AirAsia, winner of ATW's 2005 Market Leadership Award, signed a purchase contract for up to 100 A320s including 60 firm orders and 40 options. This is an increase of 20 aircraft over the carrier's original order placed late last year for 40 firm A320s and 40 options ( ATWOnline, Dec. 17), underscoring its aggressive market growth plans.
SilkAir will increase network capacity by 14% for its summer season that runs from March 27 to Oct. 29. Frequencies to Phuket will increase from 14 to 21 per week while flights to Davao will jump from four weekly to daily. Flights to Kochi will climb from four to five weekly and to Manado from three to four weekly. From July 1, SilkAir will add another weekly flight to Yangon for a total of 11 and its twice-weekly services to Padang will resume from May 3. In total, the airline will operate 127 weekly flights to 25 regional destinations this summer.
Although it was another tough year as Virgin Express faced more competition from full-service low-fare charter operators, the airline reduced its net loss to €7.3 million ($9.5 million) in 2004 from €19.6 million in the previous year. Operating loss narrowed to €3.9 million from €16.1 million in 2003. Total revenue fell 13% to €179.8 million, mainly owing to a reduction in the carrier's fleet from 13 to 11. "A further reduction is planned for 2005," Executive Chairman David Hoare said.
L-3 Communications Security & Detection Systems named VP and CFO William Frain to the position of senior VP following Allen Barber's promotion to president. James Cataldo joined L-3 as CFO. Steven Williams was appointed MD for Europe, Middle East and Africa based in L-3's UK office. Jay Payne was hired as VP-cargo; he previously was with Science Applications International Corp. Robert Fleck was appointed VP-customer service.
China Eastern Airlines Jiangsu Ltd. yesterday placed an order with Embraer Harbin for five ERJ-145s, marking the second order the company has secured with a Chinese airline. "We are very pleased to welcome the ERJ-145 to our fleet," China Eastern President and CEO Su Guoxin said. "It is a very attractive aircraft that will fit in very well with our existing fleet and route structure."
Air France and KLM will merge their respective frequent-flier programs into one new program, Flying Blue, in June. Frequence Plus and Flying Dutchman cardholders automatically will become members of the new program and will retain all the miles they have accrued without any drop in value. The new FFP contains four membership levels--Ivory, Silver, Gold and Platinum--and has some 10 million members in a first stage. Together with more than 30 partner airlines, Flying Blue will enable customers to earn miles and use them on 18,000 daily flights to 900 destinations.
SkyEurope completed a €10 million ($13 million) equity fund-raising, the proceeds of which will be used for fleet development. The investment was provided by funds managed by East Capital Asset Management AB, an independent asset manager specializing in Eastern European financial markets. Last year the airline laid out a target of achieving €50 million in new funding.
UAL Corp., reported that its February loss widened to $291 million from $259 million in February 2004, but the parent of United Airlines said it met the monthly requirements of its debtor-in-possession financing. In its Monthly Operating Report filed with the US Bankruptcy Court, UAL said the current-period loss was net of $92 million of largely noncash reorganization expenses. This compares to $119 million in reorganization expenses last year (UAL did not provide a comparison with the prior year but ATWOnline previously reported its February 2004 MOR).
Finnair President and CEO Keijo Suila announced his retirement effective at the end of 2005. A search for a successor has begun. Suila has been with the carrier since 1998. Separately, the Assn. of Support Service Industries representing Finnair and the Assn. of Finnish Flight Attendants reached an agreement on the attendants' terms of employment. Thus a strike scheduled to start on Easter Saturday has been avoided and the carrier's flights will continue to operate normally.
The tax burden on US airlines and passengers continues to rise, but not to the level regularly cited by airlines themselves as well as industry trade groups, according to the Ticket Tax Project, a joint effort of MIT's Global Airline Industry Program and Daniel Webster College.
A day after announcing the takeover of Swiss International Air Lines ( ATWOnline, March 23), Lufthansa Chairman and CEO Wolfgang Mayrhuber declared that Lufthansa Group is "leaner and stronger" as he confirmed final results showing it earned €404 million ($524.3 million) last year, reversing a loss of €984 million in 2003. Operating result was €383 million compared to €36 million in the prior year. Commenting on the outlook for 2005, "taking into account the integration of Swiss," the company expects an operating result on par with 2004.
Delta Air Lines CEO Gerald Grinstein yesterday said the company is prepared to take whatever steps are necessary to avoid a Chapter 11 filing, but cautioned that it will "constantly bump up against" liquidity issues in 2005 and 2006 and must find more ways to cut costs.
Virgin Blue, Australia's largest low-cost operator, warned that it faces a further significant decline in net earnings of A$89.2 million ($70 million) for the next financial year if fuel prices remain at current levels. Acting Chairman David Ryan announced that the airline is considering "a range of initiatives" to address the impact of extra costs imposed by the fuel price hike, including introduction of an additional ticket surcharge. Fuel prices have risen 28% in recent months and the carrier has no hedging in place beyond March 31.
AirTran CEO Joe Leonard blasted legacy carriers that are benefiting under the financial protection of bankruptcy, which he believes is used as part of their business plans. Despite their financial woes, Leonard said, these carriers are not changing their business models or coming up with a workable plan. "They can duck years of credit obligations and live to fly another day," he commented yesterday in a speech to the Aero Club of Washington. "There's no talk of making money. Those carriers are getting by on handouts and riding the back of the taxpayers of the nation."
EasyJet said it expects operating margins for the fiscal first half ending March 31 to be broadly in line with last year's in spite of high and volatile fuel prices and revenue per passenger to be higher than in the year-ago period. "Trading conditions have remained stable in the first half, with total revenue per passenger expected to increase by between 1% and 2% over the same period last year helped by Easter falling into the period," CEO Ray Webster said in a statement on trading prior to entering the closed period ahead of 2005 interim results, which will be announced May 24.
The supervisory board of Deutsche Lufthansa AG and the board of directors of Swiss International Air Lines AG, as expected, yesterday approved Lufthansa's purchase of Swiss, which already had received the green light from Swiss shareholders representing more than 80% of the company's share capital ( ATWOnline, March 21). According to a joint statement, Swiss is to remain "a mostly independent airline with its management and seat in Switzerland, its own fleet and crew, managed within the Lufthansa system as a profit center."
Singapore Aircraft Leasing Enterprise inked a deal to purchase up to 40 737NGs from Boeing, comprising 20 firm orders and 20 purchase rights. Deliveries are scheduled to begin in the fourth quarter of next year and continue through 2009. SALE said it has specified the 737-800 as the baseline aircraft for the order but under terms of the deal can convert options and purchase rights to the 737-700 or the proposed 737-900X. All aircraft will be powered by CFM56-7B engines.
Several European airlines yesterday announced new increases in their fuel surcharges. British Airways will raise its surcharge to £16 ($30.37) from £10 on long-haul flights and to £6 from £4 on short-haul flights from March 28. "Our fuel bill next year is expected to be an extra £300 million. With prices continuing to rise, a surcharge increase is regrettably unavoidable," Commercial Director Martin George said in a statement. Virgin Atlantic is adding £6 to its fuel surcharge to bring it to £16.
Hawaiian Airlines, which expects to emerge from Chapter 11 bankruptcy protection next month ( ATWOnline, March 14), reported a $1.9 million net loss in February. This compares to net income of $596,000 in the year-ago period. Total revenue during the month rose 4.7% to $56.8 million while a 36.2% increase in fuel costs pushed operating expenses up 9.4% to $57.2 million. This produced an operating loss of $435,000 compared to an operating profit of $1.9 million in February 2004. At the unit level, RASM improved 1.4% but CASM increased nearly 6%.
SN Brussels Airlines' net profit rose 66.7% to €1 million ($1.3 million) in 2004 from €0.6 million in 2003. The company had forecast a €2.5 million profit for the year. "Given the dramatic increase in fuel prices and the highly competitive market environment, these results are encouraging," CEO Peter Davies said. "Although this is slightly below budget, we have created now a solid base for the further development of SN Brussels Airlines commercially, financially as well as operationally." Revenue for the year increased 12.2% to €656 million.
Transport group Patrick Corp. is expected to review Virgin Blue's growth strategy in an attempt to rebuild earnings after securing control of the airline in a hostile takeover campaign.
Lufthansa will base 16 long-haul aircraft, including three A340-600s, at its fast-growing Munich hub this summer and projects it will handle 19 million passengers there in 2005, 1 million more than in 2004. "Our target is to base 30 long-haul aircraft in Munich by 2010," Lufthansa Group representative and Head of Hub Management-Munich Karl Ulrich Garnadt told ATWOnline. However, the carrier is running out of capacity at Terminal 2 in Munich. According to Garnadt, if LH continues its annual 7% growth rate, it will reach the capacity level at the airport by 2009 at the latest.
State-controlled CSA Czech Airlines is considering an IPO, Chairman Jaroslav Tvrdik told the magazine business weekly Euro. "I can imagine that the nearest general meeting will decide to go in this direction," he was quoted as saying. He added that the selloff will not occur until CSA covers accumulated losses and finishes a financial restructuring, which would seem to indicate that an IPO would not occur before 2006. VP-Financial Petr Juza told this website earlier that CSA is a potential subject of privatization ( ATWOnline, Feb. 23).
