US scheduled airlines should record an operating profit of $500 million this year, but "with continuing interest costs and income taxes," they will probably lose $2-$2.5 billion at the after-tax level, according to a forecast from AeroEcon, which is headed by former Air Transport Assn. Chief Economist David Swierenga.
EVA Air added cargo capacity by wet-leasing three MD-11 freighters from World Airways. Two are being placed into service this month and the third will be deployed in August. EVA Air is using the aircraft to boost cargo frequency on its Taipei-New York JFK route from eight to nine weekly flights and to increase Taipei-Atlanta service from six to seven weekly flights.
Bombardier introduced a significantly enhanced version of its CRJ900 that combines "substantially improved takeoff and landing performance and increased range." The company said the version was developed to provide better payload/range capability from shorter airfields. The improved takeoff and landing distances are made possible by combining optimization of wing leading-edge devices and a redesigned wingtip and winglet that results in a lower lift/drag ratio and reduced approach speeds. The winglet also contributes to lower fuel burn.
Republic Airways Holdings, parent of Chautauqua Airlines and Republic Airlines, reported net income of $15 million in the fourth quarter ended Dec. 31, up 56.4% over net income of $9.6 million in the year-ago period. Total operating revenues rose 40.9% to $159 million while total operating expenses increased 37.6% to $125.9 million, resulting in an operating income of $33 million, up 55% from operating income of $21.3 million in the 2003 fourth quarter. CASM excluding fuel jumped 4.4% to 8.04 cents, primarily owing to a 9.7% decrease in average stage length.
Delta Air Lines flew 8.18 billion RPMs in February, up 9.7% over the year-ago period. Capacity declined 1.6% to 11.52 billion ASMs and load factor gained 2.4 points to 71%. For the two months ended Feb. 28, RPMs climbed 11% to 16.86 billion, ASMs increased 5.6% to 23.62 billion and load factor rose 3.5 points to 71.4%.
Assn. of Asia Pacific Airlines' 17 member carriers posted a thumping 22.5% increase to 117 million in international passenger numbers for 2004. RPKs grew 18.6% while capacity lifted 13.1%, resulting in a 3.4-point jump in load factor to 73.1%. The spectacular growth was due partly to the lower base in 2003 because of SARS, but nonetheless passenger numbers and RPKs grew 7.7% and 6.9% respectively when compared to 2002. The biggest growth area was China, which recorded a 51% increase in passengers although no mainland Chinese airlines are members of AAPA.
Northwest Airlines flew 5.5 billion RPMs in February, up 6.6% over the year-ago period. Capacity climbed 2.4% to 7.09 billion ASMs and load factor gained 3.1 points to 77.6%. For the two months ended Feb. 28, RPMs increased 8.8% to 11.32 billion, ASMs rose 4.1% to 14.67 billion and load factor grew 3.3 points to 77.1%.
News from Travel Technology Update: The advent of GDS new entrants, dubbed GNEs, sparked an unusually acerbic response from the traditional vendors at ResExpo, who warned suppliers and agents that embracing new technology comes with risks. G2 SwitchWorks and ITA Software say they are close to rolling out systems that will take travel reservations off TPF mainframes and onto open systems that are more agile and a lot cheaper.
Leaders of the pilots union at Continental Airlines last week unanimously agreed to approve and support a new labor agreement and now will send the deal to union members for a ratification vote. According to the Air Line Pilots Assn., the agreement, which was reached late last month ( ATWOnline, March 1), will provide the airline with more than $200 million of the $500 million in annual cost savings Continental said it needs from employees.
European Commissioner for Transport Jacques Barrot intends to seek full ownership rights of US airlines by European companies, according to a report in the Financial Times. Barrot is scheduled to visit Washington March 21-22 to try to revive negotiations on a EU-US Open Aviation Area, which broke down last year when EU ministers rejected a proposal tabled by the US. The proposal excluded cabotage rights for EU carriers in the US, a priority at the time for European negotiators and politicians despite calls from the majority of European airlines not to concentrate on the issue.
KLM signed an agreement with OnAir to provide SMS text messaging and e-mail on its 10 777s, which operate on routes to New York, San Francisco, Sao Paulo, Cape Town, Dubai, Tokyo, Shanghai, Beijing and Manila. The accord follows a successful trial and the service will be available from mid-March onward. KLM also will install the OnAir service on six new A330s flying mainly to the Middle East and Africa from August onward. OnAir SMS and e-mail service will be available to KLM customers flying to the US on A330s of its partner Northwest Airlines as well.
American Airlines' Tulsa Maintenance & Engineering Base, the largest airline MRO facility in the world, aims to achieve $500 million in revenue through third-party work and turn the base into a profit center by the end of 2006. The goal is based on the outcome of a joint planning session held earlier this year between Tulsa base management and the Transport Workers Union that represents most of the 7,000 people at the base.
Austrian Airlines will introduce service from Vienna to Varna, Bulgaria, operating five days per week. It also will serve the Romanian city of Sibiu in cooperation with Tarom. Both destinations will be added to the summer schedule. Austrian will add frequencies to several destinations throughout its network, including boosting weekly flights between Vienna and Shanghai to five and to New York to 11. In addition, it will launch seasonal summer service to Montreal. It will begin new flights to Alexandria and Amman, with each being offered four times per week.
China has overtaken Japan as the largest air travel market in Asia and is second only to the US in terms of total scheduled departing seats, according to a new report from the ITTC consultancy division of Airclaims, which is headed by Peter Morris, former IATA chief economist.
Online travel sites such as Expedia, Orbitz and Travelocity are "outperforming" most airline websites in terms of "customer experience," according to a study by California-based Keynote Systems. The study noted that "greater selection is a major inherent advantage for online travel agencies," but stated that the sites are "also creating a better overall online experience for customers." Among airlines, Southwest and JetBlue were rated among the best sites in terms of customer experience.
Ryanair's recent order for 225 Aviation Partners Boeing Blended Winglet Systems to outfit its entire fleet of 737-800s in service and on order represents the largest single order for the program. The deal was announced in conjunction with the Irish LCC's order for up to 140 new CFM56-7B-powered 737-800s ( ATWOnline, Feb. 25). Ryanair will begin retrofitting its existing fleet immediately, while from January 2005 all new 737-800s will arrive with winglets installed. Southwest Airlines also is a strong believer in the winglets.
Bmi Group reported a £2.1 million ($2.8 million) pre-tax profit for the financial year ended Dec. 31, reversing two years of red ink at the pre-tax level comprising losses of £9.8 million in 2003 and £19.6 million in 2002. EBIT remained negative, however, with an operating loss before interest of around £4 million, according to preliminary figures. This compares to operating losses of £12.5 million in 2003, £21.7 million in 2002 and £29 million in 2001.
British Airways flew 7.8 billion RPKs in February, up 1.4% on the year-ago period. Capacity fell 1.4% to 11.04 billion ASKs and load factor consequently moved up 2 points to 70.8%. The increase in traffic comprised a 6.8% rise in premium traffic and a 0.4% increase in nonpremium traffic. Passengers carried decreased 3.1% to 2.5 million. Cargo tonne-kilometers declined 5.9%. The traffic and capacity figures versus last year are impacted by some 3 points because 2004 was a leap year, BA noted.
LAN Airlines (formerly LanChile) posted record net income of $47.6 million for the fourth quarter ended Dec. 31, up 35.4% over income of $35.2 million in the year-ago period.
American Airlines flew 9.6 billion RPMs in February, up 2.4% over the year-ago period. Capacity fell 2.3% to 13.3 billion ASMs and load factor gained 3.3 points to 72.2%. For the two months ended Feb. 28, RPMs increased 5.3% to 20.17 billion, ASMs dropped 0.3% to 27.71 billion and load factor was ahead 3.8 points to 72.7%.
Qantas confirmed that further extensive restructuring planned for the airline could result in redundancies among the 38,500-strong workforce and the relocation of operations within Australia and offshore. Responding to media speculation about likely losses of up to 3,000 jobs, CEO Geoff Dixon said it is inevitable that existing efficiency programs and a review currently being undertaken will change the direction of the carrier. However, he said there is no definitive figure for the redundancies that may result from the process.
Leading US and European airline trade organizations issued a joint statement yesterday calling on governments on both continents to "reduce obstacles to the economic recovery of the airline industry." The statement was released at the end of an extraordinary two-day meeting between the boards of directors of the Air Transport Assn. and the Assn. of European Airlines.
G2 SwitchWorks said it received funding from Norwest Venture Partners and Texas Pacific Group's TPG Ventures. G2 is a GDS new-entrant company that has stated its fees to airlines will be priced 80% below what GDSs currently charge ( ATWOnline, Feb. 28). As part of the investment, Jim Lusser of Norwest and Bill McGlashan of TPG Ventures will join G2's board. David Bonderman, managing general partner of Texas Pacific and chairman of Ryanair, will serve as a special adviser to the board, as will Promod Haque, managing partner at Norwest.
Continental Airlines flew 5.33 billion RPMs in February, up 6.6% over the year-ago period. Capacity climbed 0.1% to 7.21 billion ASMs and load factor gained 4.5 points to 73.9%. For the two months ended Feb. 28, RPMs increased 9.4% to 11.2 billion, ASMs rose 2.4% to 14.99 billion and load factor improved 4.8 points to 74.7%. Continental said consolidated passenger RASM is estimated to have increased 1%-2% in February compared to February 2004, while mainline RASM is estimated to have climbed 2%-3%. For January, both consolidated and mainline RASM were up 4.2% over January 2004.
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