St. George, Utah-based Regional SkyWest reported net income of $24.8 million for the second quarter ended June 30, a 23.5% increase over net income of $20.1 million in the year-ago period. Operating revenues rose 43.6% to $384 million, primarily as a result of a 44.5% increase in ASMs, while operating expenses climbed 46.2% to $339.4 million. This resulted in a 26.8% growth in operating income to $44.6 million from $35.2 million.
In a deal that may lead to a mega low-cost airline group in Asia, Qantas agreed to pay S$60 million ($36 million) for Singapore-based Valuair, which is to be merged into Qantas's 49%-controlled Jetstar Asia. The deal was confirmed yesterday by Jetstar CEO Ken Ryan, who will take control of Valuair. The new entity will see Qantas's stake reduced to 45.5%. The Australian airline also is holding talks with Kuala Lumpur-based AirAsia, which had been prepared to inject S$20 million into Valuair.
Air New Zealand reached agreement with its long-haul cabin crew, represented by FARSA, on a new three-year contract, staving off a third walkout that was set to begin yesterday. Terms of the deal were not released but the airline previously had offered a 3.3% wage increase in each of the next three years while the union was demanding 3.8%. Other issues included crewing levels for the carrier's new 777-300ERs. The earlier 48-hr. strikes led ANZ to cancel 85 flights, causing widespread disruption to passengers.
ExpressJet, which operates in the Continental Express feeder network, reported a 17.9% drop in net income to $24.3 million for the second quarter ended June 30 compared to net income of $29.7 million in the prior-year period. Operating revenue in the quarter rose 4.8% to $388.7 million while operating expenses jumped 8.7% to $348.7 million on a 13.3% increase in fuel expense. However, operating CASM actually decreased 6.5% to 11.52 cents. Operating income was down 20.3% to $40 million from $50.2 million in the prior-year period.
Passengers with respiratory problems will be able to use two kinds of portable oxygen concentrator units onboard commercial aircraft under a new regulation published by US FAA. The two devices, manufactured by AirSep Corp. and Inogen Inc., do not use compressed oxygen, which the agency classifies as a hazardous material. Instead they work by filtering nitrogen from the air and delivering oxygen in concentrated form to the user. The new rule marks the first time passengers will be able to use their own medical oxygen devices onboard an airliner.
Adria Airways carried 93,700 passengers in June, a 7% increase over the same month last year. There were 5% fewer travelers on scheduled flights this June but 81% more on charter routes. In the first six months, Adria carried 411,800 passengers, up 3% compared to the first half of last year. It has approximately 180 weekly regular flights to 18 cities in Europe and will start a twice-weekly service from Ljubljana to Warsaw by September.
NAV Canada said it reached a tentative collective agreement with the Canadian Auto Workers/Canadian Air Traffic Control Assn. representing air traffic controllers. Terms were not disclosed. The agreement is subject to ratification by union membership.
Varig signed a six-month consultancy contract with Lufthansa Consulting for its reorganization and restructuring. Following the filing of an application for the protection of creditors at the bankruptcy court, the airline must develop an appropriate restructuring plan within 60 days as well as a related business plan and submit those to the court. If the court accepts the plans, the implementation phase must be completed within a maximum of 120 days thereafter.
Germanwings increased its first-half sales by 60% to €163 million ($198 million), the carrier said in an statement. The number of passengers rose 60% to more than 2.3 million. The airline expects to carry 5.5-6 million passengers this year, generating sales of about €400 million, up from €247 million in 2004.
Air China signed a contract with Airbus to purchase 20 A330-200s, which are scheduled for delivery beginning next May. China Aviation Supplies Import and Export Group was involved in the deal by signing a GTA with Airbus. Air China President Li Jiaxiang said the new aircraft will help the carrier expand its fleet and open more international destinations. According to ATW's "World Airline Report," Air China currently operates a fleet of 83 aircraft consisting of both Airbus and Boeing models.
United Airlines cleared a major hurdle yesterday when its 20,000 ramp agents and customer contact employees, represented by the International Assn. of Machinists, ratified a tentative agreement reached in June ( ATWOnline, June 20). According to the union, roughly 67% of IAM members voted to approve the agreement. Terms of the deal were not released but it is believed to provide the carrier with savings of $175 million a year.
Buoyed by fuel hedge gains, Alaska Air Group, parent of Alaska Airlines and Horizon Air, reported that it earned $17.4 million in the second quarter compared to a loss of $1.7 million last year. Excluding special items, the current-period result rose to $24.7 million versus income of $8.2 million in 2004. Fuel hedges contributed $27.6 million in the quarter, up from $25.9 million last year.
In what was its 18th consecutive quarter of profitability, JetBlue Airways reported net income of $12.2 million for the second quarter ended June 30, down 43.2% from net income of $21.5 million in the year-ago period.
America West Holdings Corp., parent of the airline, reported net income of $13.9 million for the second quarter ended June 30, including a $2.7 million unrealized loss associated with fuel hedging transactions and a $4.3 million loss on the sale and leaseback of aircraft during the period. This was a 30.5% increase over net income of $10.7 million in the prior-year period, which included an unrealized gain on fuel hedging transactions of $7.2 million. Excluding these special items, second-quarter 2005 net income was $20.9 million compared to $3.5 million in the 2004 quarter.
Southwest Airlines yesterday offered to spend $130 million to construct facilities at Seattle's King County International Airport--also known as Boeing Field--that would allow it to transfer its operations from Seattle-Tacoma International, where it claims that "ever-increasing costs have become an obstacle to growth." In addition to being the delivery site for Boeing narrowbodies, KCIA is served by a few small Regional airlines along with corporate and cargo operators. It has runways of 3,710 ft. and 10,001 ft. in length and is located 5 mi. from downtown Seattle.
Delta Air Lines, which continues to be the subject of bankruptcy speculation, lost $382 million in the second quarter ended June 30, which included a net one-time charge of $78 million primarily associated with pensions. This compares to a net loss of $1.96 billion in the year-ago period, which included a one-time charge of $1.7 billion. "Delta's second-quarter results reflect both the solid progress we are making in implementation of our Transformation Plan and the substantial challenges we are facing," CEO Gerald Grinstein said.
Cargolux, as expected, has emerged as one of the launch airlines for the 747ADV after its board authorized management to enter into final negotiations with Boeing for a minimum of 10 of the type for delivery beginning in 2009. President and CEO Uli Ogiermann said, "Management's recommendation to the board is the result of a very thorough analysis during which we assessed which aircraft was best suited to our fleet renewal in the next decade.
American Airlines parent AMR Corp. overcame record fuel prices and intense competition to report net earnings of $58 million for the second quarter ended June 30 compared to income of $6 million in the year-earlier quarter.
Delta Air Lines announced yesterday that Executive VP and CFO Michael Palumbo has resigned "to pursue other opportunities" and is being replaced by Edward H. Bastian, a six-year Delta veteran who most recently was CFO at Acuity Brands Inc. Palumbo spent around 14 months at Delta, having joined the company following the resignation of Michelle Burns in April 2004. Bastian previously served at the airline as senior VP-finance and controller. Also yesterday Delta named Jim Whitehurst COO, a position that had been vacant.
Air France is negotiating with Brazilian low-cost carrier Gol as well as with TAM to conclude a cooperation agreement, Le Figaro reported. AF is keen on increasing its market share in the Europe-South America market, specifically to Brazil, and currently operates daily services between Paris CDG and Rio de Janeiro and Sao Paulo. An accord with Gol would secure connections to destinations beyond Rio while TAM could provide travel beyond Sao Paulo.
On-again off-again talks between Valuair and Qantas-operated Jetstar Asia about an alliance or merger are back on, with analysts in Singapore claiming that Qantas will put an additional S$50 million into the merged airline. ATWOnline understands that staff from an Australian financial institution flew to Singapore late last week to tie up the deal. Qantas owns 49% of Jetstar Asia and initially funded the LCC with S$50 million. Jetstar Asia is expected to start services to Kolkata on Aug. 18.
Continental Airlines returned to profit in the second quarter ended June 30, reporting income of $100 million compared to a restated loss of $28 million in the year-ago period as revenue growth and savings from its labor restructuring agreements overcame record fuel prices. Net income for the current period included a $47 million gain related to the contribution of ExpressJet shares to its defined benefit pension plan during the quarter. Excluding this gain, net income totaled $53 million. The 2004 results were restated to reflect changes to lease accounting methods.
Embraer was awarded type certification for the 170 and 175 from Transport Canada Civil Aviation, which will enable deliveries to begin of 15 175s ordered by Air Canada. The aircraft will be configured for 73 passengers in two classes. As of June 30, Embraer had delivered 66 170s and logged 412 firm orders for the 170/190 family, which range from 70 to 118 seats. Certification of the 190 is expected in the third quarter and of the 195 in the 2006 second quarter.
Republic Airways Holdings announced a follow-on public offering of 7.75 million shares of common stock--all of which are being offered by the company--at a price of $12.60 per share. Merrill Lynch served as the sole bookrunner and Raymond James & Associates acted as co-manager. The company also granted the underwriters an option to purchase up to an additional 1,162,500 shares to cover overallotments.
