North Korea's Air Koryo named the worst airline in the world again

Passengers in Pyongyang board an Air Koryo flight headed for Beijing in June. The carrier was ranked as the worst in the world by Skytrax for the fourth straight year.

 (AP Photo / Wong Maye-E)

For the fourth year in a row, North Korea’s Air Koryo has claimed the dubious honor of being ranked the worst carrier in the world.

But Air Koryo may not be that bad, according to online reviews.

The ranking, based on 13.25 million survey questionnaires compiled by Skytrax, an air-transport research company based in Britain, named Emirates as the world’s best.

The Dubai-based airline, rated four stars on a one- to five-star rating system, wowed passengers with amenities like onboard showers, lounges, gourmet food and 2,500 channels of movies and television.

Air Koryo was the only one-star rated carrier, which Skytrax said “represents a poor quality of product delivered across the assessment sectors, combining with low and/or inconsistent standards of front-line staff service.”

But to be fair to Air Koryo, several of the 46 reviews posted on the Skytrax website described the carrier as adequate, although not spectacular.

Among the features that raised concerns among reviewers was the onboard meal of hamburgers made of a “mystery meat,” safety demonstrations that often were skipped, entertainment that consisted of propaganda films played in a loop and overhead luggage racks with no doors to keep bags from falling down on fliers during turbulence.

(Hugo Martin - Los Angeles Times)

E-2C Aviators Awarded Medals for Valor in March Mishap

Lt. Cmdr. Thomas Browning, Lt. Cmdr. Kellen Smith and Lt. Matthew Halliwell were presented the award for reacting in time to prevent the loss of an E-2C aircraft during a March mishap on the USS Eisenhower.

The Navy awarded the Armed Forces’ Air Medal yesterday to the three E-2C pilots from the VAW-123 "Screwtops" for a 18 March 2016 incident. 

During a day approach to the USS Eisenhower, the E-2C Hawkeye successfully engaged the #4 arresting wire. The #4 arresting gear engine (AGE) did not decelerate the aircraft on rollout, resulting in the arresting wire breaking.

Subsequently, the Hawkeye continued forward over the angled flight deck of the carrier. The aircrew was able to maintain positive control of the aircraft at an extremely slow speed and keep flying.

A Judge Advocate General report on the incident found there was a lack of procedural compliance from maintenance personnel when troubleshooting the AGE prior to the aircraft’s attempted arrestment. The report noted one or two critical steps were missed because of unclear procedures.

However, the report also said there was no willful dereliction of duty by the maintenance personnel.

“It all happened in about eight seconds,” said Smith, who has been flying for 12 years.

“While we were decelerating we heard a loud snap. When we would normally be coming to a stop, we weren’t. Our years of training kicked in and we reacted on instinct.

I slapped back the ditching hatch (there are no ejection seats for the E-2) as we cleared the deck and began a deep settle (significant descent). I would guess we were about 10 feet from the water before we lifted back up, but Lt. Halliwell expertly kept us climbing away.

It was a sigh of relief when we were back in the air. It helps to know that at the critical moment, all we practice for this scenario actually works. The experience has made me much more confident in my training.”

It is also a testament to the training of the Naval Aviators flying the aircraft. The aircraft procedures were followed to a “T” and the ability to control an extremely large aircraft at such as slow speed is remarkable.

The JAG report stated “phenomenal airmanship by the E-2 mishap aircrew prevented any casualties among the aircrew and the loss of the aircraft”.

Unfortunately, the incident injured 8 sailors on the flight deck. The snapped cable created a variety of injuries, including a fractured ankle, wrist, pelvis and legs. The aircraft returned to Chambers Field, Naval Station Norfolk, VA without further incident. However, Smith noted the aircrew’s thoughts were with those injured on the flight back.

“The flight back to Norfolk afterwards was long,” Smith said. “Once we realized the plane was fine, we started to think about the people back on the ship. The Screwtops are a tight-knit family and the pilots are close to our maintainers. We knew some had been hurt and it was a relief to learn those injured were being taken care of.”

(Joe Ruzicka - Fighter Sweep)

Boeing's Weak Dreamliner Orders Don't Tell the Whole Story

Boeing hasn't brought in many new Dreamliner orders this year -- but that's no reason for investors to panic.

It's no secret that Boeing hasn't sold many Dreamliners recently. Year to date, it has brought in just 19 net orders for the 787 aircraft family.

Even including a commitment for five 787s announced last month but not yet finalized, order activity has dramatically lagged the new 787 production rate of 12 per month. Thus, Boeing's 787 backlog is on pace to decline for a third straight year in 2016. (Net orders for the 787 totaled just 41 in 2014 and 71 in 2015.)

However, this slow order activity doesn't mean that Boeing's 787 program is doomed. Aircraft orders historically occur in cycles. Right now, airlines are holding off on ordering wide-bodies. But as long as the world doesn't tilt into a deep recession, 787 orders are likely to bounce back in the next few years.

Blame it on the backlog

Ironically, the Dreamliner's popularity is a key cause of the recent order slowdown. Even after several years of modest order activity, Boeing still has a backlog of more than 700 787 orders to fill. That represents about five years of production at the current rate of 12 per month.

Indeed, Boeing CEO Dennis Muilenberg recently stated that Boeing is sold out of 787 delivery slots through 2018. Even in 2019 and 2020, Boeing appears to have filled at least 75% of its available slots at the 12 per month production rate. (If higher demand materializes, Boeing could increase production to 14 per month.)

Generally speaking, there's no reason for airlines to order new airplanes many years in advance if they have a choice. That's particularly true in the current unsettled economic environment.

A few years ago, airlines were forced into ordering planes for delivery five years or more in the future. With fuel prices rising and order backlogs swelling at Boeing and Airbus, it was important to reserve a place in line to get the latest fuel-efficient technology.

At today's lower fuel prices, airlines feel less urgency to order new planes. This has driven a vicious cycle: With plenty of 787 delivery slots available after 2020, airlines can afford to wait a couple of years before placing orders for their post-2020 fleet plans.

The key takeaway is that as Dreamliner availability within normal airline planning cycles improves, order activity should pick up again. Even with low fuel prices, aging airplanes eventually need to retire and new planes are needed to meet demand growth.

Orders don't match long-term demand

United Continental's Dreamliner order history shows just how far order activity can diverge from underlying demand. United Continental is one of the biggest customers for the 787 and had ordered as many as 65 Dreamliners as of mid-2013.

However, since the beginning of 2015, United Continental has exchanged 14 of its Dreamliner orders for the larger 777-300ER. As a result, United has whittled down its Dreamliner order book to just 51 787s, according to the company. (Boeing's statistics differ slightly, indicating a total of 49 787 orders from United.)

Yet this doesn't mean that United sees less of a need for the 787 in its route network. Most of the orders it has converted in the past year and a half were due for delivery in 2020 and beyond. Since there is ample Dreamliner availability after 2020, United doesn't need to lock itself into a specific delivery schedule now.

In fact, United's need for 787-sized aircraft is about to take off. The company has 51 Boeing 767s left in its fleet. The oldest of these are already 25 years old and are thus approaching retirement age. But more than half of United's 767s were built between 1997 and 2002 and still have five to 10 years of life left.

United Continental also has 55 Boeing 777-200ERs in its fleet, of which 51 were built between 1997 and 2002. These planes also have plenty of life left but will be ripe for retirement by the mid-2020s. The 787-9 and 787-10 would be ideal replacements.

Thus, United's need for Dreamliner-sized aircraft will increase significantly after 2020. However, based on Boeing's current 787 backlog, United can afford to wait a few more years to place those orders. That's why it has allowed its 787 order book to shrink.

Boeing -- and investors -- may have to be patient

Boeing still has one big potential Dreamliner order on the near-term horizon. Middle Eastern airline giant Emirates is looking to order about 70 wide-bodies by year's end and is choosing between the 787 and Airbus' A350.

However, most airlines are in "wait-and-see" mode for now. That's not a big problem for Boeing, which has already locked in virtually all of its 787 production through the end of 2018 and has filled most of its 2019 and 2020 delivery slots as well.

Boeing will just have to be patient for the time being. There are plenty of airlines aside from United that will need to replace aging 767s and 777s after 2020. Even more airlines will need to buy new wide-bodies to meet demand growth on long-haul routes. As these carriers start to finalize their post-2020 fleet plans in the next few years, 787 order activity is likely to rebound.

(Adam Levine-Weinberg - The Motley Fool)

Beginning of the end for Navy's C-2 Greyhound

U.S. Navy Grumman C-2A Greyhound (c/n 25) 162145 / 125 VRC-30 "Providers" arrives at NAF El Centro on November 17, 2015.

(Photo by Michael Carter) 

ABOARD THE AIRCRAFT CARRIER CARL VINSON -- The end of an era in naval aviation is starting this summer.

Three MV-22 Ospreys -- the Marine Corps airplane that lands like a helicopter -- are operating from the aircraft carrier Carl Vinson roughly 100 miles off the San Diego coast.

The point is to prove that the Osprey can do the job of delivering supplies and people to Navy flattops.

Starting in 2021, the Osprey will begin to replace the C-2A Greyhound, the trusty, no-frills airplane in use since the late 1960s.

"This is the future," Vice Adm. Mike Shoemaker, commander of the Navy's air forces, told Vinson sailors on Tuesday, after arriving aboard on an Osprey himself.

Shoemaker said the decision, cemented last year by the secretary of the Navy, takes into account cost and collaboration with the Marine Corps, which developed the unique "tiltrotor" Osprey for its needs starting in the 1990s. The Bell Helicopter-Boeing Osprey apparently beat out Northrup Grumman's proposal to extend the C-2 line.

"We looked at lots of things," Shoemaker told reporters Tuesday. "From affordability, total ownership cost of the (aircraft) platforms into the future. The fact that we had a production line already going with Osprey, and an opportunity to partner with the Marine Corps, that made the most sense."

Generations of sailors have flown aboard the C-2 Greyhound, which lands using a hook and wires to stop abruptly on a carrier's flight deck.

That "tailhook" landing is something one doesn't soon forget -- and it has been the hallmark of aircraft carrier aviation. A Navy flier's ability to "catch the wire" on the flight deck is what makes carrier pilots a breed apart, in the minds of naval aviators.

That will change for the next generation of carrier onboard delivery, or COD, pilots.

"You have a certain nostalgia for your aircraft, and whatever skill you can do with that aircraft," said Cmdr. Clarke Cramer, a Navy C-2 pilot who has a few hundred tailhook landings on his resume.

"It is a pretty awesome experience to be able to land a fixed-wing aircraft on a carrier. We spend a lot of time and effort doing that. ... For us, it's going to be the shift (away) from being a tailhook pilot, but you are still a carrier aviator."

The Navy saw the need for dedicated delivery planes for its aircraft carriers after World War II, said Karl Zingheim, historian at the USS Midway Museum in downtown San Diego. Converted TBM Avenger torpedo bombers were the first aircraft chosen.


"Up through World War II, the Navy seemed to be satisfied with other means of delivering people and supplies to carriers, such as visits to ports and underway transfers between ships," Zingheim said.

"By the 1950s, with carriers routinely spending more time at sea and in far-off regions, the need to have a more robust transport service ... became obvious."

The change to a helicopter-style aircraft means more flexibility for the Navy. The Osprey doesn't require a carrier to be at "flight operations," which takes a crew of roughly 50 sailors overseeing the equipment required to land and launch airplanes, Navy officials said. It takes only five people to land the MV-22.

Other advantages of the Osprey: It can land supplies at night, something the Navy didn't attempt with the C-2. It also uses cargo containers, which can be offloaded by forklift instead of by hand.

The Osprey also has more lift power -- 10,000 pounds versus 8,500 pounds, Shoemaker said. The flight range is about the same.

However, the Navy is giving up three seats for passengers and some cargo volume with the MV-22.


Also, the C-2's cabin is pressurized so it can fly at higher altitudes. And, the Osprey's "downwash," or force of air from the rotor blades, and the heat on the deck from the tiltrotor engines are something the Navy will have to contend with.

Shoemaker said those issues can be handled. For example, the engines can be rotated so they aren't always pointed at the fight deck, he said.

The Navy plans to buy 24 Ospreys as carrier delivery aircraft between 2018 and 2020, according to this year's budget.

The earliest the Osprey is expected to be ready to deploy aboard a carrier is 2021, when the Navy plans to achieve what's known as "initial operating capability."

The proof-of-concept work on the Vinson is scheduled to finish this week -- the Navy is calling it a "fleet battle experiment." Then the Center for Naval Analysis will look at the data and determine the next steps. A smaller test was done on the aircraft carrier Harry S. Truman in 2013.

Starting in October, the first C-2 Greyhound pilots, crew members and mechanics will be trained on Ospreys at New River Marine Corps Air Station in North Carolina.

Apparently, it's not tough for an aviator to learn the tilt-rotor technique. The C-2 pilots will follow in the footsteps of Marine Corps C-130, F/A-18 Hornet and AV-8B Harrier pilots who have switched from flying traditional airplanes to the hybrid Osprey, officials said Tuesday.

"I'd say it's not something that you are used to," said Col. George B. Rowell IV, a Marine Corps F/A-18 pilot who is now commanding officer of the VMX-1 Osprey test squadron in Yuma, Ariz.

"It's well within the realm of doable."

The C-2 is expecting to stop flying after 2026.

The Marine Corps Osprey got a rocky start with a handful of fatal crashes when the aircraft was in the development stage.

But the MV-22 largely proved itself in recent years over the vast expanses of Afghanistan, where it was able to move Marines in and out of battle zones faster, and therefore, more safely.

The Osprey -- which can fly like an airplane or a helicopter, as needed -- has been landing on the decks of amphibious assault ships since at least 2009. Amphibious ships have short flight decks -- 800 feet -- compared to an aircraft carrier's 1,000-foot flattop.

The Navy has contracted with the aircraft's manufacturer to extend the range of the fuel system and the radio, plus add a public-address system in the back of the aircraft.

(Jeanetta Steele - The San Diego Union-Tribune)

Southwest Pilots Seek CEO’s Ouster, Citing ‘Misguided Focus’

(Photo by Daniel Acker - Bloomberg)

Southwest Airlines Co. pilots called for the replacement of Chief Executive Officer Gary Kelly, saying a nationwide computer outage that grounded the carrier last month capped a list of problems caused by a “misguided focus” on cost control and stock performance.

“We can no longer sit idly by and watch poor decision after poor decision deeply affect our customers and Southwest Airlines,” Jon Weaks, president of the Southwest Airlines Pilots’ Association, said in a statement Monday. The union, representing about 8,000 pilots, also called for the ouster of Chief Operating Officer Mike Van de Ven.


Southwest didn’t immediately comment.


Leaders of the Aircraft Mechanics Fraternal Association, which represents about 2,400 Southwest mechanics and related workers, joined in the no-confidence resolution, Louie Key, the union’s national president, said in an interview.

Kelly, 61, became chief executive officer at Southwest in 2004 and added the chairman’s title in 2008. He’s been with the airline for 30 years. Van de Ven, 54, has led operations since 2006.


Senior executives have used record revenue to buy back “excessive shares of stock” rather than invest in the airline and its employees, according to a resolution by the union’s board. The union, which is in contract talks with the Dallas-based carrier, cited technical breakdowns during the busy summer and holiday travel seasons over the past several years, including a computer-system outage last month.


The airline spent $700 million to buy back stock in the second quarter to complete a $1.5 billion repurchase program and its board in May authorized another $2 billion plan. The carrier plans $2 billion in capital spending this year, including about $250 million on technology and $1.3 billion on planes.


‘Labor Strife’


Southwest has “the highest level of labor strife and dissatisfaction among front-line employees” in its history, the union said. The airline’s pilots and flight attendants rejected contract agreements with the carrier last year and are negotiating for new accords, as are the mechanics. Pilots also have sued the airline over flying the new Boeing Co. 737 Max aircraft, which is set to arrive next year.

Executives also boosted maintenance costs and hurt flight reliability by operating the airline’s oldest planes too long, the union said. Southwest had planned to fly its so-called 737 Classic fleet until 2021, before deciding this year to speed retirement of the planes to late 2017 to make way for new, more fuel-efficient aircraft.


Southwest last month struggled to recover after an old router and its backup system failed, crashing the carrier’s computer systems. While those computers were restored about 12 hours later, flights continued to be canceled or delayed over several days as the carrier attempted to get crews and planes in the right locations.


The airline is “studying every single angle” to determine why the failure occurred, Kelly told employees in a voice message after the outage. A new domestic reservation system will be in place next year, and other aging technology will be replaced “over the next three to five years,” he said on a July 21 conference call.


October Glitch


In October, technological problems forced Southwest to process travelers manually and delayed more than 450 flights across the U.S. The issue affected the airline’s website, mobile application, reservations centers and airports.


Pilots blamed cost-control efforts for staffing problems during a Chicago winter storm in 2014 that left planes waiting for gates at Midway Airport. Southwest later agreed to pay a $1.6 million U.S. fine for leaving passengers on 16 planes for more than three hours after landing. Malfunctions of the airline’s crew scheduling system, a staff shortage and severe weather contributed to the delay, federal regulators said.


The shares fell less than 1 percent to $36.89 at 2:17 p.m. in New York. Southwest dropped 14 percent this year through Friday.

(Mary Schlangenstein - Blommberg Business)

Southwest's Technology Is 30 Years Out Of Date... Invest Here To Profit

Southwest Airlines has always flown against the crowd with pick your own seats and free checked bags. The company was even forward thinking enough to buy oil futures when oil prices were still in the $50s back before the 2008 financial crisis and the subsequent spike of oil prices above $100 a barrel.

But there is one key area where the airline isn't as progressive as its competitors: technology.


From Bloomberg:


"For most of its 45 years, Southwest Airlines Co. has operated with a kludgy hodgepodge of technology systems, mainly built in-house. It was generally a cheaper approach that better fit the needs of its network, radically different from those of hub-and-spoke airlines."

Kludgy... That's one way of putting it. Falling behind its competition is another.

Because there's a line between cost efficiencies and being cheap enough that you sacrifice other efficiencies.

And Southwest crossed that line quite a bit ago, according to the company's CEO Gary Kelly. Apparently, the company hasn't updated its reservation system in 30 years... an unheard-of amount of time for a technology.

One has to ask if they're still using dot-matrix printers, too.

The main reason for this update is the need for more flexibility. Its current passenger service and scheduling system means a fixed schedule and clunky interfacing with international flight options, among other issues.

The upgrade has a price tag of $250 million, but the company is expected to double its investment by increasing annual profits by $500 million by 2020. That's not an insignificant boost. Its roughly 10% of quarterly revenues that are climbing at a rate in the low single digits year over year.

This isn't beginning of a cultural overhaul, though. Customers should still expect open seating and free baggage check -- two fairly big revenue generators for other airlines.

So what kind of impact will this move really have on LUV share prices?

I expect it to be a slow burning boost to revenue and cost efficiencies... but that won't translate to a huge windfall for investors.

That's why investors should take a look at the company Southwest has tapped to build its new passenger service system.

That company is Amadeus IT Holdings SA.

Headquartered in Madrid, Spain, AMS provides transaction processing solutions to the global travel and tourism industries. The company brought in €3.91 billion in 2015, a 14.5% jump over 2014. In fact, AMS revenue has grown at a CAGR of 8.6% between 2010 and 2015.

Analysts expect this year to be another double-digit growth year, with revenue growing to €4.329 billion, then to €4.644 billion and €4.934 billion in 2017 and 2018 respectively.

Southwest will begin to move its operations over to the new passenger service system in the first half of 2017, so that could mean next year will be a substantial year for AMS. Transaction fees have been slowly but steadily increasing over the past decade or so, and that trend is expected to continue.

AMS share prices have been hit by the Brexit vote, just like everyone else, but this could be a great entry point for investors, as shares have tried to move sharply higher since early February 2016.

Ambitious analysts are targeting a share price 29% higher than current prices. A move like that would put shares above €50.60 or $53.87, an all-time high.

Risks To Consider: As with any new adoption of technology, there's the potential for glitches, particularly since Southwest has to overhaul everything.

AMS seems to be an old hat a these systems, though, and it's a go-to company in the industry. In other words, the company knows what it's doing.

It even won a Red Hat award for its innovation in open source technology.

Another risk to consider is that tourism may slow down in the face of global terrorism. The latest horrific bombing in Turkey shows that there is considerable real risk for travelers. This isn't going away anytime soon.

As AMS makes a lot of its money off of transaction fees, this is nothing to sneeze at.

That said, there are lots of regional travel that's remained unaffected by these risks, and AMS has its hand in most of these areas.

Action To Take: The $250 million investment might not be more than 10% of Southwest's quarterly revenues, but it's well over 10% of AMS's annual revenues.

Amadeus IT Holdings SA could climb 29% to fresh all-time highs through 2017 with this deal with Southwest. Investors can also take a look at the pinksheet as an alternative to the Madrid listing. It's rather lightly traded, though, so proceed with caution.

(StreetAuthority Network - Yahoo Buiness)

Boeing Mulls Stretching 777 to Knock Out Airbus A380

Boeing Co. is proposing to stretch its largest 777 model to create a twin-engine behemoth aimed at delivering a knock-out blow to Airbus Group SE’s struggling A380 superjumbo, said people familiar with its plans.

The U.S. plane-maker has approached several carriers about the plane it calls the 777-10X, including Dubai-based Emirates, the world’s largest operator of both Boeing’s 777 and Airbus’s double-decker aircraft, said the people, who asked not to be identified because talks are private.

The proposed model would carry about 450 travelers, sharpening its rivalry with the A380, two of the people said. To do so, Boeing would stretch the frame of its 777-9 to squeeze in about four extra rows of seats. The -9, whose debut is slated for decade’s end, will be the first twin-engine model to encroach on jumbo territory by hauling more than 400 passengers.

“We are always evaluating technologies, airplane configurations and market needs,” said Doug Alder, a Boeing spokesman. “While no decisions have been made, we will continue to study 777X derivatives and seek customer input to develop products that provide the most value for customers.”

An Emirates spokeswoman said that the world’s biggest international airline is in “regular contact” with both Boeing and Airbus about current and future fleet requirements.


A380 Uncertainty

While Emirates has reviewed the new 777 variant, it isn’t sold on the concept, said a person familiar with the talks. The carrier has ordered 289 jets from Boeing’s 777 family, including 150 of the upgraded versions known as the 777X. Boeing unsuccessfully pitched Emirates on its 747-8 jumbo two years ago as a potential A380 replacement.

The U.S. manufacturer is angling to take advantage of uncertainty over the future of the A380, and any strain in Airbus’s relationship with Emirates.

While the Gulf carrier, which has taken 80 A380s and last month ordered two more, lifting its backlog to 64, has been pressing the European plane-maker to upgrade the model to bolster fuel savings, Airbus has been reluctant to make the multibillion-dollar investment for essentially one customer.

Tim Clark, president of Emirates, told Bloomberg earlier this month that talks with Airbus to enhance the A380 with new engines had lapsed. “My main concern is that they stop producing the plane,” he said. The airline’s A380s seat between 489 and 615 passengers, according to its website.

Boeing is exploring ways to expand its current product line-up into new market niches as it battles Airbus for supremacy in the wide-body market and staves off new competitive threats to its best-selling 737 narrow-body jets. Also on its drawing board: a potential redesign of the smallest 737 Max and a stretch of the largest plane in that family.

Enlarging the 777-9, which is already designed to seat more than 400 people, would give Boeing another way to woo jumbo-jet operators as sales of the four-engine A380 and 747 falter. Boeing’s large twin-engine jets have hastened their demise by offering similar range and seating, ample cargo capacity and greater savings on fuel and maintenance.

Boeing’s proposed plane could also help the U.S. plane-maker counter a new stretched version of the A350 wide-body jetliner that Airbus has been discussing with prospective customers who don’t need the engine thrust or the range of the 777-9.


Most Expensive

The -9, the best-selling member of the 777X family, seats between 400 and 425 passengers and has the range to fly 7,600 nautical miles (14,075 kilometers). It is the most expensive Boeing jetliner, and the first to bear a $400 million price tag.

Sales of the 777X have slowed since Boeing unveiled the plane amid a blitz for 235 orders at the Dubai Airshow in November 2013. The upgraded planes will feature Boeing’s largest-ever wingspan, complete with tips that fold up while the plane taxis around airports.

Cathay Pacific Airways Ltd. and All Nippon Airways Co. are customers, along with the three-largest Persian Gulf carriers. Boeing’s last sale came more than a year ago, when an unidentified customer ordered 10 of the planes.

(Julie Johnsson & Andrea Rothman - Bloomberg Business)

Southwest Airlines delays delivery of 67 Boeing 737 Max planes as fleet plans shift

Southwest Airlines will delay the delivery of 67 Boeing 737 Max planes by four to five years as part of a restructuring of its aircraft order book, company executives said Thursday.

The airline says the moves will help it balance its fleet growth and maintain capital flexibility. The change will defer $1.9 billion in planned capital spending beyond 2020 but will not affect the company’s overall target of expanding its fleet by 2 percent per year through 2018, chief financial officer Tammy Romo said during a presentation to investors in New York City.

“It supports our fleet modernization efforts … and provides significant flexibility as we manage our strategic growth opportunities over the long term,” Romo said.

The changes follow an April announcement that the company will accelerate the retirement of its remaining “Classic” 737-300s to phase the plane out of its fleet by the third quarter of 2017.

Those planes are being phased out earlier than planned to simplify the pilot training process, leading to a temporary dip in Southwest’s fleet size that the company will partially offset with the addition of two pre-owned 737-700s in 2016 and the accelerated delivery of six 737-800s from 2018 to 2017.

Southwest expects to end 2016 with 723 aircraft and dip to about 700 aircraft in 2017 before growing to between 730 and 750 planes in 2018, depending on the exercise of purchase options, Romo said. The 67 planes affected by Thursday’s announcement were scheduled for delivery between 2019 and 2022 but will now be delivered in 2023 through 2025.

The company still expects the first delivery of the new, more fuel-efficient 737 Max-8s in 2017, with the planes expected to enter service around October of next year.

Whether Southwest’s pilots will agree to fly those new planes remains to be seen. The pilots union, which is in year four of protracted contract negotiations with Southwest, argues that its current contract does not cover the 737 Max-8 and has said its pilots won’t fly the latest model until a new contract is reached.

Southwest executives disagree with this interpretation, prompting a federal lawsuit by the pilots union that is currently pending.

The rest of the investor presentation detailed the company’s growth over the last five years and plans for the future.

The company has undergone a tremendous amount of change, CEO Gary Kelly said, including the acquisition of AirTran Airways, an expansion at Love Field and the launch of international service.

“One of the goals that we’ve had for 2015 and 2016 is to allow our network, our systems, our people all time to mature and stabilize,” Kelly said. “In the meantime we’ve also been, in the background, if you will, investing for the future and preparing for another surge of change that is coming for 2017.”

Those changes include the launch of a new reservation system, which will be put in place starting in late 2016, the completion of a new international terminal at the Fort Lauderdale-Hollywood International Airport and the introduction of the 737 Max-8.

(Conor Shine - The Dallas Morning News)

Brazilian air force tests KC-390 transport

Paratroopers jump from Embraer's KC-390 during an operational test of the transport.

(Brazilian Air Force photo)

The Brazilian air force reports it has begun operational testing of Embraer's KC-390 transport and tanker aircraft.

The first test earlier this month involved the dropping of paratroopers and was part of a test campaign to verify aerodynamic modifications made to the aircraft and to help define the aircraft's final configuration.

The testing includes the dropping of supplies and checks of the stability of extractor parachutes. The tests will continue until July 9.

"There were major concerns about the paratroopers' exit from the fuselage because there is an aerodynamic flow around a new airframe," said Col. Claudio Evangelista, the air force's technical manager of the KC-390 program. "Fortunately, the feedback we received from the military was very positive; they reported that the exit was very smooth."

The KC-390 is a medium-sized, twin-engine jet aircraft. It can carry as many as 80 passengers, and its cargo payload is 59,500 pounds.

The KC-390 conducted its first flight last year.

The Brazilian Air Force has ordered 28 of the planes.

(Richard Tomkins - UPI)

Boeing's deal with Iran to include broad range of jets

A provisional deal calling for Boeing to supply a total of 109 aircraft to Iran includes small and large jetliners worth $20.37 billion (£13.7 billion) at list prices, both sold directly and leased, two people with knowledge of the deal, including a senior Iranian official, said on Thursday,

The deal, which is yet to be approved by both governments, includes 80 aircraft worth $17.58 billion to be sold directly by Boeing, including 34 wide-body jets: 15 each of the 777-300ER and 777-9 models and 4 of the 747-8, one of the people said.

It also includes the direct sale of 46 narrow-body jets: 40 of the upcoming 737 MAX model and 6 of the current 737NG model.

Under the same provisional deal, Boeing will arrange for IranAir to acquire a further 29 737NG aircraft through leases.

(Tim Hepher - Reuters / Yahoo Business)

Boeing nears 747-8F deal with Volga-Dnepr

Cathay Pacific Cargo Boeing 747-867F/SCD (39238/1427) B-LJA departs Los Angeles Internatioal Airport (LAX/KLAX) on January 26, 2012 sporting the carriers "Hong Kong Trader" livery.
(Photo by Michael Carter)

 

Boeing Co. is nearing a $4 billion deal with Russia’s largest air-freight company that would help extend the life of the iconic, hump-nosed 747 jumbo jet amid waning demand for four-engine aircraft, people close to the transaction said.

The U.S. planemaker is in advanced talks with AirBridgeCargo Airlines and its Moscow-based parent, Volga-Dnepr Group, to convert a year-old commitment into more than 10 firm orders for 747-8 freighters, two of the people said. The agreement could be announced as soon as the Farnborough Airshow next month in England, according to four people briefed on the deal, who asked not to be identified because the talks are confidential.

The deal would provide a crucial lifeline for the “Queen of the Skies” as Boeing tries to preserve production until the air-cargo market revives or shipping companies start to replace aging wide-body fleets. The 747 freighter, prized for a hinged nose that allows large cargo to be loaded at the front, is Boeing’s second-most expensive commercial jet, with a list price of $379.1 million. Buyers typically negotiate discounts.

Converting commitments to firm orders starts the process of allocating manufacturing resources and production slots to build the planes.

Boeing rose 2.6 percent to $133.13 at 9:37 a.m. in New York. The gain was the biggest in the Dow Jones Industrial Average, which climbed 1.4 percent in a global rally fueled by signs that the campaign to keep the U.K. in the Europe Union was gaining strength.

A representative of Volga-Dnepr declined to comment on the talks, but said the airline plans to take all 20 jumbos it committed to last year. A Boeing spokesman declined to comment.

Airline Shift

Sales have dwindled for Boeing’s four-engine 747 and the Airbus Group SE A380 superjumbo jetliner as airlines have shifted long-range travel to more-efficient twin-engine models like Boeing’s 777. Boeing had just 22 unfilled orders for the 747 through May, according to its website. The planemaker halved annual output of its largest commercial jet to six planes in January, citing declining sales.

The potential Russian savior for the 747 -- which brought long-range travel to the mass consumer market when it was introduced by Pan American World Airways in 1970 -- isn’t just a Boeing customer. Volga-Dnepr also transports large aircraft segments for Boeing’s 787 Dreamliner from suppliers to the planemaker’s factories.

‘White Tails’

At the Paris Air Show last June, Volga-Dnepr signed a memorandum of understanding to buy 20 of the 747-8 freighter. The shipping company took delivery in November of the first two aircraft, so-called white tails built for other customers whose orders fell through.

The Russian freight hauler confirmed it is the unidentified buyer for two of the four jumbo freighter orders Boeing recorded in March, saying the planes will be delivered later this year. The first of those two 747s has been repainted with the livery of CargoLogicAir Ltd., a Volga-Dnepr subsidiary.

(Julie Johnsson - Bloomberg Business)

USA-Serbia nonstops now flying for first time in 24 years

Air Serbia will operate the Airbus A330-202 on the new route.

(Air Serbia)

Air Serbia launched its inaugural flight to New York on Thursday, giving the Balkan nation of Serbia its first nonstop link on a local carrier to the United States in more than two decades.

The Belgrade (BEG/LYBE) to New York (JFK/KJFK) flight also marks Air Serbia’s first trans-Atlantic route. That in itself is a milestone development for the airline, Serbia’s new national carrier that sprouted from the demise of the old loss-making state-owned JAT Airways.

Air Serbia launched in 2013 after fast-growing Middle East carrier Etihad Airways acquired a 49% stake in then-ailing JAT. The company rebranded and began flying with some of JAT’s leftover assets.

Etihad, perhaps best known for its high-end service from its hub in Abu Dhabi, is managing the operations of Air Serbia for the airline’s first five years. The rebranding went beyond the carrier's name and logo, including everything from crew uniforms to customer-service expectations.

With that, Air Serbia became one of the latest in Etihad's growing list of strategic “equity airline partners." Air Berlin, Alitalia, Jet Airways and Virgin Australia are among those Etihad has invested in as it faces fierce competition from Gulf rivals Emirates of Dubai and Doha-based and Qatar Airways.

Air Serbia’s inaugural 2013 flight flew from Belgrade to Etihad’s hub in Abu Dhabi, though most of its early network focused on routes to Europe and the Mediterranean region.

Now, however, the service to New York puts Air Serbia squarely into the lucrative market for trans-Atlantic flights. The carrier is flying the route with 254-seat Airbus A330-202 aircraft with 18 lie-flat business-class seats and 236 in coach.

Air Serbia’s New York-Belgrade route also restores service predecessor Jat was forced to discontinue in 1992 amid conflicts during the breakup of the former Yugoslavia.

James Hogan, CEO of the Etihad Aviation Group and the vice chairman of Air Serbia, lauded both the launch of the new service and the cooperation of the Etihad group airlines.

“The Air Serbia touching down at John F Kennedy Airport is a vibrant, growing airline, one which represents the very best of modern Serbia,” Hogan wrote in an open letter in The National newspaper, based in the United Arab Emirates.

“The New York service is a perfect example of our cooperation,” Hogan added. “The Airbus A330 has been leased from Jet Airways; the pilots were trained by Alitalia; and the cabin crew were trained in Abu Dhabi. Together, the Etihad Airways family rallied around to help make this happen.”

While the new service is a step forward for Air Serbia and its Etihad Group partners, likely won't sit well with the three big U.S. carriers that have raised allegations of unfair subsidies for Etihad and Gulf rivals Qatar Airways and Emirates. Those Gulf carriers have steadfastly rejected those claims as false, but Delta, American and United have continued to press the U.S. government to freeze or restrict the Gulf carriers' access to the U.S. market.

Against that, Ben Sandilands of the Plane Talking blog sums it up by saying the new Air Serbia link adds to Etihad's "indirect interests in links across the ... lucrative North Atlantic... that aren’t available to it in its own right."

"It’s an example of the strategy that U.S. carriers see as a threat to their hold on routes where it had long been assumed traffic from second tier cities in former eastern bloc European cities would default to them either by new non-stop services or via aggregating hubs like London Heathrow, Frankfurt or Amsterdam," Sandilands adds in his Plane Talking blog.

(Ben Mutzabugh - Today in the Sky / USA Today)

Lockheed Martin factory rolls out first F-35A for Israel

Lockheed Martin's first F-35A for Israel at its rollout ceremony.

(Photo courtesy Lockheed Martin)

Lockheed Martin has rolled out its first F-35 Lightning II fighter for the Israeli air force.

The rollout at the company's production facility in Fort Worth, Texas, was conducted during a ceremony attended by more than 400 guests, including Israeli government and military officials.

"Israel is proud to be the first country in the area to receive and operate it," said Avigdor Liberman, Israel's Minister of Defense. "The F-35 is the best aircraft in the world and the choice of all our military leadership at its highest level. It is clear and obvious to us and to the entire region that the new F-35, the Adir, will create real deterrence and enhance our capabilities for a long time."

Israel is buying 33 F-35s, in the conventional takeoff and landing configuration, through the U.S. Foreign Military Sales program. It has named the aircraft the Adir, which in Hebrew means Mighty One.

Israel also is a contributor to Lockheed's production of the fighter -- Israel Aerospace Industries produces wings for the plane, Elbit Systems works on the Generation III helmet-mounted display system to be used by F-35 pilots, and Elbit Systems-Cyclone produces F-35 center fuselage composite components.

"We're honored to partner with Israel and help strengthen the deep and lasting partnership between our two nations," said Marillyn Hewson, Lockheed Martin chairman, president and chief executive officer said at the ceremony Wednesday. "The F-35 will help Israel remain a beacon of strength and stability in the region and support a safe and secure homeland for generations to come."

The F-35A rolled out will be delivered to Israel at the end of the year.

(Richard Tomkins - UPI)

China's New Y-20 Is the Largest Military Aircraft Currently in Production

The Y-20 is China's version of the C-17 Globemaster—a tank-carrying, supply-delivering, troop-transporting workhorse of a plane.

 (Xian Aircraft Corporation)

The first Xian Y-20 military transport aircraft was delivered to the People's Liberation Army Air Force (PLAAF) on June 15. Developed by Xian Aircraft Corporation, the Y-20 has an empty weight of 110 short tons, making it the largest military aircraft currently in production—larger than Russia's Ilyushin Il-76. Boeing's C-17 Globemaster III is bigger than the Y-20—the C-17's empty weight is about 60,000 pounds more than the Y-20 and its payload capacity is 25,000 pounds more—but production stopped in 2015, making the Y-20 the biggest that is currently rolling out of factories.
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The Y-20—which has the official codename "Kunpeng" after a mythical Chinese bird, though it is nicknamed "Chubby Girl" for its appearance—makes China the third nation after Russia and the United States to design and develop its own heavy military transport aircraft.

The C-17 has been a major workhorse for the United States military since it was introduced in 1995, carrying troops and cargo all over the world. It allows the U.S. Air Force to quickly transport large amounts of supplies, move troops, fly large-scale air drop missions, and even transport other military vehicles such as an M1 Abrams tank, three IAV Stryker armored combat vehicles, or six M1117 Armored Security Vehicles. With the Y-20 officially in service—and the Y-20 is remarkably similar to the C-17—the PLAAF's versatility and ability to quickly mobilize large combat forces increases significantly.

With a payload capacity of 73 short tons, the Y-20 can transport China's largest tank, the ZTZ99, as well as a variety of other vehicles, supplies, or a large number of troops. The heavy transport is also ideal for large-scale airdrops and medical evacuations if necessary. The Chubby Girl has a range of 4,850 miles while carrying 40 tons of cargo, and 2,800 miles when fully laden.

Currently the Y-20 uses four Russian-made Soloviev D-30 turbofan engines, though the PLAAF plans to replace the engines with the Chinese-made Shenyang WS-20 turbofans by 2020 to give the Chubby Girl short takeoff capabilities and a greater range. In addition to functioning as a transport, the Y-20 could be outfitted as a refueling tanker for other military aircraft or used as a a strategic command center to coordinate fighter jets and drones in combat.

The first two Y-20s with the serial numbers 11051 and 11052 were delivered to the 12th Regiment of the 4th Transport Division at Chengdu/Qionglai, and several more are expected to enter service in the coming months. Centrally located around China's air base in Chengdu, the Y-20 could be quickly dispatched to wherever it is needed, from Korea to the South China Sea.

With tensions rising between the U.S. and China in the Pacific, the People's Liberation Army continues to make significant military advances.

(Jay Bennett - Popular Mechanics)

Boeing Tallies Order for 6 Freighters, Brings Annual Total to 275

In its weekly report on orders and deliveries, Boeing Co. said that it has received six new orders for its 767 from an unidentified customer. That brings total orders for the 767 to seven for the year to date. The other one was ordered by FedEx Corp. in March and could indicate that FedEx is considering beefing up its fleet of the 767-300F freighter.

Net new orders through June 14 now total 275, based on new orders of 305 Boeing jets less 30 cancellations. The bulk of the year’s new orders, 239, have been placed for various versions of the 737. Customers have also placed new orders for 13 787s, 12 777s and four 787s, in addition to the seven new orders for the 767.

FedEx ordered 50 of the 767 freighters last summer in a deal valued at $10 billion at the 767’s list price of $199.3 per copy. General Electric Co.’s will supply its CF6-80C2 engines for all 50 of the aircraft.

Another possible customer for the new orders for the 767 is Air Transport Services Group Inc., which is leasing 20 of the planes to deliver packages for Amazon.com Inc., Air Transport is leasing the planes for terms of five to seven years, so an order placed now for new 767s will be added to the queue of 75 already on Boeing’s books.


Boeing’s production rate on the 767 is currently two per month, and the company plans to raise that to 2.5 per month by the fourth quarter of 2017. The backlog will keep the company busy until about 2020, at which time the first of the leased Air Transport planes will be coming off lease.

Amazon itself could have placed the order for the 767s, but that is less likely. Transport firm Atlas Air Worldwide Holdings Inc. also has struck a deal with Amazon for 10-year dry leases on 20 767-300 converted freighters and seven- to 10-year crew, maintenance and insurance contracts. Atlas CEO Bill Flynn said earlier this week that there are already about 150 of the planes in the global fleet that are suitable for freighter use. According to Planespotters.net, Atlas currently owns nine 767-200s and 10 767-300s.

Amazon also has acquired the right to purchase up to 19% of Air Transport Services and up to 20% of Atlas Air over the next five years.

(Paul Ausick - 24/7 Wall St.)

CAL adds freighter number three

Israeli-owned, Liege -based all cargo airline CAL has confirmed long standing plans to add a third 747 freighter to its fleet.

The deal will complete a fleet enlargement modernization program at CAL, which less than two years ago still operated two classic B-747-200 Freighters. Successive deals have now established a fleet of an ERF, an F and a BCF aircraft, said owner, chairman and chief executive, Offer Gilboa, who also confirmed that the new aircraft would be an addition rather than a replacement.

He added: "We are thrilled to announce the completion of two deals: we are introducing freighter Charlie to our fleet while keeping freighter Bravo as well. The three freighter fleet will support Cal’s Growth Strategy aimed at increasing our activity of scheduled and charter flights from our hub in Liege.”

CAL launched two weekly flights to Atlanta in the US in September 2015, although it put on hold plans to enter the Chinese market with a twice-weekly Shanghai service due to the downturn in the economy there.

Gilboa said: “Our new online station in Atlanta has expanded our capabilities in the US, and clients can rest easy knowing that we have added capacity to service them with top notch expertise, infrastructure and equipment.

“I recently returned to the position of CEO at CAL. Together with the management team we are making sure that CAL continues to grow and is on course with our strategic plans for 2016,” continued Gilboa.”

The CAL Group also includes the LACHS ground handling service in Liege, which in May was awarded a three-year contract to manage the Horse Inn at the airport. CAL specializes in dedicated charters as well as scheduled routes, and has experience in complex equine projects, including multiple charters of horses.

(Air Cargo News)

Lockheed delivers two C-130Js to U.S. Air Force

Lockheed Martin delivered two new C-130J Super Hercules aircraft to the U.S. Air Force last week, the company said.

 (Photo courtesy Lockheed Martin)

Lockheed Martin delivered two new C-130J Super Hercules aircraft to the U.S. Air Force last week, the company announced Wednesday.

Airmen from Moody Air Force Base visited Lockheed's Marietta, Ga., facility on June 9 to ferry a new HC-130J Combat King II, the company said in a statement.

The HC-130J is the service's only dedicated fixed-wing personnel recovery platform and is flown by the U.S. Air Combat Command.

Another Air Force crew arrived on June 10 to ferry a MC-130J Commando II, a multi-mission combat transport/special operations tanker, Lockheed said.

That aircraft is assigned to the U.S. Air Force Special Operations Command out of Cannon Air Force Base, N.M.

The C-130J has more than 1.2 million hours of flying combat, special operations, humanitarian, aerial refueling, firefighting and search and rescue missions under its belt, Lockheed said.

The airlifter can perform a variety of missions in austere environments.

(Geoff Ziezulewicz - UPI)

Alaska Airlines CEO says he might keep Virgin America brand

(Alaska Airlines)

Alaska Airlines CEO Brad Tilden said Wednesday that he might keep the Virgin America brand, running it and Alaska as two different products within the same airline group.

In April, Alaska announced plans to buy Virgin America for $2.6 billion, a deal which would make it a West Coast powerhouse. Both airlines have very loyal — but different — followings and almost immediately both groups expressed fears that the combination would kill off what they love about their own airline.

A decision hasn't yet been made but Tilden noted that European carriers have kept their own identity following mergers.

"We are looking at that because we do believe in the power of the Virgin America brand and we don't want to lose all that loyalty and revenue that exists today," Tilden said at the end of a speech at The Wings Club, an aviation professional group that frequently hosts CEOs as speakers.

Past aviation mergers in the U.S. have meant the death of the acquired brand. But Tilden noted that in Europe both names and cultures tend to live on. He cited the Lufthansa Group, which includes its namesake German airline, along with Swiss and Austrian Airlines. Air France and Dutch carrier KLM operate as two separate carriers despite common ownership. And International Airlines Group runs several individual brands including British Airways, Spanish carrier Iberia and Ireland's Aer Lingus.

In a brief interview with The Associated Press after the speech, Tilden said he is "taking a good look at running two brands for some period of time, perhaps forever." He also said the airline is looking to have regulatory approval for the merger by late summer or early fall.

Alaska is loved in its hometown of Seattle and throughout the Pacific Northwest. It has one of the best on-time performances, the industry's lowest complaint rate and tries to strike a balance between making a profit and keeping passengers happy. For instance, like most other airlines, it charges a fee for checked luggage. However, Alaska was the first carrier to add a guarantee — if a checked bag isn't at the pickup area within 20 minutes, fliers get $25 off a future trip or 2,500 bonus miles.

Virgin America, which is based near San Francisco airport, has its own loyal following, especially in Silicon Valley. The airline started flying in 2007 with backing from Richard Branson, the colorful British billionaire, as a minority owner — U.S. law limits foreign ownership of airlines. It quickly won over fliers with its funky mood lighting, inflight internet and individual TVs at each seat. Passengers can order meals or drinks from the screens and can even send a drink to another passenger.

But the Virgin name doesn't come cheap. In the past three years, Virgin America has spent more than $22 million in license fees to a company controlled by Branson.

Discussion of the brands came up in a question and answer session where J.P. Morgan analyst Jamie Baker noted that this is the first merger he's seen with such different corporate and passenger cultures.

"It is the thing I'm losing the most sleep over with our merger," Tilden replied.

After the speech, Baker told The Associated Press that the airline-within-an-airline model in the U.S. has been proven "time and time again, to be inefficient."

"Maintaining two distinct brands adds complexity and expense and potentially confuses passengers and employees." Baker said. "More likely is an outcome where each brand's best practices are retained. For core Alaska flyers, this could mean ordering a meal from one's seatback monitor on a flight to Anchorage."

(Scott Mayerowitz - Today in the Sky / US Today)

New survey reveals America's favorite airline and most dreaded seat mate

Southwest Airlines Boeing 737-7H4 (34951/2005) N249WN taxies towards a Rwy 20R departure at John Wayne Orange County Airport (SNA/KSNA) on May 7, 2016.

(Photo by Michael Carter)

Southwest Airlines has emerged the favorite airline among respondents in a new survey, who named the low-cost carrier the best value for money.

In a poll carried out by Airfarewatchdog that surveyed 11,000 US travelers, Southwest was chosen ahead of Delta Air Lines, American Airlines and JetBlue as the most popular carrier across several different categories.

Nearly half of respondents said Southwest offers the best value and the friendliest flight attendants.

Likewise, nearly a third said the airline offers the best frequent flier program.

Meanwhile, the most dreaded seat mate is the sick traveler (43 percent), followed by overweight passengers (18 percent) and those with bad body odor.

When it comes to booking a flight, price remains the single most important factor with the majority -- 90 percent -- agreeing it's “very important.”

Price was followed by the number of stops (72 percent); cabin cleanliness (59 percent); cabin crew politeness (57 percent) and onboard amenities (23 percent).

Atlanta's Hartsfield-Jackson International Airport -- the busiest airport in the world -- was also named the most popular hub for connections.

And nearly a quarter -- 23 percent -- said they've never flown on an international airline.

(AFP Relax News / Yahoo Business News)

Cramer: Buy Southwest Airlines: TheStreet's founder continues to be bullish on the aviation stock, as the company reported a record load factor for May.

TheStreet's founder Jim Cramer on Friday reiterated his bullish stance on Southwest Airlines.

"I urge people to buy Southwest," Cramer told TheStreet's Rhonda Schaffler, adding, "I think American Airlines is good."

As for JetBlue Airways, the company "has not been the one that I like, but it's case by case now with airlines," Cramer said.

In April, Cramer called Southwest the "single best" airline stock out there, and later that month, after Southwest reported first-quarter results that topped analysts' expectations, Cramer said he likes what Southwest is doing, noting that the company "never lost money during the down cycle."

In afternoon trading on Friday, shares of Southwest were changing hands at $43.67, down 1.2%; JetBlue shares were trading at $18.12, down 1.7%; and American Airlines shares were trading at $33.04, down 1.1%.

Cramer's latest comments on airline stocks came after JetBlue on Friday reported that capacity growth outpaced traffic in May and cut its capacity growth outlook for 2016.

The Long Island City, N.Y., airline said May traffic increased by 10.7% from a year ago, while capacity went up by 12.1%. Load factor for the month was down to 84.6% from 85.7% in May 2015.

Revenue per available seat mile, or RASM, dropped by 7% in May, and JetBlue anticipated that RASM would decline between 7.5% and 8.5% in the second quarter.

For the full year, JetBlue lowered its capacity growth forecast to between 8% and 9.5% from 8.5% to 10.5%.

For its part, Southwest Airlines on Wednesday reported a 6.4% year-over-year increase in May traffic on a 4.6% rise in capacity. Load factor of 85.8% was a record for May, bringing the load factor to 82.2% for the first five months of the year.

The Dallas airline carrier continues to estimate modest growth in operating revenue per available seat mile for the 2016 second quarter, based on May's results and positive trends in June.

Meanwhile, American Airlines on Thursday reported that May traffic grew 0.5% year over year, while capacity increased 1.7%. Domestic traffic rose 1.4% on 1.2% capacity growth, while international traffic fell 1.4% on a 0.5% increase in capacity. Total passenger load factor fell 0.9 percentage points to 81.9%.

The Fort Worth airline continues to anticipate a 6% to 8% decline in consolidated passenger revenue per available seat mile for the 2016 second quarter.

(Armie lee - TheStreet)