Monday, October 21, 2019

Embraer Hits Jackpot with $1.4B Flexjet Order

(Embraer)

Fractional provider Flexjet revealed a $1.4 billion firm order this morning at NBAA-BACE for 64 Embraer Phenom 300Es and Praetor 500/600s, making it the fleet launch customer for the latter. Praetor 500 deliveries to Flexjet will start next month. Under the deal, the Cleveland, Ohio-based operator will also convert its Legacy 450 fleet into Praetor 500s under an FAA-approved modification.

Delivery of the Praetors will mark the fourth time that Flexjet has introduced new Embraer aircraft to the fractional market. Previous introductions were the Legacy 600 in 2003, Phenom 300 in 2010, and Legacy 450 in 2016. Its current Embraer contingent includes Phenom 300s and Legacy 450s.

“The Legacy 450 is the mainstay of Flexjet’s midsize fleet,” Embraer Executive Jets president and CEO Michael Amalfitano told AIN. “It sells out shares in these twinjets every year.

“The Praetors are the most technologically advanced and most disruptive aircraft, created to dominate the midsize and super-midsize business jet market,” added Amalfitano. “And we couldn’t be more delighted that Flexjet, our partner for more than a decade, is making the most modern aircraft available to its owners.”

In anticipation of this order, “Flexjet has been aggressive in recruiting pilots this year and recently met its 2019 goal of hiring 175 new pilots,” the fractional provider said.



(AIN News)

Tuesday, October 15, 2019

Swiss Air grounds its A220 fleet following new engine incident this morning

(Swiss)

An A220 aircraft from London to Geneva was diverted Tuesday morning on Paris following a new engine problem.

These coming days will be complicated for Swiss and its passengers. The airline has confirmed that it will have to overhaul the engines of its Airbus A220 “fleet due to a new engine incident”.

Since their incorporation into Swiss fleet, these aircraft – launched under the name Bombardier C Series – have experienced several technical problems.

In a statement, Swiss announces that the aircraft concerned will not resume their scheduled flights until they have been properly inspected. In total, Swiss holds 29 aircraft of this type for its European routes.

The company said that “many flights will have to be canceled”, which will result in “a significant reduction in air operations”. Swiss did not give an estimate of how long these checks will take and how long the complications will last.

Regarding the passengers, the company explains that it will offer at its expense “the best possible solution for rerouting” and that bookings made by passengers on canceled flights may be subject to a free change or refund.


(Melanie Kraft - Air Live News)

Wednesday, October 9, 2019

Boeing's 787 under pressure as Russia's Aeroflot cancels order

Boeing faced additional uncertainty on Wednesday over future production rates for its 787 Dreamliner after Russian carrier Aeroflot formally cancelled an order for 22 aircraft valued at about $5.5 billion (4.5 billion pounds) at list prices.

The cancellation, first reported by the Seattle Times and buried in Boeing's monthly order release, is the final step in unwinding an order that had been shrouded in uncertainty ever since the airline said in 2015 it no longer needed the planes.

But the lost business theoretically knocks a hole in the production profile for the 787 Dreamliner after the world's largest planemaker increased its build-rate to 14 aircraft per month from 12 at twin U.S. factories.

Barring new orders, Boeing faces the growing possibility that it may have to cut production back by 2022, industry sources say, piling on new pressure as the grounding of the smaller 737 MAX stretches into its eighth month.

One of the sources, who closely monitors Boeing's production plans, said the planemaker has dozens of unsold or potentially vacant 787 positions on its production line in 2022.

The actual number of unfilled production slots depends on assessments about the ability of airlines to take delivery as promised, a subjective guess that planemakers keep confidential.

Boeing declined to comment.

While demand for the narrow-body aircraft that dominate most fleets remains strong, demand for larger, long-haul aircraft like the 787 and Airbus A330 and A350 has weakened.

Boeing won most of the wide-body orders so far this year but neither planemaker is selling as many aircraft as it would like amid trade tensions, concerns over the global economy and the increased ability of smaller narrowbodies to fly long distances.

Boeing Chief Executive Dennis Muilenburg told a conference last month that Boeing is closely tracking "macro risk areas," and had reserved slots on its 777 and 787 production lines for Chinese orders that have been held back by the U.S.-China trade war.

"There is dependency there on Chinese orders ultimately coming through," Muilenburg said.

The comments surprised some suppliers because planemakers typically raise output only after selling aircraft rather than opening the taps in the hope of winning orders later - though a strategic buyer like China might expect special treatment.

Boeing remains under pressure to reduce an overhang of deferred accounting costs on the 787 by producing more units.

European rival Airbus also has gaps in its production profile for wide-body jets, especially the upgraded A330neo and to a lesser extent the newer A350, other industry sources said.

The lull in wide-body orders has also raised questions about jetliner pricing. Multiple industry sources say aircraft are being offered at unusually steep discounts, something that officials at both planemakers deny.

Meanwhile, company data showed that Boeing had officially booked a previously announced order from Air New Zealand for eight 787-10s, the largest Dreamliner model. 


(Eric M. Johnson and Tim Hepher - Reuters )

Honolulu airport ranked the third worst in North America

Honolulu's airport ranked the third worst in North America for customer satisfaction and the second worst among large airports in annual survey of air passengers.

Daniel K. Inouye International Airport received the ranking in the J.D. Power 2019 North America Airport Satisfaction Study, The Honolulu Star-Advertiser reported Tuesday.

Inouye airport ranked behind New York's LaGuardia Airport and New Jersey's Newark Liberty International Airport as the worst among 62 airports. The airport moved two spots in the wrong direction in the large-airport category, where it was fourth worst the previous year.

Honolulu's satisfaction score was 719 out of a possible 1,000, or 17 points lower than its score last year.

The annual study conducted from October 2018 through September was based on responses from 32,276 U.S. or Canadian residents who passed through at least one North American airport. The survey scored airports on terminal facilities, airport accessibility, baggage claim, security check, check-in and baggage check, food, beverage and retail.

In the midsize-airport category, Kahului Airport remained at the bottom of the list, although its satisfaction score of 754 out of a possible 1,000 was only two points worse than last year.

The study found that after several years of growth, customer satisfaction stagnated as North American airports struggled to handle surges in passenger volume amid construction delays.

The Honolulu and Maui airports were among those that lost ground because of those factors, said Michael Taylor, travel intelligence lead at J.D. Power.

Hawaii's $3.6 billion airports modernization project just passed the halfway point, with most of the capital improvements expected to be completed by the end of 2021. The state Department of Transportation did not respond to a request for comment about the airport survey.

Access problems generally have a large effect on other airport factors, Taylor said.

"Despite the fact that you know the food or beverage might actually be better or great, it doesn't matter if people are not going to use it because they don't feel like they have time to do it," he said.


(Associated Press)

Wednesday, October 2, 2019

U.S. orders speedy checks for cracks on 165 Boeing 737 NG planes

The U.S. Federal Aviation Administration said Wednesday that aircraft operators must inspect 165 Boeing 737NG airplanes for structural cracks within seven days after the issue was found on a small number of planes.

Boeing Co notified the FAA of the issue after it discovered structural cracks on an aircraft undergoing modifications in China. The FAA said subsequent inspections found similar cracks in a small number of additional planes. The FAA said planes with fewer flights will eventually get inspected. The order covers 1,911 U.S. registered planes.

The 737NG is the third-generation 737 and version before the now grounded 737MAX, which is not impacted by the issue. Boeing said Friday it has been in contact with 737NG operators about the discovery of cracks, but added that "no in-service issues have been reported."


(David Shepardson -Reuters)

Friday, September 6, 2019

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

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

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

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

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

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

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

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

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

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

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

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

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


(Andrew McIntosh - Puget Sound Business Journal)

Southwest performance in Hawaii exceeding company expectations

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

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

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

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

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

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

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

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

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

(Evan Hoopfer - Dallas Business Journal)

Monday, September 2, 2019

Norwegian Air asks for more time to pay off bonds

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

* Offers London Gatwick airport slots as guarantee

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

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

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

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

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

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

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

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

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

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

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

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

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

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

BOEING

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

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

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

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

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

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

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


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

Thursday, August 29, 2019

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


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

(Photos by Michael Carter / Aero Pacific Images)

Southwest Airlines doesn’t plan to rebrand Boeing 737 MAX

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

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

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

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

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

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

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

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

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

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

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


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

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


(Daniel McCoy - Wichita Business Journal)

Monday, August 26, 2019

Friday, August 16, 2019

FedEx negotiates deal to increase presence at Alaska airport

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

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

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

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

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

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

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

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

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


(Meagan Nichols - Memphis Business Journal)

Tuesday, July 30, 2019

Air France-KLM buys smallest Airbus, retires largest

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

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

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

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

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

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

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

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


(Laurence Frost - Reuters)

Thursday, July 25, 2019

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

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

(Photo by Michael Carter / Aero Pacific Images)

Wednesday, July 24, 2019

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


(Andrew McIntosh - Puget Sound Business Journal)

JetBlue Blames Airbus Jet Delays for Slowing Its Growth

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

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

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

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

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

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

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


Slowing Growth

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

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

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


Retrofit Program

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

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

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

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

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


Europe Still On

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

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

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

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


Financial Results

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

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

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

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

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

(Brian Sumers - Skift)

Monday, July 22, 2019

Qantas set to launch longest flight ever from Chicago

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

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

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

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

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

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

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

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

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

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

(Lewis Lazare - Chicago Business Journal)

Saturday, July 20, 2019

China Southern Airlines to receive $4 billion capital injection

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

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

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

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

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

($1 = 6.8812 yuan)


(David Stanway - Reuters)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


(David Shepardson - Reuters)

Trump meets with airline CEOs over Qatar subsidy accusations

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

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

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

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

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

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

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

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

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

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

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

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

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


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