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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

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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.

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 Drops Delta Bid January 31, 2007

Posted by Andrew in Commercial Aviation, Delta, US Airways.
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When US Airways announced an offer to takeover Delta, the move left many in the industry scratching their heads. After increasing the buyout price several times to no avail, US Airways today conceded defeat . US Airways CEO Doug Parker vented his frustration to the media, quipping that the Delta creditors knew “exactly what they needed to do”, but concluded that because the Delta creditor’s committee was not being responsive to the deal and impending deadline, his company was “not willing to pursue this transaction anymore.” In an attempt to shift the focus away from the failed deal, he emphasized his airline’s need to move forward on its own. The mood at Atlanta based Delta took on a more celebratory tone on the news of the retraction of the US Airways bid. Delta’s CEO gleefully commented to the press: “this is a proud day for the thousands of Delta people, customers, communities, civic leaders and others who stood up for our standalone plan and said, emphatically, ‘Keep Delta My Delta.”

Sources: USATODAY, Yahoo Financial News

UPS Airbus A380 Cancellation Imminent January 19, 2007

Posted by Andrew in Commercial Aviation.
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According to French business daily paper Les Echos, United Parcel Services (UPS) plans to cancel its order for Airbus A380 aircraft as early as next week. An Airbus representative would neither confirm or deny the rumor, only stating that Airbus “had no information at the time.” Such a cancellation would mirror the moves of the A380 freighter program’s other clients, cargo carrier Fedex and airplane leasing company ILFC, both of whom have cancelled their orders in the recent months. Fedex elected to purchase Boeing 777 freighter aircraft instead. Some analysts believe that UPS may simply renegotiate the deal with Airbus, electing to purchase the recently launched A330 freighter variant instead of the much larger A380 aircraft. Despite reliable reports, doubt remains on both the future of the UPS deal and the A380 freighter. UPS spokesman Mark Giuffre commented on the rumors, saying that they “were still evaluating all [their] options.” If United Parcel Service does cancel its A380 order, it will be the death blow to the freighter version of Airbus’ flagship aircraft.

Sources: Atlanta Business Chronicle, Flight Global

ExpressJet Creates New Corporate Jet Venture October 17, 2006

Posted by Andrew in Commercial Aviation, Continental, ExpressJet.
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ExpressJet, a former unit of Continental Airlines, announced today that it was converting ten of its aircraft into corporate configurations to serve the burgeoning private jet market. ExpressJet Corporate Aviation, the new unit of ExpressJet, is slated to begin operation in December 2006 with Embraer 145XR aircraft. The carrier plans to invest $5 to $6 million into its new corporate division. ExpressJet boasts that the refitted aircraft will come replete with amentities like satellite radio, but without the delays that plague mainstream commercial air travel. Some analysts see this move as a natural decision to diversify the carrier’s interests, particularly since “Continental canceled [their] capacity purchase agreement” with Expressjet. Saddled with sixty-nine aircraft and no future partner, ExpressJet is exploring offers with other legacy carriers. A decision on plans for the remaining aircraft will come at a November 9 shareholder conference.

Source: Reuters

Emirates to Order Planes to Account for A380 Delays October 12, 2006

Posted by Andrew in Airbus, Commercial Aviation, Emirates.
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Emirates Airlines said that it was looking into purchasing aircraft to make up for Airbus A380 delays. The carrier, which placed a $15 billion order for 43 A380 aircraft, will not receive an aircraft until August 2008. According to original plans, Airbus planned to deliver eighteen A380 aircraft to Emirates by the end of 2008. Seeking to make up for the lack of capacity, Emirates is evaluating deals from both Airbus and Boeing to fulfill their short-term needs. The carrier made no indication whether it had a preference for either manufacturer, but Tim Clark, Emirates CEO, said “We will acquire more aircraft, if we can, to fill the gap and we have teams of people actively involved in that.” Aside from leasing, it is not clear whether Emirates can receive new a substantial number of widebody aircraft before the delivery of the first A380. The Boeing 777 family is heavily booked for the coming years, while the inferior economics of the A340 family have made it less popular in light of high jet-fuel prices.

Source: Reuters

Irish Ryanair Announces Surprise Bid for Aer Lingus October 5, 2006

Posted by Andrew in Aer Lingus, British Airways, Commercial Aviation, Ryanair.
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For the past few weeks, the difficulties at Airbus have dominated commercial aviation news. Ryanair, known for its cheaps fares and no-frills policies, shocked the world airline industry this morning by announcing a takeover of Irish flag carrier Aer Lingus. This move marks the first time a low-cost carrier has sought to takeover a competitor with trans-Atlantic operations. Aer Lingus’ board rejected the offer, claiming that the $1.9 billion offer “undervalued the group’s business and long-term growth potential.” Ryanair CEO Michael O’Leary visited European news outlets this morning, praising the possible fusion of the two airlines as ” a unique opportunity to form one strong airline group for Ireland and for European consumers.” Initially, if the hostile takeover occurs, he said that the two carriers would maintain seperate entities under a common parent. A few commercial aviation analysts have noted the deal would tranform “Ryanair, with a market value of 6.7 billion euros and cash resources to fund the purchase of some 2 billion euros, from being a pure “no-frills” carrier investment to one with network carrier exposure.” The combination of Aer Lingus and Ryanair would benefit Aer Lingus’ international operations tremendously. Aer Lingus would gain instant access to 50 million passengers, most of whom funnel through Dublin, a major hub for both Aer Lingus and Ryanair. British Airways and other European carriers are the most affected by the proposed Irish synergy, as Aer Lingus will likely be converted into a more capable international competitor with the extra passenger feed. On news of the announcement, the Irish government, a twenty-eight percent shareholder in Aer Lingus, said that it would not sell its shares. Even though O’Leary has a history of criticizing the Irish government and Aer Lingus, O’Leary conceded that he would be content with having the government as a minority shareholder. Before approval, the deal must be investigated by the European Union. Industry insiders don’t expect any government interference, however.

Source: Reuters

Continental Wins US Postal Contract September 26, 2006

Posted by Andrew in Commercial Aviation, Continental, Uncategorized.
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This morning, legacy carrier Continental Airlines was awarded a US Postal Service contract valued at $258 million. The agreement, which makes Continental the second largest passenger carrier that also carries mail, will last for five years. Continental, along with many other carriers, has begun to diversify and implement alternative ways to generate revenue in addition to carrying passengers. The latest contract is seen by some analysts as a reward for Continental, which has been carrying mail for the USPS for the past seventy-two years.

Source: Reuters