Following in the footsteps of United Airlines and American Airlines, Continental Airlines yesterday became the latest US carrier to announce a major downsizing, revealing plans to retire 67 737s, lower 2008 fourth-quarter mainline domestic capacity by 11% and reduce its workforce by 3,000. In a message to employees, Chairman and CEO Larry Kellner and President Jeff Smisek said, "The airline industry is in a crisis. Its business model doesn't work with the current price of fuel and the existing level of capacity in the marketplace. We need to make changes in response."
United Airlines, facing rising fuel costs and a weak US economy, yesterday announced a dramatic downsizing that will see its Ted service discontinued and include the retirement over the next 19 months of 100 aircraft with the aim of reducing mainline capacity by a cumulative 17%-18% for 2008-09.
Spirit Airlines said its warning to employees regarding possible job cuts was not an indication that it plans to reduce flying ( ATWOnline, June 4). "Spirit has not made any decisions regarding capacity reductions," CEO Ben Baldanza said.
Finnair CEO Jukka Hienonen is preparing the airline for what he considers to be an impending crisis in commercial aviation. "We are already looking at our network and we certainly will cut capacity in Europe and also look to some of our long-haul routes," he told ATWOnline at this week's IATA AGM in Istanbul. If the outlook remains gloomy, he said, "we will have to take additional measures." Finnair launched its new Helsinki-Incheon route this week as part of its continuing strategy to link the Finnish capital with Asia. But lately it has seen some softening in that market.
Amadeus reached 10-year agreements with 12 Arab Air Carriers Org.-affiliated airlines for distribution activities in their home markets. Six members who have partnered with Amadeus for the past seven years will be joined by another six when their current distribution agreements expire at year end.
Emirates SkyCargo carried 1.3 million tonnes of cargo in the fiscal year ended March 31, up 10.9% year-over-year, and boosted revenue 20% to AED6.4 billion ($1.7 billion), comprising 19% of Emirates' total revenue. But Divisional Senior VP-Cargo Ram Menen warned that the current fiscal year "will not be easy" and that cargo operators are entering into a "correction period" that will weed out inefficient players. "All carriers will have to refine their operating practices and airlines operating fuel inefficient aircraft will not survive," he warned at a gathering of SkyCargo employees.
Italy's Air One cemented its commitment to increasing its international profile with a firm order for 12 A350-800s plus 12 options and 12 A330-200s with eight options.
JetBlue Airways announced an expansion of the inflight connectivity services offered aboard its BetaBlue Wi-Fi-equipped A320, which launched last December ( ATWOnline, Dec. 12, 2007), to include "a more diverse e-mail and messaging platform" open to a variety of leading Web-based e-mail providers and a "simple yet extensive search and discover option" from e-commerce site Amazon.com. The expanded services are provided over JetBlue subsidiary LiveTV's Kiteline network platform and are free of charge.
ALAFCO announced the sale of five new A320-200s to Aref Logistics for $325 million. Aircraft will be operated by charter subsidiaries in Saudi Arabia and Bangladesh.
Spirit Airlines employees were notified that the low-fare carrier could be headed for hundreds of layoffs in the next two months as it struggles with soaring fuel costs, according to a report in The Miami Herald. Letters went out Saturday to union leaders indicating that up to 60% of flight attendants (448) and 45% of pilots (242) could be out of work by Aug. 1 as the airline closes its New York LaGuardia and San Juan bases and scales back its operation in Fort Lauderdale.
Royal Jordanian CEO Samer Majali took over as IATA chairman yesterday succeeding TAP Portugal CEO Fernando Pinto. He will serve one year and said the agenda "has extraordinary challenges. Change must be even more aggressive." IATA's board of governors announced that Cathay Pacific Airways CEO Tony Tyler will succeed Majali in June 2009, when the AGM will take place in Kuala Lumpur. Midwest Airlines COO Joseph Kolshak resigned after four months on the job, according to widespread press reports.
Clickair and Vueling Airlines shareholders likely will produce an MOU in the coming weeks that will trigger the merger of the two Barcelona-based LCCs, Iberia Chairman and CEO Fernando Conte told ATWOnline during the IATA AGM in Istanbul.
Shanghai Airlines expects a turnaround this year "as long as the rising oil price doesn't get out of control," VP Chen Zhuofu told ATWOnline yesterday at the IATA AGM in Istanbul. "Our cargo subsidiary will narrow its loss by a big margin this year, which definitely will relieve our operating pressure," Chen explained. Shanghai Airlines Cargo International, launched in July 2006, was cited as one of main drivers of SAL's CNY497.6 million ($71.7 million) loss in 2007 ( ATWOnline, April 29).
ExpressJet Holdings, which rejected a takeover offer from SkyWest Inc. in April ( ATWOnline, April 28), said it will return to the bargaining table to seek a new capacity purchase agreement with Continental Airlines. The renegotiation is part of a "full range of strategic" alternatives ExpressJet said it would consider when it rejected the SkyWest approach. It also will seek stockholder approval to issue additional common stock. The company announced last month that it will cut capacity by an estimated 30% until Nov.
Aeromexico reached a labor agreement with ASSA, which represents nearly 1,500 cabin staff, including a 4.5% salary increase and concessions allowing the airline "to have access to greater crew availability," it said. The union had threatened to strike and the deal was reached "after several days of intense negotiations," AM said last weekend.
Sun Country Airlines will lease an additional 737-700 for use "during its busy summer travel season" and said it will recall pilots impacted by its April furloughs ( ATWOnline, April 15). Lessor was unidentified.
Icelandair reported a ISK1.7 billion ($22.6 million) loss in the "normally negative" first quarter, deepened from a ISK1.2 billion loss in the first three months of 2007. Revenue rose 18% to ISK14 billion and operating loss was ISK1.7 billion. A year-ago comparison was not provided. Icelandair Group CEO Bjorgolfur Johannsson said the quarter still "was somewhat better than anticipated in much more difficult conditions than last year." Fuel costs increased by ISK1 billion year-over-year and the 2007 result also was boosted by ISK1.2 billion in proceeds from aircraft sales.
Italy's Air One has just released its 2007 results, calling its €6.8 million ($10.6 million) net profit "satisfactory." It reported a €6 million profit in 2006.
One-time items, including a huge writedown of its stake in Aer Lingus, resulted in a rare profit drop at Ryanair in the fiscal year ended March 31, when it earned €390.7 million ($607.2 million), down 10.3% from the €435.6 million net posted in the preceding 12 months.
Air France KLM Chairman and CEO Jean-Cyril Spinetta said the company remains very keen on participating in European consolidation, but he denied rumors the group is looking at acquiring Austrian Airlines.
Kenya Airways reported a net profit for its fiscal year ended March 31 of KES3.87 billion ($60.7 million), down 5.6% from KES4.1 billion earned in the prior year, a drop it attributed to political violence in the country during the final quarter following a disputed election in late December.
China Southern Airlines signed a framework agreement with Air France KLM to launch a cargo joint venture, CZ President Liu Shaoyong told ATWOnline yesterday at the IATA AGM in Istanbul.
Dubai Aerospace Enterprise is in talks to order an additional 50 aircraft worth approximately $2.5 billion in the next 18 months, DAE Capital CEO Bob Genise told Reuters. "Despite the rise in jet fuel prices, there are pockets of strong performance," he said. The lessor committed to 200 aircraft at last year's Dubai Air Show ( ATWOnline, Nov. 13, 2007).
Aloha Airlines, which shut down in March after declaring bankruptcy ( ATWOnline, April 1), is trying to sell off a legal claim filed in 2006 against Mesa Air Group, according to the Honolulu Star-Bulletin. Aloha said it will file a motion with the court next week, anticipating an auction the following week. "A lawsuit is no different than a propeller," said James Wagner, an attorney for Aloha Chapter 7 trustee Dane Field.
