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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


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.

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

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

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 

Airbus Wins Indian Orders for A330 Freighter January 16, 2007

Posted by Andrew in Airbus, Boeing.
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India’s Flyington Freighters announced yesterday that it would purchase six A330 freighter aircraft from Airbus at a deal valued at near one billion dollars. The deal lends credibility to the recently launched A330F, the latest freighter offering from Airbus. In a press release, Airbus noted that Flyington Freighters signed a deal with Boeing last year for freighters as well. That deal may be in jeopardy, as a Flyington representative would only confirm that the deal is in place for the moment. Delivery from both airplane manufacturers is scheduled to begin in 2009. Flyington Freighters expects to begin flying within a few months, launching with leased aircraft. So far, according to list prices, the freight carrier has signed orders valued at around two billion dollars. Boeing and Airbus are targeting India, trying to “make up for slack demand for aircraft from traditional carriers in the United States and parts of Europe.”

Source: Reuters

Lufthansa to Launch Boeing 747-800i December 5, 2006

Posted by Andrew in Airbus, Boeing, Lufthansa.

According to unnamed sources, German flag-carrier Lufthansa Airlines agreed in principle to purchase twenty Boeing 747-800 passenger aircraft. Sources close to both parties say that a formal announcement may come as early as tommorrow. Purportedly the deal has a list value of $5 billion, and Lufthansa could take options for twenty more of the aircraft. Lufthansa, a launch customer for the Airbus A380, will likely use the 747-800i as a replacement for its large, aging 747 fleet. Due to delays in the Airbus A380 program, Lufthansa is anticipated to take delivery of its first 747-800 only a few months after Airbus delivers the first A380 to Lufthansa. This order, once formally confirmed by Lufthansa, will be the first for the passenger variant of the 747-800. Analysts expect other carriers to follow suit now that Lufthansa has tested the waters.

Source: Reuters and WSJ

UPS: No Time Pressure for Airbus A380 Decision November 8, 2006

Posted by Andrew in Airbus, Fedex, UPS.
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United Parcel Service (UPS) issued a statement this morning declaring that it was in no rush to make a decision on its A380 order with Airbus. There is speculation that UPS may follow Fedex’s suit, as the Airbus A380 is seen by some analysts as an oddball aircraft in the freight company’s fleet. If UPS cancels, Airbus would likely be forced to cancel the freighter variant of the A380, which currently only has two customers. Citing “enough other planes scheduled for delivery over the next two years to cover its immediate needs,” UPS for the time dispelled any speculation of a cancellation. The freight carrier neither confirmed or negated the possibility of a cancellation in the future, but delayed a decision until a detailed analysis is made by the company. UPS has on order ten Airbus A380 aircraft, with options for an additional ten to be delivered in the next decade.

Source: Reuters

Fedex Cancels Airbus A380 Order, Defects to Boeing November 7, 2006

Posted by Andrew in Airbus, Boeing, Fedex.

Fedex, frustrated with delays in the Airbus A380 program, cancelled its order for ten of the aircraft in the freighter configuration early this morning. Citing “significant delays for delivery of A380s” and a need to meet the growing global package demand, the freight carrier elected to purchase the Boeing 777F instead of the much larger Airbus A380 aircraft. In response to the largest blow dealt to the Airbus A380 program, an Airbus spokesman said that “Airbus regrets FedEx’s decision but understand[s] their need to urgently address capacity issues.” Although Dubai-based Emirates has been threatening cancellation in recent months, Fedex is the first major carrier to follow through. Fedex’s cancellation came as a surprise to the aviation industry this morning; United Parcel Service, the main competitor of Fedex was rumored to be considering a cancellation, but such an action was not expected from Memphis based Fedex. The Boeing 777F, scheduled to be first delivered in 2008, is not seen as a replacement for the A380. The Boeing 777F is of comparable size to the MD-11, the backbone of Fedex’s widebody fleet. With MD-11’s becoming more difficult to acquire, many see Fedex’s purchase of triple-sevens as a move to augment an aircraft size that serves the company well. Fedex indicated that the decision to purchase the Boeing 777 freighter variant came as a result of the recently announced delays. The freight company, an early proponent of the Airbus A380 program, noted however that it will continue “to be Airbus’ largest wide-body airplane customer and will add additional new and used Airbus wide-body aircraft to its fleet in the coming years.” Boeing did not comment on the recent deal, however investors rewarded the company by boosting its shares on news of the deal.

Source: Reuters