KLM reached a collective labor agreement with the unions representing its ground and cabin staff for the period spanning Jan. 1, 2005, to April 1, 2007. The accord includes a phased and structural wage boost of 2.75%, with a one-off increase of 4% for July 2005. The parties also agreed to an adjustment of the rules regarding other social provisions such as pensions and health insurance. Additionally, they agreed to fill in further specifications on the different rosterings before Jan. 1, 2006.
SITA INC won a five-year, $7 million contract for IT support to baggage management at London Gatwick following a competitive tender. BagManager allows the three ground handlers--Aviance UK, Groundstar Gatwick and Servisair/Globeground---and any of the 80-plus airlines using LGW to run an automated reconciliation system of baggage through the North and South Terminals using some 250 wireless handheld scanners. The system is expected to handle 10 million bags in 2005 and will be scaled up to match expected growth over the next five years.
Air Transport Assn. member airlines flew 58.82 billion RPMs in May, up 7.2% over the year-ago period. Capacity climbed 3.3% to 74.65 billion ASMs and load factor rose 2.9 points to 78.8%. For the five months ended May 31, RPMs increased 6.5% to 274.26 billion, ASMs grew 2.7% to 357.79 billion and load factor gained 2.7 points to 76.7%.
Declining growth rates will take a mounting toll on European low-cost carriers, according to an analysis by McKinsey & Co. presented Thursday in Frankfurt. Lucio Pompeo, author of the study, stated that the booming industry is at a crossroads; "Few will survive," he warned. The study cited three reasons for falling LCC profitability: Increasingly saturated markets, aircraft orders exceeding likely demand and the growing competition among scheduled airlines, charter companies and LCCs.
Condor credited its continuing restructuring program and introduction of scheduled services for a 39% reduction in its "customary winter loss" for the fiscal first half ended April 30. The number of passengers carried rose 7.4% and fleet productivity jumped 18.2%. Actual results were not released. "The restructuring program is running according to plan, two-thirds of the cost-cutting measures have already been implemented, the seat-only business. .
CSA Czech Airlines confirmed an audited net profit of CZK324.2 million ($22.9 million) for 2004 ( ATWOnline May 12). During the first five months of 2005, CSA recorded a 16% passenger increase to 1.8 million. In May it transported 444,000 passengers, up more than 20% compared to 2004.
Austrian Airlines retired its last MD-83 on June 22, marking an end to this aircraft type that had been in service with the company for 25 years. Austrian operated a total of 20 MD-81s/82s/83s/87s, which flew 900,000 hr., made 575,000 flights and transported 35 million passengers. The last two are going to operators in South and North America. Austrian will suspend its Vienna-Osaka route temporarily in the coming winter season owing to low yields and high airport costs at Osaka Kansai, ATWOnline has learned.
FedEx Corp. reported net income of $448 million for the fiscal fourth quarter ended May 31, up 9% over net income of $412 million in the prior-year period. Revenue rose 10% to $7.72 billion, while operating expenses climbed 10% to $6.98 billion. This produced an operating income of $740 million, an 8% increase over operating income of $685 million in the year-ago period.
Niki Lauda told ATWOnline that his low-cost carrier Niki, a partner of Air Berlin, is expecting a passenger increase from 940,000 in 2004 to more than 1 million this year. "Now we have to evaluate whether to add a sixth A320 in 2006, one year earlier than scheduled," he said. In addition, Niki, which operates from bases at Vienna and Salzburg, is looking for a third hub, which could be located outside Austria, possibly in nearby Bratislava. It flies four A320s and one A321, and after the summer season the A321 will be replaced by a new A320 from an order for 10.
United Airlines late Tuesday announced it was implementing a 3% fare increase on most US domestic and international published fares, effective immediately. The increase came on the same day the price of oil briefly flirted with $60 a barrel, a new record. "With oil continuing to trade at historically high levels, all industries must act responsibly to offset rising costs. . .We are confident our customers will understand that we must take appropriate measures to mitigate our higher fuel costs," said Executive VP-Marketing, Sales and Revenue John Tague.
American Airlines said it made a $75 million contribution to its defined benefit pension plans, bringing its total contribution to the plans in 2005 to more than $200 million. AA employees, led by Chairman and CEO Gerard Arpey and leaders of the pilot, flight attendant and mechanic unions, lobbied in Washington yesterday in favor of pension reform legislation. AA noted that with its defined benefit pension plans funded at about 80%, "it has the best-funded defined benefit plans in the industry."
Evans & Sutherland Computer Corp. announced that Lufthansa Flight Training-Berlin purchased an EP-1000CT visual system for use on a new A320 simulator ordered from CAE.
FLYi Inc. shareholders approved a request by the board of directors to effect a reverse stock split in an effort to avoid delisting by NASDAQ. The parent of Independence Air has until Nov. 23 for its shares to trade above the $1 threshold for at least 10 consecutive days. The reverse split could range from 1:2 to 1:10.
CAE shareholders agreed to the transfer of the company's head office from Toronto to Montreal, where CAE was founded in 1947. The firm employs more than 2,800 in the Montreal area and generates some $70 million into the economies of Montreal and Quebec.
Qantas denied a report in yesterday's Sydney Morning Herald newspaper that the airline "could issue a profit downgrade as early as Friday." Chief Executive Geoff Dixon said Qantas "would meet the current market expectations" for the fiscal year ending June 30, 2005.
Emirates will invest $38.8 million to build a luxury conservation resort in Australia's Blue Mountains. According to the company, the development will be built on farmlands that currently border the Gardens of Stone National Park, with guest facilities occupying less than 2% of the total land. "We want to take this beautiful but sadly distressed rural farming site and turn it into a sanctuary to further showcase Australia to the world," said Emirates Chairman Sheikh Ahmed bin Saeed Al-Maktoum. Opening of the resort is planned for 2007.
The labor agreement that would have permitted Air Canada to go forward with its order for up to 36 777s and 14 787s ( ATWOnline, June 21) was rejected primarily by Air Canada pilots unhappy over the integration of Air Canada and Canadian Airlines seniority lists following AC's purchase of its cross-country rival in 2000, the Air Canada Pilots Assn. confirmed Monday. Of pilots who voted, 54% opposed the agreement, which would have set pay rates and working conditions for 777 flightcrew.
Ryanair, while warning that its fuel costs will be higher than expected if oil prices stay at current levels, maintained its earnings guidance for its current financial year. The LCC is unhedged on fuel until September, but from that point it has hedging in place for 90% of its fuel needs at $47 per barrel. "If it stays at $60 through the remainder of the summer and the winter, our fuel bill will be higher than originally predicted," CEO Michael O'Leary said at a press briefing in London.
Vietnam Airlines yesterday signed a firm agreement with Boeing to purchase four 787-8s at a signing ceremony in Washington. The deal was announced in December ( ATWOnline, Jan. 4). The aircraft, valued at $500 million at list prices, are scheduled for delivery in 2009 and 2010. The agreement also includes purchase rights for 11 additional aircraft in the 2010-13 timeframe. Engine selection was not announced. The carrier plans to use the 787-8s to expand its route system and replace some existing aircraft.
United Airlines carried its 3,888,888th passenger from the US to China. It currently operates four daily services to China, flying from San Francisco and Chicago to Beijing and Shanghai.
US mainline system revenue per ASM for the eight largest US passenger airlines (excluding Southwest) rose 5.2% in May compared to the year-ago period on a 2.4% increase in capacity, according to JP Morgan, which cited data from the Air Transport Assn. Yield was up 0.6%--the first year-on-year increase since July 2004--and revenues climbed 7.7%. JP Morgan's Jamie Baker described the RASM rise as "stronger than expected."
Continental Airlines yesterday said it applied to the US National Mediation Board for the immediate appointment of a federal mediator to help in its negotiations with its flight attendants. Earlier this year, the flight attendants rejected a tentative agreement, becoming the only workgroup at the carrier that did not ratify a new deal ( ATWOnline, April 1). Continental has said it needs $500 million in annual pay and benefit savings from its employees and has achieved roughly $418 million of that total.
