Virgin Blue, Australia's largest low-cost operator, warned that it faces a further significant decline in net earnings of A$89.2 million ($70 million) for the next financial year if fuel prices remain at current levels. Acting Chairman David Ryan announced that the airline is considering "a range of initiatives" to address the impact of extra costs imposed by the fuel price hike, including introduction of an additional ticket surcharge. Fuel prices have risen 28% in recent months and the carrier has no hedging in place beyond March 31.
First new IL-76 freighter designed to meet ICAO noise and emissions standards will begin flight testing in June before entering service with Volga-Dnepr Group in September, the company announced. Designated the IL-76TD-90VD, the aircraft is fitted with Perm PS-90A-76 engines at a cost of $4.3 million each. It is being built at Tashkent's TAPO aircraft plant under a joint program involving Volga-Dnepr, Ilyushin Aviation Corp., Perm and TAPO.
United Airlines mechanics, represented by the Aircraft Mechanics Fraternal Assn., yesterday ripped UAL Corp. after the union learned that CEO Glenn Tilton received a $366,393 bonus for 2004 under the company's Success Sharing program ( ATWOnline, March 18). "Our pay, benefit and pension cuts helped to fund the exorbitant Success Sharing bonuses for Tilton and his team," AMFA head Joesph Prisco said. "We do not understand Tilton's view of 'Success.' Neither do we get his concept of 'Sharing.'"
Several European airlines yesterday announced new increases in their fuel surcharges. British Airways will raise its surcharge to £16 ($30.37) from £10 on long-haul flights and to £6 from £4 on short-haul flights from March 28. "Our fuel bill next year is expected to be an extra £300 million. With prices continuing to rise, a surcharge increase is regrettably unavoidable," Commercial Director Martin George said in a statement. Virgin Atlantic is adding £6 to its fuel surcharge to bring it to £16.
IATA named FAA Assistant Administrator for International Aviation Douglas Lavin to lead its Washington activities from May 1, replacing Regional Director-North America David O'Connor, who will leave that month. "Decisions in Washington impact the entire industry. I am confident that Doug will significantly raise the profile of international aviation among Washington's decision-makers," said DG and CEO Giovanni Bisignani. Prior to joining FAA, Lavin was VP-portfolio management for American Express.
European Commission VP in Charge of Transport Policy Jacques Barrot yesterday appeared to welcome the news that Lufthansa will acquire Swiss. Speaking to media in Washington through a translator, Barrot said, "We are convinced that alliances of companies allow for better quality of service, better effectiveness, and I don't see a risk of monopoly, which is why this coming together of Lufthansa and Swiss is a positive thing."
El Al unveiled new upgrades to its inflight services that will be available on all flights between the US and Israel. The airline has equipped all of its 747-400s and 777s with a new video-on-demand service in all classes. In addition, it has reached an agreement with Connexion by Boeing to install high-speed Internet service on its 747-400s and 777s. Installation will begin in June and be completed at the end of next year at an estimated cost of $3 million.
AirTran CEO Joe Leonard blasted legacy carriers that are benefiting under the financial protection of bankruptcy, which he believes is used as part of their business plans. Despite their financial woes, Leonard said, these carriers are not changing their business models or coming up with a workable plan. "They can duck years of credit obligations and live to fly another day," he commented yesterday in a speech to the Aero Club of Washington. "There's no talk of making money. Those carriers are getting by on handouts and riding the back of the taxpayers of the nation."
EasyJet said it expects operating margins for the fiscal first half ending March 31 to be broadly in line with last year's in spite of high and volatile fuel prices and revenue per passenger to be higher than in the year-ago period. "Trading conditions have remained stable in the first half, with total revenue per passenger expected to increase by between 1% and 2% over the same period last year helped by Easter falling into the period," CEO Ray Webster said in a statement on trading prior to entering the closed period ahead of 2005 interim results, which will be announced May 24.
The supervisory board of Deutsche Lufthansa AG and the board of directors of Swiss International Air Lines AG, as expected, yesterday approved Lufthansa's purchase of Swiss, which already had received the green light from Swiss shareholders representing more than 80% of the company's share capital ( ATWOnline, March 21). According to a joint statement, Swiss is to remain "a mostly independent airline with its management and seat in Switzerland, its own fleet and crew, managed within the Lufthansa system as a profit center."
Air New Zealand reached agreement with Boeing to install the Boeing Electronic Flight Bag on its 777s and 787s. ANZ will have an EFB system installed, certified and delivered on the eight 777-200ERs it has on order, and also will receive EFBs on the two 787s it has ordered.
Singapore Aircraft Leasing Enterprise inked a deal to purchase up to 40 737NGs from Boeing, comprising 20 firm orders and 20 purchase rights. Deliveries are scheduled to begin in the fourth quarter of next year and continue through 2009. SALE said it has specified the 737-800 as the baseline aircraft for the order but under terms of the deal can convert options and purchase rights to the 737-700 or the proposed 737-900X. All aircraft will be powered by CFM56-7B engines.
The Latin American Airline Assn., supported by IATA, called on the US government to end efforts by the Internal Revenue Service to impose US federal withholding requirements and related taxes on Latin American carriers and their non-US-based crewmembers. AITAL also warned that there could be retaliation by affected Latin American countries against US airlines if the tax probe is not halted immediately.
The leading European and US airport trade organizations called for "urgent" progress on European-US open skies when the two sides meet today in Washington.
General Electric said yesterday that it has frozen the design for the GEnx engine that will power both the 787 and A350. Called Tollgate 6 in GE nomenclature, completing this stage in the development process launches the detailed design phase. Also, fabrication of components is underway, leading to assembly of the first full engine in October. The first GEnx goes to test in 2006, with certification set for 2007. It will produce 55,000-75,000 lb. of thrust.
News from Travel Technology Update: The Airlines Reporting Corp. delayed the date for the elimination of the travel agent coupon to May 9. It said the delay will give ARC-accredited travel agencies and corporate travel departments an extra month to become more familiar with enhancements to the ARC Document Retrieval Service that will be rolled out in early April. ARC had planned to eliminate the agent coupon on April 4.
Hawaiian Airlines, which expects to emerge from Chapter 11 bankruptcy protection next month ( ATWOnline, March 14), reported a $1.9 million net loss in February. This compares to net income of $596,000 in the year-ago period. Total revenue during the month rose 4.7% to $56.8 million while a 36.2% increase in fuel costs pushed operating expenses up 9.4% to $57.2 million. This produced an operating loss of $435,000 compared to an operating profit of $1.9 million in February 2004. At the unit level, RASM improved 1.4% but CASM increased nearly 6%.
Messier-Bugatti-Tracer is extending its wheel and brake repair and overhaul contract with CanJet Airlines to include the carrier's new 737-500 fleet. MBT, a joint venture of Messier-Bugatti and Tracer Repair and Overhaul, now will provide wheel and brake support for CanJet's entire 737 fleet.
SN Brussels Airlines' net profit rose 66.7% to €1 million ($1.3 million) in 2004 from €0.6 million in 2003. The company had forecast a €2.5 million profit for the year. "Given the dramatic increase in fuel prices and the highly competitive market environment, these results are encouraging," CEO Peter Davies said. "Although this is slightly below budget, we have created now a solid base for the further development of SN Brussels Airlines commercially, financially as well as operationally." Revenue for the year increased 12.2% to €656 million.
Reduced Vertical Separation Minima were implemented over four states in the Caucasus area last week, ICAO announced. They are Armenia, Azerbaijan, Georgia and the high seas portion of the Russian Federation Rostov Flight Information Region.
European Commission and the relevant regulatory authorities in the US cleared the proposed joint takeover bid for Amadeus by current airline shareholders Air France, Iberia and Lufthansa and Amadelux, which was formed by two venture capital funds, BC Partners and Cinven. Amadeus is owned 23% by AF, 18% by Iberia and 5% by Lufthansa. The airlines and private equity funds have formed a takeover vehicle, WAM Acquisition, to bid for the whole of Amadeus, which they valued at around €4.3 billion ($5.67 billion).
Transport group Patrick Corp. is expected to review Virgin Blue's growth strategy in an attempt to rebuild earnings after securing control of the airline in a hostile takeover campaign.
Rockwell Collins was selected by Air Berlin to provide avionics for its fleet of 70 A320s. The agreement includes an option for an additional 40 aircraft. Deliveries are expected to begin in September.
Lufthansa will base 16 long-haul aircraft, including three A340-600s, at its fast-growing Munich hub this summer and projects it will handle 19 million passengers there in 2005, 1 million more than in 2004. "Our target is to base 30 long-haul aircraft in Munich by 2010," Lufthansa Group representative and Head of Hub Management-Munich Karl Ulrich Garnadt told ATWOnline. However, the carrier is running out of capacity at Terminal 2 in Munich. According to Garnadt, if LH continues its annual 7% growth rate, it will reach the capacity level at the airport by 2009 at the latest.
