Southern California Aircraft Spotting (Featuring Long Beach Airport (LGB/KLGB) and Los Angeles International Airport (LAX/KLAX), Gulfstream News, plus Domestic and International Airline News
Gulfstream G550 (c/n 5463) N563GA rests on the Gulfstream service center ramp on February 11, 2014. It arrived from Savannah-Hilton Head International Airport (SAV/KSAV) on February 10, 2014 at 1036 pst. Also visible is the tail of G650 (c/n 6076) N676GA which arrived from Savannah-Hilton Head International Airport on Saturday February 8, 2014 at 1403 pst.
Gulfstream G550 (c/n 5444) N344GA tbr N344RS departed Long Beach Airport (LGB/KLGB) as "GLF9" at 1454 pst bound for "Shots" on a pre-delivery test flight.
Boeing Co. said Air India Ltd. is dissatisfied with the performance of its 787 Dreamliner, joining other carriers including Norwegian Air Shuttle ASA in slamming the manufacturer for repeated faults on its marquee jet.
"Yes, they are not happy with the reliability portion, neither are we," Dinesh Keskar, a senior vice president at the Chicago-based planemaker, said in an interview at the Singapore Air Show today. "Over the last few months, we understood which are the components that were causing issues, which software needs to be upgraded."
Airlines Stick With Boeing's 787 Despite Bumpy Takeoff
The Dreamliner has experienced a series of malfunctions since its debut in 2011, including a three-month grounding of the global fleet last year after battery meltdowns on two planes. Air India, which hasn't reported an annual profit since 2007, and low-cost airliner Norwegian Air built their growth plans around the composite-material airliner and its promise of more fuel-efficient operation. Air India diverted one of its 787s to Kuala Lumpur this month as a precaution after a software fault on a flight to New Delhi from Melbourne. Boeing is upgrading software and changing some components on Air India 787s whenever the planes can be taken out of service, Keskar said, adding that a 13th Dreamliner will be delivered to the carrier this month. Missing Mark Air India, which has ordered 27 Dreamliners, will seek compensation from Boeing after the carrier found that its 787s aren't as fuel efficient as the planemaker had claimed while selling them, The Times of India reported today, citing officials it didn't identify. G. P. Rao,, a spokesman at Air India, wasn't immediately available to comment.
Fuel efficiency of the Dreamliner is improving after earlier models didn't "quite make the mark" on this count, Keskar said.
More from the Singapore Airshow:
Boeing Working Hard on ANA Deal After Japan Air Chooses Airbus
Indonesia Officials Skip Singapore Airshow as Tensions Rise
GE Weighs Helicopter Leasing as Plane Competition Rises
The 787 is the first jetliner built chiefly of composite materials rather than traditional aluminum. It also relies to a greater degree than other jets on electricity to run the plane's systems, putting a spotlight on the lithium-ion batteries.
Mumbai-based Air India has sparred with Boeing over compensation for tardy deliveries. Even so, Keskar said Boeing sees potential aircraft deals in India later this year. The company is in advanced talks with discount carrier SpiceJet and Jet Airways, the nation's biggest publicly traded airline, to sell 737 Max jets.
In January, Japan Airlines Co., one of the biggest operators of the Dreamliner, found a battery cell in an empty jet smoking during preflight maintenance. Last year's grounding added to a history of setbacks for the Dreamliner, whose entry into commercial service in 2011 for Tokyo-based ANA Holdings Inc. was more than 3 1/2 years late because of production snags.
Boeing will increase its prediction for India plane demand in the next couple of months, Keskar said in Singapore today. The company had forecast last year that carriers in the Asian nation will need 1,450 new aircraft, worth $175 billion over the next two decades.
Republic Airways was down 5.2% to $9.34 Tuesday following news of a pilot shortage that will make the airline take 27 planes out of service in 2014. The airline announced it expects to take 27 of its 41 Embraer planes out of service this year. The airline previously sought extensions on the planes. The move will cut pre-tax income by $18 million to $22 million. In the announcement Republic Airways said that a "significant reduction" in the number of pilots who meet U.S. experience rules was a factor in taking the plane out of service.
New rules from the U.S. Federal Aviation Administration last year require 1,500 hours of flight time for U.S. pilots of commercial jets or cargo planes, up from 250 hours previously required for co-pilots. A separate rule change also required more rest time for pilots. The combination increases costs and limits flight time, putting strain especially on smaller airlines.
A new airline has announced plans to launch intrastate air service at Tallahassee Regional Airport. Ft. Lauderdale-based Florida Express Jet Travel will begin offering air service between Tallahassee and Ft. Lauderdale and Orlando starting March 20, 2014. Jeff Thompson, Director of Sales for Florida Express Jet, says fares for the initial flights will be as low as $69 for Tallahassee to Orlando and $99 for Tallahassee to Ft. Lauderdale flights.
Company leaders say they will offer 8 daily flights between the 3 cities. Tentative scheduling involves departing Ft. Lauderdale daily at 7:00 a.m. and arriving to Orlando at 7:50 a.m. The flight would then continue to Tallahassee where it would arrive at 9:20 a.m. The return flight would depart Tallahassee at 10 a.m. with a stop in Orlando before arriving back in Ft. Lauderdale.
The flight schedule would repeat several times each day with arrivals and departures at Tallahassee Regional Airport. The final flight departing Tallahassee will leave at 5:10 p.m.
"This service pattern will now give Floridians an opportunity to save precious time traveling throughout the State of Florida without having to visit Atlanta Hartsfield Airport for a connecting flight or driving for up to 6-8 hours,” Thompson said. The flights will be operated by Swift Airlines using Boeing 737-400 aircrafts. The planes will feature Florida Express Jet’s name and a purple and white color scheme representing the Florida sun, water and beaches, palm trees and the state Everglades. The interior of the aircrafts will feature blue leather seats, Wifi, and food and beverage service; among other amenities. Later in the year, company leaders say they expect to add air service to Jacksonville, Miami, Key West, and Tampa.
The first several months of 2013 proved to be a trying time for Boeing as it launched its new and revolutionary 787 Dreamliner aircraft to the subsequent string of problem after problem while the new planes got acclimated.
Battery fires and circuitry problems were nearly a weekly occurrence, and airlines worldwide were forced to divert flight after flight as the problems mounted. Throughout the year, these problems settled, but Boeing is now facing yet another issue with its technological centerpiece, but this time on the production end.
At a pace of 10 units per month, the 787 is the fastest produced twin-aisle jet in the world, but employees with the company are concerned that the company won’t be able to maintain that rate. Reuters reported them as saying that the two factories that assemble the 787 are struggling to cope with a ramp-up in production that started late last year, and a huge backlog of unfinished work threatens to slow output.
Boeing’s plant in North Charleston, South Carolina reportedly has thousands of uncompleted work orders, and has been sending pieces to the Boeing plant in Everett, Washington, which is larger, to be completed so that the company can maintain its 10-a-month rate, Reuters quoted the employees as saying and adding that a work order encompasses everything from attaching a part to installing a duct system entirely.
One employee — which the site noted as being senior-level — said that much of it had to do with the 787′s complex wiring systems, and fuselage sections were being shipped in from South Carolina with large bundles of wires that were not connected properly.
It’s not a lack of knowledge or ability that’s hindering the South Carolina facility, the senior-level employee to Reuters, but shortage of workers altogether. “There are not enough of them to match the rate increase,” he said. “They can’t keep up.”
Though Boeing knows of the strain on the production line, the company maintains that it’s working through it and will meet its production goals for 2014. ”While we try to minimize it, traveled work is something we deal with in all production programs,” Boeing spokesperson Marc Birtel told Reuters. “The 787 program remains on track to meet its delivery commitments in 2014 and we are producing 787s at a rate of 10 per month as planned.”
Given that the 787 is one of Boeing’s highest-volume planes, its ability to produce them is a crucial component of Boeing’s financial performance for the year. the cash generated will be sunk into new plane development, and for appeasing shareholders’ thirst for dividends and buybacks.
As it stands now, Boeing hopes that the North Charleston factory will put out three jets per month by mid-year, while Everett fills in the remaining seven, Reuters said.
(Justin Lloyd-Miller - Wall Street CheatSheet / Reuters)
Leading U.S. passenger carrier Southwest Airlines Co. is eyeing those markets in which rival carriers have downsized their operations. Southwest wants to tap opportunities in these markets by leveraging from its recent slot pair wins in New York and Washington D.C.
The Dallas-based carrier is targeting Memphis, Tennessee, where rival Delta Airlines Inc. trimmed operations last year. Also on Southwest’s list is the Midwestern city of Cleveland whichUnited Continental Holdings Inc. no longer wants as its hub. Despite being small markets, Southwest is encouraged by the growth opportunities that these offer. We expect Southwest – known for its low fares – will get a strong foothold in these markets with competitive ticket prices.
Such a practice is not new for Southwest, as the carrier has previously benefited by scaling its operations in the city of Nashville in the 1990s and in St Louis, Missouri, where the erstwhile American Airlines had downsized its service.
The last few months have been really fruitful for Southwest. In Dec 2013, Southwest acquired 22 take-off and landing slots at New York’s La Guardia airport (LGA/KLGA) and recently won bids to purchase 27 take-off and landing slots at Reagan National Airport (DCA/KDCA) in Washington. The slot purchase is part of a mega merger deal between American Airlines and U.S. Airways that led to the formation of American Airlines.
The company has decided to add flights to Nashville, Texas, Chicago and Ohio from LGA and expects to expand its operations to large and mid-sized cities from DCA. Apart from slot purchases, the company delivered a stellar fourth quarter of 2013, beating the Zacks Consensus Estimate on both lines.
These positives were, supported by the company’s announcement that it will operate non-stop flights from Dallas starting Oct 13, when the Wright Amendment act is lifted. Additionally, the major passenger carrier has also decided to fly beyond national boundaries to three destinations in the Caribbean Island from Jul 2014. It is thus an encouraging time for both Southwest investors and passengers.
Southwest Airlines 737-3H4 (23938/1549) N334SW "Shamu One" arrives at Portland International Airport (PDX/KPDX) on August 25, 2011.
(Photo by Michael Carter)
Southwest Airlines was already a behemoth when federal regulators were grappling over the latest huge merger in the industry, and this year the airline will get even bigger.
Southwest was the dominant winner in the asset auction that federal regulators mandated as part of its approval of American’s merger with US Airways. The carriers were required to divest takeoff and landing slots at New York’s LaGuardia Airport and Reagan National Airport near Washington, D.C., as well as airport gates and other assets in several cities.
LaGuardia and Reagan are both constrained by U.S. limits on hourly aircraft operations due to congestion, so gaining ground in either venue is a big deal. (In a 2008 blog post, Southwest called its entry into New York City “GINORMOUS!”) Rival JetBlue Airways collected slots for a dozen new daily round-trip flights at Reagan, giving it 30 total. American remains the airport’s largest carrier, with about 56 percent of the slots. Virgin America, which flies daily from Reagan National to San Francisco, is also believed to have bid for slots there, although the carrier has refused to confirm that.
The last batch of slots at Reagan has not been finalized, a Justice Department spokesman said Friday, and federal officials have declined to identify bidders for the slots at either airport aside from making it clear that United and Deltaaren’t welcome in the process. The number of daily Southwest flights at both LaGuardia and Reagan will remain modest: 33 in New York and 44 in Washington. Yet the flight expansion gives the airline more exposure to two airports with many high-paying corporate travelers. It also helps to cement the idea—at least among regulators—that Southwest serves as an effective deterrent to pricing excess by the Big Three legacy airlines. That idea will soon get a field test, with the new flights beginning in the summer.
Rival airline executives have grumbled for several years about how Southwest manages to retain its public image as a low-fare champion, even though the carrier is not always the cheapest option and has aggressively raised fares since the 2008 spike in jet fuel prices. Southwest contends that its two free checked bags per traveler—a $50 extra fee at most U.S. airlines—still keeps it ahead on total price.
Since the end of 2012, Southwest’s average one-way fare has climbed 5.5 percent, to $156.05. Comparatively, that’s still below the national round-trip domestic average of $390, as of Sept. 30, according to federal data. But the carrier has made no secret of its frantic push for new revenue as its rivals revamped their costs in bankruptcy and then bulked up through mergers.
That has left Southwest with higher costs than some newer upstarts, such as Spirit and Allegiant, while no longer being a growth airline. As a result, new business opportunities will come largely from abroad and from luring business travelers in some of the larger markets Southwest once shunned. Southwest has grown to 3,600 daily flights since its first flight in June 1971, when its fleet numbered three Boeing 737s shuttling travelers among Dallas, Houston, and San Antonio. The airline is no longer “a small fish in a big pond,” as Edward Jones analyst Logan Purk told Bloomberg News.
On Monday, Feb. 3, the airline will announce a bevy of new destinations from its home base at Dallas Love Field, an airport where flights have been restricted geographically since 1979, when Congress enacted the Wright Amendment to protect Dallas-Fort Worth International Airport 25 miles west. That law expires Oct. 13, and Southwest has been heavily promoting its freedom to fly nationwide from Love Field.
The airline is also about to embark on its first international foray this year, with new flights to Aruba, Jamaica, and the Bahamas starting in July. Southwest is building a new international terminal at Houston’s Hobby Airport to allow it to fly to Mexico, the Caribbean, and Latin America. That facility is scheduled to open next year, in what promises to be a year of expansion for Southwest.
Airline passengers complain dramatically more about large airlines than they do about discounters, even when the actual quality of the carriers’ performance is similar, according to a new paper that examined traveler complaints to the federal government over a decade.
The startling conclusion—and one any C-suite executive at American or Delta has long rued—is that smaller airlines such as Alaska, Southwest, and JetBlue Airways tend to catch a break from the public. How come? One likely reason is that the Deltas and Uniteds of the airline industry carry a higher percentage of business travelers, who pay steeper fares and expect better service in return. Smaller airlines predominantly serve leisure travelers and others who are less likely to even know about the U.S. Department of Transportation’s Aviation Consumer Protection Division.
“When I first started this, I had no idea it was possible to make a complaint to the government about a service failure,” says Mike Wittman, a graduate student at MIT’s International Center for Air Transportation who compiled the gripe data from 2002 to 2012. His paper was published last month in the Journal of Air Transport Management.
Federal transportation officials compile airline complaints and issue a detailed monthly report on service quality. A complaint to the DOT is also likely to prod an airline to respond to a problem it may have otherwise ignored or overlooked. The consumer protection office also accepts compliments for airlines and tallied a grand total of two positive remarks from travelers in November 2013, the month covered in the most recent report. Travelers submitted 755 complaints that month.
Recent years have seen a steady stream of travel complaints, but whining spiked in both 2000 and 2007 at times when airport congestion led to severe delays. Mergers also seem to lead to an uptick in issues. United saw a sharp increase in complaints during 2012 due to severe operational problems as part of its merger with Continental; Delta has seen its complaint tallies drop ever since it finished absorbing Northwest in 2010.
Aside from those outliers, however, airline performance has been fairly uniform even though the targets selected by complainers have not. United and Southwest, for example, mishandle similar volumes of luggage, but complaints about United’s baggage woes surpassed Southwest’s by a rate of nearly 10 to 1, Wittman found:
Across three common complaint areas—delayed flights, mishandled bags, and denied boardings—Southwest received roughly 4 complaints per 10 million passengers, while United’s complaint rate was 12 times higher in the same period. Likewise, JetBlue’s 76 percent on-time performance was the worst across the industry in the 10-year period studied by Wittman, owing to its hub location at JFK International in New York. Yet JetBlue’s complaint rate for delays came in below American, Delta, United, and US Airways.
Of course, there’s another potential reason airlines like Southwest and JetBlue fare better when it comes to customer complaints: happier employees. “A friendly smile or a sympathetic reaction at the point of service failure may go a long way towards moderating complaint rates at low-cost carriers,” Wittman wrote. Maybe those folks aren’t any more enthused about their bosses than a worker at American or United, but they tend to defuse your wrath enough that a flight problem doesn’t spur you to make a federal case of it.
Flying doesn’t come cheaply these days, particularly on long-haul flights across the Atlantic.
But Norwegian Air Shuttle, which specializes in low-cost flights within Europe, plans to bring its pared-down model to the United States and Asia.
Its strategy, however, comes with a few twists: Norwegian is moving its long-haul operations from Norway to Ireland, basing some of its pilots and crew in Bangkok, hiring flight attendants in the United States, and flying the most advanced jetliner in service — the Boeing 787 Dreamliner. In the process, it has infuriated established carriers and pilots.
Other airlines have tried a low-fare approach on long-haul flights, with little success. But Bjorn Kjos, Norwegian’s ebullient chief executive, is confident that his unconventional approach will allow the airline to offer fares 50 percent cheaper than the competition’s.
Norwegian started flying between Oslo and Kennedy Airport in New York in May and has round-trip fares starting at $509. The second-lowest price found recently was $895 on United Airlines flying out of Newark Liberty International Airport. Norwegian plans to add more than a dozen new routes this year, including direct service from London to New York and Copenhagen to Fort Lauderdale, Fla., once regulators approve its new registration in Dublin.
Bjorn Kjos, chief of Norwegian Air Shuttle, which in 2012 ordered 222 aircraft, including 10 Boeing 787s for long-haul flights.
(Heiko Junge/Scanpix, via European Pressphoto Agency)
“We expect to see more dramatic reductions in fares,” said Mr. Kjos, a former maritime lawyer who co-founded the airline in the early 1990s.
But Norwegian’s novel model has raised stiff opposition from American labor groups, airlines and pilots who see it as a backhanded attempt to outsource cheaper labor and undercut competition.
Norwegian, these critics argue, is unfairly taking advantage of an open-skies agreement between the United States and Europe even though Norway is not a member of the European Union.
“Complex is not a good word here for what they are trying to do; I’d say it’s convoluted,” said Lee Moak, president of the Air Line Pilots Association, a union that is one of the leading opponents of Norwegian’s plans. “They want to exploit legal and regulatory loopholes to give them an unfair economic advantage over U.S. airlines that operate in a global marketplace.”
The pilots union said Norwegian was trying to “cheat” the agreement, first struck between the United States and Europe in 2007 and expanded in 2010, which gave easier access to major airports like Kennedy and allowed airlines to operate more freely across the Atlantic. Critics said Norwegian was pursuing a “flag of convenience” strategy, and compared it to the exodus of the domestic cargo ship industry to countries with weaker regulatory oversight like Liberia. Another union called it “the Walmarting” of the airline industry.
In a joint letter to the Department of Transportation, Delta Air Lines, United Airlines and American Airlines said the low-cost airline wanted to skirt labor laws by resettling its long-haul operations in Dublin, while using a Singapore-based company to hire pilots on its behalf in Thailand. The result would give it “a competitive advantage on trans-Atlantic routes in direct competition with U.S. carriers.” (A Norwegian subsidiary, called Norwegian Air International, is waiting to be certified as an air carrier by Irish civil aviation authorities.)
The lobbying battle is heating up. American and European Union officials and pilots met in Oslo this week to press their opposition to Norwegian’s expansion plans. At the same time, the Norwegian transportation minister, Ketil Solvik-Olsen, made the airline’s case on Monday in a letter to his American counterpart, Anthony Foxx.
“I believe we should not hinder the establishment of new business models just because we cannot know for sure how they will develop,” Mr. Solvik-Olsen said in his letter.
Norwegian’s case may be testing the spirit of the labor protection provisions in the open-skies agreement, according to William S. Swelbar, an aviation expert and the executive vice president at InterVISTAS Consulting, but the airline will provide the type of competition to United States carriers and their global partners that was contemplated by regulators.
“They are the first true low-cost carrier to take advantage of the opportunities provided for under that agreement,” he said. “As in any agreement, the first case always challenges the meaning of the negotiated language.”
Mr. Swelbar added Norwegian could be setting a precedent that incumbent airlines probably wish to avoid. “Maybe the fear is that if Norwegian is successful, then that will invite Ryanair and some U.S. low-cost carrier and others to take advantage of what was negotiated between the U.S. and the E.U.,” he said.
Other airlines are beginning to test those waters, too. Emirates, the Dubai-based giant airline, recently began flying direct service between New York and Milan, a move that has also angered domestic carriers.
Norwegian’s long-haul business model essentially establishes new bases for pilots and flight attendants in the United States and Asia that will serve nonstop destinations in Europe.
The airline opened a base in Bangkok last spring, as it began its international service out of Thailand with flights from Bangkok to Oslo and Stockholm. Pilots for the 787s based there come from various European countries, and have previously flown for airlines like British Airways and KLM Royal Dutch, Mr. Kjos said. They are paid competitive salaries averaging $200,000 a year, he said.
The airline also just started two new bases in the United States and plans to hire 300 flight attendants and ground agents in New York and Fort Lauderdale.
“You need to put your crew in large catchment areas,” Mr. Kjos said, meaning it makes more financial sense for the airline to hire crew members outside of Europe since that’s where most of its long-haul passengers and traffic will come from. For instance, out of the 10 weekly flights that Norwegian plans to have out of Kennedy Airport, just three will fly to Norway.
In a letter to the Department of Transportation, the airline said its planned trans-Atlantic service was “precisely the kind of pro-competitive, pro-consumer, pro-growth innovation that the department has long supported and that was envisioned by the framers of the Open Skies Agreement.”
Norwegian, the third-largest low-cost airline in Europe after Ryanair and EasyJet, carried more than 20 million passengers last year.
It has shown no signs of slowing down. In 2012, it made what was then the largest plane order in European history, pledging to buy 222 jets from Boeing and Airbus worth nearly $22 billion at list price. Most of those are the more efficient B737 Max or A320 Neo — narrow-body planes for the carrier’s European network that will be delivered starting in 2016.
The order also included 10 787s that will form the backbone of the airline’s long-haul operations. Three were delivered last year; Norwegian will get four more this year and the rest through 2016. The 787s are also critical to the business plan since they promise fuel savings of 20 percent compared with similar-size planes. Norwegian is flying 291 passengers in a coach-only cabin, with 32 seats in a “premium economy” configuration that provides a little more legroom. (The planes have individual TV screens, but the airline charges for food.)
The long-haul plan has had its share of hiccups. The 787 has had numerous problems since its commercial debut in 2011, and the fleet was grounded for three months last year after a couple of unresolved battery flameouts.
Norwegian was forced to lease an Airbus A340 for its new long-haul route and Mr. Kjos has complained loudly to Boeing about the fleet’s reliability.
In the most recent incident, in January, a flight from Bangkok to Oslo was delayed 19 hours after passengers noticed a fuel leak from one of the plane’s wings.
Still, Mr. Kjos remains confident in the 787. “It’s a great airplane,” he said.
Labor relations have also been tense in the past year, particularly after the airline decided to hire a Thai cabin crew at lower wages than those paid to Scandinavian employees. Norwegian pilots threatened to go on strike but a deal for a new contract was eventually reached in November.
“Southwest and JetBlue established new standards of fares,” he said. “That is exactly what will happen across the Atlantic. We just need to be incredibly efficient.”
Mr. Kjos once wrote a spy novel about his years as a fighter pilot in the Norwegian air force policing the skies against potential intruders from the Soviet Union.
He now seeks to challenge the iron grip of the three global airline alliances — Star Alliance, SkyTeam and Oneworld — which he said accounted for 87 percent of flights across the Atlantic. (United, Delta and American each belong to a different group.)
“Obviously they want to keep competition out.” Mr. Kjos said. “Especially low-cost carriers.”
Speaking at an investor conference on Wednesday,Boeing CEO Jim McNerney joked about the historic $100 billion order, announced at the Dubai Air Show, for 777X jets. "There are no orders left after Dubai, by the way," McNerney said.
He got a laugh, but also the comment seemingly provides insight into Boeing's underwhelming 2014 share price performance. Boeing was the top performer in the Dow Jones Industrial Average in 2013, gaining more than 80%. Boeing closed Thursday at $122.67, down 10% for the year.
At the Dubai Air Show in November, Boeing announced na historic $100 billion order for 259 of the yet-to-be-built 777X. The order marked the largest commercial aircraft launch in history.
On Nov. 18, the first Monday of the Dubai show, Boeing shares reached an all-time high of $142 in intraday trading. During three days last month, Boeing shares once again rose to $142, surpassing it to reach $144.57 in intraday trading on Jan. 22.
But that was the peak. On Jan. 29, Boeing beat earnings estimates but issued disappointing current-year guidance, and shares fell 5% from the previous close to $129.78.
In the ensuing days, Boeing's problems seemed to mount. They included problems in Dreamliner 787 production that were disclosed in a Feb. 3 Seattle Times story, which said that 787 fuselage sections from North Charleston, S.C., arrived at the Everett final assembly line "seriously complete with wiring and hydraulics lines missing," according to sources. The problems occurred as Boeing seeks to ramp up 787 production to 10 a month.
Additionally, in a business where rising aircraft orders tend to trigger rising share prices, the Dubai Air Show order was a landmark that led unfortunately to the question, "Who is left to order?"
As McNerney said at the investor conference, "Dubai just had a show that ordered five times the number of airplanes as Paris and Farnborough combined the last two years."
McNerney was responding to an analyst's question about the prospect for Boeing orders at the Singapore Air Show, which opens Feb. 11. "I don't think it will be anywhere near the magnitude of what you saw in Dubai, but that is up to customers, not up to us," he said. "We are obviously in discussions with folks."
On Thursday, Reuters quoted sources as saying that Thailand's Nok Airlines is close to placing an order for Boeing 737MAX jets despite domestic political turmoil. The order could be worth between $1.5 billion and $3 billion.
Major Singapore orders or not, Boeing appears to have entered a more stable period, with fewer peaks and valleys. "The decade out in front of us looks more stable than any decade I've seen in this industry," McNerney said, citing "strong market stability in our production environment only executing derivatives, not taking big development risks, which enables us to drive productivity and partnering for success on a more sustainable basis."
On Wednesday, Boeing ramped up production of a most-established prized product, the 737, to 42 airplanes a month. Since 2010, production of the 737 has increased from 31.5 airplanes a month to 42, with production scheduled to increase to 47 airplanes a month in 2017.
Also contributing to stability is the 10-year deal Boeing signed last month with the International Association of Machinists, after an agonized period when Boeing threatened not to put 777X work in Seattle, where most of its workers are. "We now have this unbelievable 10-year opportunity," McNerney said. "When we have a strike for six weeks, it costs us a couple of billion dollars."
As for 787 problems, McNerney said the company has been "adding people down in Charleston over the last couple of days to address a bottleneck we have in the mid-body assembly area, which I view as not any sign that the 787 is off the rails. This is what we do all the time, find bottlenecks and fix them." He said the mid-body is the aircraft section with the most differentiation between the 787-8 and the 787-9.
Sterne Agee analyst Peter Arment said he considers Boeing's pullback to represent a buying opportunity. He said Boeing faces the problem of selling current 777s when the updated 777X is projected to enter service around 2020, but said Boeing has the ability to discount the current model in order to maintain production flow, just as it has done for airlines anticipating the 737MAX.
Ethiopian Airlines is in preliminary talks with Boeing that could lead to an order for 10 of the U.S. planemaker's latest model, the 777X, the airline's chief executive said.
"When the 777X comes, as soon as we can get the (production) slots we will be there," Tewolde Gebremariam told Reuters in a telephone interview.
"We are discussing with Boeing for about 10 777X," he added - a deal potentially worth $3.8 billion at list prices.
The comments represent a strengthening of Ethiopian's interest in the 406-seat jet after it said last month it was evaluating it but had no immediate plans to place an order.
The 777X was launched with record orders at the Dubai Airshow in November.
The airline is expanding its fleet as part of an existing plan to increase revenues five-fold to $10 billion by 2025.
It already plans to order 10-20 smaller narrowbody jets and expects to make a decision within three months.
Gebremariam said the Ethiopian flag carrier also wanted to lease up to three more Boeing 787 Dreamliners and would order even more directly from Boeing if they were available.
Ethiopian recently restored a Dreamliner to service after a fire on the ground in London's Heathrow Airport, but has said it is satisfied with the performance of Boeing's high-tech jet despite persistent reports of glitches.
Modifications offered by Boeing since it was grounded in a crisis over melting batteries last year have improved the aircraft's reliability, Gebremariam said.
Gebremariam said he was not worried about recent turbulence in emerging markets, which continued to increase their demand for air travel, notably on expanding trade routes with China.
"The continent of Africa is still attracting a lot of foreign direct investment and that means huge growth in traffic," he said.
But he complained that African airlines faced unfair competition from rivals prepared to "dump capacity," referring to the practice of flooding a route with cheap seats to win market share or pressure rivals.
He declined to name the airlines involved.
Due to its location, analysts say Ethiopian mainly competes for business with long-haul rivals such as Turkish Airlines and Gulf carriers Emirates, Etihad and Qatar Airways.
Indian Air Force (IAF) C-17A (F-263) CB-8006 in the distance.
Another successful pre-delivery test flight!
On Tuesday February 4, 2014, the first Kuwait Air Force (KAF) C-17A (F-264) KAF 342 conducted its second pre-delivery test flight from Long Beach Airport (LGB/KLGB) to "Shots" and back to Long Beach. I was treated to a brief period of sun to capture her return, needless to say I was very pleased.
Boeing is set to announce its first Indian customer for the 737 Max at the Singapore Airshow next week. Dinesh Keskar, its senior vice president for Asia Pacific and India sales, says a "sizable order" for the Max from an Indian carrier will soon be made public.
He would not name the carrier but says that SpiceJet, Jet Airways and Air India are natural potential customers since they already have the 737 in their fleets.
Keskar adds that the airframer is also confident of securing a second Max order from India later this year.
"It will be sizable number," he says. "We're going to press hard to make sure we protect our customer base in India."
Media reports in India claim that low-cost carrier SpiceJet has signed for some 40 737 Max aircraft. Jet Airways is also said to have made a similar Max order.
Keskar admits though that Indian carriers are "not doing well" due to the decline in the rupee, high fuel costs, and high capital costs and taxes in India.
India will however this year still see the entry of two new joint venture carriers - Tata SIA Airlines and India AirAsia. Both operators will use Airbus A320 for their operations.
Keskar says that he is "not even going to try" reaching out to AirAsia because of the large number of A320s the carrier has on its order books. He adds that with the huge backlog for the 737, it was not able to provide narrowbodies to Tata SIA in line with its target to start operations this year.
Sky Way Enterprises Inc. DC-9-15(F) (47013/129) N112PS arrived at Long Beach Airport (LGB/KLGB) from El Paso International Airport (ELP/KELP) at 09:15 pst as "SkywayN112PS" on February 5, 2014 and parked at Signature.
In the above photos, she is caught departing to Salina Regional Airport (SLN/KSLN), Kansas at 11:25 pst as "SkywayN112PS."
This 47 year old "Baby9" was originally delivered to Continental Air Lines as a DC-9-15(RC) registered as N8905 on June 26, 1967. In 1972 the DC-9 was bought by Air Canada and registered CF-TOR then changed to C-FTOR in 1974. In 1981, the aircraft was bought by Air Florida and registered N73AF. On November 30 30, 1981 it was bought by Emerald Air and operated as N73AF but was later reprocessed by Air Florida for non-payment.
On September 13, 1982 All Star Airlines bought the aircraft and operated it as N73AF until re-registering it as N557AS on September 8, 1985. On December 16, 1985 the "Baby9" was sold to CIS Corporation and leased to Hawaiian Airlines who operated it until being WFU and stored at Honolulu in September 1990. The aircraft was reprocessed from the CIS Corporation in April 1991 then bought by Aircraft Leasing Inc. on March 17, 1992 and immediately leased to Kitty Hawk Aircargo and converted to a DC-9-15(F). In June 1992 the registration was again changed to its current registration N112PS.
The aircraft served with Kitty Hawk Aircargo until July 30, 2001 when it was bought by current owner Sky Way Enterprises Inc.
Northern Air Cargo (NAC) 737-301(F) (23553/1406) N360WA arrived at Long Beach Airport LGB/KLGB) from Laredo International Airport (LRD/KLRD) at 06:38 pst as "NAC914" on February 5, 2014 and parked at Signature.
In the above photos, she is caught departing for Gary/Chicago International Airport (GYY/KGYY) at 08:18 pst as "NAC914."
The aircraft was originally delivered to Piedmont Airlines as N335P "City of Jacksonville" on June 30, 1987. It's registration was changed to N350US when the merger with US Air was completed on August 5, 1989.
Silk Air has taken delivery of its first Boeing 737-8SA (44217/4765) 9V-MGA, thus beginning the carriers start of its transition to an all Boeing fleet. The new aircraft, will be put into passenger service on 20 February, and will be deployed on routes to Kuala Lumpur, Penang, Phuket and Medan.
Silk Air's pilots will be flying the aircraft back to Singapore on 9 February. The narrowbody will make the 21 hour flight with stops at Honolulu, Majuro and Guam. It will arrive in Singapore on 12 February and be on static display at the Singapore Airshow on 14 February.
(Boeing)
"The new Boeing 737 aircraft will support our network expansion plans," says SilkAir chief executive Leslie Thng at the delivery ceremony in Seattle. "The transition to an all-Boeing fleet will enable us to efficiently serve more destinations, fly longer routes and increase capacity on existing routes."
The Singapore Airlines' regional arm will take delivery of a total of eight 737s this year. With the deliveries, the carrier will fly the aircraft to destinations in Cambodia, Vietnam, India and the Philippines starting in March.
SilkAir placed an order for 23 737s and 31 of the re-engined 737 Max in 2012. It also has purchase rights for an additional 14 aircraft.
Boeing has painted 747-87UF/SCD (37564/1437) N770BA (Atlas Air - NTU) in this commemorative livery to celebrate the Seattle Seahawks appearance in this years Superbowl.
Airlines are beginning to push for discounts on current generation Boeing 777s, as the airframer looks to bridge a gap in deliveries until the 777X enters service at the end of the decade. “I think it is common knowledge that aircraft tend to be sold to large and good customers with substantial discounts,” says Christoph Franz, chief executive of the Lufthansa Group, on a potential 777 discount during a media event in New York on 30 January. “So, the question of if there is additional discount to the existing discount, that is an interesting question.
Hopefully, we would be able to achieve this discount.”
The list price of a 777 freighter is $300.5 million, according to Boeing.
The group’s freight arm Lufthansa Cargo operates two 777 freighters with three more on order. However, it has not selected a replacement for the 13 McDonnell Douglas MD-11s that will remain in its fleet after the last 777 delivery in 2015.
“There are at least 13 MD-11 freighters waiting for roll over,” says Franz. “For us, this gives a perspective that there will be demand in the future for further freighter aircraft and the 777, as we have already five on our orderbook, is a nice aircraft and hopefully we would be one of the customers.” This is where further discounts could come in.
The Chicago-based airframer faces a steep drop in 777 deliveries after 2016. Deliveries will fall to just six in 2018 from 56 in 2016, Flightglobal’s Ascend Online database shows. They pick up again with the entry-into-service of the 777-9X in 2020.
Boeing acknowledges a need to fill this gap.
“We anticipate being able to build that bridge over the next number of years as we approach 2020,” said Jim McNerney, chairman and chief executive of Boeing, during an earnings call on 29 January.
“We are working with customers on combined orders for the current 777 as well as the new one.
And we anticipate at least the same kind of result that we had with the 737.”
Boeing has discounted end-of-line next generation 737s, which helped it land an order from Ryanair for 175 737-800s in March 2013. Deliveries will continue through 2018.
The first 737 Max delivery is scheduled for the second quarter of 2017.
Boeing’s cost control initiatives are critical to any 777 discounts. These include the partnership for success programme where the airframer is forging long-term partnerships with certain suppliers in order to reduce costs in the near term, and its new contract with the International Association of Machinists and Aerospace Workers (IAM) for work on the wide-body.
McNerney implied in his recent comments that these initiatives will likely help Boeing maintain its profit margins on the current generation 777 during the bridge.
“Now the partnering for success will be hitting it's mid-stride right around the time that the 777 bridge is being implemented and that’s not by accident,” he said.
In addition to discounts, Boeing could reduce the production rate of the 777 from 8.3 per month – about 100 aircraft per year – to help counter the gap in deliveries.
Lufthansa Cargo became the first operator of the type in the group, when it took delivery of its first 777 freighter in November 2013.
Entry-into-service was uneventful, says Franz. “The best news of it – I didn’t get any complaints,” he says.
Swiss will begin taking delivery of six 777-300ERs begin in 2016 and Lufthansa has an order for 34 777-9X aircraft with deliveries beginning after 2020.
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