Monday, November 26, 2018

Boeing wins deals for 15 planes from Caribbean and Turkish airlines for 777 and 737 Max jets

Boeing said it won two deals for a total of 15 new airplanes worth $2.5 billion, bolstering work for its Puget Sound region jet factories.

The Chicago-based jet maker said Turkish Airlines ordered three new 777 Freighters, while Caribbean Airlines has picked Boeing's 737 Max 8 single aisle jet to replace its aging fleet of 12 older model 737s.

The freighter deal with Turkish is valued at just over $1 billion at list prices, though the carrier is a big Boeing customer and likely gets discounts of up to 50 percent. It ordered three 777 Freighters just a year ago.

"The additional aircraft will provide us more flexibility to serve even more destinations as we continue to grow our global freight network," Turkish Airlines Chairman of the Board İlker Aycı said in a Boeing news release.

Neither company said when the jets will be delivered, but the order helps Boeing fill out the Everett 777 manufacturing line as the jet maker transitions to building the new advanced 777X jet.

Turkish Airline's Boeing jet fleet has grown to more than 160 aircraft, with nearly 100 additional jets on order. Turkish Airlines operates more than 30 777s, putting it among the top 10 operators of the wide-body jet in Europe and the Middle East.

As part of the deal, Boeing said it's planning to open an engineering center in Istanbul, specializing in research and supporting Turkey's aerospace sector.

As well, Turkish Technic, the maintenance arm of Turkish Airlines, becomes a strategic supplier for Boeing's Global Fleet Care program.

The program provides airlines with maintenance, component service and repair for multiple jet models. Boeing and Turkish Technic will also partner to train and certify aircraft technicians.

Boeing declined to say whether its deal with Trinidad and Tobago' carrier Caribbean Airlines was a firm order or merely a commitment for future orders.

A deal for 12 737 Max 8 jets is worth $1.4 billion at list prices. Boeing and Caribbean said in a statement the airline "plans to take delivery of 12 aircraft in the coming years."

A selection ceremony was attended by Boeing executives and Trinidad and Tobago's Prime Minister Keith Rowley.

Press reports in Trinidad and Tobago said deliveries are to begin the fourth quarter of 2019.

(Andrew McIntosh - Puget Sound Business Journal)

Saturday, November 24, 2018

Cayman Airways Boeing 737-8Max (68309/7256) VP-CIW

(Photo by Joe G. Walker)

The first 737-8MAX destined for Cayman Airways, is captured departing Boeing Field/King County International Airport (BFI/KBFI) on a pre-delivery test flight to Grant County International Airport (MWH/KMWH), Moses Lake today (November 24, 2018). 

The aircraft had been scheduled for her post paint flight on Wednesday November 21 but the flight was cancelled due to bad weather.

Thursday, November 22, 2018

Wednesday, November 21, 2018

El Al Boeing 787-9 (42117/616) 4X-EDB "Rishon"

Captured under-tow at Los Angeles International Airport (LAX/KLAX) on November 13, 2018 sporting "70th Anniversary" markings just behind the cockpit windows.
(Photo by Michael Carter)

LaudaMotion receives first of two A320s from SMBC


LaudaMotion has received the first of two Airbus A320s leased from SMBC Aviation Capital as part of the Ryanair subsidiary’s growth plans.

The Austria-based LCC took delivery of the first A320, a former Turkish Airlines aircraft, this week, with the second one set to arrive in January 2019.

Irish LCC Ryanair, which acquired a 75% stake in the airline founded by Formula 1 driver Niki Lauda, plans to grow the LaudaMotion fleet to 19 aircraft by summer 2019.

Ryanair CEO Michael O’Leary told ATW earlier this year the company must invest more money in LaudaMotion because the airline will lose approximately €150 million ($175 million) in its first “very difficult” year, up from a previous estimate of €100 million. The carrier should break even in 2019, however, and turn a profit in 2020, he said.

LaudaMotion and Lufthansa confirmed Oct. 9 that the companies have agreed that LaudaMotion will redeliver nine aircraft to Lufthansa between Dec. 31, 2018, and June 30, 2019, ending a leasing dispute that escalated in July.

(Kurt Hofmann - ATWOnline News)

Airbus names new CFO, commercial COO

Airbus CFO Dominik Asam

Airbus’ management transition continued Nov. 21 with the appointments of Dominik Asam as CFO and Michael Schoellhorn as COO of Airbus Commercial Aircraft. Both will also be members of the Airbus executive committee.

The appointments are for two of the last three key management positions that had yet to be filled as part of the manufacturer’s ongoing leadership reshuffle. Asam will replace Harald Wilhelm, who is leaving in April 2019. Schoellhorn follows Tom Williams, who is retiring at the end of the year.

Airbus is in the middle of a broad leadership transition. CEO Tom Enders will step down in April 2019 to be succeeded by Guillaume Faury, currently president of Airbus Commercial Aircraft. His predecessor, Fabrice Bregier, left in April after the board decided not to select him as new CEO. Former CCO John Leahy retired in February, and his successor, Eric Schulz, left in October. He was replaced by former ATR CEO Christian Scherer. EVP-Airbus Commercial Aircraft Didier Evrard is to retire soon.

Michael Schoellhorn’s appointment as COO of commercial aircraft (left) is an apparent indication that Faury does not plan to backfill his position as president of the unit when he becomes the group’s CEO. Appointing a COO would otherwise likely have had to wait until a new president was found. Schoellhorn will report directly to Faury.

In the fine-tuned balance of core nationalities in top management, Schoellhorn’s appointment, along with the naming of Asam as CFO, compensates the German side inside Airbus for the loss of the CEO position to a French national. Such balancing acts have officially been declared things of the past that have no influence on company decisions. However, keeping French and German control roughly equal is still an important informal factor. Faury has long experience working and living in Germany and speaks fluent German. Also of note as the UK prepares to leave the European Union is that Schoellhorn replaces Williams, the highest-ranking British executive.

Airbus chairman Denis Ranque earlier made clear that he will not seek re-election at the 2020 annual general assembly. Rene Obermann, the former CEO of Deutsche Telekom and an Airbus board member, is widely considered to be the top candidate for the position.

Asam joins Airbus from Infineon Technologies, where he has been CFO since 2011. He holds an MBA from INSEAD and a degree in mechanical engineering from the École Centrale Paris.

Schoellhorn has been COO of BSH Home Appliances since 2015. He served in the German armed forces as a helicopter pilot from 1984 to 1994.

(Jens Flottau - ATWOnline News)

AirAsia X widens net loss in 3Q on higher fuel, operating costs

AirAsia X Group, the long-haul arm of LCC AirAsia, recorded a net loss of MYR197.5 million ($47.7 million), deepened from MYR43.4 million loss in the year-ago quarter, as operating costs continue to increase. The carrier had reported MYR99.3 million loss in the previous quarter.

The airline cited rising fuel costs as the main contributor to rising operating costs, saying the average fuel price per barrel rose from $65 in 3Q17 to $91.

Cost, measured as cost per available seat kilometer (CASK), increased 12% year-over-year (YOY). In addition, doubtful debts provided for subsidiary AirAsia X Indonesia contributed to the negative quarterly performance.

Third-quarter revenue fell 4% YOY to MYR1 billion from MYR1.1 billion because of a 5% drop in average base fare as part of a plan to increase capacity on established routes and introduce new ones.

ASKs decreased 4% YOY after capacity was redeployed to the North Asia region. Revenue per ASK (RASK) dipped 1% YOY, but was up 4% compared to the previous quarter because of improvements in China routes.

“Our average fares have increased by 13% from 2Q18 and we expect to reap further rewards once these routes mature,” AirAsia X Group CEO Nadda Buranasiri said. “While we expect that the provision of doubtful debts will place short-term pressures on the full-year earnings, we remain confident on the ongoing efforts to boost our ancillary revenue, passenger growth and yields in the longer term.”

He said the company is studying the sustainability of AirAsia X Indonesia, which will cease its last scheduled service from Bali to Tokyo-Narita in January 2019 and operate as a non-scheduled airline.

As part of cost-cutting measures, Buranasiri said the group is in advanced negotiations with aircraft lessors to lower lease rates and business partners to reduce ground handling rates at its foreign stations.

(Chen Chuanren - ATWOnline News)

Italian railway company waits for decision on Alitalia offer

Alitalia Boeing 777-243(ER) (32858/425) I-DISU "Alberto Nassetti" on short final to Rwy 24R at Los Angeles International Airport (LAX/KLAX) on October 24, 2017.
(Photo by Michael Carter)

Italian rail company Ferrovie dello Stato (FS) appears to be in pole position to acquire bankrupt Alitalia and is in talks with a number of airlines that could partner with it to run the carrier if its bid is successful.

Italian news agency ANSA, citing FS CEO Gianfranco Battisti, reported that UK-based LCC easyJet is among the airlines with which FS is having talks.

Alitalia received two binding bids, including the FS bid, and one expression of interest by the Oct. 31 sale deadline, the latest step in the long search for a partner to help the Italian flag carrier relaunch, which has dragged on since it filed for bankruptcy in May 2017.

Battisti said Nov. 20 that FS was waiting for a response from Italy’s economic development ministry on whether its offer had been accepted. “We are waiting for the conditions to be made official, after which we’ll get started on the project,” Battisti said.

FS emerged as the frontrunner to revive Alitalia as part of an integrated transport company, which is also aimed at boosting Italian tourism, after Italy’s coalition government said it wanted to keep the carrier at least partly in Italian hands. Alitalia unions are also pressing for the airline to be owned by an Italian company, but FS would need airline management expertise.

ANSA also reported Nov. 21 that FS had received a letter from the special commissioners who have been steering Alitalia through the long-running sale process since it entered into administration, which stated that its bid had been judged positively.

EasyJet has previously confirmed it submitted an expression of interest in Alitalia while Lufthansa has said it will not invest in Alitalia together with the Italian government or a state-owned Italian company, but could imagine a commercial partnership with the airline.

Atlanta-based Delta Air Lines, a fellow SkyTeam partner with Alitalia, is also thought to be one of the interested parties.

Alitalia also confirmed Nov. 20 that one of its special commissioners had resigned. Luigi Gubitosi has been named CEO of Telecom Italia.

(Helen Massy-Beresford - ATWOneline News)

Boeing to brief 737 MAX customers next week

Boeing will hold a set of regional meetings and conference calls next week with 737 MAX customers to address their questions and concerns about a new system that was introduced on the re-engined narrow-body.

Boeing originally planned to hold a single conference call, but that was canceled, and the manufacturer is instead going to brief airlines on a regional basis early in the week of Nov. 27.

Boeing confirmed to ATW that it had rescheduled the 737/NG MAX fleetwide operator calls “to allow for more attendance, more time for Q&A and to accommodate different time zones.”

A spokesperson added that the meetings would be hosted by Boeing field service representatives.

“Safety is a core value at Boeing, and always will be. We have complete confidence in the safety of the 737 MAX. Boeing is in constant communication with regulators and our customers,” the company said.

Boeing is under increasing pressure to clarify a feature that was introduced on the MAX family of aircraft called the maneuvering characteristics augmentation system (MCAS). The system can automatically change pitch in manual flight mode and is designed to help mitigate flight-control issues that the model's new heavier, larger engines and related design changes introduced. MCAS relies on certain parameters to determine when it is needed and is meant to work in the background. But Boeing says it recently learned that erroneous data from one sensor—such as an angle-of-attack indicator—can cause MCAS to move the stabilizer and push the aircraft’s nose down when it is not needed.

A Boeing bulletin on the system linked the issue to the investigation into the Oct. 29 crash of Lion Air flight JT610, a MAX 8, though the bulletin did not say MCAS played any role in the accident sequence. Boeing’s bulletins and information on MCAS emerged after the crash.

Since the crash, in which all 189 people onboard were killed after the aircraft dived suddenly into the sea soon after takeoff, there has been growing scrutiny of the MAX and how much information on MCAS was given—and when—to operators and pilots. The pilot unions of some major airlines that operate the MAX, including American Airlines, say they were not informed about the system.

Boeing CEO and president Dennis Muilenburg, in an internal memo to employees, denied that aircraft functionality information was intentionally withheld from customers.

Boeing’s share price fell sharply this week, reaching a one-year low Nov. 20, although it rebounded a little Nov. 21.

(Karen Walker - ATWOnline News)

Ryanair high density Boeing MAX emerges from factory

The first Ryanair 737 MAX 8-200 at Boeing’s Renton factory
(Chris Edwards - Woodys Aeroimages)

Boeing has rolled out the first high-density seating minor-model derivative of the 737 MAX 8-200 aircraft that is specially modified with an additional set of passenger cabin exit doors so it can seat up to 200.

The aircraft, which rolled out of the company’s Renton, Washington, facility in mid-November, is the first of 135 737 8-200s ordered by ultra-LCC Ryanair. The Irish-based airline, which originally launched the model as the MAX 200 with an order for 100 in 2014, subsequently exercised additional options to bring the total to 135. The airline also holds options for a further 75.

Seating 197 in Ryanair’s single-class configuration compared to 189 on the airline’s current 737-800 fleet, the derivative incorporates the mid-fuselage, extra-passenger exit door of the higher-capacity 215-seat Boeing 737 MAX 9 to satisfy regulatory safety emergency-evacuation requirements. The modification, which adds the extra doors at row 26, provides capacity for up to 11 more seats than the standard configuration of the Boeing 737-8. Additional cabin capacity is created primarily by removing elements of the aft galley and installing slimline seating.

Deliveries of the first aircraft are scheduled to begin during the second quarter of 2019 and run through to 2023. Boosted by the expanding fleet, Ryanair plans to grow from around 80 million passengers per year to more than 150 million passengers over the next decade.

The first 737-8 minor derivative emerges from the Renton production system at a challenging time for the program. Boeing, which successfully ramped up the production rate to 52 per month this summer is preparing to accelerate the rate to 57 per month next year as it continues to catch up after production issues that impacted deliveries earlier this year. On top of this, Boeing is readying for the start of initial deliveries of the 737 MAX 7 and is preparing to introduce the 737 MAX 10 test aircraft onto the production line.

(Guy Norris - ATWOnline News)

Friday, November 16, 2018

Alaska Airlines adds more flights to Paine Field after Southwest pulls out

Alaska Airlines plans to launch commercial airline service at the new Paine Field air terminal in Everett on Feb. 11, after a one month delay beyond its control, the airline said.

Alaska has begun ticket sales for Paine Field flights to eight West Coast cities, and the airline has added five extra flights a day after acquiring landing gate slots from Southwest Airlines.

Southwest has decided to delay its Paine Field flights "indefinitely" and transferred its slots to Alaska, said Brett Smith, chief executive officer of Propeller Airports, which is building and operating the passenger air terminal for Snohomish County.

"It's not our decision, but all in all, it makes it easier for us to operate, so I'm not unhappy about it," Smith said.

The extra slots acquired from Southwest mean more flights to several of the previously announced destinations Alaska will serve from Paine Field, including: Las Vegas; Los Angeles; Orange County, California; Phoenix; Portland; San Diego; San Francisco; and San Jose, California.

Alaska is offering a two-day sale on fares to and from Paine Field to celebrate the new airport's launch.

The flights will start slowly at Paine and increase over time as the operation gets up to full speed to ensure smooth flight operations. Only Las Vegas will be served the first day, and only Los Angeles and San Jose served the second day.

The full details on flight schedules in the first month can be seen here.

Alaska also said its Mileage Plan members who fly on all nonstop flight to and from Paine Field through March 31, 2019, will earn double miles after they register for the promotion.

The service from Paine Field will be provided by Horizon Air flying the Embraer 175 regional jet aircraft featuring both first class and economy cabins and onboard entertainment.

"We're tremendously honored to be a part of this historic moment with the opening of a brand new commercial airport," Andrew Harrison, Alaska Airlines' chief commercial officer, said on the airline's blog.

(Andrew McIntosh - Puget Sound Business Journal)

Thursday, November 15, 2018

China Southern is leaving SkyTeam alliance 2019

China Southern Airlines Boeing 777-31B(ER) (43225/1358) B-2049 departs Los Angeles International Airport (LAX/KLAX) on December 25, 2016 sporting the carriers SkyTeam livery.
(Photo by Michael Carter)

China Southern Airlines announced on November 15, 2018, that it would leave SkyTeam alliance. The Chinese airline decided not to renew its contract with the alliance to align with “the company’s development strategy”.

This decision will come into effect on January 1, 2019. Both SkyTeam and China Southern Airlines declared they would ensure a “seamless transition for all customers and partners”.

As for the reasons behind the decision to leave, there are China Southern’s “strategic development, the changing trends of the global aviation industry and the evolution of alliances,” according to SkyTeam. "The airline puts it even more bluntly: besides strategic development needs, it wants to “better align with the new trend of cooperation model in the global aviation industry”.

A move that SkyTeam say they understand. "We recognize that the airline industry has matured since China Southern joined SkyTeam in 2007, especially in China," said a spokesperson of the alliance to AeroTime. "Against that background, China Southern is evaluating its strategic opportunities."

The carrier said it would now seek partnership with “advanced airlines” outside the alliance.

The decision does not come as a surprise, as China Southern is closely linked to American Airlines a oneworld alliance member. In fact, back in August 2017, American Airlines acquired 2.68% of China Southern Airlines shares.

Now, the chinese carrier is reportedly considering joining Oneworld alliance, but “has not yet made a decision” according to a source cited by Reuters. If it was to do so, China Southern would become the first Chinese airline to be part of Oneworld. For its part, SkyTeam still includes Xiamen Airlines and China Eastern Airlines.

(Clément Charpentreau - AeroTime News) 

FAA, Boeing study need for 737 MAX software changes after crash

The U.S. Federal Aviation Administration and Boeing Co are evaluating the need for software or design changes to 737 MAX jets in the wake of last month's deadly Lion Air crash in Indonesia, the regulator said on Tuesday.

Boeing shares fell 2.1 percent on Tuesday on concerns related to the first crash of the newest version of the plane-maker's best-selling jet, in which all 189 people on board were killed when it dived into the sea.

Indonesian investigators said on Monday a system designed to deal with the accident scenario was not described in the flight manual. They called for more training for 737 MAX pilots.

U.S. pilot unions later said they were not aware of the new anti-stall system.

Operating procedures and training for the 737 MAX could also change as the FAA and Boeing learn more from the investigation, the regulator said in a statement.

Investigators are preparing to publish their preliminary report on the crash on Nov. 28 or Nov. 29, one month after the Lion Air jet crashed at high speed into the Java Sea.

Until now, public attention has focused mainly on potential maintenance problems including a faulty sensor for the 'angle of attack,' a vital piece of data needed to help the aircraft fly at the right angle to the currents of air and prevent a stall.

The focus of the investigation appears to be expanding to the clarity of U.S.-approved procedures to help pilots prevent the 737 MAX from over-reacting to such a data loss, and methods for training them.

Information recovered from the jet's data recorder last week led the FAA to issue an emergency directive warning pilots that a computer on the 737 MAX could force the plane to descend sharply for up to 10 seconds even in manual flight, making it difficult for a pilot to control the aircraft.

Pilots can stop this automated response by pressing two buttons if the system behaves unexpectedly, the directive said.

But questions have been raised about how well pilots are prepared for such an automatic reaction and how much time they have to respond.

Boeing Chief Executive Dennis Muilenburg told Fox Business Network on Tuesday that Boeing provides "all of the information that's needed to safely fly our airplanes" and that the 737 MAX was a "very safe" airplane.

"This comes out of thousands of hours of testing and evaluating and simulating and providing the information that our pilots need to operate our airplanes safely," Muilenburg said.

"In certain failure modes, if there's an inaccurate angle of attack sensor feeding information to the airplane, there's a procedure to handle that," he added.

The FAA on Tuesday denied a report that it had launched a new probe into the safety analyses carried out by Boeing on the 737 MAX.

Boeing, the world's largest plane-maker, said earlier on Tuesday it delivered 43 of its 737 aircraft last month, up from 37 a year ago, helped by a booming global market.

The number of 737 deliveries was down slightly from the 61 delivered in September due to lingering supplier problems, flagged by a Boeing executive last week.

          (David Shepardson in Washington, Sanjana Shivdas in Bengaluru and Eric M. Johnson in Seattle)

Boeing Stock Drops After Continued Bad News for Its 737 Jets

Boeing dropped after weak deliveries for its 737 jetliner compounded a troubling report about a safety feature linked to a deadly crash in Indonesia last month.

Low October shipments of the 737 put Boeing at risk of missing annual delivery targets for its largest source of profit as the plane-maker works to ease parts shortages that have snarled production. The company has been relying on revenue gains from faster output of the narrow-body jet to help ease financial strain from introducing its newest wide-body aircraft, the 777X.

Boeing will need to deliver 72 of its single-aisle workhorse in November and again in December to reach its planned build rate, Bloomberg Intelligence analyst George Ferguson said in a report to clients Tuesday. Boeing shipped just 43 last month. The company also needs to speed deliveries of its high-margin Max planes, “which affect profit disproportionately,” Ferguson said.

The shares dropped 2.4 percent to $348.63 at 3:26 p.m. in New York, the most in the Dow Jones Industrial Average. The stock had climbed 21 percent this year through Monday.

The Max has accounted for 37 percent of all 737 deliveries this year, trailing Boeing’s goal of 40 to 45 percent. The company had warned of a weak October performance, saying deliveries would pick up in the rest of the year.

New System

The deliveries data came a day after Bloomberg News reported that U.S. pilot unions said they hadn’t been notified or properly trained on a new safety system for the Max. The system, which wasn’t on earlier versions of the popular 737, is a focal point of investigators probing the Oct. 29 crash of Lion Air Flight 610. That plane plunged into the Java Sea, killing 189 people.

“The bottom line here is the 737 Max is safe,” Boeing Chief Executive Officer Dennis Muilenburg said Tuesday on Fox Business Network. “This airplane went through thousands of hours of tests and evaluations, certification, working with the pilots, and we’ve been very transparent on providing information and being fully cooperative on the investigative activity.”

A union bulletin to pilots at American Airlines Group Inc. said the company hadn’t provided details about the system with its documentation about the plane. “This is the first description you, as 737 pilots, have seen,” the Allied Pilots Association dispatch said. Southwest Airlines Co. pilots expressed similar concerns.

The Maneuvering Characteristics Augmentation System in limited instances will lower the nose of the 737 Max if the airplane is close to an aerodynamic stall even if pilots are manually operating controls. Indonesian authorities suspect faulty sensor readings may have caused the Lion Air jet’s computers to repeatedly press its nose downward before the plane accelerated into a final dive into the sea.

Key Information

“The crew may have been hampered in their efforts to understand the airplane’s behavior, and regain control, by the fact that they were missing a key piece of information -- the existence of an automatic system that could adjust the trim, even when the airplane’s autopilot was switched off,” Douglas Harned, an analyst at Bernstein Research, said in a note to clients.

Boeing and regulators have underscored the steps pilot can take to disable the pitch-trim system, as it’s known, in bulletins to 737 Max operators over the past week. Because the safety system is software-based, it could be updated relatively easily if regulators and the manufacturer determine that’s the best course.

Such a fix would be much less disruptive for airlines and Boeing than the three-month grounding that halted the plane-maker’s 787 Dreamliner flights in 2013.

“Because the Max is a derivative aircraft, we doubt that this is a difficult-to-correct technical issue as the battery fire early in the 787’s life, appeared to be,” Cowen analyst Cai von Rumohr said in a note.

(Julie Johnsson - Bloomberg)

Saudi's flyadeal to pick Airbus or Boeing jets by end of month

Saudi Arabian budget airline flyadeal aims to decide whether to order Airbus or Boeing narrow-body jets by the end of this month, its chief executive said on Wednesday.

Flyadeal, a subsidiary of state-owned Saudi Arabian Airlines, had been due to decide on the order for 30 Airbus A320neos or Boeing 737 MAXs in the second quarter but held off to further assess the performance of the revamped models.

"We want some evidence because we're committing a huge chunk of capital," Con Korfiatis told Reuters at a Dubai conference, adding that the plane-makers had competed "very vigorously".

Flyadeal is a pure low cost airline, with passengers charged for meals and checked luggage, a model that has so far not had major success in the Middle East beyond United Arab Emirates-headquartered Air Arabia.

The order for the planes, which are the latest versions of world's most used jets and typically employed for short to medium haul flights, would be worth more than $3 billion at current list prices, although industry sources say discounts of around 50 percent are common on such large orders.

Although the world’s two largest plane-makers say they are mostly sold out of the jets until 2024, the order will give flyadeal a pipeline allowing it to plan for long-term growth.

The airline, which plans to add around 10 aircraft a year to its fleet from 2020, will next year start leasing the model of jet it orders until it receives its first aircraft from the production line, Korfiatis said.

Flyadeal operates a fleet of eight leased Airbus A320ceos and will add another three by early January 2019, allowing it to expand from 10 to 14 domestic destinations.

The airline, which launched in September 2017, has carried more than 2 million passengers so far and expects to carry more than 3.5 million in 2019, Korfiatis said.

It is also planning to launch its first international flight next year which will likely be to Egypt, Turkey, or to other Gulf Arab countries.

(Alexander Cornwell - Reuters)

Wednesday, November 14, 2018

Hawaiian Airlines Raises Bag Fees to Match Rivals

Since late August, U.S. airlines have raised their checked bag fees one after the other. By the end of October, Hawaiian Holdings subsidiary Hawaiian Airlines was one of the last remaining holdouts -- with the notable exception of Southwest Airlines, which is sticking with its popular "bags fly free" policy.

For a while, it seemed like Hawaiian might be reluctant to raise its baggage fees due to the impending arrival of Southwest Airlines in Hawaii. However, Hawaiian Airlines announced this week that it is matching its other rivals' bag fee increases on mainland-Hawaii routes. 

A new standard for baggage fees

Until recently, most U.S. airlines charged $25 for the first checked bag and $35 for a second checked bag on domestic routes. However, over the span of a month beginning in late August, four of the top six U.S. airlines raised their checked bag fees to $30 for the first bag and $40 for the second.

Aside from Southwest Airlines, Alaska Air was the only one of the six largest carriers that hadn't adjusted its bag pricing as of the end of September. That made it hard for Hawaiian Airlines to raise its baggage fees, because Alaska is arguably its closest competitor. Indeed, Alaska Airlines flies to Hawaii from eight of Hawaiian's 12 mainland gateway cities: Seattle, Portland, Sacramento, Oakland, San Francisco, San Jose, Los Angeles, and San Diego.

However, in mid-October, Alaska Airlines matched the legacy carriers' $5 bag fee increases, effective Dec. 5. That paved the way for Hawaiian Airlines to follow suit.

Hawaiian Airlines announces new baggage fees

On Tuesday, Hawaiian Airlines increased its first bag fee to $30 and its second bag fee to $40 for mainland-Hawaii routes. (Unlike Alaska Airlines, it is implementing the new fees immediately.) This harmonizes Hawaiian's pricing for checked baggage with that of its major rivals.

Elite-level frequent fliers and holders of Hawaiian Airlines' co-branded credit cards will continue to receive special baggage allowances. Additionally, customers on Hawaiian's international flights will still be allowed to check two bags free of charge.

More interestingly, Hawaiian Airlines is maintaining its special baggage pricing for inter-island flights. Members of the carrier's (free) frequent flyer program pay just $15 for the first checked bag and $20 for the second checked bag. First and second checked bag fees for non-members will stay at $25 and $35, respectively.

A small way to bolster unit revenue

Once all of its larger peers -- other than Southwest -- had decided to raise their checked bag fees, there wasn't much point to Hawaiian Airlines standing pat. Travelers who care a lot about baggage fees are going to gravitate toward Southwest Airlines when it starts flying to Hawaii, regardless of whether Hawaiian charges $25 or $30 to check a bag. For all other travelers, Hawaiian would be leaving money on the table by charging below-market checked bag fees.

Higher baggage fees may help Hawaiian Airlines reverse a string of recent unit revenue declines in the mainland-Hawaii market. Last quarter, Hawaiian's revenue per available seat mile plunged about 10% on those routes due to overcapacity.

Of course, the unit revenue impact of higher baggage fees alone will be fairly modest. An extra $5 isn't much compared to the fares Hawaiian charges for mainland-Hawaii flights, which are typically more than $200 one-way. However, Hawaiian Airlines can use all the help it can get. Furthermore, bag fees are a stable source of revenue that isn't subject to big swings based on competitive dynamics.

Fortunately, Hawaiian Airlines will face easier year-over-year comparisons next year, and the completion of its ongoing fleet transition should also help stabilize unit revenue. And with unit costs trending in the right direction and oil prices finally pulling back, 2019 is shaping up to be another solid year for Hawaiian Holdings.

(Adam Levine-Weinberg - The Motley Fool)

Airbus likely sold 10 A330neo jets to Delta

U.S. carrier Delta Air Lines has emerged as the probable buyer for 10 Airbus A330neo jets worth $3 billion, industry sources said, in a boost for the becalmed European model.

Airbus announced an order for 10 of the 300-seat aircraft in its latest monthly order update on Friday, but withheld the name of the buyer for the Oct. 30 deal.

Two industry sources, asking not to be named, said Delta was the buyer. A third said Delta had been looking to expand an existing order for 25 A330neo aircraft.

Airbus declined comment. Delta was not immediately available for comment.

If confirmed, the deal would mark the second order for the slow-selling A330neo in as many weeks after Kuwait Airways ordered eight of the long-haul planes in mid-October.

Airbus is aggressively seeking more orders for the latest version of its profitable A330 franchise after sales of the engine-upgraded A330neo model fell short of expectations in the face of heavy competition from the newer Boeing 787.

However, industry sources have questioned how far recent orders represent net new sales for the European giant, saying they could replace at least some earlier orders for the A350.

The new-generation A350 is a longer-term bet for Airbus and competes with the 787 and Boeing 777. But one market source said Airbus was willing to give up some orders for the newer plane in order to keep the A330neo afloat and prevent production cuts.

Airbus has given cautious signals that it is prepared to be flexible in both directions when offering combinations of the A330 and A350, sources said, though it cannot afford to lose too many orders or customers for the more strategic A350 plane.

The wide-body A330neo is part of a pair of upgraded aircraft - the other being the strong-selling A321neo narrow-body - that strategists say Airbus is trying to push into the market to reduce the space for a new 220-260 seat, mid-sized jet being studied by Boeing. A decision on that project is due next year.

Airbus is especially keen to continue A330-series production because it has been a major source of profits and cash.

Airbus also needs an aircraft like the 250-300 seat A330 to offer airlines a step-up into the wide-body market from its largest narrow-body, the A321neo, which holds up to 240 people.

Without it, Airbus's smallest wide-body would be the 315-seat A350-900, which leaves a large gap in Airbus's portfolio above the A321neo for rival Boeing to exploit.

(Tim Hepher and Tracy Rucinski - Reuters)