Arguing that the case for its merger with Delta Air Lines is "stronger than ever," Northwest Airlines yesterday unveiled a further round of capacity cuts that will contribute to the removal of 43 aircraft from its fleet this year retroactive to Jan. 1. "In response to these extraordinary fuel costs, we are taking prudent actions to reduce our capacity and right-size the airline. This will allow us to better match our capacity to customer demand as airfares, by necessity, must increase," President and CEO Doug Steenland said.
Korean Air changed the name of its short-haul domestic LCC, slated to start operations next month, from Air Korea to Jin Air ( ATWOnline, May 5). KE said the name change is intended to signal the carrier's "practical" approach, also to be signified by employee uniforms comprising jeans, t-shirts and jackets. The LCC's livery will feature a butterfly with blue and purple wings on a bright green background emblazoned on the tails of its 737-800s and A300-600s. The bodies of the aircraft will be painted silver.
Gate Gourmet entered into a joint venture with Western Group to form Gate Gourmet Middle East. The new company will look for strategic investments and flight kitchen development in the Gulf region. Offices will be in Abu Dhabi and Dubai. Financial information was not disclosed.
AirAsia CEO Tony Fernandes said the LCC will be "comfortable" even if oil prices reach $200 per barrel, the Associated Press reported from Kuala Lumpur. "We have taken a very different approach in that we will market ourselves out of this problem," he said. "We think that just putting your head in the sand and crying about oil and cutting routes is not the solution." He said reduced competition will be the "silver lining" during the current downturn. AirAsia also will focus on boostin onboard sales, AP reported.
US majors (the six legacy carriers plus Alaska Airlines) reported a system operating loss margin of 5.2% in the first quarter, reversed from a 2.5% profit in the year-ago period, according to the US Dept. of Transportation's Bureau of Transportation Statistics. The seven carriers reported a combined operating loss of $1.32 billion compared to a $559 million profit in the year-ago period ( ATW, June 2008). Summaries of low-cost carriers and regionals were not completed because bankrupt Frontier Airlines and Comair did not file their results on time.
AirTran Airways said second-quarter "yield growth has been slower" than expected "despite numerous fare increases," leading it to drop its unit revenue forecast to a year-over-year improvement of 1.5%-2% from April's prediction of 5%-6% ( ATWOnline, April 23). It said in a filing with the US Securities and Exchange Commission that in "some" markets, "fares were increased too rapidly, which limited the company's ability to effectively manage close-in demand," resulting in an increased mix of lower-yield connecting traffic.
TAM and Swiss International Air Lines yesterday signed an MOU establishing a codeshare agreement and loyalty program link-up. It is expected to be implemented in the second half of this year.
German airlines will need more than 900 commercial aircraft valued at $109 billion over the next 20 years, with 100 around A380 size, 200 mid-to-long-range and 600 short-haul, Airbus VP-Market Forecasting Laurent Rouaud told media in Frankfurt yesterday.
Cathay Pacific Airways and Dragonair flew 7.59 billion RPKs in May, up 19.6% on the year-ago month, against a 16% increase in capacity to 9.81 billion ASKs. Load factor rose 2.3 points to 77.4%. Gol and VRG flew a combined 2.36 billion RPKs in May, up 20.7% year-over-year. Capacity climbed 18.6% to 3.61 billion ASKs and load factor rose 1.1 points to 65.4%. WestJet flew 1.13 billion RPMs in May, a 19.3% year-over-year increase, against a 20.1% lift in capacity to 1.42 billion ASMs. Load factor slipped 0.5 point to 79.5%.
UK-based Thomsonfly and First Choice Airways will begin operating jointly under the name Thomson Airways from May 1, 2009. The rebranding of the two leisure carriers follows the merger of the tourism division of TUI AG and First Choice Holidays last fall. Changes will be phased in gradually with rebranding work on the fleet expected to be completed over the next two years. "Our aim is to build on the very best from these two award-winning airlines that share a very strong drive to provide a truly exceptional customer experience.
Lufthansa Chairman and CEO Wolfgang Mayrhuber remains confident that the current downturn in the industry will not force the German carrier to reduce capacity like European rivals British Airways and Air France KLM.
US Dept. of Transportation is considering an extraordinary request by the six US legacy carriers and Alaska Airlines to issue a "blanket waiver of all dormancy conditions" for up to two years that would allow airlines to scale back or stop serving "limited entry" international routes without losing coveted traffic rights.
US FAA Acting Administrator Robert Sturgell yesterday announced the elimination of flight caps at Chicago O'Hare, saying that the city "has outdone itself when it comes to boosting capacity" by completing the extension of one runway two months early and adding a new runway by year end. In October 2004, arrivals at ORD were capped at 88 during most hours of the day, but Sturgell said the upgrades will allow for an additional 4-5 arrivals per hr., or 56-70 each day. FAA claimed that "this additional capacity is expected to result in a modest decrease in delayed flights."
Serbian government said Friday that it will offer for sale a 51% stake in Jat Airways for a starting price of €150 million ($231.9 million). The tender, set to published July 15, according to press reports, will include an option to acquire up to 75% of the airline. "Anyone can bid, but bidders outside the EU will have to run in a consortium," Economy Minister Mladjan Dinkic said. "Our main request is to keep Jat as the national carrier and keep the Serbian flag on it." It reportedly has assets worth $150 million and is carrying €209 million in debt.
Luxair narrowed its full-year loss to €860,000 ($1.3 million) in 2007. It did not provide the year-ago result. It cited the addition of three Q400s, implementation of a "new, clear, transparent pricing structure," expanded e-ticketing and route rationalization for the improvement. Parent LuxairGroup, which counts the airline as one of four subsidiaries, reported a profit of €18.2 million.
Missouri state government authorized up to $240 million in tax credits to entice Bombardier to build its CSeries assembly plant at Kansas City International, the Associated Press reported. Bombardier said it also is considering a site near Montreal. The $400 million plant reportedly would create up to 2,100 jobs. Bombardier hopes to announce a launch customer for the new 110/130-seat jets by year end.
International Brotherhood of Teamsters filed a petition with the US National Mediation Board last week seeking a vote to represent Atlas Air and Polar Air Cargo crewmembers.
Delta Air Lines' voluntary severance offer has been accepted by 4,000 employees, double the number of workers it originally planned to slash via the program. The carrier, which plans to cut domestic capacity by 10% year-over-year in the second half of 2008 ( ATWOnline, June 3), said the workers accepting the severance offer will leave in the fall.
Air Transat parent Transat A.T. posted net income for its fiscal second quarter ended April 30 of C$40.7 million ($39.8 million), down 32.2% from C$53.8 million earned in the year-ago quarter. The company said earnings were affected negatively by a C$17.9 million writedown related to asset-backed commercial paper holdings.
Australia's Virgin Blue announced Friday a range of capacity reductions and a A$50 million ($46.9 million) cost-savings package in response to continuing record fuel prices.
Air Mauritius expects its profit for the year ending March 31, 2009, to fall to €4 million from the €16 million it earned in the recently completed year, according to a statement cited by Reuters. It said the drop is due to "prevailing market conditions and current fuel prices."
TAM will operate twice-weekly Sao Paulo Guarulhos-San Carlos de Bariloche service July 3-Aug. 10 aboard an A320. The route currently is served only by charter flights, according to TAM, which said it will evaluate the viability of the route for scheduled service.
