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United Follows American’s Lead in Checked Baggage, Will Charge for 1st Checked Bag June 12, 2008

Posted by Andrew in Airbus, American Airlines, Boeing, United Airlines.
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United Airlines announced two amendments to its checked baggage policy this morning. United, following in the steps of competitor American Airlines, disclosed today that it will begin charging those flying domestically (or to Canada) in economy class $15 for their first checked bag. The fees are waived for passengers flying internationally in all classes or domestically in either First or Business class. Those that hold Premier Status with United or within the Star Alliance are also exempt from these new fees.

John Tague, executive vice president and chief operating officer of United Airlines, attributed the new fees to the current difficult operating climate of commercial aviation, writing in a United  press release that “with record-breaking fuel prices, we must pursue new revenue opportunities, while continuing to offer competitive fares, by tailoring our products and services around what our customers value most and are willing to pay for.” United predicts that the new fees, which will be levied to select customers who bought their tickets after June 13, will generate an estimated $275 million a year in revenue. With United Airlines following rival American’s suit, expect other legacy carriers in the coming days to adopt charges for the first checked bag as well.

Source: United Airlines Press Release

Boeing 787 Still on Track June 9, 2008

Posted by Andrew in Boeing, Commercial Aviation.
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Boeing reiterated today it was still on track for a first flight of the 787 in the fourth quarter of 2008. On the program’s schedule, one spokesman said: “There is no change to the schedule for the 787 that we announced in April, which has us achieving power on by the end of June, first flight in the fourth quarter of 2008 and first delivery in the third quarter of 2009.” The most recent statement from Boeing was released to clarify a comment made by Mike Bair, vice-president of business strategy and marketing at Boeing Commercial Airplanes, who said over the past weekend that he expected the 787 to fly by the end of this summer. Boeing expects to power on the first of its 787 aircraft within the month. The success of this test is be seen as a vital indicator in whether Boeing will be able to maintain its revised schedule for the 787 program.

Source: Reuters

United Vows to Ground More Aircraft– Across the Atlantic, British Airways Looks to do the Same June 4, 2008

Posted by Andrew in Airbus, Boeing, British Airways, Commercial Aviation, Qantas, Ryanair, United, United Airlines.
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United Airlines announced its intent today to ground one hundred of its least efficient aircraft and slash over one thousand jobs as it works to combat the high price of jet fuel. Across the Atlantic, British Airways dispelled any notion that they were immune to the same market forces dogging their American counterparts. Citing high oil prices, British Airways CEO Willie Walsh said: ‘It doesn’t make sense with oil at $130 a barrel to operate flights that have not made a contribution to our cash situation. We have a healthy balance sheet. But we can’t afford to be complacent.’

While British Airways is framing their decision as proactive, the situation at United Airlines is more dire. United is slashing mainline domestic capacity by seventeen percent, and even cutting international operations, traditionally its most profitable segment, by four to five percent. Such measures include laying off an additional one thousand employees, dismantling United’s all coach offshot TED, and even mothballing Boeing 747 aircraft. Ultimately, United Airlines seeks to reduce its fleet size by twenty percent,  and will slash the size of its workforce to reflect the size of its diminished fleet.

Meanwhile, the rhetoric coming from British Airways chief Willie Walsh  is cautionary– for now. But the carrier is evaluating each route on a “route by route basis”, and contemplating grounding aircraft after the busy summer season– on the heels of recent similar announcements from  competitors Qantas and Ryanair. Further cost savings will be accrued as British Airways alters its method of repainting its aircraft. The carrier plans to entirely strip planes of their former paint jobs when they are brought in for refurbishment, a costly process, but one capable of knocking off as much as eight hundred pounds of weight.

US airlines are experiencing a time of downsizing akin to the aftermath of September 11, 2001. However, their troubles are hardly isolated to North America, and with high oil prices worldwide becoming the norm, and not an exception, worldwide airlines are taking a closer look at the efficiency of their aircraft and profitability of individual routes.

Sources: Chicago Tribune, UK Airport News.

Aloha Airlines Requests Chapter 11 Bankruptcy Protection March 21, 2008

Posted by Andrew in Aloha Airlines, Go! Airlines, Mesa.
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Aloha Bankruptcy Header

Credit: Aloha Airlines

Honolulu based Aloha Airlines filed for Chapter 11 bankruptcy protection yesterday, citing increasingly competitive competition in the Hawaiian inter-island market. In a written statement, the carrier alleged “its inability to generate sufficient revenues from its inter-island passenger business [was] due to predatory pricing by Mesa Air Group’s go! airline.” Aloha cited the combination of go!’s predatory pricing and astronomically expensive fuel prices, which reached a high of $111 a barrel last week, as reasoning for filing for protection from its creditors. The carrier plans to keep operating under bankruptcy protection, and has already lined up financing from the General Motors Acceptance Corporation. Aloha employs 3500 employees, and is an important piece of inter-island cargo operations within Hawaii. In a press release, Aloha Airlines CEO David A. Banmiller further condemned Mesa’s go!’s pricing practices, writing: “it is a travesty and a tragedy that the illegal actions of a competitor and other factors completely beyond our control have forced us to take this action.”

Source: PR Newswire

Lufthansa Buys Stake in Jetblue, Gains US LCC Partner December 16, 2007

Posted by Andrew in Airbus, Boeing, Jetblue, Lufthansa.
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Germany flag carrier Lufthansa Airlines agreed on Friday to buy a nineteen-percent share in US based low-cost carrier Jetblue Airways. According to the Associated Press,  “the deal provides for an ‘operation cooperation,’ but the companies said no specific areas of integration of flight schedules or systems have been identified.” With the deal, Lufthansa infused $300 million into Jetblue– much needed cash for an airline with $433 billion in current debt. Jetblue Airways was once the darling of Wall Street and the US media, but an operations meltdown on Valentine’s Day 2007  tarnished its reputation and precipitated a fifty-percent loss in its value since April. The deal offers code-sharing opportunities for both carriers, although neither airline discussed the specifics of their future plans. Still, Lufthansa CEO Wolfgang Mayrhuber was bullish on future interline opportunities, saying “this investment presents Lufthansa with a compelling opportunity to invest in the U.S. point-to-point carrier market as the industry continues to evolve.” Lufthansa’s investment in Jetblue comes on the heels of the Open Skies Agreement, a treaty that allows European and American carriers to fly between the continents without restrictions. The agreement does not permit European carriers to fly point to point flights within the United States, however. A Lufthansa-Jetblue alliance provides Lufthansa with a domestic partner with an established New York City hub and sizable domestic network, while Jetblue gains an ally with significant international reach. With the deal, Lufthansa places itself in a good position to take over the US carrier– but only if American legislation preventing a foreign carrier from owning more than twenty-five percent of a US carrier is overturned. Some analysts have speculated that United Airlines, a Lufthansa partner, could purchase the remainder of stock necessary to earn majority ownership, sharing control with its Star Alliance partner.

Sources: Reuters, AP

Boeing 787 Delayed Six Months October 10, 2007

Posted by Andrew in Boeing.
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Grappling with supplier shortages and assembly difficulties, Boeing announced this morning that it was pushing back the delivery of the first production aircraft six months. Boeing CEO Jim McNerney sought to temper the news, writing that “notwithstanding the challenges that we are experiencing in bringing forward this game-changing product, we remain confident in the design of the 787, and in the fundamental innovation and technologies that underpin it.” According to Boeing, their earnings guidance for 2007 and 2008 will not be affected, but at the time of publication, Boeing stock had dipped 2.3 percent. Industry insiders have suspected a delay for some time, as “early last month, Boeing announced a delay in the planned first flight of the 787 citing ongoing challenges with out-of-sequence production work, including parts shortages, and remaining software and systems integration activities.” At the time, no overall delay for the program was announced, as there was time built into the schedule to accommodate the delays. That margin has eroded, and “while [Boeing has] made some progress over the past several weeks completing work on our early production airplanes and improving parts availability across the production system, the pace of that progress has not been sufficient to support [their] previous plans for first delivery or first flight.” Although Boeing has refused to comment specifically on the individual elements holding up assembly, it is widely believed by industry insiders that the aerospace giant cannot acquire enough titanium fasteners, the components that hold together the revolutionary composite frame of the 787. Learning from rival Airbus’ mistakes on the A380 program, Boeing has been more forthcoming about difficulties with the 787. While delays in neither program have been received favorably, both companies have pushed back the delivery of their aircraft to ensure that they are safe and perform to the expectations of their customers. Boeing plans to further address the delay of the 787 program in a conference call at 12:30 CST, today.

Source: Boeing Press Release

Safety to Supercede Comfort in Brazilian Air System July 26, 2007

Posted by Andrew in Airbus.
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Complaints about travel delays within the domestic US have been the talk of the commercial aviation industry this summer, but in the wake of several recent deadly crashes in Brazil, delays are surely preferable to disaster. The Brazilian government is embracing this rhetoric, vowing that “if air safety means queues for some time longer, then there will be more queues.” In response to a GOL Linhas Aereas crash several months ago, and most recently a TAM Linhas Aereas crash in Sao Paulo that killed over two-hundred people, Brazil’s Defense Minister Nelson Jobim has begun to outline measures to stabilize the Brazilian air traffic control system. Criticizing his predecessors, he reiterated a belief that “Infraero (Brazil’s Airport Authority) had prioritized comfort over safety in past years, building shopping malls and food courts in airports rather than new runways.” Industry insiders expect a shuffling of officials within the various aviation and airport ministries, although some are fearful that appointees will be chosen based on political connections. Further details on Jobim’s plan to fix the turbulent Brazilian are expected in the coming days, but for now the emphasis is on stabilizing the system, which has been crippled by the aftermath of the TAM crash at the nation’s most populous airport, Congonhas, in Sao Paulo.

Source: Reuters

Jetblue Amidst Rigorous Review of Business Strategy June 14, 2007

Posted by Andrew in Airbus, Commercial Aviation, Embraer, Jetblue, Southwest.
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Licking its wounds from a customer service melt-down in February and an overall soft market, Jetblue Airways has begun a second review of its long-term business strategy. New Jetblue CEO Dave Barger has already shaved back the carrier’s growth prospects in the short-term, and is considering selling some of the carrier’s Airbus A320 aircraft to generate capital. Last year the airline sold five of its most elderly aircraft to Bluewings, a low-fare carrier based in Dusseldorf, Germany. With Airbus A320 aircraft in high demand at the moment, the sale of these aircraft has proven to be both a financially savy move and a way to reduce capacity. Within the American domestic market, most carriers have reduced their fleet sizes significantly since September 11, 2001. Until recently, Southwest Airlines and Jetblue were notable exceptions; however, even stalwart Southwest is warning that it may have to slow growth amidst a sluggish economy. So far, Barger is satisfied with Jetblue’s cost discipline, but at a recent Merrill Lynch conference, he added that “there is still opportunity for improvement.” All options are being considered to boost revenue, except the implementation of first-class, the CEO recently commented.

Sources: Reuters, Blue Wings

American Airlines Tenders Deal with Boeing for More 737’s, 787’s March 28, 2007

Posted by Andrew in Commercial Aviation.
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American Airlines announced today that they plan to take accelerated delivery of 47 Boeing 737-800 aircraft. The carrier recently embarked on a fleet renewal program, seeking to replace its aging MD-80 aircraft with Boeing’s more efficient model. Slipped innocuously within the press release was even larger news. According to the statement, American Airlines recently negotiated with Boeing “the right to purchase 787 aircraft.” While not a firm commitment, this admission is the firmest evidence yet that the carrier will purchase Boeing’s newest offering. American Airlines has refused to comment any further, but many industry analysts believe that the airline will sign a large deal within the year. Time is of the essence for American Airlines, even if the carrier is a very important customer for Boeing. Early delivery slots are dwindling; unless Boeing saved slots for American on the belief that the airline would eventually buy the 787. With the legacy carriers beginning to enjoy a rejuvenated market, a flurry of orders is expected in the coming months from American, United, and Delta Airlines as they upgrade their long-haul fleets to compete with international rivals.

Source: American Airlines

US Airways to Announce New Aircraft Order in April March 15, 2007

Posted by Andrew in Airbus, Boeing, US Airways.
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Legacy carrier US Airways plans to order new aircraft at the end of April, beginning an extensive revamp of their aging fleet. According to major news outlets, the carrier is evaluating proposals from Boeing and Airbus for both narrow and wide body aircraft. US Airways plans to reach a decision by April 30, choosing either the Boeing 737 or Airbus A320 in the narrow-body segment, and the Boeing 787 or Airbus A350 in the wide-body market. Since Airbus financed a hefty chunk of US Airway’s exit from bankruptcy several years ago in exchange for a loose commitment to the A350 program, many analysts believed that an Airbus order was a certainty. However, in response to the redesigns and delays that have come to characterize the A350 program, US Airways Chief Financial Officer recently quipped, “the A350 today is not the plane we ordered.” He added that the airline was contractually able to cancel the order, if it so desired. From all appearances, US Airways is serious about possibly ordering Boeing’s 787 offering. Industry sources indicate that Boeing has reserved production slots for US Airways– but they will be given to another customer if the carrier does not come to a decision quickly. No matter which carrier US Airways chooses, it will likely not receive new aircraft for a few years, as Boeing is rumored to be sold out of production slots in the short term. Airbus’ A350 offerings isn’t estimated to enter service until 2013, at the earliest. Additionally, US Airways is rumored to be in talks with Air Canada Airlines to purchase its fleet of Airbus A340-500 aircraft, with the hope that these aircraft could serve its proposed Philadelphia to Shanghai route. Air Canada dumped these aircraft in favor of Boeing 777 aircraft, citing significant operational savings of the Boeing aircraft over Airbus’s offering.

Source: Bloomberg.com