Tuesday, January 31, 2017

Westjet Boeing 737-8CT(WL) (37158/2841) C-GWSV

Departs Los Angeles International Airport (LAX/KLAX) on January 29, 2017 wearing the special Walt Disney Studio "Frozen" livery.

(Photo by Michael Carter)

Alaska Airlines Boeing 737-790(WL) (30795/1277) N644AS

Departs Los Angeles International Airport (LAX/KLAX) on October 13, 2016 sporting the carrier new livery.

(Photo by Michael Carter)

United Airlines Boeing 737-924(ER) (32835/2817) N75432

Captured at Los Angeles International Airport (LAX/KLAX) on November 30, 2016 sporting the special "ECO-Skies" livery.

(Photos by Michael Carter)

Southwest Airlines Boeing 737-7H4(WL) (27842/2) N708SW

Taxies from Rwy 25L as another Southwest Airlines flight departs from Rwy 25R bound for Mexico on January 26, 2017.

This was one of the Boeing 737NG flight test aircraft before entering service with the carrier.

The photo also gives us a nice comparison between the old and the new liveries.

(Photo by Michael Carter)

Virgin America Airbus A320-214 (c/n 5034) N853VA "MT Hoodie"

Caught departing Los Angeles International Airport (LAX/KLAX) from Rwy 25R on December 19, 2016.

(Photo by Michael Carter)

LATAM Boeing 787-9 (38474/426) CC-BGK

Seen under tow at Los Angeles International Airport (LAX/KLAX) on January 30, 2017.

(Photo by Michael Carter)

Cargolux Airlines International Boeing 747-4R7F (35804/1390) LX-WCV "City of Petange"

Turns off Rwy 25L at Los Angeles International Airport (LAX/KLAX) following her arrival on January 26, 2017.

(Photo by Michael Carter)

United Airlines Boeing 777-222 (26919/11) N768UA

This is one of the oldest Boeing 777's still in service having been delivered to United Airlines almost 22 years ago on June 26, 1995.

In the above photo it is captured arriving at Los Angeles International Airport (LAX/KLAX) on January 11, 2017.

(Photo by Michael Carter)

Sichuan Airlines Airbus A330-243 (c/n 1082) B-6518

Climbs from Rwy 25L at Los Angeles International Airport (LAX/KLAX) as it departs on December 19, 2016.

(Photo by Michael Carter)

Swiss Boeing 777-3DE(ER) (44582/1363) HB-JNA

The carriers first 777-300 arrives at Los Angeles International Airport (LAX/KLAX) on December 4, 2016 sporting the special "Faces of Swiss" livery.

(Photos by Michael Carter)

China Southern Boeing 777-31B(ER) (43225/1358) B-2049

Departs Los Angeles International Airport (LAX/KLAX) on December 25, 2016 sporting the carriers "Skyteam" livery.

(Photos by Michael Carter)

FedEx McDonnell Douglas MD-11F (48792/636) N621FE "Connor"

Taxies at Los Angeles International Airport (LAX/KLAX) on January 30, 2017 and in an earlier photo, departing LAX on November 30, 2016.

(Photos by Michael Carter)

Gulfstream G650 (c/n 6086) VP-BLF

Captured resting on the Gulfstream Service Center ramp at Long Beach Airport (LGB/KLGB) on January 31, 2017, ex-VHLUY, N686GD.

(Photo by Michael Carter)

Air France Airbus A380-861 (c/n 117) F-HPJJ

Delivered to Air France on June 23, 2014, the aircraft is captured at Los Angeles International Airport (LAX/KLAX) on January 30, 2017 sporting special "Paris 24" markings in support of the city as it hopes to win the bidding to host the 2024 Olympic Games.  

(Photo by Michael Carter)

Monday, January 30, 2017

Delta operations ‘back to normal’ after Jan. 29 IT failure

Delta Air Lines experienced its second systems outage in six months Jan. 29, triggering a ground stop and cancellation of approximately 280 flights, with additional cancellations possible for Jan. 30, the Atlanta-based airline said.

In a 7 a.m. EST statement Jan. 30, Delta said “[the airline] is operating the vast majority of its flight schedule today as the airline recovers from a systems outage that caused departure delays and about 170 cancellations Sunday.”

Delta’s essential IT systems went down at about 6:30 p.m. EST Jan. 29, causing an immediate ripple effect of departure delays and cancellations throughout Delta’s operations. The airline said some flights experienced delays upon landing, particularly at Delta’s hub airports.

A Delta spokesperson declined to comment on the cause of the outage.

Confusion was reported among passengers as many effects of the outage, i.e. delays and cancellations, were not reflected on Delta systems, including delta.com, the Fly Delta App, airport information screens or through the airline’s reservations agents.

The computer system was restored late in the evening and a ground stop was lifted, allowing flights to resume. Delta said “all systems were back to normal shortly after midnight Monday.”

Delta CEO Ed Bastian issued an apology at 4 a.m. EST Jan. 30, saying “This type of disruption is not acceptable to the Delta family, which prides itself on reliability and customer service.”

The airline is waiving change fees for customers affected by the outage for re-booking through Feb. 3.

Delta last experienced a system outage in August 2016, a three-day event that resulted in approximately 1,925 flight cancellations. Delta later reported the outage cost the airline $100 million in lost revenue.

In July 2016, Southwest Airlines had a systemwide IT outage that resulted in over 2,000 flight cancellations and delays. 

(Mark Nensel - ATWOnline News)

Asia-Pacific international traffic up 6% in 2016; cargo rebounds

Asia-Pacific airlines carried 293 million passengers in 2016, up 6% over 2015, according to the Association of Asia Pacific Airlines (AAPA).

Low oil prices earlier in the year, coupled with a highly competitive market and expanded travel networks, prompted Asia-Pacific carriers to slash airfares, boosting international passenger demand 6.6% year-over-year (YOY) to 1.1 trillion RPKs in 2016. International capacity was up 6.3% YOY to 1.4 trillion ASKs, creating an international passenger load factor of 78.7%, up 0.3 point from 2015.

“Notwithstanding some unexpected geopolitical developments and macro-economic uncertainty in 2016, air passenger traffic carried by Asian airlines continued to grow,” AAPA DG Andrew Herdman said. “Asian regional travel markets were relatively strong, as was demand on routes to and from North America, although routes from Asia to Europe saw some weakness following terrorist-related incidents.”

Asia-Pacific air freight markets improved in the second half of 2016, AAPA said, after a lackluster start to the year. For the full year, air freight demand grew 1.8% to 66.3 billion FTKs, reflecting a 2.2% YOY contraction in the first half of the year followed by a 5.7% YOY rise in the second half of the year. AAPA attributed the growth to expansion in manufacturing production and international exports, combined with increasing consumer market demand within Asia. Air cargo capacity grew 3.5% YOY to 106 billion ATKs, creating a freight load factor of 62.5% for the year, down one point YOY.

“The outlook for [Asia-Pacific] air travel markets in 2017 remains broadly positive,” Herdman said, “[but] the earlier boost to demand from falling oil prices is now behind us, and growth rates may moderate.”

In December, international passengers in the region increased 6.7% YOY; traffic demand was up 7.5% and capacity during the month grew 5.2%, leading to a passenger load factor of 80.4%, up 1.7 points YOY. International air freight traffic increased 8.7% during the month, with capacity up 4.9%; the region’s’ freight load factor for the month was up 2.3 points YOY to 65.7%.

AAPA’s figures—all of which are provisional—are based on aggregated traffic data for 31 Asia Pacific-based carriers.

(Mark Nensel - ATWOnline News)

U.S. Air Force Awards Boeing Third KC-46 Production Contract

The U.S. Air Force on January 27 awarded Boeing a third low-rate initial production (LRIP) contract for KC-46A tankers. LRIP lot 3, valued at $2.1 billion, calls for the delivery of 15 aircraft, two spare engines and five wing refueling pod kits by July 30, 2019, bringing to 34 the number of production tankers the service has ordered over three lots.

The contract announcement followed Boeing’s release of fourth-quarter 2016 financial results on January 25, indicating that it continues to cope with cost overruns on the tanker program. The manufacturer declared $312 million in pre-tax charges related to the 767 military derivative.

The largest charge of $243 million, taken from revenue of the Commercial Airplanes division, was attributed to “additional effort to incorporate previously identified changes into initial production aircraft.” A pre-tax charge of $69 million was taken from revenue of the Defense, Space & Security division.

Under the original engineering and manufacturing development contract it was awarded in 2011, Boeing has built two 767-2C provisioned freighters and two full KC-46 tankers to serve as test aircraft. Those aircraft and the first production tanker have logged nearly 1,500 flight hours to date, the manufacturer said.

The LRIP Lot 3 award “is great news for the joint Boeing-Air Force team and reinforces the need for this highly efficient and capable tanker aircraft,” said Mike Gibbons, Boeing’s KC-46A tanker vice president and program manager. “Our Boeing industry team is hard at work building and testing KC-46 aircraft, and we look forward to first delivery.”

(Bill Carey - AINOnline News)

SCAC Boss Gaynutdinov Raises Bar On SSJ100 Support

While Sukhoi Civil Aircraft (SCAC) considers the SSJ100 regional jet one of the world’s most capable and advanced regional jets on the market, the Russian manufacturer recently has committed to showing that it can support its product to an equally worthy standard. Most recent plans call for the April 1 opening of a modern parts distribution center at Moscow Sheremetyevo Airport as part of an exercise to move warehouse capacity from two locations in the city, allowing for faster response times and better overall service.

Speaking with AIN from his Moscow offices Tuesday, SCAC president Kamil Gaynutdinov explained that the project reflects a broader effort to erase some of the perceptions of the SSJ100 as simply a niche Russian product. Nevertheless, he would not claim that SCAC has by any measure reached its potential in terms of support capabilities.

“I’m not satisfied personally because I expect much more,” he acknowledged. “I’m used to raising the bar continuously and we are pouring a humongous amount of investment into development of the spares distribution network…And we building a great digital service package for our customers—something they’ve come to expect from Boeing and Airbus airplanes.”

Named president of SCAC last September, Gaynutdinov last served as director of sales and business development for Boeing in Seattle. With his 11 years of experience at the U.S. company, Gaynutdinov brings something of a fresh, perhaps more outward-looking perspective to SCAC, more in line with its aspirations to be counted as a true global player in the civil aircraft industry.

“It’s a pretty new and big decision for a Russian company to decide to hire a former Boeing guy,” he said. “That’s pretty telling relative to the intentions and expectations to take this business global and win a much larger market share.”

Although the SSJ100 now flies with two Western airlines, namely Mexico’s Interjet and, more recently, Ireland’s CityJet, Guynutdinov sees far more opportunities in places such as Brazil, for example, where he said a group of investors has expressed serious interest in the airplane. But he said the biggest prize perhaps resides in the U.S., a market SCAC has failed to penetrate despite years of intense marketing effort.

But now, an opening might have presented itself as one of the SSJ100’s direct competitors—the Mitsubishi MRJ—suffers through yet another two-year delay, moving back expected certification to mid-2020. Guynutdinov said he has approached all of Mitsubishi’s customers, which include SkyWest Airlines and Trans States Airlines of the U.S., in an effort to convince them to consider the SSJ100 as an alternative to the Japanese regional jet. “We’re a business, we definitely need to go after every opportunity as our competitors would,” he stressed.

Of course, SCAC’s competitors didn’t likely lament the recent grounding of several SSJ100s after routine inspections discovered a tail stabilizer defect in late January. While Aeroflot, the SSJ100’s largest operator, needed to address the problem on six machines, Interjet of Mexico had to temporarily ground half of its 22-strong SSJ100 fleet until it completed checks and defect-rectification work.

Dublin-based CityJet, which now flies three SSJ100s, continued flying its airplanes as usual after performing requisite checks on December 24 and finding no anomalies. Guynutdinov said SCAC would certainly finish all the work needed to return the remaining affected airplanes to service by the end of this month.

Rather than staining the airplane’s reputation, the unfortunate episode in a way helped prove SCAC’s ability to address challenges not uncommon in a relatively young program quickly and effectively, he suggested.

“I personally received very impressive comments about how quickly our guys reacted,” said Guynutdinov. “I’ve worked with Boeing and I know how complicated these things can be. These things can happen and the airplane OEM’s job is to quickly react to it to the satisfaction of its customers. In this case I’m very proud with how our team has reacted and definitely the feedback from the airline executives speaks to that.”

Guynutdinov also credited program partner Superjet International, the joint venture between Italy’s Leonardo and Sukhoi that provides SSJ100 sales and support and performs cabin completions, for its role in the quick resolution to the problem. Although Leonardo recently announced it would sell its remaining 5 percent stake in SCAC, the Superjet relationship remains strong, he said. However, he alluded to some changes coming in the near future.

“We’re streamlining operations between the two companies,” he noted. “We still have a great future. Our Italian partner will remain a great partner of ours, and there is even a potential for some development of certain capabilities on the engineering side.”

(Gregory Polek - AINOnline News)

Gulfstream Jet Deliveries Find Bottom in 2016

Revenues at General Dynamics’s aerospace division, which includes Jet Aviation and Gulfstream Aerospace, fell 5.5 percent last year, to $8.362 billion, but earnings increased to $1.718 billion, up 0.7 percent from 2015. According to General Dynamics CFO Jason Aiken, revenues and earnings at the division are expected to climb at a compound annual growth rate of 5.3 percent and 5.8 percent, respectively, from now until 2021. This year is expected to be mostly flat, he said, with moderate growth in 2018 and 2019 and a “significant” rise in 2020.

Gulfstream delivered 115 outfitted aircraft last year, 88 large-cabin and 27 midsize jets, down from 154 (120 large and 34 midsize) in 2015. The delivery outlook for this year is 90 to 95 large-cabin and 25 to 30 midsize Gulfstreams, Aiken said. The former is expected to include an unspecified number of outfitted G500s in the fourth quarter, he added.

Meanwhile, Gulfstream had “good order intake” last year, especially in the second half, Aiken noted, with that trend continuing into this year. Interest in the G500 and G600 is also ramping up as these new jets get closer to entry into service. Backlog for the G650/650ER is 24 months and the G550 is 12 months. Only one slot remains to be sold for the G450 before production of this legacy model ends early next year, according to Aiken. Total backlog at the aerospace division was just shy of $11 billion at year-end 2016, down from $11.5 billion at the end of September.

(Chad Trautvetter - AINOnline News)

Airbus Helo Shipments Rise Despite 'Difficult Year'

Airbus Helicopters delivered 418 rotorcraft last year, a 5 percent increase over 2015, against a market backdrop company CEO Guillaume Faury called “the most difficult year for the helicopter industry since 2008.” Results were released on Friday.

The company logged gross orders for 388 helicopters in 2016, compared to 383 in 2015. Orders booked last year include 188 light singles, 163 H135/H145 light twins and 23 Super Puma-class helicopters. Overall backlog stood at 766 helicopters at year's end. Airbus continues to maintain a 47 percent share of the world civil market for helicopters over 2,866 pounds/1,300 kg.

Meanwhile, Faury announced a variety of developments concerning new and existing programs. The new H160 medium twin is currently undergoing cold-weather testing in Canada and a third prototype will join the program early this year. Airbus Helicopters will begin taking orders for the new model this year and already has a “significant number” of letters of intent for it.

Airbus also plans to fly its Clean Sky2 compound helicopter demonstrator in late 2019 or early 2020 and plans to reveal more details about it at the Paris Air Show in June. Faury also said the company will conduct the first unmanned flights of its “City Airbus” all electric, VTOL, four-seat urban vehicle next year and manned flights beginning in 2019. Development of a full-scale vehicle will start this month in Germany.

The X6 heavy helicopter, seen as an eventual replacement to the H225, remains in the “concept phase,” with Faury characterizing it as a “long-term investment.” Faury said Airbus looks forward to “restoring trust” in the H225 following last year's North Sea crash.

(Mark Huber - AINOnline News)

Robinson Readies To Deliver Its 12,000th Helicopter

Robinson Helicopter has produced its 12,000th helicopter, the Torrance, California-based helicopter manufacturer announced late last week. Company CEO Kurt Robinson said the helicopter rolled off the assembly line on December 23 and called the milestone “a nice way to end the year.”

The aircraft—a turbine single R66, S/N 0763—will be delivered to Hover Dynamics, one of three long-time Robinson dealers in South Africa. It was purchased by a new charter and tour operator, Fly Karoo Air Services, operating in the Graaff-Reinet area.

Meanwhile, Robinson is currently working to certify several new options on the R66, including a gyro-stabilized camera for newsgathering, wire-strike kit, lithium-ion battery, data recorder and inlet barrier filter.

Besides the five-place R66, the company also makes the two-place R22, four-place R44 and the new two-place (increased-payload) R44 Cadet. Robinson was founded in 1973 and is the world's leading manufacturer of civil helicopters.

(Mark Huber - AINOnline News)

Signature Pursuing 'All Avenues' after SNA Decision

Signature Flight Support plans to pursue “all avenues available” and said it is strongly encouraging the Orange County, California board of supervisors to revisit the process that led to the chain’s loss of a lease at Santa Ana’s John Wayne Airport (SNA/KSNA). The board last week voted four-one to switch the leasehold from Signature—which has provided services at SNA for 20 years—to ACI Jet, a California-based FBO, charter, management and maintenance provider. The board cited complaints about fuel pricing and a desire for a locally based operation in its decision.

“Last Tuesday’s decision by the Orange County board…ignored the unanimous decision of its citizen airport commission, as well as a strong recommendation by the John Wayne Airport staff,” said Signature v-p Geoff Heck. He agreed that the decision to award a short-term lease as the airport finalizes a master plan seemed sound, but he questioned the decision in light of the scoring process.

During last week’s meeting, supervisor Todd Spitzer also noted that the board’s decision supersedes the airport staff's recommendation and the selection of an FBO that was not originally among the higher-scoring submissions. Signature claimed to take the top spot in the scoring process, but Heck said after a “closed session…the board of supervisors reordered the rankings, placing ACI first, Atlantic second and dropping Signature to fifth place.” 
The board agreed to continue to provide a leasehold to Atlantic, the second FBO on the airport. Heck, however, noted that Signature “was unable to participate in the [closed-meeting] discussion and, most important, was unable to hear the board’s rationale for making the decision to re-rank the bidders.”

Signature's customer base has “reacted with shock” to the decision, Heck said, and has expressed concerns about how the decision would affect their operations.

Heck also characterized as baseless conjecture the board's comments about pricing. He said, “Pricing varies by airport based on our costs of operating at a respective airport. We carefully take these issues into consideration when we establish our market fuel pricing.” Most of its customers benefit from loyalty and other pricing programs, Signature said. Supervisor Shawn Nelson had acknowledged Signature’s pricing differential, but countered that pricing is important to all of the tenants.

Signature also called public statements made against its chain “unwarranted and damaging,” and said it “cannot allow inaccurate statements or allegations that negatively impact our well established brand and our customer loyalty to go unanswered.”

For ACI Jet, the SNA leasehold would add a fourth location for the FBO. “We are excited to bring our award-winning, independent FBO to Orange County’s John Wayne Airport,” William Borgsmiller, president of ACI Jet, had said of the decision. “A duopoly of sorts has existed at Santa Ana for the past several years between the chain FBOs, and competitive fuel pricing and service has suffered as a result.”

(Kerry Lynch - AINOnline News)

Qantas unveils A380-sized hangar at LAX

Qantas' new hangar at LAX is billed as the first in North America specifically designed to accommodate the giant Airbus A380. (Photo - Qantas)

Where would you hide an A380?

If you needed to, you could fit it completely inside (either nose-in or tail-in, your choice) the $30 million hangar Qantas Airways, Australia’s largest airline, officially unveiled at a ribbon-cutting ceremony on Friday at Los Angeles International Airport.

The hangar, billed as the first in North America specifically designed to accommodate the giant Airbus A380 and one of the largest commercial hangars in North America, replaces one built back in 1958.

The new facility, which has connected parking pads on the outside of the hangar, now has the capacity to perform maintenance on four aircraft at the same time and is expected to help Qantas reduce the time needed to perform maintenance tasks on the A380 and other aircraft by about 20%.

That’s helpful because there are currently more than 40 Qantas flights each week traveling between LAX and Sydney, Melbourne and Brisbane, Australia, on Airbus A380s and Boeing 747s, with Boeing 787-9 Dreamliner service planned to begin on the Melbourne-Los Angeles route in December 2017.

“We can have up to four aircraft on the ground at LAX at once and some are here for around 14 hours,” said Qantas Group CEO Alan Joyce at the unveiling. “So it makes sense to have a facility where we can make good use of that time by doing scheduled maintenance.”

Joyce added that while Australia will always be where the carrier does the majority of its maintenance, “LAX is our next biggest transit point so we’re pleased to now have a facility that reflects that.”

He said that in addition to doing work on its own planes, the size of the new hangar means the carrier can now bid for work on aircraft owned by other carriers at LAX and rent out space to airlines.

At 480 feet by 370 feet, the new hangar is large enough to allow four aircraft to be worked on simultaneously, Qantas boasts, and has a ceiling high enough for an A380 to be jacked up to make room for undercarriage changes.

In addition to a larger parts facility with vertical lifts that enable parts to be delivered to engineers quickly, the new building has skylights, electric vehicle charging stations and "mega doors" made from a translucent material that lets in natural light when the doors are rolled down.

(Harriet Baskas - Today In The Sky / USA Today)

Sunday, January 29, 2017

One of American, Delta, and United's most feared rivals may be in trouble

Etihad CEO James Hogan (R) with Airbus CEO Fabrice Bregier.
(REUTERS: Fabian Bimmer)

Since its founding in 2003, Etihad Airways has managed to storm its way to the forefront of the airline industry.

This week, the airline's parent company — Etihad Aviation Group — announced that long-time CEO James Hogan will step down from his post later this year.

Hogan, who became the airline's CEO in 2006, is credited as the man who oversaw Etihad's meteoric rise from a 22-aircraft regional airline to a global aviation conglomerate with equity in more than half a dozen international airlines and a fleet of 700-plus aircraft.

The departure of James Hogan is certainly a blow to the company.

With that said, Hogan's departure doesn't necessarily serve as a signal of impending trouble at Etihad, as much as a confirmation that the era of explosive growth at the airline — and its fellow Middle Eastern mega carriers — is over.

Hogan — along with CFO James Rigney — will leave Etihad in the second half of 2017 to join an, as yet unnamed, investment firm.

Etihad was not immediately available for comment.

Over its short time in business, Etihad has made the flashy acquisitions, garnered the critical acclaim, and showed off its flying palace in the sky. Now it's time to settle down and focus on life as a big-time international airline. In that respect, Hogan and his team have put Etihad in a good, but not perfect position.

Here are some of the challenges Etihad must face down.

Partners for better or for worse

Over the past few years, Hogan has embarked on an ambitious equity acquisition spree that has seen Etihad take substantial ownership stakes in a series of "partner airlines." This includes 49% of Alitalia, 29% of Air Berlin, 49% of Air Serbia, 24% of Jet Airways, 20% of Virgin Australia, 40% Air Seychelles, and 33% of Swiss-based Etihad Regional.

(In September 2016, these partner airlines along with Etihad Airways and its accompanying subsidiaries were reconfigured to form Etihad Aviation Group.)

In theory, Hogan's partnership concept makes a tremendous amount of sense. Investing in or taking over struggling airlines in advantageous markets for pennies on the dollar while simultaneously growing Etihad's global reach is strategically sound. In addition, this approach also allows Etihad to enter potentially hostile markets free of political opposition and without the need to launch an operation from scratch.

In practice, the partnership strategy is much more complex. Some have worked out well for Etihad. For instance, Air Serbia has relaunched and become a solid feeder into the Etihad network. The investment in Jet Airways has helped Etihad unlock the potentially lucrative Indian market. While Virgin Australia has become a viable competitor for Qantas.

However, Germany's Air Berlin and Italy's national carrier, Alitalia, have not fared so well. Both airlines were acquired to help Etihad increase its reach into the prized European and trans-Atlantic markets, and to a certain extent they have done exactly that. But, operationally, Air Berlin and Alitalia have continued to bleed money. So, what happened?

On the face of it, the $2.35 billion Alitalia investment seemed like a solid deal. For the cost of a few Airbus A380 superjumbos, the company acquired a major airline with a fleet of 100 planes, Hogan once said during an interview with Business Insider.

"These two investments have turned out to be sort of Etihad biting off more than it can chew," Airways senior business analyst Vinay Bhaskara told Business Insider.

According to Bhaskara, there are two types of reclamation projects that tend to succeed in the airline industry. The first is an airline that's underperforming simply because it's "making boneheaded strategic errors" to the point where the airline is essentially its own worst enemy. These are easier to fix because they tend to be in good markets with good fundamentals. Thus, a management change should do the trick, Bhaskara said. Jet Airways falls into this category.

The second is an underperforming airline that's government owned or struggling with an incredible amount of internal dysfunction. These turnarounds can be successful if an outside force such as Etihad is "handed the keys to the kingdom" to completely tear down and rebuild the airline after making wholesale changes. This is exactly what Etihad was able to do at Air Serbia, Bhaskara added.

Technically, Air Berlin and Alitalia should have gone into this second category. Unfortunately, Etihad was never given the chance to implement the same type of full rebuild as Air Serbia.

With Alitalia, Etihad brought in new management, revamped its product, and improved its service. However, many of the old problems that plagued the "Old Alitalia" still plague the "New Alitalia" today. According to Bhaskara, one of the major issues the airline ran into was the powerful labor unions that prevented Etihad from making the drastic changes they needed to make the airline profitable.

According to the Financial Times, the last time Alitalia generated an annual profit was 2002 — one year prior to the founding of Etihad Airways.

At Air Berlin, Etihad ran into similar challenges with organized labor. In addition, the two airlines faced legal challenges in Germany over their ability to sell tickets across one another's networks.

Bhaskara believes the struggles at Air Berlin and Alitalia served as a catalyst for Hogan's departure from Etihad.

Cheap oil is bad for business

While most airlines love periods of low fuels prices, it's a major problem for Etihad and its fellow Middle Eastern carriers Emirates and Qatar Airways — also know as the ME3.

Even though Etihad and the rest of the ME3 have become world renown for their top-notch customer service, lavish appointments, and incredible first class accommodations, the airlines actually depend on offering large numbers of affordable economy seats to fill their planes and makes ends meet.

Traditionally, the ME3 has been able to be competitive by undercutting its rivals in terms of price while offering a more premium experience in exchange for a slightly longer flight. (Almost all ME3 flights either originate or end at their Persian Gulf mega hubs, meaning most flights tend to be longer.)

Cheap oil makes it difficult for the ME3 to beat its competitors on price. When fuel prices are high, ticket prices are high. As a result, the discount that Etihad and the rest of the ME3 can offer is higher in terms of total dollars. With lower ticket prices industry wide due to cheaper fuel, the ME3 now have to offer a greater percentage discount to have the similar effect on customers.

"As human beings, we are conditioned to judge absolute price differences as opposed to relative price differences," Bhaskara explained. "A 10% discount on $900 seems more appealing than a 10% cut on $700. We're more likely to see an airline charging $810 versus $900 as a good deal than an airline asking for $630 as opposed to $700."

Consequently, Etihad, Emirates, and Qatar Airways' ability to price competitively versus its rival legacy carriers have been greatly eroded.

The Trump Card

The ME3's greatest critics are the US trio of American, Delta, and United Airlines — also known as the US3.

The US3 allege that the explosive growth experienced by Etihad and its fellow Middle Eastern carriers have been fueled by more than $50 billion in unfair government subsidies over the past decade.

"We've done nothing improper. We've created a great airline, with great service, created value, and the accounts are audited by one of the top accounting firms in the world," Hogan said in a 2015 interview with Business Insider. "I don't know what the problem is."

The US carriers also claim that continued expansion of the ME3 into the US will lead to the loss of domestic aviation jobs. As as result, the US3 contend that the ME3 are in violation of the Open Skies bilateral agreements that govern air travel between the US and foreign nations.

The US3 petitioned the Obama administration to reevaluate and renegotiate the Open Skies agreements with the United Arab Emirates and Qatar.

In July 2016, representatives of the UAE and Qatari governments met with members of the Obama administration to discuss the matter. However, no concrete results emerged from those talks.

With President Trump and his America First initiative in full swing, the US3 will once again ask the federal government for assistance in regards to the ME3. During its latest earnings call, American Airlines made it clear that it will ask the Trump administration to take action against the Middle Eastern trio.

All in all, Etihad is in the midst of a period of great change. The favorable fare environments and easy untapped markets are fewer and fewer. However, the partnership airline model installed by Janes Hogan, while troublesome at times, may be the key to its future success.

(Benjamin Zhang - Business Insider)

Saturday, January 28, 2017

Santa Monica Airport will close in 2028 and be replaced by a park, officials say

Capping decades of legal battles and protests, federal and local officials announced an settlement Saturday to close Santa Monica Airport in 2028 and immediately shorten the runway to limit jet flights.

The city of Santa Monica has been fighting to shut down the general aviation airport — long a favorite of celebrities and business leaders — contending it is unsafe, noisy and pollutes nearby neighborhoods with potentially harmful aircraft exhaust.

Aviation interests and the Federal Aviation Administration have opposed the city, stating the airport must stay open at least until 2023, if not in perpetuity, under federal agreements dating to the end of World War II, when the facility was used by the military.

The agreement between the FAA and Santa Monica ends years of litigation and ensures that control of the 227-acre airport will be returned to the city and its residents.

“This a historic day for Santa Monica,” Mayor Ted Winterer said. “The FAA has finally and categorically said that we can do whatever we want with our land at the end of 2028. This is a windfall for the residents” of the city.

The closure will leave the Los Angeles area with one less general aviation airport, but it will allow Santa Monica to replace the complex with a proposed park, recreational facilities and other non-aviation uses.

“This is a good deal, but it is not ideal in all regards because it will keep the airport open longer than desired,” said John Fairweather of the groups Community Against Santa Monica Airport Traffic and Airport2Park. “But we will regain the western parcel of the airport immediately, and the agreement gives us absolute certainty.”

Under the agreement, Santa Monica must maintain stable and continuous operations at the airport until it is closed Dec. 31, 2028.

The terms allow the city to immediately reduce the length of the 4,973-foot runway to 3,500 feet, a move that would substantially reduce jet traffic and charter operations.

The FAA also acknowledged that the city has the right to establish its own company at the airport to provide aviation services, such as fuel, hangars and tie-down space for aircraft.

The city has been trying to evict two so-called fixed base operators — Atlantic Aviation and American Flyers — and replace them with its own operation run by municipal employees. Both companies have sued to halt their removals.

FAA officials say, however, that the city remains obligated to enter into leases with private aviation companies to ensure the continuity of services until the runway is shortened and it decides to provide such services on its own.

The City Council voted 4 to 3 to approve the settlement, which was worked out during two weeks of negotiations with the FAA and U.S. Department of Justice.

“This is a fair resolution for all concerned because it strikes an appropriate balance between the public’s interest in making local decisions about land use practices and its interests in safe and efficient aviation services,” said FAA Administrator Michael Huerta.

City Councilman Kevin McKeown voted against the settlement, saying he wanted the airport closed sooner and that the city would have eventually prevailed in court.

“That’s 12 more years of planes, including some jets,” McKeown said. “That’s 12 years before we can replace the airport with parks and play fields.”

Supporters of the airport were stunned by the agreement and the closed-door nature of the discussions — a view shared by some anti-airport activists.

“I’m just shocked that a backroom decision was made without any public discussion” said Mark Smith, a pilot, aircraft owner and member of the Santa Monica Airport Assn. board. “The fact remains that this is a national asset and a critical part of the national airspace system.”

The Aircraft Owners and Pilots Assn. as well as the National Business Aviation Assn. vowed Saturday to continue their efforts to keep the county’s oldest operating airport open.

Santa Monica was once home to Douglas Aircraft Co., which produced the famous DC-3 and military aircraft at the airport before it moved to Long Beach.

Today, the facility has about 270 aircraft and averages roughly 250 takeoffs and landings per day. Its tenants have included celebrities such as Harrison Ford, Arnold Schwarzenegger and Tom Cruise.

Supporters say Santa Monica is a reliever airport for Los Angeles International Airport and provides substantial economic benefits to the region as well as a base of operations for major emergencies and medical flights.

"I'm extremely disappointed in the FAA action to forgo further legal action” said Christian Fry, president of the Santa Monica Airport Assn. “The people who lose here are the people of West L.A. who will see major development.”

Fry said that closing the airport will eliminate height restrictions for new buildings constructed near the airport or on land that was below its flight paths.

“Get ready for the high-rise wall,” Fry added. “It won’t all be a park.”

Airport opponents contend the airport should be closed because of noise, the risk of a serious crash in one of the surrounding neighborhoods, and aircraft emissions, particularly lead and fine bits of carbon.

Santa Monica officials have been trying to close the airport since the early 1980s, but they have not been able prevail in legal challenges to federal agreements requiring the airport to stay open.

In January 2011, a federal appeals court rejected the city’s longstanding effort to ban certain high-performance jets from using the airport.

Last year, the City Council adopted a so-called starvation strategy that aimed to close the airport by July 2018. The plan included shortening the runway, reducing aviation services and evicting aviation tenants.

More recently, the FAA ruled that the city must keep the airport open at least until 2023 under the terms of a federal grant the city received to improve the airport. Santa Monica appealed the decision in federal court.

In a separate action, the city has been pursuing a federal lawsuit to gain clear title to the airport and nullify its federal obligations to keep the airport open. The agreement announced on Saturday ends the litigation.

The controversy over the airport intensified in 2015 when Ford, flying a restored World War II-era trainer, crashed on Penmar Golf Course because of engine trouble shortly after takeoff.

National Transportation Safety Board records and news reports show that since 1982, there have been at least 42 crashes within five miles of the airport.

In 11 of the crashes, the planes came down in Santa Monica and West Los Angeles neighborhoods, but no one on the ground was killed or seriously injured.

One plane came down in a Venice intersection, and two, including Ford’s, crashed on Penmar. A decade earlier, a plane from the airport slammed into an apartment building in the Fairfax district more than five miles from the runway. Five people were killed.

Based on the number of accidents per 100,000 takeoffs and landings, Santa Monica ranks in the middle of the 11 busiest general aviation airports with control towers in Los Angeles, Orange and Riverside counties.

It is unclear how the agreement will affect several pending complaints that private aviation interests have filed with the FAA in an attempt to keep the airport open.

They allege that the city has violated its federal agreements and regulations to prevent unjust discrimination against aviation uses and the diversion of airport revenue to pay for other city activities.

“This is a big question,” Fry said. “Does this agreement sweep these complaints under the carpet? We would like to see them run their course.”

(Dan Weikel and Dakota Smith - Los Angeles Times)

Friday, January 27, 2017

Nigeria’s Arik Air switches Boeing 747-8s with 787-9s

Nigeria’s Arik Air has scrapped a longstanding order for two Boeing 747-8Is, replacing it with a pair of Boeing 787-9s.

The change means a further shrinking of the already slim orderbook for the 747-8. Most of the new variant 747s ordered to date have been the -8 freighter version, as airlines increasingly turn to “big twins” for long-haul passenger services.

Boeing has reduced the 747-8 production rate to 0.5 aircraft a month as it fulfills remaining orders.

Arik Air’s order for the 747-8I dates back to 2011.

The two 787-9s are worth $529 million at book value. A regional source, who requested not to be identified, told ATW the 787-9 “makes much better sense” than the 747-8I for Arik Air, notably on routes to the US and UK.

Boeing said the delivery dates were a matter for the customer; an Arik Air representative said she did not have that information, but understood deliveries were “not imminent.”

According to Arik Air’s website, the Nigerian flag carrier’s long-haul fleet comprises two Airbus A340-500s and two A330-200s. Its short- to medium-haul services are operated by a mixed batch of 10 Boeing 737-700s and -800s, while regional routes are operated by four Bombardier CRJ900s, a single -1000 and two Q400s.

(Alan Dron - ATWOnline News)

British Virgin Islands carrier seeks approval to serve US

British Virgin Island carrier BVI Airways plans seek US approval to serve Florida's Miami International Airport (MIA), after receiving its air operator’s certificate (AOC) from UK-based regulator Air Safety Support International (ASSI).

ASSI is a wholly owned subsidiary of the UK’s Civil Aviation Authority.

“This is a significant step forward toward commencing the first-ever, nonstop flights between the US and the BVI,” BVI Airways president and CEO Jerry Willoughby said. “With the AOC in hand, we can immediately file with the US DOT [Department Of Transportation] to obtain the necessary approvals to fly into the US.”

The carrier is applying for foreign air carrier economic authority. Once that application is accepted, the next step will be to file with FAA’s International Field Office near Miami, Florida, for operating authority under FAR Part 129. Concurrently, the airline will be applying for the necessary authorizations from the US Transportation Security Administration and Department of Homeland Security.

The airline expects the process to take 60 days, after which it can schedule first services and begin ticket sales. Flights will operate from Terrance B. Lettsome International Airport (previously known as Beef Island Airport) on Tortola. Flight times to Miami will be around 2.5 hours.

The airline hopes it will be able to start flights in late April to mid-May: “We are working as fast as we can to make this happen,” Willoughby said. “But the regulatory process, by its nature, is outside our control.”

BVI Airways has acquired two BAE Systems Avro RJ100 regional jets, with a third expected to arrive shortly. The aircraft are being refurbished and be used by BVI in a two-class, 85-passenger layout, including 12 seats in premier class. 

(Alan Dron - ATWOnline News)

Horizon pilots file suit against management, claim RLA violation

Pilots for Seattle-based Horizon Air—the regional subsidiary of Alaska Airlines—filed a lawsuit Jan. 27 claiming Horizon executives “broke faith with the negotiation process and began making unilateral changes to compensation,” violating the terms of the Railway Labor Act (RLA). The suit also claims violation of the terms of the labor agreement between Horizon’s 675 pilots and Horizon management.

The RLA is a 1926 federal law that governs labor relations in the airline industry.

Horizon Air’s pilots are represented by the International Brotherhood of Teamsters (IBT).

According to an IBT statement, “from last summer through December, the pilots at Horizon had been negotiating with Horizon executives to alter compensation and resolve a severe staffing shortage.” The IBT said the pay rate for Horizon pilots is “second to last … among 16 regional airlines similar in size,” and the airline is “unable to hire and retain enough pilots to fly the company’s fleet of airplanes.”

IBT said the airline canceled 720 flights in December 2016 as a result of pilot shortages, forcing Alaska Airlines to fly the routes on larger aircraft “adding a significant additional expense for Alaska Air and putting a strain on its staff and regularly scheduled flights.”

Horizon pilots have indicated they are prepared to strike “if executives continue to put the financial stability of Horizon and Alaska at risk and violate the contract agreement.”

The IBT derided signing bonuses Horizon Air is offering new pilot recruits, saying the move does not address retention issues affecting experienced Horizon pilots.

“Short-sighted maneuvers won’t solve the staffing problem,” Teamsters Local 1224 executive council chair and Horizon pilot Capt. Jeff Cox said. “The only way we can continue serving our … customers in the months and years ahead is [for Horizon] to offer industry-standard pay and benefits so we can recruit and retain skilled pilots. We also need a career path that allows Horizon pilots to grow in the … Alaska family.”

Horizon’s pilots are willing to negotiate, Cox said.

In a statement made available to ATW, the airline said: “Horizon Air takes pride in the partnership with our workgroups and unions, which is built on longstanding mutual respect. After months of negotiations with the pilot union, Horizon Air will continue to work toward a solution that is attractive to new pilots, while respecting the contributions of existing pilots and the competitive regional airline marketplace. We do not anticipate any disruption in service.”

The suit was filed Jan. 27 in the US District Court of the Western District of Washington state.

(Mark Nensel - ATWOnline News)

Gary Kelly: ‘Basic economy’ would be ‘a huge mistake’ for Southwest

Southwest Airlines will not be following American Airlines, Delta Air Lines and United Airlines in implementing a “basic economy” fare, chairman and CEO Gary Kelly said.

Speaking to analysts and reporters to discuss Southwest’s 2016 earnings, Kelly said Dallas-based Southwest is sticking to its relatively straightforward fare structure that includes checked bags and flight changes at no extra-cost. Southwest also will stay with a single-class configuration on its all-Boeing 737 fleet, he added.

While Southwest does offer a “business select” product that includes perks such as guaranteed early boarding (a particular draw for Southwest passengers since the carrier has no seat assignments), Kelly said the airline has built its brand around a simple, fee-free fare and passenger experience model that would be unwise to alter.

“There is huge value in offering all of our customers—100% of them—a great product,” Kelly said. “We like to say at Southwest there is no second class [and] in addition to that we strive to keep the customer experience and the product offering as simple as possible … Complexity drives confusion and it clouds the brand. So what you have at Southwest is a very strong brand positioning in customers’ minds that we stand for friendliness, reliability and low fares. The whole ‘free bags and no change fees’ becomes a very powerful component of all that.”

Kelly added that Southwest has “spent 45 years educating our customers as to what to expect” and making a major change like offering a basic economy fare “would be a huge mistake.”

He also said Southwest has no plans “to change our seating configuration and add bigger seats compared to littler seats.” American, Delta and United, Kelly argued, “lavish attention on elite customers, and they ignore the rest, and that is our biggest opportunity because we don’t ignore anybody. And we just don’t want to change that.”

Kelly said Southwest’s financial results, which include record net profitability each of the last two years and 44 straight years of operating in the black, indicate “there’s just no emperical evidence that we’re missing anything.”

He added, “If we start tinkering with the brand, we start offering the basic economy, blah, blah, blah, it would risk the revenue stream and the loyalty that we have with that frequent flyer base … So my report to you is we don’t have any thoughts about any radical changes to the program.”

(Aaron Karp - ATWOnline News)

Is Southwest Airlines Really Boeing’s Launch Customer for the 737 MAX?

Sounding a bit like President Donald Trump trying to convince everyone that the crowd at his inauguration was bigger than, well, just about any previous president, Southwest Airlines Co. claims that it is really the launch customer for Boeing's new 737 MAX passenger jet.

Southwest CEO Gary Kelly is not giving up the title just because upstart Norwegian Airlines will actually get its first new 737-8 two months before Southwest. Norwegian, a low-cost carrier that plans to use the new planes to fly transatlantic routes between smaller U.S. and European airports, is scheduled to receive its first new plane in May, while Southwest will wait for its first plane to arrive in July.

Kelley told Bloomberg News, "We're the launch customer, regardless of when we take the first delivery."

Being a launch customer may seem like a big "who cares" to anyone outside the industry, but it's more than just bragging rights, according to Southwest Chief Operating Officer Mike Van De Ven:

We're the ones that have done the service-ready operational validation for Boeing. We're the ones working very closely with Boeing to make sure it's operating as everyone intended.

Boeing, intelligently, has not tried (so far) to adjudicate the matter, although the company's website lists Southwest as the launch customer for the smaller 737-7. Norwegian has ordered 108 of the new 737-8s and expects to receive six this year. Southwest has ordered 200 of the planes, but the airline must retire some of its 737-300s before it can begin taking delivery of the new planes.

Norwegian is scheduled to make the first flights of its new 737-8s in June, while Southwest is not scheduled to begin flights until October.

Southwest is Boeing's largest customer with more than 225 737s in the company's backlog.

(Paul Ausick - 24/7 Wall St / Yahoo Business News)

Wednesday, January 25, 2017

Raytheon-Leonardo team withdraws from T-X competition

Raytheon and Leonardo-Finmeccanica will not jointly pursue a contract for the U.S. Air Force's T-X trainer aircraft program.

The T-X program is an Air Force effort to procure a new two-seat military jet trainer to replace its Northrop T-38 Talon, which has been in service with the branch for over four decades.

Prior to ending their joint involvement, Raytheon and Leonardo's partnership intended to submit a T-100 platform for the project.

"In February 2016, Raytheon and Leonardo announced their intent to team on the T-X pursuit. While we remain confident that the T-100 is a strong solution, our companies were unable to reach a business agreement that is in the best interest of the U.S. Air Force," Raytheon spokesperson B.J. Boling said in a press release. "Consequently, Raytheon and Leonardo will not jointly pursue the T-X competition."

Other competing partnerships included Boeing and Saab, Lockheed Martin and Korea Aerospace Industries, and Northrop Grumman and BAE Systems.

U.S. defense officials initially planned to replace the T-38 in 2017, but budget cutbacks have pushed initial operating capability for the aircraft to around 2023. The Air Force plans to begin the program in 2017.

(Ryan Maass - UPI)

Boeing CEO commits to increasing 737 jet production in Renton

Boeing CEO Dennis Muilenburg said the jet maker is firmly committed to ramping up its 737 aircraft production in Renton as planned over the next three years.

Muilenburg appeared to go out of his way to comment on a hot debate about the 737 production rate that unfolded among rival aerospace analysts this week.

Muilenburg praised the team at the Renton plant that makes all 737s for Boeing, saying the facility and its workers remain "on track" to dramatically boost 737 output between now and 2019.

"Simply put, this is a big attractive market and the 737 family's position within it is solid," Muilenburg said during a conference call to discuss the company's most recent financial results.

Aerospace industry analyst Addison Schonland last week said he thought Boeing won't boost 737 production in Renton because aircraft orders and the order backlog have peaked and he expects fuel prices to remain low.

Cheap fuel lets airlines delay deliveries of more fuel-efficient aircraft they ordered when oil prices were much higher. Jet makers will respond by not boosting production, as planned, he wrote.

Rival analyst Scott Hamilton, a Bainbridge Island aerospace specialist, disagreed, saying Boeing needed to crank up 737 deliveries to generate cash to support its rich dividend and aggressive stock buyback programs.

Boeing CEO Muilenburg sided with Hamilton's view, noting both that Boeing's 737 production is currently oversold and overall order deferrals for all the jets it produces now represent only two percent of the Chicago-based company's current aircraft order backlog.

"That remains well below our 15-year historical average of six percent," he added.

Boeing has vowed to boost 737 production to 47 aircraft a month this year, up from 42 in 2016. It also has unveiled plans for further monthly production rate increases to 52 737s per month in 2018 and 57 per month in 2019, numbers which Muilenburg reaffirmed during the conference call.

Boeing currently has a total of 4,452 orders for all variants of its 737 aircraft included in its unfilled backlog.

Muilenburg also told aerospace reporters Boeing Commercial Airplanes will continue to press its aircraft manufacturing lines in the Puget Sound region and in South Carolina, as well as its outside suppliers, for even more cost reductions in 2017 to help the operations achieve pretax profit margins in the double digits.

"This will be a relentless effort going forward," Muilenburg said. "While we've made some strong strides over the last couple of years, and you see it reflected in the performance, we have much more ahead of us than what's behind us."

Chief Financial Officer Greg Smith said Boeing was aiming to "obviously" reset the bar on costs " to where we want to be near term and longer term."

(Andrew McIntosh - Puget Sound Business Journal)

Spike Aero To Fly Subsonic Prototype of SSBJ This Year

Spike Aerospace expects to certify its $60 to $80 million, low-boom, Mach 1.6 SSBJ by 2023. To keep on that path, it plans to fly a low-speed demonstrator this summer and a supersonic prototype by the end of next year.
(Photo: Spike Aerospace)

Spike Aerospace expects to fly a subsonic prototype of its 18-passenger supersonic business jet (SSBJ) this summer, the Boston-based company announced today. The scale prototype of its S-512 Quiet Supersonic Jet will demonstrate low-speed aerodynamic flight characteristics. It plans to follow this with a series of larger prototypes and a supersonic demonstrator by the end of next year.

“We made a lot of progress in 2016 in engineering and with the addition of a number of engineers and partners,” said Spike Aerospace president and CEO Vik Kachoria. “Our plans for 2017 are even more exciting as we continue development of the Spike S-512. I’m looking forward to our first flight later this year.”

Spike Aerospace expects to certify its low-boom, Mach 1.6 SSBJ by 2023. Meanwhile, the company recently added several advisors with experience selling business jets in the U.S., Canada, Europe and the Middle East. Target price of the S-512 is somewhere between $60 million and $80 million.

(Chad Trautvetter - AINOnline News)

Textron Cuts Legacy Production Rates

Textron Aviation will trim production of legacy models such as the Citation X+ and Sovereign+ as it expands the output of newer models, such as the Latitude and, later this year, the Longitude.
(Photo: Cessna)

Textron Aviation expects to boost its Citation Latitude output by nearly 30 percent in 2017, but at the same time is planning production rate cuts by almost as much throughout the rest of its Citation jet line, company executives told analysts this morning. Releasing its fourth quarter 2016 results today, Textron forecast that revenues for Textron Aviation 2017 would remain flat at roughly $5 billion.

The forecast comes on the heels of a fourth quarter in which both business jet and turboprop deliveries slid for the Wichita-based manufacturer, causing revenues to dip by $52 million and profit to slip by $3 million.

Textron Aviation delivered 58 new Citations and 28 Beechcraft King Air turboprops in the fourth quarter of 2016, down from the 60 jets and 33 King Airs shipped in the fourth quarter of 2015. As a result, revenues dropped to $1.436 billion and profits to $135 million in the fourth quarter of the year.

For all of 2016, revenues were up by $99 million to $4.921 billion, but profits were down by $11 million to $389 million.

Backlog also inched downward in the quarter by $73 million to $1 billion.

Scott Donnelly, chairman, CEO and president of Textron Aviation parent Textron Inc., pointed to pricing pressures that escalated in the fourth quarter in the decision to adjust production of legacy Citation models. Donnelly did not break down cuts for the individual models but said the total would be about the same as the increases in Latitude production.

Noting the demand is “not there” for aircraft at higher prices, Donnelly said, “it just reached a price point where it doesn’t make sense for us to build the aircraft.” Latitude sales have remained strong, he added, and expects the increased production there to be split evenly between NetJets and its other customers.

However, Latitude pricing also has been “very difficult,” Donnelly said. “It has been improving but…[at a level] we’re clearly not happy with.”

Textron Aviation also saw turboprop sales diminish as the Joint Primary Aircraft Training System (JPATS) program winds down. Textron Aviation's Beechcraft sector supplied the T-6 Texan II turboprop single for the program.

While the market remains soft, Textron continues to invest in its new programs, with plans to bring the Longitude to market by the end of 2017. Textron Aviation expects to certify the model, which would be its largest yet, by the end of the year and deliver the first few to customers, Donnelly said. Production ramp up would follow.

Textron Aviation also is continuing its development of the Hemisphere, part of an overall strategy to move further into the large-cabin sector as market preferences have shifted in that direction.

(Kerry Lynch - AINOnline News) 

Grumman HU-16B "Albatross" (c/n G-55) N16HU

Delivered to the U.S. Air Force on March 31, 1951 as 49-097, this gorgeous aircraft is captured rolling for takeoff on Rwy 30 at Long Beach Airport (LGB/KLGB) in November 1997.

(Photo by Michael Carter)

Varig McDonnell Douglas MD-11 (48501/513) PP-VPP

Taxies at Los Angeles International Airport (LAX/KLAX) in November 2000 sporting the carriers gorgeous 1998 World Cup livery.

(Photo by Michael Carter)

Tuesday, January 24, 2017

Hawaiian Airlines posts lower Q4 earnings, full-year gains

Hawaiian Airlines met analysts’ expectations for fourth quarter earnings despite reporting net income that was 72 percent lower than the year ago period.

Hawaiian Airlines posted net income of $10.6 million, or 20 cents per diluted share, compared to $37.9 million, or 66 cents per diluted share, reported for the fourth quarter of 2015.

The Honolulu-based airline reported full-year net income of $244.1 million, or $4.52 per diluted share, in 2016, a 33.7 percent increase from the year ago period of $182.6 million, or $2.98 per diluted share. Earnings per diluted share was $4.52, up $1.54 from last year.

“2016 was a great year for us,” said Mark Dunkerley, Hawaiian Airlines president and CEO. “The business environment has been characterized by strong demand, balanced industry capacity in our markets and manageable fuel prices.

Our hard working team has done a good job ensuring that the investments we made in our business at the beginning of this decade continue to deliver the returns we anticipated from them," Dunkerley said. "Our business is stronger and we are growing value for our shareholders, giving us great confidence for 2017 and beyond.”

Total revenue rose 10.2 percent to $632.9 million in the fourth quarter, from $574.2 million during the same quarter in 2015, and Hawaiian’s adjusted earnings per share of $1.28 met Yahoo Finance analysts' average expectations.

For the full year, revenue increased 5.7 percent to $2.5 billion from $2.3 billion, while the adjusted EPS of $5.19 missed the mark by 3 cents.

The stock closed Tuesday at $54.95 per share, up 1.1 percent from Monday’s close.

(Katie Murar - Pacific Business News)

American Air Drops Seat-Back Video Screens on New Boeing Max

Passengers who want to watch a movie on American Airlines Group Inc.’s new 737 Max better bring a device to watch it on.

The carrier said it won’t feature seat-back video screens on the Boeing Co. aircraft because almost all travelers now carry mobile phones, tablets and laptops. Satellite-based systems have improved on-board internet speed and access, which will enhance the viewing experience, the Fort Worth, Texas-based airline said.

“More than 90 percent of our passengers already bring a device or screen with them when they fly,” American told workers Tuesday in a message. “Those phones and tablets are continually upgraded, they’re easy to use and, most importantly, they are the technology our customers have chosen.”

The move marks a reversal for Chief Executive Officer Doug Parker, who said less than a year ago that American would have seat-back screens on all of its planes to remain competitive. The carrier this year will receive the first four of its 100 Max aircraft. A decision hasn’t been made on whether to extend the policy to other new planes.

Video screens will remain on planes used for international flights, American’s three-class Airbus SE A321T and some single-aisle planes used for specific flights.

Movies and television shows in American’s on-board library and live television can be viewed on devices at no charge, the airline said. Satellite connections to use the Internet, text or access on-demand video will be available for a fee from gate to gate.

Plans call for American to have satellite-based Wi-Fi on half its single-aisle fleet by the summer of 2018, with full installation by the end of 2019. Half the domestic narrow-body fleet will have power at every seat by the end of 2018.

(Mary Schlangenstein - Bloomberg Business News)

Where will Southwest Airlines fly next: Hawaii, South America or elsewhere?

Southwest Airlines has added Cincinnati, the Cayman Islands and Cabo, dropped the Ohio cities of Dayton and Akron-Canton, and rejiggered its route map out of Dallas Love Field to continue to benefit from the expiration of the Wright amendment.

Looking ahead, Hawaii, Alaska and South America are increasingly showing up as blips on the Dallas-based airline’s radar screen of possible destinations for future expansion.

And in the meantime, Southwest, is hoping to hang on to its Cuba routes now that President Donald Trump is in office.

“We’re matching our service with the need of our customers,” Southwest spokesman Dan Landson said in an interview. “We’re seeing a lot of demand from customers throughout the country for different cities and different city pairs, and we want to make sure that we’re putting the service on the routes that our customers want to fly.”

Cincinnati had long been one of the largest metros that Southwest did not serve directly. The new flights into Cincinnati/Northern Kentucky International Airport will connect to Baltimore/Washington and Chicago Midway airports.

“Ohio’s got a lot of airports that are close to each other and they’re seeing growth,” Landson said. “When we really looked at what we wanted to accomplish in Ohio, we saw some opportunities in the larger cities — Cleveland and Cincinnati — that previously had not been there. Due to the close proximity of Akron-Canton to Cleveland and Dayton to Cincinnati, the tough decision was made to exit those markets in order to make nearby markets more successful.”

Delta Air Lines has a hub at Cincinnati/Northern Kentucky International Airport but has shrunk its presence since its 2008 merger with Northwest Airlines.

“With the number of customers there and the changing dynamic of the airport, there was an opportunity where we were able to announce new service and also reach out to the business travelers and get their support to come into the market,” Landson said.

Growth in demand has also prompted Southwest to add flights in San Diego, Landson said. The airline announced Jan. 17 that it will start flying April 25 to Los Cabos International Airport from San Diego’s Lindbergh Field once daily. The airport serves San Jose del Cabo and Cabo San Lucas.

Southwest now serves 31 locations from San Diego, where it has been rapidly expanding.

At Dallas Love Field, Southwest’s headquarters, the airline in early January began operating a weekly flight to Reno and a daily nonstop flight to Ontario.

The Dallas-Ontario flight is an example of one that would not have been allowed before the October 2014 lifting of flight restrictions under the Wright Amendment.

During the week, Southwest now offers about 180 daily departures to 50 destinations from Love Field, Landson said.

That compares to 116 daily departures and fewer than 20 nonstop destinations before the Wright amendment’s expiration. The amendment allowed Southwest to fly nonstop out of Love Field to New Mexico, Missouri, Oklahoma, Arkansas and Louisiana, but prohibited nonstop flights to destinations beyond those states.

Many factors go into determining new destinations for Southwest Airlines, Landson said.

“We look at it through a couple of different lenses,” he said. “One is, is it a business/financial/economic center? Another is, is it a leisure destination? Or is there a combination of both?”

The Boeing 737 MAX could also open new routes for Southwest when the airline begins flying the new planes later this year.

Southwest CEO Gary Kelly has said the 737 MAX could make about a half dozen South American destinations feasible, including Bogota, Colombia.

Southwest has placed 170 firm orders with Boeing for the 737 MAX 8, which has a 175-seat capacity, and 30 firm orders for 737 MAX 7s, which seat 150 passengers, said Steve Jenkinson, who manages Southwest’s Boeing 737 MAX program.

The new planes are roughly 14 percent more fuel efficient and can fly about 500 miles farther than the 737s that are being taken out of the fleet, Jenkinson said.

Landson said Southwest spokespeople can’t comment on future destinations until they are published on the airline’s flight schedule, which currently runs through Aug. 14.

Kelly, at a shareholder meeting in Chicago last year, told the Chicago Tribune that Hawaii and Alaska are both “in scope,” for Southwest.

The CEO made similar statements this month in a brief interview with the Tampa Bay Times after an award ceremony at Tampa International Airport.

"Now we've added flights to Mexico, Central America and the Caribbean, so our orientation right now is south, but ultimately we're looking to expand in North America," Kelly said. "We'll add flights to Hawaii one of these days, Canada, Alaska and perhaps as far south as South America."

Kelly also said he hopes direct flights between Florida and Cuba — launched in November and December — will remain open under Trump’s presidency. The airline offers one daily flight between Tampa and Havana and flights from Fort Lauderdale to Varadero and Santa Clara.

"Those flights have high demand both from the U.S. and from Cuba, and obviously we're hopeful that we can continue to operate them," Kelly said. "If the government, for other reasons, decides that that's not possible, obviously we'll obey the law, but we're hoping that's not the case."

Recent Southwest Airlines changes:


— Southwest on Jan. 5 announced the beginning of flights to Cincinnati. There will be five daily round-trip flights between Cincinnati and Chicago Midway, and three daily round-trips between Cincinnati and Baltimore. Tickets went on sale last week and flights begin June 4

— The airline is also adding new nonstop service between Cleveland and Atlanta with fares starting as low as $69 one-way. Additionally, the carrier will add a second daily flight between Cleveland and St. Louis.

— In San Diego, Southwest has announced new year-round nonstop service to Boise, Idaho, and Salt Lake City, Utah, beginning June 4, as well as new seasonal flights to Indianapolis, Indiana, and Spokane, Washington.

— In other West Coast changes, Southwest will offer year-round nonstop service between San Francisco and Portland, Oregon, and seasonal nonstop service between Oakland and Newark, New Jersey.

— The airline added one round-trip daily between Austin and Panama City, Florida.

— Southwest on Jan. 5 announced flights from Fort Lauderdale to Grand Cayman. Tickets went on sale last week and flights begin June 4.

— On Jan. 18, Southwest announced flights between San Diego and Cabo San Lucas, beginning April 25.

— Southwest last year began flights to the Cuba cities of Varadero, Santa Clara and Havana. The airline offers one daily flight between Tampa and Havana and flights from Fort Lauderdale to Varadero and Santa Clara.

— At Dallas Love Field, Southwest’s headquarters, the airline in early January began operating a weekly flight to Reno and a daily nonstop flight to Ontario.


— Southwest will exit Dayton, Ohio, and Akron-Canton, Ohio, in June, with the start of service to Cincinnati.

— Southwest dropped a route between New York LaGuardia and Indianapolis.


— Hawaii

— Alaska

— Bogota, Colombia

— Other cities in South America

— Additional cities in Canada

(Bill Hethcock - Dallas Business Journal)