MUCH OF THE FOCUS IN THE airline industry over the past year has been on the soaring cost of fuel and the multitude of revenue-raising possibilities, such as charging for checked bags, that some carriers have undertaken to survive the current crisis--with good reason. IATA is predicting an industry loss of $5.2 billion this year as oil prices remain high while demand weakens, and it suggests that 2009 won't be much better.
IN THE LAST EIGHT YEARS, UNITED AIRLINES HAS LOST ITS STATUS as the world's largest airline, survived a three-year bankruptcy restructuring, billions of dollars in losses and having its aircraft used to perpetrate the 9/11 terrorist attacks. For one of the oldest and most recognized names in the global air transport business, fancy new product offerings, shiny next-generation aircraft and expansion are not on the radar screen. More than 70 years after its founding as an airmail carrier, Chicago-based UA and its parent company UAL Corp.
FACC AG recently won a contract with Airbus to provide flap track fairings (wing components made of composite materials) for A330s/A340s, a deal expected to create 100 new jobs and expand the supplier's core competencies in aerostructures. The agreement follows a contract FACC signed last year with Airbus to produce FTFs for A330 and A340-200/-300 aircraft as well as design and procure the necessary tools to manufacture them. The order value, FACC estimates, will amount to $75 million over the next four years and could be worth more as the contract is open-ended.
PHOTO CREDIT: Thales Thales won Level D certification in China for an A320 full flight simulator for Sichuan Airlines. One of two FFSs in a package that also includes a formation systems trainer device, the simulator was awarded to the company earlier this year in a contract valued at more than $20 million.
Air France Industries KLM Engineering & Maintenance appointed Jonathan Soesman VP-sales-Southern Europe and Karen J. Berg VP-sales-North America. Air France KLM said that Chairman and CEO Jean-Cyril Spinetta will relinquish the latter title on Jan. 1 when Pierre-Henri Gourgeon will become CEO. AWAS tapped Frederic Mireur as head-corporate finance. Boeing named David Schumacher dir.-state & local government relations, Fakher Daghestani Middle East communications dir. and Chantal Dorange communications dir.-Europe, Middle East & Africa.
THE DELIVERY IN SEPTEMBER OF Qantas's first A380 afforded ATW an opportunity to talk with CEO Geoff Dixon, who retires at the end of this month. Dixon assumed leadership of the carrier in March 2001 and has led it successfully through some of the greatest challenges the airline industry has faced. This year Qantas recorded another record profit while continuing to enjoy an enviable reputation for safety and market leadership.
IT'S 10:45 ON A SUNLIT SATURDAY morning. The passengers onboard an ExpressJet (Delta Connection) ERJ-145 from Vancouver can actually see the Los Angeles Basin. Beautiful day. Beautiful flight, made more so by the fact that the pilot just chirped over the cabin PA that it will be 50 min. early. A happier cabin of campers would be hard to concoct.
PHOTO CREDIT: Rolls-Royce Rolls-Royce opened a 1,127-sq.-m. service center in Brazil to support its Trent engines in South America. The $1 million facility will feature Rolls' On-Wing Care service, initially supporting the Trent 700 on A330s and eventually the Trent 1000 on 787s.
A NEW BEGINNING" was how Chinese Minister of Taiwan Affairs Office of State Council Wang Yi characterized the July 4 launch of weekend (Friday through Monday) flights between the mainland and Taiwan. Although cross-straits flights had occurred infrequently since 2003-typically during peak leisure travel periods such as the Spring Festival and Chinese New Year-this is the first time that such flights have been conducted on anything like a regular basis.
SURVEYS CONSISTENTLY reveal that more than 90% of commercial air passengers travel with a mobile phone and/or PDA. Even in countries where cellular technology is more limited, airline passengers usually are among the most technologically savvy citizens. With such devices able to carry 2-D barcodes and receive and transmit more and more information, airports and airlines are seeking ways to take advantage of the fact that nearly all of their customers are carrying them.
FOR TURKISH AIRLINES PRESIDENT AND CEO TEMEL KOTIL nothing is aggressive or unrealistic about the carrier's five-year business plan, which aims to double passengers carried to 40 million and more than double revenue to $10 billion by 2013. THY's recent RFP for 25 twin engine widebodies and 50 narrowbodies plus 10 widebody and 10 narrowbody options confirms its intent to become one of Europe's major players. It carried 10.3 million passengers in the first half of 2008, representing 6% of all passengers carried by the Assn. of European Airlines' 35 members and a respectable seventh position.
Centre for Asia Pacific Aviation announced plans to launch its CAPA AeroPark best practice aviation training campus in India. Facility will accommodate operational and educational training requirements for airlines, airports, ANS providers, government and suppliers. Sites in Bangalore, Navi Mumbai and Pune are under consideration. Final location will be announced in early 2009. First phase is slated for 2010.
Sensis Corp. reached agreement with Nav Canada to provide its Multistatic Dependent Surveillance multilateration for surface surveillance at Montréal-Pierre Elliott Trudeau International. Contract also calls for Sensis's VeeLo NextGen vehicle locators to be used for tracking airport vehicles in maneuvering areas. "MDS's use of nonrotating sensors significantly enhances surveillance coverage from the current surface radar, especially during inclement weather conditions such as rain and snow storms," Sensis Air Traffic Systems VP and GM Tony Lo Brutto explained to AP.
Honeywell signed a 10-year contract with Kunpeng Airlines to provide MRO services on components, avionics and lighting equipment for ERJ-190s. Valued at $21 million, the agreement covers more than 65 Honeywell parts. "Honeywell's service program provides one manageable package that incorporates maintenance, logistics and spares access, giving Kunpeng Airlines the parts and services they need, when and where they need it," said Honeywell Airlines VP Mike Madsen.
Sabre Travel Network has devised a way for travelers and travel agents to compare the true costs of flights when factors such as checked-bag fees and preferred seat selection are taken into account. Called Attribute-Based Shopping, the application will be available to consumers and travel management companies in 2009. It will be available both to airlines that are hosted on the Sabre system and to airlines that simply distribute through the Sabre GDS.
Delta Air Lines CEO Richard Anderson hit the nail on the head last month when he remarked that "You would rather deal with demand cessation than $150 oil." Anderson's observation sums up the peculiar good news/bad news situation in which the airline industry finds itself this autumn.
HOW QUICKLY THE PRESENT BECOMES the good old days in the air transport industry! Twelve months ago, providers of maintenance, repair and overhaul services were confidently eyeing new markets and growth opportunities in line with rising airline traffic and capacity. The aging of the fleet and higher aircraft utilization meant that demand for MRO services was increasing. Private equity was turning its attention to the sector and places like India seemed ripe for exploration (ATW, 11/07, p. 46).
Compagnia Aerea Italiana, the consortium of investors negotiating a bid for Alitalia, reportedly walked out of talks with labor unions late Wednesday night, putting its bid for the failing flag carrier in doubt ( ATWOnline, Oct. 30). It was scheduled to present its offer this evening. CAI head Roberto Colaninno said he was "very worried about the situation caused by the breakdown of negotiations" in a statement cited by press reports.
Northwest Airlines closed a $500 million secured revolving credit facility led by U.S. Bank with Citigroup and Morgan Stanley as co-lead arrangers and joint book runners. Financing comprises a three-year, $200 million secured revolving credit facility priced at LIBOR plus 4.5% with a final maturity on Oct. 28, 2011, and a 364-day, $300 million secured revolving credit facility with a final maturity on Oct. 28, 2009, bearing interest at LIBOR plus 3.5%.
Arab Air Carriers Org. is urging Arab governments to take responsibility for security costs, to relax bilateral agreements and ownership rules and to "genuinely review" taxes and charges imposed on air transport in order to revitalize traffic and reduce the impact of the global economic crisis on the industry.
Republic Airways Holdings reported third-quarter net income of $17 million, a 15.7% drop from the $20.2 million earned in the year-ago period. Operating revenue rose 16.7% year-over-year to $385.2 million and expenses climbed 19.2% to $325 million. Operating income was up 4.8% to $60.2 million from $57.4 million last year. During the quarter the company incurred $7.4 million in expenses related to the estimated return costs of 11 ERJ-135s and $8 million in carrying costs tied to unallocated E-170s returned from service with Frontier Airlines.
China Southern Airlines yesterday reported an CNY810 million ($118 million) net loss for the third quarter, joining "big three" rivals Air China and China Eastern Airlines deep in the red. CA and CEA earlier reported CNY1.9 billion ( ATWOnline, Oct. 29) and CNY2.33 billion ( ATWOnline, Oct. 30) three-month losses respectively. China Southern's operating revenue dropped 11.6% year-over-year to CNY14.59 billion against a 14.2% increase in expenses to CNY14.07 billion.
Virgin Atlantic Airways, which has held several discussions with bmi over a possible tie-up, still believes a combination is possible and reportedly is seeking a partnership with its UK counterpart and its future-owner Lufthansa ( ATWOnline, Oct. 30). "Everyone has speculated that it would make sense for Virgin Atlantic and bmi to combine their long-haul and short-haul networks," CEO Steve Ridgway told Reuters. "There is now a major opportunity to do that and create a new, strongly viable competitor to British Airways.
Silver Air, a charter and ACMI carrier based in Dubai, said it has received its UAE air operator's certificate. It has three 737-200s and one 737-300 and said it plans to operate 10 737 Classics by 2010.
