DHL yesterday unveiled a $2 billion restructuring of its loss-making US express business that includes shifting its air lift capacity in the market to rival UPS, a potentially devastating blow to ABX Air and Astar Air Cargo, which currently provide the German express giant's US lift.
Air New Zealand announced that its pre-tax profit for the year ending June 30 will fall by more than 23% because of soaring jet fuel prices. It said earnings will be less than NZ$200 million ($157.8 million), down from NZ$259 million the previous year. Last month ANZ reduced its full-year profit forecast to NZ$200-NZ$220 million ( ATWOnline, April 28). It raised fares last month and from September it is cutting capacity on its Auckland-London Heathrow service by switching to 777-200ERs from 747-400s.
Wataniya Airways is the name of a new short-haul premium carrier based in Kuwait that will launch service next January and offer point-to-point flights to Persian Gulf and Middle East destinations. It initially will operate two A320s with 122 seats and what it claimed will be the "lowest seat density of an A320 of any scheduled airline in the world."
Regional Express (Rex) of Australia reported an A$8.2 million ($7.9 million) pre-tax profit in the fiscal third quarter ended March 31, up 7.9% from the A$7.6 million earned in the year-ago period. Executive Chairman Lim Kim Hai said Australian regional aviation "encountered a veritable tsunami in the past few months" with rising oil prices, economic difficulties and a pilot shortage ( ATWOnline, May 8). Lim said Rex "performed beyond our expectations" in part because it remains debt free.
SAS Scandinavian Airlines said it requested a 10% price reduction on goods and services it receives from its suppliers as part of its Profit 2008 program ( ATWOnline, April 30).
AirAsia founder and CEO Tony Fernandes hit back at suggestions that his airline is exposed to surging oil prices, with analysts souring on the company's stock as it hit its lowest level--MYR1.02 ($0.32)--since it listed in November 2004. Speaking yesterday to ATWOnline, Fernandes argued, "There are opportunities, in a slower economy, whereby travelers who might have flown on a legacy airline will now choose a lower-cost, better-value option. People still need to travel."
Air Berlin will reduce its Dusseldorf-Shanghai service to thrice-weekly from five-times-weekly from the end of June owing to a "drop in demand for the Chinese market and the high fuel costs," CEO Joachim Hunold said. Separately, AB announced the sale of its Dusseldorf-based "LTU plus" service center to former LTU partners Jurgen Marbach (55%) and Rudolf Worhl (45%) for an undisclosed sum. The center employs 65 and provides services to AB under a two-year deal.
Republic Airways flew 874.4 million RPMs in April, a 28.1% increase over the year-ago month. Capacity climbed 28.5% to 1.15 billion ASMs and load factor slipped 0.3 point to 75.9%.
News from Travel Technology Update: Of all the actions taken by the airlines to defend against high fuel costs, none has brought the gravity of the fuel crisis home to consumers quite like American Airlines' plan to charge most coach passengers $15 each way for the first checked bag. The high fuel costs are "the biggest threat to the world's airlines ever," Henry Harteveldt, vice president and principal analyst at Forrester Research, said. Even in the dark days following 9/11, "we knew demand would return."
SITA reached agreement with Bogota's El Dorado International to provide its AirportConnect Open technology for agent and self-service passenger check-in. CUTE system allows passengers to check in at any kiosk or desk. Investment is part of a $650 million expansion program at BOG.
El Al said it is making a $20 million provision in its financial reporting for a "possible settlement" with the US Dept. of Justice regarding antitrust activities related to cargo transport. Carriers throughout the world are contending with a wide-ranging multinational probe conducted by DOJ, EU antitrust authorities and other governments into alleged price fixing on cargo carriage in 2000-06.
Anatolia Jet, Turkish Airlines' wholly owned low-cost subsidiary, launched successfully last month. "We already have an 80% load factor, and the carrier is getting better, as we expected," THY CEO Temel Kotil told ATWOnline. He said Anatolia, which operates five 737-400s from its Ankara hub, could increase its fleet to a possible 10 aircraft this year. "Public response to this product is very good," he said ( ATWOnline, March 31).
Swiss International Air Lines last week unveiled new business class seats to be installed on its long-haul aircraft beginning next year, part of the airline's concerted effort to distinguish itself from parent Lufthansa.
SkyTeam hopes to announce the addition of an Indian partner later this year, governing board Chairman Leo van Wijk told ATWOnline. "Discussions with Kingfisher [Airlines] are progressing," he said. "We hope to conclude the negotiations in autumn." SkyTeam has been looking to add an Indian carrier for several years and was the first group formally to invite one (Indian Airlines) into an alliance early last year.
Bmi Group reported pre-tax profit of £15.5 million ($30.6 million) for 2007, a 47.8% decline from the £29.7 million earned in the prior year, as revenue increased 12.9% to £1.02 billion including £112.9 million attributable to the operations of BMED that were integrated fully in November.
South African Airways said its restructuring plan launched last year so far has yielded ZAR1 billion ($130 million) in annual cost savings and the program is on track to allow the carrier to begin achieving "sustainable profitability by March 2009." On the labor front, SAA said it has reached agreement on new multiyear deals with unions representing cabin crew and ground staff, while pilots are in the process of ratifying a tentative agreement that will "guarantee" a 5% productivity improvement.
Jetstar Pacific, Vietnam's first low-cost airline, launched commercial operations as part of Qantas Group Friday. It has become the first Vietnamese carrier to offer online booking to domestic customers. Qantas holds 18% of the LCC and will increase its investment to 30% in 2010 ( ATWOnline, April 15). Jetstar Pacific has four 737s and will add a fifth next month, but it eventually will fly up to 30 A320s.
Singapore Airlines will add a second A380 service to London Heathrow beginning July 16. It will operate Flight SQ318 from Singapore to LHR and SQ321 on the return leg four-times-weekly, boosting service to 11 weekly flights. Executive VP-Marketing and Regions Huang Cheng Eng said, "Our A380 products have been very well received by our customers and loads on the Singapore-London route have been exceptionally encouraging."
UPS will transfer its intra-Asia air hub to Shenzhen from Diosdado Macapagal (Clark) in the Philippines in order "to improve customer service by reducing transit times across Asia," it said. The 89,000-sq.-m. hub will be operational in 2010 and will "slash at least a day of shipment times-in-transit for Asian customers." UPS will invest $180 million at Shenzhen, which will include a sorting hub with five times the capacity of Clark--up to 36,000 pieces per hr.--and employ 400. UPS's new hub at Shanghai Pudong will open in November.
IATA reported a 3.9% year-over-year decline in March premium traffic following a 5.1% increase in February. In the first quarter, premium traffic was up 0.2% over the first three months of 2007. "Given the importance of premium passengers for airline profitability the absolute decline in numbers is bad news, particularly since the price of jet fuel rose 170% over the year to March reaching $130 a barrel," IATA said of the March numbers.
ExpressJet Airlines will cut capacity by approximately 30% beginning Aug. 23 and lasting at least through Nov. 15, President and CEO Jim Ream announced yesterday, "due to the current economic environment, including skyrocketing fuel costs and excess capacity in the domestic market." Ream did say that the carrier is "encouraged by the recent booking pace for summer travel in our branded flying and trends we are seeing in our short-haul markets."
Air France KLM will launch a new cabin class in winter 2009-10 catering to SMEs, the elderly and leisure travelers seeking more comfort. The still-unnamed class will be introduced on long-haul aircraft of both AF and KLM, Executive VP-Marketing, Revenue Management & Network Bruno Matheu told ATWOnline, stressing it will not "really be a premium economy. In comfort it's closer to business class with a 38-in. seat pitch and eight seats abreast instead of 10 [in economy] on our 777s. But regarding service levels it will be closer to economy.
Mesa Air Group said yesterday that if Delta Air Lines succeeds in ending its service agreement for 34 ERJ-145s, MAG may have to file for Chapter 11 bankruptcy protection as the loss of business and the resulting cash crunch would make it impossible for the regional to continue operations.
