenue grew 4.5% while unit costs declined as fleet modernization efforts reduced fuel and maintenance expenses.

While the results were a quarterly record for Southwest, CEO Gary Kelly made it clear that the company has plenty of upside left. Indeed, the company's 9% operating margin last quarter was well below the levels Southwest typically achieved prior to the Great Recession.

Southwest plans to deliver on this upside by moving quickly to integrate the AirTran and Southwest brands and optimize the company's combined route network. This process has been slowed by fleet and technology issues, but both issues are receding. The optimization process should drive Southwest's unit revenue significantly higher while keeping costs in line, boosting profitability.

Optimizing the route network

For the first two years following Southwest's acquisition of AirTran, the two airlines ran as completely separate entities. The two companies had incompatible reservation and technology systems, and whereas Southwest only flies Boeing 737s, AirTran has a mixed fleet of 737s and smaller Boeing 717s. As a result, there were no revenue synergies between the two.

Earlier this year, Southwest was finally able to begin "code-sharing" between its namesake brand and AirTran. A customer can now book a single ticket through Southwest or AirTran that includes flights on both airlines. Southwest stated that it achieved $45 million in incremental revenue last quarter from this code-sharing process.

An equally big opportunity lies ahead, as Southwest is on the verge of completely retooling its Atlanta operations. AirTran historically operated a hub in Atlanta, with most of its flight activity clustered in the early morning and the evening in order to facilitate connections. However, Delta Air Lines is a formidable competitor in Atlanta, where it operates the largest hub in the world, with nearly 1,000 daily departures.

The result is that Delta has been able to offer much better travel schedules for passengers. This has helped it maintain a near monopoly on local traffic (i.e. non-connecting passengers). Southwest is fighting back by dismantling the AirTran hub and instituting a point-to-point operation, which features flights to large cities spread across the day.

The new schedule goes into effect next month, and Southwest's management team seems very pleased with the advance booking levels so far. Since local customers tend to pay higher fares than connecting passengers, Southwest has a big opportunity to boost its revenue if it can capture some of the local market from Delta.

Fleet modernization

The other big stumbling block in the AirTran integration has been AirTran's fleet of Boeing 717s. Southwest has decided to stick with the larger 737 as its only airplane; doing so vastly simplifies its operations. Last year, the company struck a deal with Delta Air Lines, under which Delta will lease all 88 of AirTran's 717s. These AirTran 717s will be replaced by Southwest-branded 737s.

The first 717 was delivered to Delta in August, and Southwest expects to deliver a total of 16 in 2013, followed by 36 more in each of 2014 and 2015. Southwest is currently replacing the 717s with 737-800s that have 50% more passenger capacity and significantly lower unit costs.

The rapid replacement of AirTran 717s with Southwest 737s will improve Southwest's cost structure over the next two years, offsetting expected wage increases.

A big opportunity

In short, by 2015, Southwest should have completed the AirTran integration and boosted its profit margin to near pre-recession levels. The company is just beginning to optimize the combined route network, which should improve unit revenue, while the retirement of AirTran's 717s in favor of 737s will help keep costs down.

This will provide a strong platform for growth into new markets like Canada, Latin America, or Hawaii in the second half of this decade. In light of Southwest's likely margin expansion and its continued long-term growth prospects, I believe that the risk to reward trade-off remains favorable for investors, even with Southwest stock trading near multi-year highs.


Thursday, October 24, 2013

Southwest Airlines reports record 3rd Quarter profits

Average fares are rising on Southwest Airlines Co., the fuel bill is shrinking, and profit is soaring.

The airline is gearing up for the holiday travel season, and officials say that bookings for November and December are strong.

Southwest released third-quarter results Thursday and gave more evidence that the airline industry continues to rebound from the 2008 recession. Mergers have reduced the number of competitors, and the remaining airlines are boosting fares by controlling growth and limiting seats.

The results sent Southwest shares up 61 cents, or 3.7 percent, to close at $17.02.

Southwest said that third-quarter net income jumped to $259 million, or 37 cents per share, from $16 million, or 2 cents per share, a year earlier.

Excluding special items such as fuel-hedging, the company said it would have earned 34 cents per share. That matched analysts' forecast of adjusted profit.

Revenue rose 5.5 percent to a record $4.55 billion. Analysts were expecting $4.54 billion, according to FactSet.

The average one-way fare on Southwest increased 11.3 percent, to $159.39. That reflects longer flights — the average trip was 1,000 miles, an extra 41 miles — and long-term trends in fuel prices, Southwest officials said.

The airline was forced to boost fares to offset fuel prices that rose for several years, "and finally we're getting caught up," Chairman and CEO Gary Kelly said on a conference call with analysts and reporters. "If fuel prices are flat next year, I would hope that we wouldn't have to have fare increases."

Over the past three years, Southwest's price per gallon of fuel has risen faster than the average fare — fuel 26 percent, fares 20 percent. Over four years, fuel is up 37 percent while the average fare is up 40 percent.

In the last few months, airlines have gotten a break from rising fuel bills as oil prices have stabilized. In the third quarter, Southwest paid a few cents less per gallon and consumed 12 million fewer gallons than a year ago. The combination reduced Southwest's biggest expense by 5.1 percent, to $1.45 billion.

That was helpful because the second-largest expense, labor, rose 6.9 percent to $1.27 billion. The company blamed contract raises for union workers and higher health insurance costs.

The third quarter includes the last two months of the busy summer travel season, so it's a strong period for airlines. Even with higher fares than last year, Southwest was able to fill 80.8 percent of its seats, although that was down from 82.1 percent in summer 2012.

When summer vacations end, travel drops off, but Southwest is hinting at a busy holiday season. Officials said the recent partial government shutdown cost Southwest $20 million in October, but they said that bookings for November and December were strong.

Kelly called the third-quarter results "very solid," and said that his airline — once known as a scrappy underdog to the giants, but now the fourth-biggest U.S. carrier — was transforming itself for the future.

Southwest is converting more AirTran Airways flights to its own colors and brand, and expects to fully absorb AirTran by the end of 2014. The conversion includes using Southwest planes on international flights beginning next year.

 (David Koenig - Associated Press) 

Friday, October 18, 2013

Hawaiian Airlines announces new seasonal service from LAX

Hawaiian Airlines will offer first-ever non-stop service between Los Angeles and the islands of Kaua'i and Hawai'i, in response to growing demand during next summer's peak travel period.
New annual summer service will commence between Los Angeles and Lihu'e, Kaua'i four times a week, and Los Angeles and Kona, Hawai'i Island three times a week starting in 2014 from June 26 to September 19.
The new service will add more than 22,000 seats to both island travel markets over 12 weeks of service, and complements the new Oakland service that will also start next summer with direct flights to Lihu'e and Kona for 10 weeks.
"We are offering more options for Southern California travelers to book their vacation and experience Hawai'i's Big Island and Garden Isle," said Peter Ingram, Hawaiian Airlines executive vice president and chief commercial officer.
"We are pleased to be supporting both Kaua'i and Big Island's visitor industries with this new summer service and offering island residents direct access to Los Angeles."
Hawaiian Airlines 767-3CB(ER) (33467/894) N590HA "Koale'ula" taxies from Rwy 25L following its arrival from Honolulu (HNL/PHNL).
(Photo by Michael Carter)

The new Los Angeles service will be operated by Hawaiian Airlines' wide-body, twin-aisle Boeing 767-300ER aircraft. With the addition of the service, both Lihu'e Airport and Kona International Airport will have a Hawaiian Airlines wide-body aircraft arriving every day of the week next summer.
Start Date
HA 62 KOA-LAX 12:40 p.m. 9:05 p.m. Tues, Thurs, Sun June 26, 2014
HA 61 LAX-KOA 8:00 a.m. 10:55 a.m. Tues, Thurs, Sun June 29, 2014
HA 64 LIH-LAX 12:40 p.m. 9:15 p.m. Mon, Wed, Fri, Sat June 27, 2014
HA 63 LAX-LIH 8:00 a.m. 11:10 a.m. Mon, Wed, Fri, Sat June 27, 2014

Couple fined for joining the "Mile High Club"

A former Applegate Valley vintner and a Medford salon technician learned today that the cost of allegedly having oral sex in their seats in front of other passengers on a commercial airline flight from Medford to Las Vegas in June is $250.
But to former Troon vintner Christopher Martin, his plea today to a federal misdemeanor in the case that garnered international attention has cost him much more than that.
"I have made many mistakes in my life, none greater than this one," Martin said in a written statement sent this afternoon to the Mail Tribune. "I have lost my job, my reputation and damaged the legacy I had worked 10 years to nurture and grow. I will learn from this and move on to the next chapter in my life."
Martin, of Las Vegas, and Medford resident Jessica Stroble each pleaded guilty in absentia today in U.S. District Court in Las Vegas to a federal misdemeanor charge of disorderly conduct and each was sentenced to a $250 fine.
U.S. Magistrate Judge George Foley Jr. ordered the fines after accepting pleas from attorneys representing Martin and Stroble, who were not required to attend today's hearing.
The pair initially were charged with a federal misdemeanor crime of lewd, indecent and obscene acts on an airplane.
An FBI affidavit states that passengers on the June 21 Allegiant Air flight saw Martin exposing his genitals and twice joined Stroble in oral sex and other acts despite warnings from flight attendants.
One of the passengers complained to an attendant that "this is not the sex education I wanted to give my teenage sons," according to the criminal complaint.
Martin and Stroble were asked to stop by an attendant and did so during the drink and snack service, but later repeated the sex acts before landing, the affidavit states.
The original charge carried a maximum sentence of up to 90 days in jail and a $500 fine, according to the complaint.
In his written statement, Martin chided the Mail Tribune and other media outlets for doing "everything to paint me in nothing but the worst possible light" amid wide electronic circulation of their case.
In a follow-up statement, Martin denied that he and Stroble were exposed to passengers or flight attendants, but he declined to elaborate on the events of the flight.
Martin said he thought he would have been exonerated if his case had gone to trial, but that he pleaded guilty today to put the case behind him and move on.
Martin also apologized to "all those who have been hurt and offended by my actions," ranging from his family and friends to airline passengers, Troon workers and Stroble.
"My actions were clearly inappropriate and inconsiderate," Martin wrote. "Seeing and hearing the level of venom directed at these people has been hardest for me and I am truly sorry for that."
Troon spokeswoman Erika Bishop did not return a telephone call today seeking comment.
(Mark Freeman - Oregon Mail Tribune)

Thursday, October 17, 2013

Northrop Grumman wins huge contract from French Government

Despite the current stalemate in the U.S. economy, which has restricted defense contract flows, Northrop Grumman Corp. emerged as one of the key winners. Northrop’s shares inched up 1.37% to close at $98.68 on Oct 16, 2013 thanks to the company’s foreign military sales contract win from the French government.

The $34 million contract awarded via the U.S. Navy involves modernizing military hardware which includes the installation of AN/APX-122A IFF Mode 5/Mode S Interrogators and AN/APX-123 IFF Mode 5/Mode S Transponders on board three French navy E-2C "Hawkeye" airborne early warning aircraft.
The mode transponders provided by Northrop will enhance the aircraft’s Identification Friend or Foe ("IFF") system and will improve communications with the U.S. Navy’s E-2D Advanced Hawkeye aircraft. The IFF technology allows aircraft to identify friendly forces thereby preventing any casualties from friendly firings.
Apart from the U.S., France is the only country which operates E-2C Hawkeye from an aircraft carrier. The long-standing operational collaboration between the U.S. and France has ensured the relevancy of the multimission E-2 Hawkeye platform in battle. The joint effort has contributed to constant technological developments of the E-2 Hawkeye which has optimized its reliability and capability.
Northrop has been the one of the few contractors to effectively counter the sequestration. In late Sep 2013, the company scored ten contracts from the Department of Defense worth $1.28 billion.
In addition, Northrop is devoting its efforts to capitalize on the rising demand for defense products, especially in the Middle East and the Asia-Pacific markets. Recently, Northrop expanded its footprint in Australia through multiple acquisitions and strategic partnerships.
  (Zacks Equity Research)

New G650 arrives in Long Beach

Caught on short final
to Rwy 30
and smoking the mains at 11:20 pst.

Gulfstream G650 (c/n 6061) N661GA arrived at Long Beach Airport (LGB/KLGB) from Savannah-Hilton Head International Airport (SAV/KSAV) this morning at 11:20 pst as "N661GA."
(Photos by Michael Carter)

Boeings order book grows

Boeing released its latest report on airplane orders received -- and cancelled -- through the first nine-point-something months of 2013 on Thursday.
To date, the aerospace giant has booked:
  • 842 "gross" orders for various flavors of its 737 regional airliner
  • 132 orders for the 787 Dreamliner
  • 44 for the 777 airliner
  • five 747 orders.
From this total, Boeing subtracted 119 737s, eight 777s, all five 747s, but just a single 787, for customer cancellations, resulting in a net of 890 commercial airplanes ordered year to date.

This is a significant jump in orders since I last checked in on Boeing late last month, and found the company's order book populated with "only" 834 net new plane orders.

The increase is entirely attributable to Boeing's ever-popular 737 airliner. The Boeing-anointed "best selling commercial aircraft in aviation history" has picked up 71 new orders, while losing only 15, in the past three weeks. 

(Rich Smith - The Motley Fool)

Wednesday, October 16, 2013

One awesome aircraft!

(Photo by Michael Carter)

Check out the following link, I know everyone will like this.
I had the chance to fly on this gorgeous bird in January 2011 out of Opa-Locka Airport just north of Miami and what an awesome flight it was! It is one I will never forget.
Michael Carter - Editor Aero Pacific Flightlines 

LAX contract employee arrested in dry ice bombing

A Los Angeles International Airport employee has been arrested in connection with the dry ice explosions during a two-day span earlier this week at one of the nation's busiest airports, police said in a statement.
Dicarlo Bennett, 28, is being held on $1 million bond and faces one charge of possession of an explosive or destructive device near an aircraft.

Bennett is an employee of Servisair, a company that does baggage handling and ramp services at LAX, ABC News has learned.

"We are aware of the situation," Servisair said in a statement to ABC News. "We have no comment at this time."

It's unclear whether Bennett has entered a plea.

Bennett's motives are unclear, but a law enforcement official said he was riding in a van with a supervisor and other co-workers when he decided to plant one of the dry bombs, according to The Associated Press.

The others in the van were made aware of the dry ice, but no other arrests have been made, the AP reported, citing the official briefed on the investigation who wasn't authorized to speak publicly.

Police had previously said they didn't believe the explosions were an act of terror but could have been the work of a disgruntled employee. Authorities poured over surveillance video looking for clues and interviewed workers at the airport for two days before arresting Bennett.

No one was injured in either incident but police say dry ice can explode with the intensity of a pipe bomb. Deputy Chief Michael Downing told The Associated Press that the bombs, made by putting dry ice in 20-ounce bottles, could have caused serious injury to anyone in close proximity.

Authorities say all the bombs were found in restricted areas away from passengers. The first explosion happened Sunday in an employee bathroom in Terminal 2. Another exploded Monday night by the tarmac.

A third bomb was disabled before it was detonated, according to police. A fourth bottle the LAPD originally thought was involved turned out to be trash.

Passengers at LAX said they were glad a suspect is in custody and can now breathe a little easier.

"It's obviously bothersome but at the same time life's got to go on," William Hopper said. "You can't keep shutting everything down just because of some wacko doing something stupid."

 (Anthony Castellano and Alex Stone - ABC News)

Friday, October 11, 2013

Norwegian Air Shuttle still happy with 787 despite recent issues

Norwegian Air Shuttle CEO Bjorn Kjos has made a stink about his problems with the Boeing 787 Dreamliner, but he said he would still order the aircraft if he had it to do over again.

"It's a fantastic airplane; it's great," Kjos said, in a telephone interview. "The 787 is incredible on fuel burn. Boeing has been very professional; they understand the aircraft has to be flying."
By now, the story of Norwegian's 787 problems is well-known because the airline has been relentless in discussing them with U.S. reporters. In one recent press release, it called the 787 "a nightmare for the airlines relying on this new craft." Asked if he has perhaps complained too much for Boeing's liking, Kjos responded: "I don't think so. They understand. It shouldn't have done (what it did) and it has performed much better."

Oslo-based Norwegian began flying the 787 in August on European routes as well as Oslo and Stockholm to Bangkok and New York. Its two planes have suffered from a series of problems, including failures of the brakes, hydraulic pumps and power systems, causing cancellations of several flights.

Recently, Boeing sent a team of about two dozen technicians to Stockholm to work on the planes. Kjos, a former fighter pilot, was all smiles on Friday.
He said the problems were largely confined to one aircraft, the second 787 to be delivered to Norwegian, which is scheduled to fly again on Monday.

"We were unlucky with the second airplane," he said. "It had a lot of problems, minor bugs that have kept it on the ground for a long time." But the first one, he said, "is working very nicely (with) very high reliability." 

Looking back to the time of the aircraft order in 2009, Norwegian considered the usual options from Airbus and Boeing. "The (Airbus) 340 used too much fuel, the 330 didn't have the range and the 767 didn't have the range," he said. The A350-900, meanwhile, was "too big to use as a start-up" and also, was not going to be ready in time.

The 787 could fly economically, given that Norwegian put 291 seats on the aircraft. Fuel efficiency and high utilization enable Norwegian to offer low fares across the Atlantic, starting at $236 one-way from New York. From the West Coast, where service starts next year, one-way fares start at around $300.

Some passengers connect to Bangkok and other destinations, Kjos said. He noted that even with added service in 2014, only about 5% of Norwegian revenue will be from trans-Atlantic flights; short-haul European flying accounts for the bulk of revenue. Norwegian, profitable in 2012, expects to be profitable in 2013.

Kjos realizes that Norwegian, like other European carriers, competes with Middle East carriers like Emirates for connecting passengers to India and Asia, but said Norwegian has an advantage in terms of flight time. To Bangkok, he said, "the shortest way is via Stockholm. You save at least an hour or two. Why stop in Dubai, when it is better to stop in Stockholm?"

Told that Emirates has become the biggest carrier between the U.S. and India, according to Deutsche Bank analyst Mike Linenberg, Kjos said Norwegian will look at India. It is also eyeing additional U.S. destinations including Chicago, Denver, Las Vegas, Seattle and Washington.

As for an alliance with a U.S. carrier, Kjos said JetBlue "would be a natural if we wanted an alliance with somebody in the U.S." JetBlue is the largest domestic carrier at JFK and has alliances with a variety of international carriers, although it eschews costly code share agreements. Kjos said he has met JetBlue CEO Dave Barger and his team, but "we haven't been able to set one up yet" and "we are not in talks" at the moment.

(Tim Reed - The Street)

Thursday, October 10, 2013

Egypt Air to evaluate 777, 787, A350 & A380 for future fleet renewal

Egypt Air aims to add about 60 more jets and will evaluate Boeings 787 Dreamliner and 777, plus the Airbus SAS A350 and even the A380 double-decker as it seeks to rejuvenate an aging fleet and spur tourist traffic.

The Cairo-based carrier plans to operate 125 jets by 2022, up from 81 now, adding 17 aircraft to replace models more than 15 years old and 44 to meet its growth requirements, Egyptian Civil Aviation Minister Abdel Aziz Fadel said in an interview.

Egypt Air will most likely lease planes, which could also include current or re-engined variants of the Airbus A320 or Boeing 737-800 for short-haul routes, with the Embraer E-195 and Bombardier C-series models also in contention. Fadel said the carrier, which has lost 7 billion Egyptian pounds ($1.02 billion) since January 2011, must overhaul its fleet to add long-haul routes and exploit Cairo’s geographical position.
“Cairo sits between three continents, it has a special location,” the minister said in Dubai. “We’re developing Cairo as a hub and Egypt Air is developing better connectivity.”

The state-owned carrier’s plan envisages offloading older Airbus A320s and Boeing 737-500s, together with four-engine A340 wide-bodies and some 777s, Fadel said, adding that the models will be replaced with others in the 150 and 300 seat categories.

Hong Kong, Sao Paulo
“We are trying to sell the old planes, then we will be ready to acquire the new ones,” he said. Operating the A380, the world’s biggest passenger model, is a “possibility” beyond 2020. The airline will add routes to Hong Kong and Jakarta in Indonesia in 2014 and is considering Sao Paulo as a destination.

Egypt Air has been struggling for traffic since 2011’s Jan. 25 revolution forced former President Hosni Mubarak from power, with the instability exacerbated when successor Mohamed Mursi’s Muslim Brotherhood was ousted by the military in July amid deadly street clashes. Tourist arrivals fell 46 percent to about 564,000 in August from a year earlier as tensions heightened.
The Egyptian government has tasked Fadel with completion of projects halted after the initial 2011 upheaval. His ministry is overseeing construction at Cairo and Alexandria airports and at Hurghada on the Red Sea, costing a combined 6 billion Egyptian pounds and aimed at boosting total annual capacity from 30 million passengers to 45 million in 2030 and 55 million by 2050.
Funding for the projects is available through loans from the World Bank and Arab Development Bank, given in 2010, Fadel said. The financing of aircraft leasing should be “easy” because the monthly costs are cheaper than ownership, he said.
Egypt Air’s holding company may merge some businesses, which include maintenance and cargo arms as well as the airline, and the state could also provide an equity injection, Fadel said. The aviation industry hasn’t received any of the cash pledged by Gulf Cooperation Council countries after the ejection of Mursi and is “self-funding” via commercial loans, he added.

(Deena Kamel Yousef - Bloomberg News) 

Wednesday, October 9, 2013

Republic Airways unloads Frontier Airlines

After years of attempting to turn around Frontier Airlines, Republic Airways  made a move that should have surprised no one in the industry.

The operator of fixed-fee flights for partner airlines agreed to sell Frontier to a group run by William Franke, the former chairman of Spirit Airlines. Exiting the troubled subsidiary allows Republic to focus on the profitable fixed-fee segment, but the airline failed to obtain anything significant for its four years of work attempting to make Frontier viable.

Record load factors not enough

Republic has spent the last four years improving Frontier's operations, but it hasn't been able to turn the struggling airline into a winner. Frontier has been able to juice the load factor to record heights, but squeezing more people on planes without grabbing fees hasn't produced meaningful profits.

In fact, for the first half of 2013, Frontier is still in the red while even a  still-bankrupt American Airlines is reporting sizzling profits.

Republic Airways is only getting $36 million in cash for the money loser, plus the assumption of over $100 million in debt, but investors clearly see dumping Frontier for virtually nothing as questionable; Republic's stock is trading down since the deal was announced and now trades at multi-month lows.

The Republic division, which focuses on fixed-fee flights operated under airline partner brands, is solidly profitable, and likely didn't fit well with the low-cost carrier model.

Frontier removal impact

For the second quarter, Frontier generated revenue of $327.6 million -- a revenue base close to that of Spirit Airlines. Frontier's also similar in size to the remaining Republic segment.

As with any massive change, investors need to understand that Republic's reported numbers will be vastly different in 2014 -- nearly 50% lower. That kind of change typically leads some investors to make invalid comparisons to previous periods.

Frontier recorded a profit in 2012, which might lead to further questions about why a segment that generated pre-tax income of $29.6 million wasn't able to obtain a higher offer than $36 million. In the last year, Republic has done an exceptional job of improving profits even as revenue stalled out.

During its second quarter, pre-tax income soared 45.8%, even with revenue declining 5.8%.

Like Republic, SkyWest focuses on operating regional flights for the major airlines, running both SkyWest and ExpressJet. However, SkyWest isn't able to generate the same level of margins as Republic -- only around 6% during its seasonally strong second quarter. Incredibly high aircraft maintenance costs, amounting to 20% of revenue, ate into its profits.

SkyWest's numbers highlight Republic's operating efficiency, even including the struggling Frontier division; Republic as a whole generated operating margins of 10.6% and only spent 11% on aircraft maintenance costs. Going forward without the distractions of Frontier, Republic may be able to further improve margins.

Bottom line

While the market has been volatile since the announced deal, investors appear reasonably disappointed that Republic wasn't able to obtain more for an airline into which it poured four years of work.

Regardless, a focused corporate structure and strong profits for the remaining Republic segment might drive some multiple expansion for its shares, which would compensate the company for its solid results and reduced risk.

(Mark Holder - The Motley Fool)