Monday, October 29, 2018

El Al Israel Airlines 787-9 (63394/735) 4X-EDF "Rehovot"

Climbs from Rwy 24L at Los Angeles International Airport (LAX/KLAX) as she departs on the carriers inaugural 787 service between LAX and Ben Gurion International Airport (TLV/LLBG) Tel Aviv, Israel as "El Al 6" (ELY6 / LY6) this afternoon (October 28, 2018).

She was off the deck at 14:28pst, 12 minutes early and sports the carriers "70th Anniversary" Retro Livery.

(Photos by Michael Carter)

Sunday, October 28, 2018

Lufthansa Cargo McDonnell Douglas MD-11F (48784/628) D-ALCD

Arrives at Los Angeles International Airport (LAX/KLAX) on October 26, 2018 sporting the carriers new livery.
(Photos by Michael Carter)

Southwest Airlines' 2019 Hawaii Plans Become a Bit Clearer

Ever since Southwest Airlines announced in October 2017 that it intended to start flying to Hawaii, U.S. air travelers and investors have both been eager to learn more about its plans. Over the past year, there has been a slow trickle of information, but the carrier still hasn't confirmed exactly which routes it will operate, how often it will serve them, and when the flights will start.

However, during its recent third-quarter earnings call, Southwest Airlines provided the most detail yet on its Hawaii plans. What Southwest said could have important implications for Hawaiian Holdings and Alaska Air, which will be its two main competitors in the West Coast-Hawaii air travel market.

Getting closer to launch

The main reason why it is taking so long for Southwest Airlines to launch its Hawaii flights is that it needs to receive FAA approval for long over-water flights. This "ETOPS certification" process -- which entails defining and documenting safety procedures, training flight crews, and then demonstrating the effectiveness of those procedures -- typically takes 12 to 18 months.

According to COO Mike Van de Ven, Southwest Airlines has completed the documentation phase of the certification process. It still needs to do simulations for the FAA and then operate validation flights to receive the final regulatory sign-off.

This suggests that Southwest is at least a few weeks away from achieving ETOPS certification. Yet it does expect to complete the process before year-end. The first half of December now seems like the most likely time frame for receiving ETOPS approval.

Southwest Airlines plans to publish schedules and begin selling tickets for Hawaii flights just a few days after that. Moreover, the first flight could occur as soon as a few weeks after ticket sales begin, which is a much shorter interval than normal. Nevertheless, all signs point to Southwest Airlines' Hawaii flights beginning in early 2019.

Southwest hints at its capacity plans

Back in the spring, Southwest Airlines revealed that it plans to fly to Hawaii from four mainland cities next year, all in California: Oakland, Sacramento, San Diego, and San Jose. It also said that it will serve four airports in Hawaii: Honolulu, Kahului, Kona, and Lihue.

From that description, it was clear that Alaska Airlines and Hawaiian Airlines faced the biggest threat from the first phase of Southwest's expansion. Excluding the big hubs of Los Angeles and San Francisco, Alaska and Hawaiian currently dominate the market for travel between California and Hawaii.

During Southwest's recent Q3 earnings call, CEO Gary Kelly stated that the carrier expects to grow its available seat miles (ASMs) no more than 5% in 2019, with about half of that growth coming on Hawaii routes. That makes it possible to estimate how many Hawaii flights the low-fare airline plans to operate next year.

Southwest Airlines is on track to offer approximately 160 billion ASMs in 2018. Thus, it plans for up to 8 billion ASMs of capacity growth next year, with up to 4 billion ASMs of growth targeted at the Hawaii market. Based on a roundtrip distance of about 5,000 miles and 175 seats per aircraft, that implies an average of about 12.5 daily roundtrips to Hawaii during 2019.

Of course, the Hawaii flights aren't likely to start on Jan. 1, and Southwest will probably allow for a bit of a ramp-up period. Thus, a more reasonable expectation might be for an average of no more than 10 flights a day during the first quarter, rising to as many as 15 flights a day by June. This would allow Southwest Airlines to connect most of the potential city-pairs between its four Hawaii destinations and its four California gateway cities while operating multiple daily flights on the most popular routes.

What does it mean for Alaska Airlines and Hawaiian Airlines?

If Southwest Airlines actually reached a schedule of 15 daily flights by the summer peak season, that would give it about 80,000 monthly seats to Hawaii. By itself, that would represent a roughly 10% increase in industry capacity to Hawaii compared to 2018, based on Hawaii Tourism Authority data.

That's enough extra capacity to have a significant impact on the overall supply demand balance. Furthermore, it would represent growth of about 70% on average across Southwest's four planned gateway cities in California.

Yet the news isn't necessarily as bleak as it may seem. For one thing, Southwest has a massive base of loyal customers, and there have been rumors about Southwest Airlines flights to Hawaii for years. Thus, the launch of Southwest flights next year will probably unlock quite a bit of "new" pent-up demand -- both from people who have been waiting to cash in Rapid Rewards points and from Southwest loyalists who simply want to fly their favorite airline to Hawaii.

Additionally, industry capacity between the West Coast and Hawaii surged nearly 12% in the first eight months of 2018, so this level of growth is not unprecedented. Scheduled capacity for the rest of the industry to Hawaii is roughly flat for the first part of 2019 as of now -- and if anything, other carriers are likely to trim capacity as the year progresses.

Alaska Airlines and Hawaiian Airlines will surely have to make some adjustments as Southwest's Hawaii expansion plays out. But while Alaska in particular may have to cut some flights due to the additional competition, both carriers should continue to enjoy plenty of success in the West Coast-Hawaii market during the years ahead.

(Adam Levine-Weinberg - The Motley Fool)

Friday, October 26, 2018

Apex Oil Company Gulfstream G-IV (c/n 1111) N511PA

Rolls for takeoff on Rwy 30 at Long Beach Airport (LGB/KLGB) in June 2002.

(Photo by Michael Carter)
(Kodachrome K64 Slide)

Thursday, October 25, 2018

JetBlue’s A321 Fleet Central To Plan To Boost Margins

jetBlue Airbus A321-231(SL) (c/n 7855) N987JT "Sky's The LiMint" on short final to Rwy 24R at Los Angeles International Airport (LAX/KLAX) on December 7, 2017.
(Photo by Michael Carter)

jetBlue executives sang the praises of the Airbus A321 for its margin-boosting capability during the company’s third-quarter earnings call on Tuesday, as the New York-based airline addressed the challenges of a 37-percent increase in fuel costs compared with a year earlier.

While its 130 A320s still account for the bulk of jetBlue’s fleet, since 2014 another 60 A321s have proven themselves as the best-performing models in terms of profit generation, both in their 200-seat standard cabin layout and the so-called Mint configuration, which features 16 lie-flat business class seats and 143 economy seats.

Next year jetBlue plans to take delivery of its first of 25 A321neos ordered as conversions from its original commitment for A320neos. Holding delivery positions on a total of 85 A321neos, jetBlue now plans to take 13 next year, 15 in 2020, 16 in 2021, 15 in 2022, 14 in 2023, and 12 in 2024.

“[The A321] is a fantastic aircraft both in the Mint configuration and the high-density configuration,” said jetBlue president and COO Joanna Geraghty. “They have done remarkably well from a margin perspective. Now as we look to the best and highest use of that asset we’re looking at the higher-density version and the margins on that...are actually exceeding that on our Mint routes.”

Geraghty’s comments came as jetBlue embarks on an effort to improve margins overall in 2019 through fare and ancillary revenue increases along with what CEO Robin Hayes referred to as five pillars of cost control. The company also expects see earnings benefits next year as its recently announced network reallocation takes full effect, said Hayes.

The series of network changes will see jetBlue shift fleet resources from what it considers under performing cities and accelerate its focus-city growth strategy in Boston and Fort Lauderdale. The service reallocation will also result in a new jetBlue destination in Ecuador, new service between current jetBlue cities and more flights on popular routes.

Cities slated to lose service starting January 8 include Daytona Beach International Airport from New York JFK airport and from San Juan to Saint Croix. jetBlue also plans to eliminate daily service to Washington Dulles Airport from New York JFK and Boston. Elsewhere on its route map, the airline plans to cut flying on a number of other under performing routes and frequencies in January, including certain flights serving Baltimore, Detroit, Pittsburgh, and Santiago, in the Dominican Republic.

(Gregory Polek - AINOnline News)  

United Airlines Studies A321LR for Transatlantic Service

EASA and the FAA recently certified the A321LR to operate with up to three underfloor auxiliary center tanks, including on flights operating under 180-minute Etops rules.
(Photo: Airbus)

United Airlines has recently priced a proposal to acquire Airbus A321LR single-aisle aircraft as replacements for the RB.211-535E4-powered Boeing 757-200s it operates on transatlantic routes, according to UK-based aviation technical consulting firm IBA Group.

The proposal studied by United specifically centered on A321LRs fitted with 16 Polaris business-class seats, 72 Economy Plus extra-legroom seats and 90 economy seats, IBA Group head of advisory Paul Lyons said during a webinar on low-cost long-haul airlines the company held recently. Each of the 757-200s United now operates on transatlantic services carries 169 passengers: 16 in Polaris business class, 45 in Economy Plus and 108 in the economy cabin.

While Lyons and Mike Yeomans, the firm’s head of valuations, recognized that the A321neo “has been receiving a lot of attention” and noted the interest various carriers have shown in the type's latest Airbus Cabin Flex (ACF) version, they questioned whether the 240-seat maximum capacity of the A321neo ACF (at the A321LR’s 97-tonne maximum takeoff weight) would suit airlines’ longer-haul service needs.

In a 240-seat cabin configuration, all A321LR seat rows would provide a seat pitch of just 28 inches; the second doors on the left and right sides of the aircraft’s fuselage would be removed and therefore unavailable for potential emergency evacuations. Yeomans questioned whether a 28-inch seat pitch would provide enough passenger comfort for any A321neo service of more than five hours in duration. “It’s something we’ve identified, or noted, as perhaps happening with the Wow Air and Norwegian situations,” said Yeomans. Norwegian doesn’t operate A321neos or A321LRs yet, but in 2019 the carrier plans to take the first eight of 30 A321LRs it has ordered and operate them on routes to the U.S. from European cities such as Berlin, Brussels, Budapest, and Prague.

Wow Air already operates A321neos (though not yet ACF-configured A321LRs) configured for 220 seats at mixed 30- and 31-inch pitches on routes from Iceland to North America—all of which extend at least five hours in flight duration. Although Norwegian has yet to receive its first A321LR, it operates 189-seat Boeing 737 Max 8s configured to seat 189 passengers on transatlantic services. So Norwegian could conceivably configure its A321LRs to offer a 29-inch seat pitch.

Lyons also noted that the A321LR’s cruise speed of Mach 0.78 is “relatively low … compared to some of its competitors” such as the Mach 0.85-cruising Boeing 787, possibly producing a negative “knock-on effect for utilization on some of the shorter-length but still long-haul sectors” operated by the A321LR.

However, IBA Group does not doubt that the A321LR, fitted with a third auxiliary center fuel tank, will offer sufficient range for even longer-haul transatlantic services. Lyons pointed out the Airbus had flown an A321neo a distance of 4,750 nm in that configuration non-stop from Mahé in the Seychelles to Toulouse with the aircraft’s weight configured for the test flight to represent 162 passengers and with 11 technicians and five crew-members aboard.

(Chris Kjelgaard - AINOnline News)

PAL set to permanently retire A340s as A350 gains traction

Philippine Airlines Airbus A340-313 (c/n 474) RP-C3441 rotates off Rwy 25L at Los Angeles International Airport (LAX/KLAX) on March 12, 2018.
(Photo by Michael Carter)

Philippine Airlines (PAL) is on the verge of permanently retiring the Airbus A340-300, as its A350-900s get up to speed on long-haul routes.

The carrier has one A340-300 that can be put in use should there be a technical issue with another aircraft, says Jose Perez, vice-president of corporate communications at PAL.

He says that recent unsourced reports that the type has been permanently retired are “close to the truth.”

“We actually made a decision to retire them sooner rather than later,” he says. “We might have an announcement to make at some point. There is one aircraft we can use if [there are] technical difficulties with one of our 777s or A350s.”

“Utilization is very low. It may fly to Los Angeles or San Francisco, and then be parked again. Right now, we're reviewing that. We might have to make a decision at a certain point to ground all the aircraft.”

The permanent retirement of the type will mark the end of A340 operations in the Asia-Pacific.

Perez made the remarks in an interview with FlightGlobal at the Association of Asia Pacific Airlines (AAPA) Assembly of Presidents, which was held recently on the resort island of Jeju, South Korea.

Perez adds that the carrier’s four A350-900s have enjoyed a smooth service entry. The type is used on non-stop services from Manila to London-Heathrow and Los Angeles. A four-times-weekly services to New York JFK will commence on 29 October. This will go to five-times weekly on 6 December.

Perez says that the aircraft will be able to operate a full payload in both directions to New York, although there could be restrictions in the winter months. This flight will replace the existing Manila-Vancouver-New York flight. Manila-Vancouver will then be operated by Boeing 777-300ERs as a direct turnaround service.

The carrier will receive two additional A350s in 2019 and is considering additional USA services, either to Chicago or Seattle.

On other types, Perez says the carrier’s four new A321neos have performed well, especially to longer-haul destinations such as Sapporo, Brisbane, and Sydney. He says customer feedback has been positive and notes that the A321neo product resembles that of a wide-body, with full-flat seats in business class, a good seat pitch in economy, and seatback inflight entertainment.

Flight Fleets Analyzer shows that PAL’s A321neos have 168 seats, with 156 in economy and 12 in business. PAL has an additional 17 A321neos on order, with deliveries to run to 2023. Airbus has proposed the A321neoLR variant of the narrow body type, but Perez says that PAL is still assessing the business case for this.

(Greg Waldron - FlightGlobal News) 

Thai Airways delays wide-body retirements to ease capacity issues

Thai Airways is postponing retiring some of its oldest wide-body aircraft to cover delays in its fleet acquisition plans and a capacity crunch caused by Boeing 787 groundings for unscheduled engine maintenance.

The Thailand flag carrier had planned to retire its remaining Boeing 747-400s over the next few years, VP-alliances and commercial strategy Krittaphon Chantalitanon said. However, it has extended the phaseout “for another year or so,” he told ATW’s sister publication Aviation Daily on the sidelines of the Association of Asia Pacific Airlines assembly in Jeju, South Korea on Oct. 19.

Thai has six passenger 747-400s remaining in service after retiring two earlier this year. Of the remainder, one will be phased out in 2019, one in 2020, two in 2021 and two in 2022.

Thai may also have to keep some older Boeing 777s in its fleet longer than planned. The carrier must either delay their retirement or phase them out, bringing in leased or used aircraft to provide short-term capacity, Chantalitanon said.

Thai is one of the many airlines that must progressively ground its Rolls-Royce Trent 1000-powered 787s for unscheduled engine maintenance.

As of Oct. 19, four of Thai’s eight 787s were grounded for engine work, Chantalitanon said. The carrier hopes the number of aircraft grounded at once can be reduced, but it will still have some 787s out of action for the short term at least.

Thai has not yet had to adjust its schedule or cut flights because of the 787 engine issues as other airlines have done. However, the airline has operated a “very tight schedule” because of the groundings, and there have been many flight delays, Chantalitanon said.

Another reason for keeping the 747s and 777s longer is that no new aircraft deliveries are arriving. The last new delivery received was its 12th Airbus A350 earlier this year, and there are no more outstanding orders.

The carrier intends to place more orders, but this process has been delayed because of a government request for the airline to conduct another review of its acquisition plan and growth strategy. This review is likely to be completed by the end of this year, said Chantalitanon. However, even if an order is placed soon, it would still be at least a few years before new aircraft arrive.

When the acquisition plan was initially submitted to the government, it included the purchase of 23 aircraft. The government has asked for this plan to be resubmitted with more details about whether the aircraft are for growth or replacement, and what its expansion plans include.

The 23 aircraft in the submission were to be two-thirds wide-bodies and one-third narrow-bodies, Chantalitanon said. However, the total and mix may change slightly as a result of the review. No specific models have been selected yet, and if the plan is approved, an order would likely be placed in the first half of 2019, Chantalitanon said.

Thai cannot afford to postpone its fleet expansion plans for too much longer, Chantalitanon said. The carrier’s rivals are upgrading their fleets, and Thai must do the same to remain competitive with its premium product. The lack of fleet growth also means the carrier is focused more on consolidating its existing markets than adding new routes.

While the airline is not adding aircraft, it is taking steps to refresh its existing fleet. Thai is progressively upgrading the cabins on its Airbus A330s—three of 15 aircraft have been completed so far, he said. Five more are scheduled to be finished next year. One of the main features of the upgrade will be the introduction of a lie-flat seat in business class on the A330s.

(Adrian Schofield - ATWOnline News)

Hawaiian’s 3Q net income up 31%; A321neo deliveries ‘back on track’

Hawaiian Airlines Airbus A321-271N (c/n 8157) N214HA "Kului" on short final to Rwy 30 at Long Beach Airport (LGB/KLGB) on October 18, 2018.
(Photo by Michael Carter)

Hawaiian Airlines reported a 3Q net profit of $93.5 million, up 31% compared to net profit of $71.6 million in the same period a year earlier.

Hawaiian CEO Peter Ingram described this as a “solid” performance, but still short of expectations mainly because of severe weather events in Hawaii and Japan that affected operations. Operating profit fell 31.5% to $115.8 million.

Revenue for the quarter was up 6% to $759 million, with passenger revenue up 4.3%. Operating costs rose 17.6% to $643.3 million. Hawaiian’s capacity increased by 8.1% in the third quarter, with yield down 1.7% and passenger unit revenue dropping 3.6%.

The carrier expects fourth-quarter capacity to be up 4.5%-6.5%, and full-year capacity is forecast to grow by 5.5%-6.5%. For next year, capacity growth is expected to be less than in 2018.

Hawaiian said its A321neo deliveries have caught up to their planned timetable following delays earlier this year, which will allow the airline to phase out its remaining Boeing 767s in early 2019.

A321neo deliveries are now “substantially back on track,” Ingram said during the carrier’s 3Q earnings call Oct. 23. The airline expects to have 11 of these aircraft by the end of this year, which was its target before delays occurred in the first half of the year. Hawaiian currently has nine A321neos.

The delivery slowdown was caused by issues with the Pratt & Whitney geared turbofan engine that also affected other airlines. However, Ingram said the carrier now has “a lot more confidence” in the reliability of the delivery timetable. Delivery dates are typically moving by just a few days or a week, a major improvement from the uncertainty in the first quarter.

Hawaiian has grown its A321neo fleet to the point that it will be able to retire all its 767s soon after the Christmas/New Year holiday peak, Ingram said. This will mean the airline has simplified its fleet to three types—the A321neos, A330s and Boeing 717s. The Hawaiian fleet is now “better positioned now than at any time in the past decade,” Ingram said.

Regarding Hawaiian’s application for antitrust approval for a joint venture with Japan Airlines, Ingram said the “working expectation” is that a decision will come in early 2019. This would open the way for the joint venture to be implemented later next year.

(Adrian Schofield - ATWOnline News)

JetBlue posts $50 million 3Q profit as fares, ancillary revenues rise

New York-based LCC JetBlue Airways, reacting to a 37% year-over-year (YOY) increase in fuel prices, doubled down on its plan to “improve our earnings, particularly in the areas we can control,” CEO Robin Hayes said in a third-quarter earnings call Oct. 23.

“We are taking actions to recapture higher fuel costs through price, both with fare increases over recent months and through higher ancillary revenue initiatives,” Hayes said. “We are on track to hit our 2018 CASM ex-fuel guidance, despite pulling capacity in both the third and fourth quarters to adjust to higher fuel prices.”

JetBlue EVP-commercial & panning Marty St. George said the airline’s flown capacity for the third quarter grew by 8.7% and fourth quarter capacity growth is expected to be between 7.5% and 9.5%. “Given the 2.9 points of lost capacity from hurricanes in the fourth quarter of 2017, our schedule-to-schedule capacity growth is approximately 6% for the fourth quarter of 2018,” St. George said. “[It] includes a previously announced 2 point ASM growth reduction to mitigate the impact of higher oil, [which] follows the 0.5 point reduction related to the third quarter.”

The airline posted a $50 million net profit for the third quarter, down 72.1% from a $181 million net profit in the 3Q 2017. While total revenues increased 10.5% to $2 billion, JetBlue’s operating expenses rose 28.1%, to $1.9 billion, with fuel and related taxes rising 48.4% YOY, from $347 million to $515 million. The carrier paid $2.32 per gallon, a 36.6% increase over the 3Q 2017 cost. The airline will hedge about 7.7% of its fuel for the 2018 fourth quarter and first quarter of 2019—32 million gallons total—and expects its 4Q per-gallon price to be between $2.25-$2.45.

JetBlue reported $83 million in operating income for the quarter, down 73.6 % YOY. Its operating margin was 4.1%, a 13.2-point drop from a 17.3% operating margin in the year-ago quarter.

Passenger traffic increased 9.7% YOY to 13.4 billion RPMs, as capacity grew 8.7% to 15.6 billion ASMs, producing an 85.9% load factor for the quarter, up 0.8 point YOY. The carrier’s 3Q RASM was 12.91 cents, up 1.7%, while CASM-ex was 8.27 cents, up 3.2% YOY. Yield increased 1% YOY to 14.53 cents.

In the fourth quarter, JetBlue’s Airbus A320s will fly 53% of available ASMs, with its A321 Mint-configured aircraft next at 20%, followed by its “all-core” A321s at 16%, and its Embraer E190s at 11%. Three A321ceos are expected for delivery by year-end; at which point JetBlue’s fleet will comprise 253 aircraft: 130 A320s, 35 Mint-configured A321s, 28 high-density A321s, and 60 E190s.

A significant step in JetBlue’s strategy to increase margins came Oct. 9, when the airline announced network reallocations set for early 2019 that will fortify networks in its three primary focus cities, Boston, New York-JFK and Fort Lauderdale.

“We’re relocating underperforming routes … and expect revenue benefits of $100 million to $120 million by 2020,” St. George said. “We will be closing three cities, Washington Dulles, St. Croix and Daytona Beach. We plan to convert a fourth city, Portland, Maine, to seasonal service. And we are reducing frequencies to Mexico City from both Fort Lauderdale and Orlando. We do not take these changes lightly, as we know these relocations impact a number of our crew members.”

“With the uptick in fuel in the second half of the year, I think JetBlue has been very proactive on capacity reductions,” Hayes said, when an asked about expectations for margin expansion in 2019. “We’ve been very proactive on fare increases, we’ve been very proactive on ancillary revenue changes … wherever we can [to] mitigate the cost of higher fuel.”

Hayes emphasized the company has the network building blocks and structural cost programs in place to reach its $2.50-$3.00 EPS goals by 2020. “Many of those start to kick in, in early 2019,” Hayes said. “We are very confident that we will see absolute margin expansion in 2019, even if fuel was to rise from here.” 

(Mark Nensel - ATWOnline News)

Qatar’s cargo operations goes transpacific

Qatar Airways Cargo Boeing 777-FDZ (62085/1410) A7-BFJ on short final to Rwy 25L at Los Angeles International Airport (LAX/KLAX) on November 20, 2017.
(Photo by Michael Carter)

Fast-expanding Qatar Airways Cargo has begun operating services to Macau and onward to North America.

Macau is the airline’s fourth freighter destination in Greater China, with the 2X-weekly services to the southern Chinese city acting as a hopping-off point across the Pacific. The service will be operated by a Boeing 777F.

China and the Americas are key markets for Qatar Airways Cargo, with many of the major industrial and manufacturing centers in the Guangdong province of China located on the Macau side of the Pearl River Delta. Electronics, garments and e-commerce goods are major exports from Macau, while imports into the former Portuguese colony consist primarily of consumer goods.

“We have launched our newest freighter destination, Macau, just in time for the holiday season when air freight demand is high and the market is strong,” Qatar Airways chief officer cargo Guillaume Halleux said. The airline said its cargo arm is now the second-largest dedicated freighter company in the world.

“The new services will connect manufacturing industries and exporters from the region to North America directly and quickly, without requiring a stopover at our hub in Doha,” Halleux added.

In North America, the carrier has a network of nine freighter destinations and 11 belly-hold cargo destinations.

From Macau, the new service operates to Los Angeles and Mexico City. On the return leg, the freighter flies over the Atlantic to Liege, Belgium, before arriving at the carrier’s hub in Doha. One hundred tonnes of cargo capacity is offered on each flight leg.

(Alan Dron - ATWOnline News)

Al Baker says Qatar Airways could leave oneworld in 2019

Qatar Airways Group CEO Akbar Al Baker told members of the media Oct. 18 in New York that its Oneworld membership is in question and the Doha-based carrier could leave the alliance in 2019.

Even though he stressed the importance of the airline’s position in Oneworld—describing it as one of the most important tools for collective action in serving customer needs—he suggested some alliance members, especially the US Big Three carriers—Dallas/Fort Worth-based American Airlines, Atlanta-based Delta Air Lines and Chicago-based United Airlines—were not on good terms with the Middle Eastern carrier.

“In June 2013, we joined the Oneworld [alliance]. We were invited by American Airlines and [UK-based] British Airways together. Unfortunately, the same airline that invited us is now talking against Qatar Airways,” Al Baker said at the media briefing.

Al Baker added there are a lot of bad feelings with the three US airlines, despite Qatar’s agreement not to exercise fifth freedom flights into the US.

Al Baker said that while one of the principal purposes of an alliance is for members to feed passengers to each other, Qatar is now getting more passengers from non-Oneworld airlines.

He said he could see Qatar withdrawing from Oneworld, possibly next year, and said the carrier would privatize in the next decade.

“As in most families, there are times where members of our alliance have differences on specific points from time to time. We hope these can be resolved quickly so the carriers can focus on providing great service to our customers,” Oneworld VP-corporate affairs Michael Blunt told ATW.

In an Oct. 20 statement, Al Baker further emphasized how the beneficial exchange of culture and commerce made possible by the US-Qatar Open Skies agreement must not be blocked merely because of Qatar Airways’ decision to serve markets that others have ignored.

Qatar operates a fleet of more than 200 aircraft to over 150 destinations.

(Kurt Hofmann - ATWOnline News)

Why Southwest Airlines Is Falling 8% Today

What happened

After the company reported third-quarter financial results that beat industry watchers' top- and bottom-line forecasts, shares in Southwest Airlines are trading 8.2% lower at 2:15 p.m. EDT today.
So what

Southwest Airlines' second-quarter performance was dragged down by promotions to drive passenger volume following an accident in April. Its sales only grew 0.2% to $5.74 billion in Q2 because its average load factor fell 90 basis points to 84.7%, despite average fares declining 4% to $151.94.

The third-quarter performance was better, though. Sales were $5.58 billion, up 5.3% from the same quarter last year, in part because an average fare increase of 2.5% to $153.40 offset a 0.9% decline in its load factor to 83.9%. Net income was $614 million and earnings per share were $1.08 in the quarter, up from $528 million, or $0.88 per share one year ago.

Revenue was $10 million better than analysts were looking for, and earnings per share clocked in $0.02 ahead of estimates, so investors' disappointment may be related to the declining load factor, which may suggest Southwest's capacity isn't in line with demand. As a reminder, load factor is calculated by dividing revenue passenger miles by available seat miles.

Investors may also be nervous about headwinds due to higher jet fuel prices, and guidance that costs excluding fuel and oil expense and profit-sharing will increase by at least 3% in 2019 because of investments to support future growth.

Now what

The airline industry is capital-intensive, and demand tends to track the economic cycle. In recent years, Southwest Airlines and its peers have done better at controlling capacity and costs to avoid steep price cuts, but risks could emerge if inflation continues to negatively impact the bottom line and demand slows because of slowing economic growth due to higher interest rates.

Nevertheless, Southwest Airlines has historically been among the most profitable airlines, and next year, its first-half results will go up against easier year-over-year comparisons. As a result, this decline in share price may offer airline investors a buying opportunity.

One big investor whose buying and selling ought to be watched closely following these results, though, is Warren Buffett. In Q2, he increased Berkshire Hathaway's stake in Southwest Airlines by 20% to roughly 57 million shares, making it the airline's second-largest owner. Unquestionably, it will be important to see what Buffett did with his Southwest Airlines shares in the third quarter, but we'll have to wait a few more weeks until Berkshire's 13-F is filed with the SEC to find that out.

(Todd Campbell - The Motley Fool)

Tuesday, October 16, 2018

New startup Genghis Khan Airlines formally signs for ARJ21s

ARJ21 being prepared for delivery to Genghis Khan Airlines.

New Chinese regional carrier Genghis Khan Airlines has formally signed a contract with the Commercial Aircraft Corp. of China (COMAC) for ARJ21 regional jets, confirming plans to begin flying early next year.

The first ARJ21 delivery is scheduled for the end of 2018, COMAC said, confirming an Aug. 21 ATW report.

In August, an industry source said the company had already placed the order, but the formal signing ceremony was held Oct. 15.

COMAC did not specify the quantity in its latest announcement, but Genghis Khan Airlines said it plans to have 25 ARJ21s in five years.

The new carrier is owned by companies of the central and Inner Mongolian provincial government. It will be based at Hohhot, the capital of Inner Mongolia.

Genghis Khan Airlines will be the second operator of the ARJ21 and the first that is independent of COMAC. Lead ARJ21 operator Chengdu Airlines is a subsidiary of the manufacturer. 

(Bradley Perrett - AviationWeek / ATWOnline News)

Aerion's supersonic business jet to meet U.S. noise standards

A Digital rendering of the Aerion AS2 Supersonic Business Jet is seen in this image provided by Aerion, October 15, 2018.

Aerion Supersonic, the developer of a $120 million supersonic business jet, said on Monday it would be able to take off and land without regulatory changes in the United States, a potential boost to efforts to bring back faster air travel.

General Electric's GE Aviation unit has completed initial designs for the new Affinity turbofan engine, which will be used in Aerion's AS2 jet, the companies said on the eve of the world's largest business jet show.

"We're on track to fly in 2023, and before that year is out cross the Atlantic at supersonic speed, which will be the first supersonic crossing since the Concorde's retirement 20 years earlier," Aerion chief executive Tom Vice said ahead of the Oct. 16-18 NBAA event in Orlando, Florida.

A push by U.S. start-ups Aerion, Boom Supersonic and Spike Aerospace to re-introduce supersonic passenger travel, for the first time since Anglo-French Concorde retired in 2003, has triggered a debate over noise even at the subsonic level.

Until now, supersonic designs have struggled to meet current subsonic noise standards due to engine constraints.

GE said the engine would enable supersonic flight over water and subsonic flight over land without regulatory changes.

"In the last 50 years, business aircraft speeds have increased by less than 10 percent," said GE vice-president Brad Mottier. The next step, he said, "is speed."

Honeywell Aerospace will develop the cockpit for the AS2 and is "talking with everybody that's making supersonic aircraft," Carl Esposito, president of the company's electronic solutions business, said in an interview.

(Allison Lampert - Reuters)

Tuesday, October 9, 2018

Air Tahiti Nui Boeing 787-9 (39297/750) F-OMUA "Fakarava"

(Photos by Michael Carter)

Arrives at Los Angeles International Airport (LAX/KLAX) on October 9, 2018 as she passes thru Southern California on her delivery flight which started this morning from the Boeing factory at Charleston Air Force Base/International Airport Charleston, South Carolina.

Operating as "Air Tahiti Nui 940 - THT940 / TN940" she departed Charleston at 11:59 EDT and arrived at Will Rogers World Airport (OKC/KOKC) Oklahoma City, OK at 13:04 CDT.

Following her visit to Oklahoma City, she departed at 14:40 CDT bound for LAX were she arrived at 15:14 PDT.

Air Tahiti Nui receives first Boeing 787-9


Air Tahiti Nui has received the first of four Boeing 787-9s it has on order, which will replace its ageing Airbus A340-300s.

The first aircraft F-OMUA (39297/750) "Fakarava" is being leased from Air Lease Corporation (ALC). Out of the four 787s the airline is planning to take, two are leased from ALC, while the other two are ordered directly from Boeing.

Boeing says each aircraft is configured with 294 seats across three classes: 30 business, 32 premium economy, and 232 in economy, and will operate to destinations such as Auckland, Los Angeles, Paris, and Tokyo.

"The Tahitian Dreamliner will make flying to one of the world's treasures an unforgettable experience, as we introduce new seats and a culturally inspired cabin on the 787. As we celebrate our 20th anniversary this year, the 787 Dreamliner will guide us towards another successful 20 years and beyond," says Michel Monvoisin, Air Tahiti Nui's chairman and chief executive.

Flight Fleets Analyzer shows that the second 787-9 (42116/796) F-ONUI "Bora Bora" is scheduled to be delivered in December. The remaining two 787s on order will arrive in the first half of 2019. All four aircraft are powered by the General Electric GEnx 1B engines.
(Firdaus Hashim - FlightGlobal News)

Monday, October 8, 2018

Gulfstream G650 (c/n 6354) N654GA

Another new green G650 arrived at the Gulfstream Service Center at Long Beach Airport (LGB/KLGB) on October 4, 2018 as "GLF64" from the factory at Savannah-Hilton Head International Airport (SAV/KSAV).

(Photo by Michael Carter)

Southwest capacity outpaces traffic for sixth straight month

Southwest Airlines Boeing 737-8H4(S/W) (42534/6437) N8539V taxies to Rwy 30 at Long Beach Airport (LGB/KLGB) on October 5, 2018.
(Photo by Michael Carter)

September marked the sixth straight month that Southwest Airlines saw capacity growth outpace revenue passenger-miles (RPMs), suggesting supposed short-term challenges that dragged down mid-year performance may be lingering, even as its revenue outlook remains solid.

The Dallas-based carrier increased its year-over-year ASMs by 6.8% last month, while RPMs grew 5.3%, it said Oct. 5. The September gap helped push year-to-date ASM growth past the RPM increase, 3.0%-2.8%.

Southwest’s third-quarter operation faced weather-related disruptions that forced it cancel more than 2,200 flights, primarily in the Denver, Baltimore/Washington DC and the Southeast US. That led it to cut its Q3 ASM growth forecast to 3.5%-4%, down from 4.5%-5%. It ended near the top of its guidance, at 3.9%, while RPMs rose 2.7%

Momentum generated during a strong first quarter (Q1) was interrupted by the April 17 inflight engine failure that left one passenger dead. Southwest suspended its marketing after the accident and reported a short-term decline in bookings, which helped contribute to a rare YOY decline in monthly RPMs.

The airline has also struggled to optimize its schedule and grow as planned following last year’s fast-tracking of Boeing 737 Classic retirements ahead of taking delivery of its first 737 MAX-family aircraft. Southwest ended the first quarter with a fleet of 717s, compared to 727 in the year-earlier period and 735 at the mid-point of 2017, just before the bulk of the Classic retirements. Even with fewer aircraft, first-quarter capacity grew 1.8%, because in part of the addition of early-morning and late-evening flights. Aviation Week Fleet Discovery shows the fleet count is now at 739, including 20 737-8s.

Speaking on the carrier’s second-quarter earnings call in July, Southwest CEO Gary Kelly said the accident-related headwinds had subsided, in part thanks to a rare summer fare sale. Fleet growth was helping with schedule optimization, with steady improvement expected through the third quarter as demand ramped up from the in-between, or shoulder, demand season to the summer peak season.

“[Our] flight schedule in Q3 is still somewhat sub-optimal, but the headwinds begin to subside in August as a percentage of shoulder flying begins to decrease as we overcome our fleet deficit,” Kelly explained. “The schedule impact in Q3 improved sequentially from Q2, but it’s still about a 0.5-point drag on Q3 RASM. And this penalty should subside wholly by Q4.”

Southwest increased Q2 ASMs 3.3%, while RPMs were up 2.2%.

While the fleet-related schedule issues could explain the weak third-quarter figures, they also may point to some larger issues, Delta Airport Consultants chief industry strategist Bill Swelbar said. The continued maturation of the US market makes finding new opportunities more challenging for everyone, he stressed.

Southwest’s Kelly acknowledged that market maturation in the current environment takes time, and the carrier prefers practicing patience over constantly shuffling its network in search of short-term winners.

“We have startup markets that sometimes will take several years before they reach the kind of maturity that we're satisfied with,” Kelly noted. “But I’ll tell you this, once we decide to put Southwest in a market, we are loathe to pull out. We have the overall cost structure and operating margins and balance sheet to be patient.”

Meanwhile, airlines continue to develop more sophisticated fare and product segments, giving them more flexibility to compete against lower-cost operators without completely wiping out their margins. While Southwest is now among the carriers with more advanced segmentation capabilities thanks largely to a new reservations system, it is merely catching up with most of its peers.

“The competition is smarter, whether it be the ULCCs or even the network carriers segmenting their product offerings and not ceding traffic to LCCs as they have in the past,” Swelbar noted.

Despite the capacity/traffic imbalance, Southwest has expressed confidence in its RASM outlook. A Sept. 12 investor update highlighted “continued passenger revenue momentum during third quarter 2018 with solid bookings and strength in close-in yield trends.” The carrier in late August changed its early-check-in fee structure, adding higher-priced options. It expects to generate $70-$80 million in Q3 pre-tax revenue from the move.

(Sean Broderick - AviationWeek / ATWOnline News)

Hawaiian closes GEnx purchase and services deal for 787s

Hawaiian Airlines has finalized deals with General Electric to purchase at least 20 GEnx engines to power its Boeing 787-9s, and to have GE maintain those engines.

The purchase, finalized in a definitive agreement reached by the companies on 1 October, also gives Hawaiian options to purchase another 20 GEnx and "a number of spare engines", Hawaiian says in a regulatory filing.

Also on 1 October Hawaiian signed a flight-hour services deal with GE Engine Services, under which GE will maintain Hawaiian's GEnx for 10 years. The agreement could be extended for six years after that, Hawaiian adds.
Ads by ZINC

The Honolulu-based airline estimates that the combined deals, including all options, could cost $1.7 billion.

Hawaiian ordered 10 787-9s earlier this year, saying at the time that it had selected GEnx engines to power the aircraft. Airlines can also purchase 787s with Rolls-Royce Trent 1000 powerplants.

The airline does not hold options for any more aircraft, according to FlightGlobal's Fleets Analyzer database.

Hawaiian expects to begin receiving its 787-9s in 2021, it says.

Airlines have chosen GEnx to power about 60% of the in-service and on-order fleet of 787s, Fleets Analyzer shows. Rolls-Royce holds 30% share of those aircraft, while engine choices on 10% of that fleet remain undisclosed, data shows.

(Jon Hemmerdinger - FlightGlobal News)

Thursday, October 4, 2018

Aruba Airlines Airbus A320-232 (c/n 573) P4-AAC "Tio Elias"

Captured on short final to Rwy 30 at Miami International Airport (MIA/KMIA) on February 8, 2017.
(Photo by Michael Carter)

Originally delivered to Air Macau as CS-MAD on February 27, 1996 she served with the carrier until being leased to Ryan International Airlines as N573DC on February 12, 1999.

Returning to Air Macau as B-MAD on December 15, 2000 the carrier operated her until early 2003 when the aircraft was leased to Sichuan Airlines as B-6025 on April 1, 2003.

Beginning on June 30, 2010, Hebei Airlines leased the aircraft from Sichuan Airlines and operated it until returning the A320 to Sichuan Airlines on July 11, 2011.

Sichuan continued operating the aircraft until returning it to International Lease Fiance Corporation (ILFC) on February 20, 2013.

On July 19, 2013 Aruba Airlines put the aircraft into service and operated it until it was withdrawn from use (WFU) on February 28, 2017 just 20 days after the above photo was taken. The aircraft was then stored at Phoenix-Goodyear Litchfield Municiple Airport (GYR/KGYR) on March 11, 2017 and later scrapped in October 2017.

Monday, October 1, 2018

United adds Boeing 787s and expands U.S. coast-to-coast routes

United Airlines said on Monday it placed an order for nine more Boeing 787 wide-bodies and is also increasing its coast-to-coast flights between New York and Los Angeles and San Francisco.

The third-largest U.S. carrier's order brings Boeing's total 787 orders for 2018 to 105 aircraft, already surpassing the 94 orders it received in all of 2017, a source familiar with the deal said.

The expanded routes are part of United's plans to increase its capacity for this year by around 4.5 percent to 5 percent, a quicker growth rate than other airlines in the industry.

Reuters reported in May that United was in talks with plane makers Airbus and Boeing over the purchase of wide-body, long-haul passenger jets to replace a fleet of 50 Boeing 767 aircraft.

United said on Monday it was increasing flights between New York and Los Angeles and San Francisco to 27 daily flights. Its new 787-10 jets, the newest and longest variant in Boeing's Dreamliner family, will enter service early next year.

The carrier said it would be the first North American airline to operate the 787-10 Dreamliner on select flights between those cities.

(Tracy Rucinski and Eric M. Johnson - Reuters)