Airways News

Boeing Says 787 Still On Track

2009-05-22T04:53:00.001-07:00

Boeing said on Thursday that its Dreamliner 787 was still on track for its first flight later this quarter, and the company stood by a previous full-year forecast.

The company said deliveries of new planes, including the 787, set to begin next year would hurt margins even as they produce growth longer-term.

The plane maker told its investor meeting that it planned to keep revamping itself despite the pressures on its commercial and defence businesses.

"The current market uncertainties and evolving customer requirements provide impetus to accelerate our pace of change to better compete and grow," chief executive Jim McNerney told the investor meeting, which was broadcast over the Internet.

Chicago-based Boeing and rival Airbus are suffering as airlines and cargo operators defer plane deliveries amid weak demand in the economic recession.

Boeing said its test flight programme of the fuel-efficient 787 was on schedule to begin this quarter. The plane has been plagued by repeated production delays, and James Bell, the company's finance chief, also said on Thursday that there were "more requests for deferrals."

Although the 787 and new 747-8 freighter will hurt margins initially, Bell said the two plane programmes would generate "significant growth" in the longer term.

Lufthansa Applies For Austrian Takeover Approval

2009-05-10T10:24:00.000-07:00

Lufthansa has filed for European Commission approval for its planned takeover of Austrian Airlines, a spokesman for the German flagship carrier said on Friday.

Commission spokesman Jonathan Todd confirmed the EU regulatory watchdog had received Lufthansa's notification, and the deadline for the first phase of the EU's review of the case was June 17.

The European Union's executive Commission had launched an investigation in February into the planned deal, saying it had concerns over the price and restructuring plan.

Lufthansa had agreed in December to buy the loss-making Austrian carrier, expecting the move to make it Europe's biggest airline. As part of the deal, it is taking over Austrian state holding company OeIAG's 42 percent stake in AUA.

The deal also involves the Austrian state assuming around EUR500 million (USD$670.4 million) of AUA debt.

The Commission had said it had doubts the amount of aid had been kept to a minimum and whether Austria's restructuring plan would restore the airline's long-term viability without the need for more funds in the future.

Lufthansa chief executive Wolfgang Mayrhuber has said that the carrier would drop its offer to buy AUA if the EU did not approve all the conditions.

The airline has also said its offer was conditional on reaching at least a 75 percent stake following its public offer. Its 4.49 euro per share takeover offer to shareholders of AUA, submitted in February, expires on Monday.

OTHER DEALS

The European Commission has the power to block mergers across the 27-nation bloc if they violate competition rules or involve illegal state aid.

Once notified, the Commission has 25 working days to conduct a first-stage review. It could approve it or extend the review to 35 working days, to consider either a company's proposed remedies or an EU member state's request to handle the case.

The Commission could also open a detailed second-stage investigation for up to 90 additional working days, which it may extend to 105 working days.

Lufthansa is waiting for decisions from the Commission on two other deals. The EU executive launched an in-depth investigation early this year into the carrier's plan to acquire Belgian SN Airholding, which controls Brussels Airlines, and that decision is expected by June 10.

A decision on Lufthansa's bid to take sole control of UK carrier bmi is expected by May 14.

Air Canada Loss Widens On Revenue Drop

2009-05-08T10:15:00.000-07:00

Air Canada reported a wider quarterly loss on Friday as it was hit by lower passenger revenue.

The airline posted a net loss of CAD$400 million (USD$343 million), or CAD$4.00 a share, compared with a net loss of CAD$288 million, or CAD$2.88 a share, a year ago.

Excluding items, the company reported an operating loss of CAD$188 million.

On an adjusted basis excluding losses on foreign exchange, the airline reported a loss of CAD$2.99 a share.

Passenger revenue fell 13 percent to CAD$2.01 billion due largely to a decrease in traffic, it said.

The airline reduced its overall capacity by 10.3 percent during the quarter.

The company said it had identified more than CAD$250 million in cost savings which it expects to realise over the next 18 months.

US Airlines See Less Traffic, Fuller Planes

2009-05-08T10:14:00.000-07:00

US airlines saw a steep decline in the number of passengers they carried in April, but planes were more full, a sign that steep capacity cuts may be serving their intended purpose.

Monthly data on airline operations released this week show traffic declined for all but two of the nine largest US carriers. Load factors, which reflect how full planes are, were up for seven of the nine.

Only low-cost carriers Southwest Airlines and AirTran Airways saw increases in traffic.

"Because they offer lower ticket prices, we expected low-cost carriers like Southwest and AirTran to show an increase in traffic," said Morningstar equity analyst Basili Alukos. "As for the raise in load factor, the capacity cuts are working well."

The US airline industry has been hit hard this year and last year by an economic recession that put a crimp in travel demand.

United Airlines saw the biggest decline in traffic at 10.5 percent. But the carrier also had the largest decrease in capacity at 10.2 percent. United's load factor slipped 0.2 percent in April.

Delta Air Lines, which last year bought Northwest Airlines, said its April traffic was down 7.7 percent year over year on a 7.1 percent capacity cut. Delta's load factor slipped 0.5 percent.

Other major airlines such as American Airlines, Continental Airlines and US Airways saw higher load factors.

Alukos said the higher load factors could be a sign that demand is starting to pick up but that it was more likely the numbers are distorted by the shift of the Easter weekend from March to April in 2009.

Air Berlin Passengers Down 3.4 Percent In April

2009-05-05T09:13:00.001-07:00

May 5, 2009

Air Berlin's passenger numbers fell 3.4 percent in April from a year earlier as demand fell at a faster rate than it cut capacity.

The German carrier -- the country's second-biggest after Lufthansa -- said on Tuesday that it had reduced the number of seats on offer by 0.4 percent in April. It carried a total of 2.17 million passengers.

The load factor narrowed by 2.4 percentage points to 76.4 percent.

Fare yields rose 13 percent from a year earlier, meaning the company improved its profitability per seat sold.

Air Canada Asks Unions For Pension Deal

2009-05-05T09:11:00.000-07:00

May 4, 2009

Air Canada said on Monday it was seeking support from its unions for "a moratorium and other conditions" on funding its more than CAD$3 billion (USD$2.5 billion) pension deficit, but at least one of the unions warned against gutting its pension plans.

Concessions from Air Canada's unions, which represent around 18,000 of its employees, are widely seen as crucial to keeping the country's biggest airline from re-entering bankruptcy protection.

Air Canada said in a statement the moratorium would allow it to establish financial certainty over the next several years and help it maintain its defined benefit pension plans.

But the Canadian Auto Workers union, which represents about 4,500 unionised staff at the airline, demanded on Monday that the company continue funding its pension plan.

"If the company insists on getting rid of the pensions, they'll have the fight of their life, by not only the CAW, but all the unionised employees of Air Canada," said Leslie Dias, president of CAW Local 2002.

Dias said the last time Air Canada went into bankruptcy protection, in 2003, CAW members gave up the equivalent of 20 percent of the overall staff costs, and the company is still in dire straights.

Cameron Doerksen, aerospace analyst at Versant Partners, said funding its pension deficit is a "significant problem" for Air Canada but so are the large debt repayments the airline faces as well as the renegotiation of several union contracts.

"All three of those things combined result in a significant degree of uncertainty around Air Canada," Doerksen said.

Air Canada spokeswoman Angela Mah declined to comment further on Monday's brief statement.

The collective agreement between Air Canada and the CAW-- the country's largest private-sector union -- expires at the end of the month.

The CAW presented a five-point plan on Monday designed to keep the airline out of creditor protection. The proposals included a call for the federal government to retake a stake in the airline, which was privatised by Ottawa in the late 1980s.

"An equity stake in the national carrier would allow the government to make sure that the communities stay connected from one end of this country to the other," said CAW President Ken Lewenza. "The fact of the matter is, when Air Canada is in the air, Air Canada represents Canada."

The union also called on Ottawa to block the windup of Air Canada parent ACE Aviation and to reinvest the company's capital in the airline.

The plan would also see new regulations on capacity in the airline industry and the creation of a federal fund to backstop pension guarantees.

Finally, the union said it would like to block all future bonuses to ACE chief executive Robert Milton.

The union said that Milton has received tens of millions of dollars in compensation since 2003, and will receive millions more upon the successful windup of ACE, while Air Canada itself is now worth only slightly more than CAD$80 million.

"Our members are demoralised by the fact that... their sacrifices have, in the end, benefited only a few," said Dias.

Air Canada has recently cut capacity by 7 percent, resulting in 2,000 layoffs, and has been working to raise capital to shore up its balance sheet.

Delta CEO Compensation Was USD$5.9 Million In '08

2009-05-02T10:03:00.001-07:00

Delta Air Lines' chief executive had total compensation of about USD$5.9 million last year, up about 77 percent from the year before, boosted by values for stock and option awards, the company said in its proxy filing on Thursday.

The total compensation figure for CEO Richard Anderson also includes salary, amounts for change in pension value and personal benefits. Anderson, who became Delta CEO in September 2007 and was CEO at Northwest Airlines from February 2001 to November 2004, received a salary of USD$600,000 in 2008 but only USD$200,000 in 2007.

Anderson had USD$3.6 million in stock awards in 2008, up from USD$2.3 million in 2007; and USD$1.6 million in stock options, up from about USD$300,000 in 2007. Delta said amounts for stock and options awards do not represent monies that were received but detail the expense recognized by the company.

Atlanta-based Delta merged with Northwest last year, creating the world's largest airline.

President Edward Bastian had total compensation of USD$8.8 million last year, up 90 percent from USD$4.6 billion the year before, the filing with the Securities and Exchange Commission showed.

On Wednesday, Anderson and Bastian had sent employees a memo saying that their take-home pay amounts for 2008 came to USD$2.5 million for Anderson and USD$5.2 million for Bastian.

The executives also said in the memo, which was filed with the SEC, that their base pay will not change this year and that they collected no bonus for 2008 since Delta was unprofitable.

The proxy said Anderson was granted a special award of 1.5 million stock options and 760,000 shares of restricted stock in connection with the Northwest merger. It said the award vests over a three-year period.

Delta also said Anderson waived change-in-control provisions in his pay arrangements in early 2008 and as a result his equity awards did not vest at the closing of the Northwest merger. But for the waiver, he would have realised about USD$5.2 million for the vesting of shares and restricted stock awards on the merger's closing date in late October, the filing said.

Boeing Working Round Clock To Make 787 Test Flight

2009-05-02T10:02:00.001-07:00

Boeing mechanics and engineers are working round the clock to make sure the new 787 Dreamliner, already two years behind schedule, makes its first test flight before the end of June.

The carbon composite aircraft -- assembled near Seattle from parts made around the world -- was supposed to fly in the summer of 2007, but has been pushed back four times by production problems and delayed by a two-month mechanics' strike.

Boeing has reshuffled its schedule a number of times, but says it is on track to finally get the first 787 into the air sometime in the second quarter, as promised in December. If the tests go to plan, it will start delivering planes to airlines in the first quarter of 2010.

That is crucial to Boeing, which gets the bulk of the payment for a plane when it is delivered. Despite a few cancellations this year, Boeing has 878 Dreamliners on order, worth about USD$140 billion at list prices.

Boeing gave reporters a rare glimpse of the 787 production plant on Thursday, where it has eight of the aircraft in various stages of assembly.

Two are for ground tests only, and will never fly. The other six will form the fleet of planes that Boeing will fly for a total of 3,500 hours over an eight- or nine-month period to meet the US Federal Aviation Administration's stringent certification.

The first 787 scheduled to fly is the same one that was rolled out in front of thousands of cheering Boeing employees in July 2007, then hastily pulled back for more work.

It is now stationed in Boeing's paint hangar, where it has already been touched up and had its fuel tanks washed out in preparation for the first flight. Mechanics swarmed about the plane on Thursday, making checks and adjustments inside and out.

Inside Boeing's massive wide-body plant at Everett, Washington, some 30 miles north of Seattle, there is a nose-to-tail line of 787s in various stages of construction, set to become test flight planes.

Workers glide by on tricycles, making their way across one the world's biggest buildings, which Boeing says could fit 911 basketball courts.

Much of the plane's structure is manufactured in Japan and Italy and flown in enlarged 747 jumbos to be joined in South Carolina, then flown onto Everett for final assembly.

Boeing still won't say exactly when the first test flight will take place, but industry-watchers believe it will happen around the middle of June.

If the tests go well, Japan's All Nippon Airways is set to take delivery of the first production 787 in the first quarter of next year, nearly two years after the initial delivery date of May 2008.

Boeing Delivers 121 Planes In First Quarter

2009-04-03T10:40:00.000-07:00

Boeing delivered 121 commercial planes in the first quarter of 2009, up from 115 a year earlier, the company said on Thursday, indicating Boeing is on track to reach its target for deliveries in 2009.

The company said 91 of its deliveries were of its 737 Next Generation. Boeing said in February that it was targeting 480-485 deliveries in 2009.

Boeing, which is struggling to recover from a two-month strike by its assembly workers last year, predicted a further dip in plane orders this year after handing back the title of biggest-selling plane maker to rival Airbus last year.

The company also said on Thursday that it received orders for five 737 aircraft in the week ended March 31.

The company has received 28 orders and 32 cancellations so far this year as the weak economy battered the company. Last year Boeing booked 662 new orders. The year before it hit an industry record of 1,413 orders.

Boeing did not identify the buyers of the five 737s.

Air Canada Likely To Need Court Protection - Analyst

2009-04-03T10:39:00.002-07:00

Air Canada needs to make sharp cuts in its aircraft fleet and operations, and probably cannot do that without filing for bankruptcy protection, an analyst warned on Thursday.

Canada's largest airline has spread it operations too thin, and should reduce its domestic routes by 57 percent and international routes by 53 percent, said Jacques Kavafian of Research Capital.

Speculation that the airline is planning another major restructuring has been running high since the surprise announcement this week that Calin Rovinescu was taking over as chief executive, following Montie Brewer's resignation.

Rovinescu was Air Canada's vice-president of corporate development and strategy from 2000 to 2004, a period that included its last restructuring under creditor protection. He subsequently co-founded investment bank Genuity Capital Markets

"Air Canada needs to cut over CAD$2 billion (USD$1.6 billion) from its fixed costs, and we believe such a drastic surgery can best be achieved in bankruptcy protection, given the large size of cuts required, and Mr Rovinescu is the right person for that," Kavafian wrote in a research note.

Another analyst also suggested on Thursday that Air Canada might need to again seek protection, but said that will not be clear until the company reports its second-quarter results in early August.

"The key will be the extent to which it can cut costs and realise substantial fuel savings, and the extent to which passenger demand and price hold up during the peak summer travel season," CanaccordAdams analyst Tom Varesh wrote in a report.

Air China Agrees To Buy Out Cargo Unit

2009-04-03T10:39:00.001-07:00

Air China said on Friday it has agreed to buy all the shares it does not already own in its cargo venture with the parent of Beijing Capital International Airport for CNY718 million yuan (USD$105 million).

Under the agreement, Air China will acquire the Beijing airport group's 24 percent stake in Air China Cargo, increasing its stake in the unit to 100 percent, it said in a statement.

Air China Cargo booked an unaudited net profit of CNY410,000 on sales of CNY7.07 billion in 2008, it said. It gave no comparative figures.

In January 2008, Air China signed a deal to buy a 25 percent stake in the cargo venture for CNY857 million from CITIC Pacific, boosting its stake to 76 percent as part of an effort to strengthen its core business.

American Air In Talks With Citi To Boost Cash - Report

2009-04-03T10:38:00.001-07:00

American Airlines is in early talks to raise cash from its credit card partner, Citigroup, by selling it frequent flyer miles, the Financial Times reported citing people familiar with the matter.

The paper said the two companies were in discussion over an arrangement in which American Airlines would sell Citigroup a block of frequent-flyer miles in advance.

The talks were at an early stage and could end if other sources of financing opened up or if demand for travel improved, the paper said.

Rival carriers United Airlines and Continental Airlines both raised money in 2008 via advance sales of frequent flyer miles to their credit card partner JPMorgan Chase.

Weaker travel demand during an economic recession, volatile fuel prices and dwindling financing options have put pressure on balance sheets of airline companies.

In March, Brokerage Stifel Nicolaus had raised concerns about AMR's liquidity.

US Air Traffic Dips On Easter Move, Falling Demand

2009-04-03T10:37:00.000-07:00

US Airways said on Friday that its domestic mainline traffic fell 10.9 percent in March amid a shift in the Easter holiday and falling travel demand, resulting in a dip in passenger unit revenue.

The reduction in mainline traffic, which excludes flights operated by regional partners, came amid a 10.2 percent cut in domestic capacity from a year earlier.

The airline said its total mainline traffic - including international flights -- fell by 8.9 percent, and its total mainline capacity was down 6.1 percent.

As a result, planes remained relatively full, but less so than a year ago. The load factor was 81.9 percent, which was down 2.6 percentage points from March 2008.

"Our March traffic results reflect the Easter holiday shift from March in 2008 to April in 2009 as well as a reduction in travel that we, like the rest of the industry, experienced during the month," US Airways President Scott Kirby said in a statement.

"Both of these factors contributed to a decrease in consolidated passenger revenue per available seat mile of approximately 17 to 19 percent versus the same period last year," Kirby said.

But new fees for on-board items and services offset some of the weakness, he said. US Airways' total revenue per available seat mile on a year-over-year basis fell by between 13 percent and 15 percent.

The airline industry has been battered by economic weakness that has dampened travel demand. Airlines responded last year by cutting the number of seats for sale, and capacity reductions continued in 2009.

In a separate investor update filed with the government, US Airways said it expected its domestic mainline capacity to fall by 8 percent to 10 percent in 2009, while total mainline capacity will be down 4 percent to 6 percent.

US Airways said it had hedged 18 percent of its anticipated fuel consumption for 2009. The carrier has said it stopped buying hedges in August to save money and benefit from cheaper jet fuel.

The price of fuel fell in the second half of 2008 when the price of crude oil declined 75 percent from a record high reached in July.

Thai Air May Delay A380s, Sees Return To Profit

2009-04-02T10:41:00.002-07:00

Thai Airways said on Thursday it wanted to talks with Airbus about delaying delivery of six A380 superjumbos as part of an overhaul of its business aimed at putting it back into profit this year.

The restructuring may affect its fleet and flight schedule, so it needed to talk to Airbus about delivery dates for the A380s due in late 2010, Pichai Chunhavajira, head of a team overseeing a new business plan, told a news conference.

"We are exploring how to delay the delivery. If we could, that would be good. We will also look at flight schedules and routes, which need a review," he added.

Airbus declined to say how talks might go.

"We are in constant talks with our customers, but these talks are confidential and we do not communicate on delivery positions," head Airbus spokesman Stefan Schaffrath said at the plane maker's headquarters in France.

Pichai said the delivery of six A330 aircraft would be on track for this year despite a delay of a few months.

Thai Airways has ordered eight A330 aircraft in total. The first delivery is due this month.

Pichai forecast the state-run national carrier would make a net profit of about THB6 billion - THB7 billion baht (USD$169 million - USD$197 million) in 2009.

It is in the process of overhauling its operations after reporting a record net loss for the fourth quarter of 2008 of THB14.8 billion and a full-year loss of THB21.4 billion.

Thai Airways is among several Asian airlines struggling to cope with reduced travel because of the global economic slowdown and a surge in fuel costs last year. It was also hurt by political instability in Thailand that cut tourist numbers.

The 2009 net profit forecast was based on the assumption of earnings before interest, tax, depreciation and amortisation (EBITDA) of THB33 billion, Pichai said.

"If we follow the plan, we should be able to get THB33 billion EBITDA and net profit of about THB6 billion - THB7 billion," he said.

SHARE PRICE RECOVERY

Thai Airways shares have risen nearly 30 percent over the past month due to optimism over the business plan, which should also improve ticketing systems and cut non-fuel operating costs by 10 percent this year.

The cash-strapped airline will negotiate with creditors on rescheduling payments on THB15 billion of debt and it plans to borrow THB20 billion to boost cash flow, Pichai said. "The repayment period will be extended for another year," he said, adding the negotiations with creditors and talks on new loans would be completed in the next few months.

Under the business plan, which is subject to approval by the government, the airline's debt-to-equity ratio was targeted to be cut to 1.5 from above 3.0 now, Pichai said.

"We are considering several ways to improve operations, which include the possibility of raising capital or converting debt into equity," said Pichai, also chief financial officer of state-controlled energy firm PTT.

Aer Lingus Reports Record March Bookings

2009-04-02T10:41:00.001-07:00

Irish carrier Aer Lingus saw a huge surge in bookings in March to a monthly record of more than 1 million, it said on Thursday.

On March 11 the former state airline posted an after-tax loss for 2008 and said it would not meet its earlier forecast for a pre-tax profit in 2009.

Chief Financial Officer Sean Coyle said then of a sharp downturn in bookings since the beginning of the year, which he said was forcing Aer Lingus to cut fares aggressively to keep volume up.

"The airline's web site experienced a huge surge in bookings during March with the highest number of daily visitors recorded on March 10th when almost 250,000... logged on," the airline said in a statement on Thursday.

Consumer sentiment remained subdued and it had stimulated demand by cutting ticket prices, it added.

Ryanair, which earlier this year withdrew a hostile bid for Aer Lingus, has said it would formally accuse its Irish rival of market manipulation over what it said was misleading guidance.

In its defence plan against Ryanair in December, Aer Lingus said it would post a pre-tax profit before exceptional costs in both 2008 and 2009.

New Air Canada Bosses May Get Months To Solve Woes

2009-04-02T10:28:00.000-07:00

Air Canada's new senior executives may get a few months to solve thorny staff contract and pension deficit issues as the recession bites before they are forced to do so under bankruptcy protection.

In a surprise move this week, Canada's biggest airline named Calin Rovinescu as chief executive and Duncan Dee as chief operating officer, sparking speculation that a major restructuring is in the works.

Rovinescu is a veteran of Air Canada's last corporate revamp under creditor protection, which began six years ago as the carrier struggled with high debt and falling traffic as the SARS crisis hit Toronto, its main hub.

Now, it must navigate union contract talks, a pension deficit topping CAD$3 billion (USD$2.4 billion), debt obligations, weak travel demand and brisk competition on fares from its chief rival WestJet Airlines.

Barry Prentice, director of the transportation institute at the University of Manitoba, said the airline could have about six months to sort out its problems before being forced to do so under court protection.

"They're going into what is the more profitable season of air traffic -- summertime isn't going to be when an airline's going to fail because they're going to have lots of business," Prentice said. "But if the economy stays in the doldrums, next fall they'll be back with the same problems again even if they get through the summer."

Rovinescu replaced Montie Brewer, who tried to steer the carrier through one of the industry's worst downturns. Brewer cut staff last year by 2,000 jobs and capacity by 7 percent.

Air Canada lost CAD$727 million in the fourth quarter. As its cash position worsened, the airline scrambled to raise more than CAD$640 million in new financing by selling assets.

It has said it has another CAD$1 billion of assets it could use to raise cash if necessary.

Air Canada shares have lost more than 90 percent in the past 12 months.

"The company's facing some pretty significant challenges. The financial and cash requirements they have for this year are pretty well-documented -- I don't think a change in leadership changes any of that," said analyst Cameron Doerksen of Versant Partners in Montreal.

"The major challenge they have is with their labour groups and they have to renegotiate all those contracts in the next few months, and it's not going to be easy based on some of the public commentary by the unions."

The Canadian Auto Workers union, which represents about 5,000 employees, called the Rovinescu's appointment "disturbing," saying the lawyer and investment banker's efforts in the last restructuring contributed to the airline's current woes. The unions are particularly worried about the security of their members' pensions.

A work disruption would hinder Air Canada's ability to generate cash, which would worsen its financial position, Doerksen pointed out.

Today's low fuel costs work in Air Canada's favour, but with no end in sight to the weak economy, the carrier has little latitude to bolster its fortunes by lifting fares, especially with WestJet recently instituting a low-price guarantee.

Canadian Transport Minister John Baird said on Wednesday he is looking closely at the airline's pension deficit situation and has asked to meet the new executives.

Air Canada and other companies have been lobbying Ottawa to relax federal rules for topping up pension plans.

"We're obviously very concerned and we'll certainly keep a watchful eye," Baird said.

US Airline Passenger Traffic To Drop 9 Percent - FAA

2009-04-01T09:43:00.001-07:00

Passenger traffic aboard all airline flights in the United States will drop nearly 9 percent this year due to recession compared with 2008, when they carried 679 million people, the government said on Tuesday.

The Federal Aviation Administration (FAA) estimate, if it proves accurate, would represent the largest decline in annual domestic capacity since the industry was deregulated in 1978.

Major airlines cut capacity by more than 8 percent when demand dropped in the year following the 2001 attacks on New York and Washington.

The FAA also said the number of passengers boarding international flights on US carriers is expected to drop 2.4 percent.

American carriers have scaled back transatlantic routes due to a sharp drop in business travel. The global financial services meltdown has hurt travel between New York and London, industry officials have said.

Aircraft operations are forecast to fall 5.7 percent in 2009 as carriers cut service and flights by some larger aircraft due to falling demand.

Most flights, however, should remain full or nearly full, with load factors expected to hover around 80 percent, the FAA said.

The FAA also estimated domestic carriers would board 1 billion passengers for the first time in 2021, instead of the previous forecast of 2016.

Air Arabia To Launch Morocco Hub

2009-04-01T09:41:00.000-07:00

Low-cost carrier Air Arabia is aiming to launch its Morocco hub by May and is waiting for market conditions to improve to finance the acquisition of 44 aircraft, its chief executive said.

The region's largest budget carrier by market value said in February it would launch its Casablanca operations at the end of March.

"It's a work in progress. When you're trying to get an operating certificate for an airline you progress with the government authorities," Adel Ali told reporters on Tuesday.

"We have aircrafts delivered, ready to go to Morocco and operate. As soon as the logistics are sorted out we will be ready to operate and it should not be long," he said, adding it was targeting the end of April or early May.

The aim is to have about 25 aircraft flying out of the Moroccan city to at least 60 destinations in Europe and Africa within five years, Ali said.

Air Arabia has a fleet of 16 A320 aircraft, and has placed an order for 44 additional A320s from Airbus, according to the airline's website.

Delivery of the aircraft, worth around USD$55 million each, would take about five years, Ali said.

"We see no issue with financing the airplanes," Ali said. "We could have done it earlier. The only reason we are not doing it is that it's not the right time to get into that."

The airline is in ongoing discussions with local and international financial firms "to get the best deal available", he said, without elaborating.

CHEAPER OIL VS GLOBAL WORRIES

A global decline in travel would affect earnings, Ali said, but a lower oil price would provide support for the airline, which in recent years had profited from an economic boom and rising demand for discount travel in the Gulf Arab region.

The air transport sector received a strong blow in 2008 first by rising fuel costs, then by the financial crisis, although low-cost carriers typically perform better in an economic downturn than national carriers by competing on price.

Ali said first-quarter earnings would be "positive", but declined to be more specific. Air Arabia posted a 45 percent increase in fourth-quarter profit, which was below expectations.

"There is pressure in the region and globally on the yield simply because there are far too many seats available in the world for people to travel," Ali said. "Having said that, there is the benefit of lower oil prices."

Air Arabia hedged 60 percent of its crude oil requirements for 2009 last December, Ali said, but declined to say at what price. The average price for NYMEX crude in December was USD$44.6 per barrel.

The airline was on track to launch new services to Athens and Goa next month, and Ali said all its expansion plans were intact. Air Arabia was keen to expand further into Pakistan, he said.

"We would like Pakistan to be like India," he said, adding that once the airline has launched its Goa service, Air Arabia will have 150 flights to destinations in India every week, versus only seven to Pakistan.

"The Indian Civil Aviation Authority opened their door to us and we are hoping that Pakistan will do the same," he said.

Qatar Airways To Order Planes In June - Report

2009-04-01T09:40:00.000-07:00

State-owned Qatar Airways plans to place an order for new planes in June and will add seven new destinations this year, Abu Dhabi-based newspaper The National reported on Wednesday.

The Doha-based airline will make the order during the Paris Air Show, Qatar Airways' chief executive Akbar al-Baker told The National, without giving further details.

The airline plans to add an average of seven new routes a year over the next five years, he said. Passenger traffic could rise by 20 percent to reach 14.4 million this year, he added.

Passenger growth in 2009 will be the lowest in 12 years due to the global economic downturn, he said.

AirAsia To Raise USD$824 Mln In 2010

2009-04-01T09:17:00.000-07:00

Malaysian budget carrier AirAsia needs to raise MYR3 billion ringgit (USD$823.5 million) next year as it expects to take delivery of another 24 new aircraft, a company official said on Wednesday.

Mohshin Aziz, investor relations manager at AirAsia, said the MYR3 billion was on top of the MYR2 billion planned for 2009.

AirAsia told investors in March it needs to raise MYR2 billion to MYR2.1 billion in order to take delivery of 14 Airbus A320 aircraft this year.

Investment bank UBS said AirAsia disclosed early this year that it had secured funding for its aircraft deliveries in 2009 and 2010.

"Management have indicated that these facilities contain no material covenants, so we would be surprised if the company faced any funding difficulties over the next couple of years," said UBS in a report published on Tuesday.

Boeing To Deliver USD$17 Bln Of Planes To India

2009-03-31T06:21:00.000-07:00

Boeing will deliver 100 planes worth USD$17 billion over the next four to five years in India, the president of its Indian operations said on Tuesday.

"We clearly want to extend our footprint in India," Dinesh Keskar, president of Boeing India, told reporters at the launch of Boeing's research and technology centre in the southern city of Bangalore.

Last year Boeing had projected India would need 1,001 aircraft worth more than USD$105 billion over the next 20 years and Keskar said the forecast was still valid despite an economic downturn.

Boeing has not seen any cancellations of its orders for civilian aircraft from Indian carriers, though Jet Airways deferred the order of two aircraft last year, he said.

Boeing and Airbus have seen new orders for planes slump as many major economies have slid into recession.

DREAMLINER COMPENSATION

Boeing will pay compensation to national carrier Air India and Jet Airways for the delay in delivery of the 787 Dreamliner, Keskar said, but declined to quantify.

Rival Airbus was forced to pay hundreds of millions of dollars in compensation after its A380 superjumbo fell two years behind schedule. Now Boeing may face similar claims.

More than 50 airlines are waiting for 892 Boeing 787s, worth a combined USD$145 billion at list prices.

Earlier this month Boeing said it was working towards the first delivery of the delayed 787 in the first quarter of 2010. It said it was on track to make its first test flight of the aircraft in the second quarter of 2009.

Air Canada CEO Resigns

2009-03-31T06:20:00.001-07:00

Air Canada said its chief executive Montie Brewer resigned, effective April 1.

Calin Rovinescu, a former senior executive with the airline, will succeed Brewer, the company said in a statement late on Monday.

Last month, UBS analyst Fadi Chamoun said the airline could be forced to file for bankruptcy protection if it does not secure additional financing and succeed in renegotiating covenants in credit card agreements.

The airline reported a worse than expected fourth-quarter loss in February on waning passenger revenue and sharply higher costs, and said it aims to wrest more savings from operations to preserve cash.

"While the challenges in front of us are large, we will continue to build upon the successes of the airline to date and deliver a quality product for our customers, employees and shareholders," Rovinescu said in a statement.

Rovinescu, who is the co-founder of Genuity Capital Markets, a Canadian investment bank, was previously chief restructuring officer at Air Canada.

Turkey's Sabanci Family Buys Air Berlin Stake

2009-03-31T06:18:00.000-07:00

Turkey's Sabanci family is buying a 15.3 percent in German airline Air Berlin, scooping up part of Len Blavatnik's stake, more than two months after the US billionaire sold the holding.

Blavatnik had sold his 18.9 percent stake in Air Berlin in January, leaving the market guessing who bought the holding. A spokesman for Air Berlin said he could not say who currently holds Blavatnik's shares that had not been acquired by the Sabanci family.

Air Berlin had said in a statement earlier that the Sabanci family's venture capital company ESAS Holding, which operates Turkish carrier Pegasus, had signed a share purchase agreement to buy the stock from Swiss bank UBS.

"We think this is a good step because then we have an investor whom we already know. And the family already knows the aviation industry,

ESAS would be represented on the board of Air Berlin with one non-executive director, Air Berlin said.

The move comes less than two weeks after Air Berlin announced a cross-shareholding agreement that will see TUI Travel's TUIfly unit taking a stake of up to 20 percent in the German carrier.

NO STRATEGIC TALKS

Since Air Berlin's initial public offering in 2006, the company's stock has fallen from 12 euros to just over 3 euros now. Over the past year alone, its price has more than halved.

So far, Air Berlin has not held talks with the Sabanci family or ESAS on the Turkish investor's strategic interest in the company, the spokesman for the airline said.

"We will see whether there will be any strategic moves eventually. Air Berlin is not very strong in Turkey," he said.

The Sabanci family has interests in the automotive, energy and banking sectors. It set up ESAS Holding in 2000 to bundle a number of its investments, which include Pegasus, dairy company Coban Yogurt and electronics retailer Electro World.

Pegasus has a 15-plane fleet that serves routes from Istanbul to countries including Germany, the UK and Switzerland. The airline has positioned itself as a European budget carrier.

Aer Lingus May Cut Long-Haul Airbus Orders

2009-03-31T06:17:00.000-07:00

Irish airline Aer Lingus is considering asking Airbus to supply short-haul aircraft instead of some of its existing long-haul orders, a spokeswoman said.

The spokeswoman was responding to an Irish Times newspaper report at the weekend which said Aer Lingus was looking to trim its struggling transatlantic schedule further and directors met on Friday to evaluate options.

The spokeswoman said the short haul/long haul swap was among the options being considered but no decision had been taken.

Other newspapers have reported Aer Lingus could scale back its aircraft orders to save money.

Aer Lingus' share price fell sharply after it said earlier this month it had swung to a loss in 2008 and would not meet its previous forecast of a pre-tax profit in 2009.

Analyst expect it to take swift action to conserve cash.

Finance Director Sean Coyle said at the time of a 2008 results presentation that Aer Lingus could take more aircraft out of transatlantic routes which he described as struggling.

China Spring Air Aims To Double 2009 Profit

2009-03-31T05:38:00.000-07:00

Privately-run Chinese carrier Spring Airlines aims to double its net profit to CNY40 million yuan (USD$5.9 million) this year, banking on a low-cost operating model to lure customers despite a slowing economy, its chairman said on Monday.

Spring Airlines is expected to book CNY2.2 billion in sales this year, up from CNY1.6 billion in 2008, Wang Ronghua told reporters on the sidelines of an event to take delivery of an A320 single-aisle plane.

The carrier plans to take delivery of six more planes over a three-year period, increasing its fleet size to roughly 30, including leased ones, a company spokesman said.

Spring Air's debt ratio is at 40 to 50 percent, far lower than over 80 percent for many of its state-owned peers, including loss-making China Eastern Airlines.

Wang attributed Spring Air's relatively better financial situation in part to a low-cost operating model which gives the carrier a much higher passenger load factor of 95 percent compared with roughly 75 percent at many of its larger peers.

The Shanghai-based carrier, which flies around 30 domestic routes, will apply to the regulator to start servicing Hong Kong and Macau this year, the company spokesman said.

It is considering opening international service to Japan and Hong Kong next year if the air travel market stablises, he added.

ATR Wins Royal Air Maroc Order

2009-03-28T20:22:00.001-07:00

Regional turbo-prop plane maker ATR has won an order from Royal Air Maroc for two ATR 42-600s and four ATR 72-600s, plus options for two ATR 72-600s, the company said on Friday.

ATR is a joint venture between EADS and Italy's Finmeccanica.

The aircraft will be operated by Royal Air Maroc Express, the new regional subsidiary of the Moroccan airline, which will be launched in the summer of 2009, a statement said.

Air Berlin Agrees Cross-Shareholding With TUIfly

2009-03-28T20:19:00.000-07:00

Air Berlin said it had agreed to take a stake of up to 20 percent in TUI Travel's German airline TUIfly, and TUIfly will take up to 20 percent in Air Berlin.

The companies had previously announced the proposed deal, under which Air Berlin would take over TUIfly's city route sector. The charter sector, with 21 planes, would remain with TUIfly, Air Berlin said late on Friday.

Air Berlin had already said on March 17 it had agreed on a cross-shareholding with TUIfly, which would help consolidate the German airline industry.

TUIfly has 41 aircraft flying to destinations across Europe as well as to beach holiday spots such as the Canary Islands.

The agreement was pending regulatory approval, Air Berlin said.

TUI Travel had been seeking a partner for TUIfly to lower costs for ground facilities, maintenance and catering.

Over the past year talks over possible combinations of different airlines in Germany have collapsed.

A year ago, TUI Travel neared a deal to merge TUIfly with Lufthansa's Germanwings, while Air Berlin had proposed a marriage to Thomas Cook's Condor airline.

Then Air Berlin left Condor at the altar as the regulatory approval process for the deal dragged on, and Condor joined Germanwings and TUIfly in three-way aviation talks.

In September, the talks started falling apart and a deal was never completed.

Now, Air Berlin and TUIfly plan to take stakes in each other to test a new pairing that would give Air Berlin access to routes to Italy, Cologne and Stuttgart.

Delta Steps Up Makeover With Branding Changes

2009-03-27T11:05:00.000-07:00

Delta Air Lines is expanding in-flight wireless Internet access and looking to bring more benefits to frequent flyers as it completes the integration of Northwest Airlines.

Tim Mapes, senior vice president of marketing, said the carrier's advertising will assert the global reach of Delta more boldly as the Northwest name is phased out by the end of 2010.

"This is a brand with very high levels of awareness but still with an opportunity to be seen as even more international," he said.

Atlanta-based Delta became the world's largest airline when it merged with Minneapolis-based Northwest in October.

As of next week, the make-over of the combined company will become more evident to consumers as Northwest flight attendants, airport service agents and pilots wear Delta uniforms, and airport gates in Detroit, Minneapolis, Tokyo and other cities shed their Northwest signage.

Additionally, Northwest and Delta airport lounges will be branded Delta SkyClubs, and passengers on Northwest flights will be able to read a newly redesigned Delta Sky magazine.

"By the end of next year, what you've known as Northwest will be entirely Delta," Mapes said.

He declined to detail marketing spending but said Delta was intent on expanding services even as the recession dents consumer and business spending on travel.

"I think (Delta) is doing all the right things to integrate two very different brands," said Ken Bernhardt, a marketing professor at Georgia State University's Robinson College of Business. "It's not easy and it's not inexpensive."

In its latest annual report filed earlier this month, Delta said it expected one-time costs of about USD$500 million to meld the two airlines, but added the merger would generate about USD$2 billion in annual revenue and cost synergies by 2012.

Wi-Fi will be installed on Delta-branded US aircraft except regional jets by late this year, and will be expanded to Northwest domestic planes next year, Mapes said.

The Delta SkyMiles and Northwest WorldPerks frequent-flier programmes will be consolidated by the end of this year. About 74 million people will be members of the combined SkyMiles programme. Award and tier levels are currently being reviewed, and changes will likely be unveiled later in the year, Mapes said.

Embraer Q4 Profit Down 44 Percent On Derivatives

2009-03-27T11:04:00.000-07:00

Brazilian aircraft maker Embraer said on Thursday its fourth-quarter profit fell 44 percent because of large derivatives losses and slowing sales.

Net income under US generally accepted accounting principles dropped to USD$111.7 million for the quarter from USD$200.9 million in the year-earlier period, Embraer said in a statement.

Sales fell 3 percent to USD$1.82 billion as aircraft deliveries dropped to 59 from 61 in the year-earlier period.

Adjusted earnings before interest, taxes, depreciation and amortisation, or EBITDA, climbed to USD$607.5 million from USD$433 million in the fourth quarter of 2007.

Embraer had USD$120.6 million in losses on derivatives positions, which pressured the bottom line in the period. Net financial losses totaled USD$154.03 million, compared with financial gains of USD$34.76 million in the fourth-quarter of 2007, mainly because of the derivatives losses.

The company said its firm order backlog had reached USD$20.9 billion at the end of the fourth quarter, 3.2 percent lower from the quarter ended in September as demand for air travel dropped around the world because of the global economic downturn.

China's East Star Air Faces Liquidation

2009-03-27T11:02:00.000-07:00

Debt-ridden Chinese carrier East Star Airlines, grounded by the government earlier this month, faces liquidation, the official Xinhua news agency said on Friday.

Six creditors of East Star Airlines have asked a court in the central city of Wuhan to start liquidation proceedings against the privately-run carrier, Xinhua said, citing unnamed city officials.

It did not name the creditors but said the carrier's 16 bank accounts had been frozen by the court.

Officials at East Star Airlines could not be reached for comment after repeated phone calls to the company.

East Star, which has a fleet of nine aircraft and operates about 20 flights a day, was marked as a potential takeover target by Air China, the flag carrier had said in a statement in January.

Slumping air traffic due to slowing domestic demand has made it hard for China's small private airlines to compete with state-owned giants Air China, China Eastern and China Southern.

Since December, China Eastern and China Southern have announced plans to receive a total of CNY10 billion yuan (USD$1.5 billion) in cash injections from the government to help them ride out the slump. Private carriers do not enjoy such support.

China's first private airline, Okay Airways, said in December it had halted its passenger services indefinitely because of the global financial crisis.

Air France-KLM Shares Sag After Profit Warning

2009-03-27T08:45:00.000-07:00

Shares in Air France-KLM fell as much as 7.3 percent at the start of trading on Friday after Europe's largest airline warned of a EUR200 million euro (USD$271.4 million) operating loss in its financial year ending March 31.

Air France-KLM ditched its forecast for an operating profit in 2008/09 after being hit by falls in traffic, lower average revenues for passengers and cargo and redundant hedges for high oil prices.

"While this announcement is almost certainly the last of the negative news for the share, we do not expect news flow to improve before end-April, and the first positive catalyst is likely in mid-May with the announcement of the extension of the cost-cutting programme," a trader said.

The warning came as the head of US engine maker Pratt & Whitney warned of "significant" further layoffs in the face of slackening airline demand.

Airlines Lose Fewer Bags In Quieter Airports

2009-03-26T09:52:00.000-07:00

The world's economic slowdown has reduced your odds of losing a bag the next time you fly, SITA said on Wednesday.

SITA, a network of airlines, airports, freight companies and computer reservation systems, said that 10 million fewer checked-in bags were mishandled in 2008 than the year before and estimated that the improvement saved airlines USD$800 million over the year.

New fees to encourage passengers to travel with fewer and lighter baggage have also reduced the number of bags being loaded onto the wrong flights and conveyer belts, according to the Societe Internationale de Telecommunications Aeronautiques (SITA).

"Lower weight means less fuel burned and fewer bags mean speedier aircraft turnaround times and less compensation paid for mishandled and lost bags," it said.

Only 736,000 of the nearly 33 million bags that were mishandled last year were never found, and labelled lost or stolen, according to a report from SITA which has 550 members worldwide.

Most of the rest of the bags that went missing were reunited with their owners within 48 hours. The overall mishandling rate last year was 14.3 bags per 1,000 passengers worldwide, compared to 18.9 bags per 1,000 in 2007.

SITA said the economic downturn that has hit both passenger and cargo traffic, especially in Asia, has also eased strains on airlines and airports that had been working at full capacity.

"The apparent reduction in the number of bags being checked-in and lower volumes of passenger traffic reported towards the end of 2008 have relieved the pressure on airport infrastructure including baggage handling systems," its report said.

Consumer groups have baulked at the fees that major carriers have begun charging passengers to check-in bags, alongside other extra charges for optional goods and services such as drinks, meals, and seat assignments.

Qantas To Cut 90 Senior Management Jobs

2009-03-25T07:10:00.000-07:00

Australia's Qantas Airways moved to rein in costs with another round of job cuts, this time targeting its senior management team, to help it ride out the global financial crisis.

Qantas will shed 90 senior management positions adding to 1,500 job cuts announced last year, it said on Wednesday.

The airline said in a statement it would a maintain a salary freeze and make a number of role changes for remaining managers.

"Starting today, we will be making some longer term organisational changes to the management of the Qantas Group to develop a leaner, more fast-moving organisation," Qantas chief executive Alan Joyce said in the statement.

Most of the job cuts announced on Wednesday would be achieved by the end of April, a source briefed on the situation said. The cuts announced last year also included some senior management positions, the source added.

Qantas did not say how much the latest round of redundancies would cost.

Airlines around the world are grappling with slumping demand as business and leisure travellers cut back amid the tough economic times.

The International Air Transport Association (IATA) sees the global air transport industry posting a loss of USD$4.7 billion in 2009, up from its previous estimate of a USD$2.5 billion loss, reflecting the deterioration of global economic conditions.

That comes on top of an estimated USD$8.5 billion loss last year.

IATA said on Tuesday that industry revenues are expected to fall by 12 percent to USD$467 billion, worse than the drop seen after the September 11 attacks in the United States.

Airlines To Lose USD$4.7 Billion In 2009 - IATA

2009-03-24T11:10:00.000-07:00

World airlines are set to lose USD$4.7 billion this year as a result of the global recession that has shrunk passenger and cargo demand, industry body IATA said.

The International Air Transport Association had estimated in December the industry would lose USD$2.5 billion in 2009.

"The state of the airline industry today is grim. Demand has deteriorated much more rapidly with the economic slowdown than could have been anticipated even a few months ago," Director-General Giovanni Bisignani said on Tuesday.

"The relief of lower fuel prices is overshadowed by falling demand and plummeting revenues. The industry is in intensive care."

IATA, which represents 230 airlines also raised its estimate of international airline losses in 2008 to USD$8.5 billion, from its previous USD$8 billion estimate.

The Swiss-based body said its latest forecast was based on a view that the economy and air transport demand would hit bottom by mid-2009 and then start to recover.

"We do expect better prospects toward the end of this year or the beginning of 2010," Bisignani told a news conference at Geneva airport.

Leading airlines have slashed fares to encourage continued travel and unveiled a range of cost-cutting measures to stay afloat throughout an economic slump.

Fares should stay low throughout the year while airlines compete for the business that remains until global economic activity rebounds, Bisignani said.

Asia-Pacific carriers will continue to be hardest hit by global economic turmoil and are expected to post losses of USD$1.7 billion, against the earlier forecast loss of USD$1.1 billion in 2009, according to the Geneva-based body.

Carriers in North America are expected to deliver the "best performance" among the world's regions with an estimated USD$100 million profit, IATA said, crediting their strength to early capacity cuts and relatively little fuel hedging that has permitted them to benefit from sliding oil prices.

And European carriers are expected to lose USD$1 billion in 2009 as a result of the recession that will continue to drag down both economy and premium demand worldwide.

Nearly 40 airlines worldwide have suspended their operations in the last 15 months because they could not pay their bills, Bisignani said.

International passenger demand fell 5.6 percent in January compared to the same month a year ago, and cargo volumes fell 23.2 percent year-on-year, the eighth consecutive month of contraction for cross-border freight.

IATA's February traffic figures are due to be released later this week. The data excludes domestic flights.

Airlines Ask US To Preserve Global Alliances

2009-03-24T10:44:00.000-07:00

US and overseas airlines asked the Obama administration to oppose an effort in Congress they said would threaten the global aviation alliances that allow relief from antitrust law to coordinate schedules and fares, particularly on transatlantic routes.

Lobbyists for airlines, hotels and other travel organisations said in a letter to US Transportation Secretary Ray LaHood on Monday that ending the tie ups would cost jobs and weaken an industry nervous about softening demand amid recession.

"The emergence of global alliances - which are defined by their core European/US airlines partnerships - have eliminated inefficiencies, promoted best practices and fostered vigorous competition," said the letter to LaHood.

The move comes as LaHood's office considers two antitrust immunity applications.

Continental Airlines wants to join United Airlines Lufthansa in the Star Alliance. American Airlines and British Airways would like to cement deeper ties under the Oneworld banner.

Representative James Oberstar, the chairman of the Transportation Committee in the House of Representatives has co-authored a provision in aviation legislation that would launch a government study of whether the alliances serve the public interest, especially those with antitrust immunity.

"They sure work in the corporate interest," Oberstar told the International Aviation Club on Monday, underscoring his intention of allowing alliances to expire if the administration finds them unfair to consumers or monopolistic.

Oberstar believes concentration of the biggest carriers under three global alliance flags with immunity -- Star, Oneworld and SkyTeam -- would amount to what the influential lawmaker called "defacto mergers" over the routes they share.

"Is that what I voted for when I voted for (US airline) deregulation in 1978?" Oberstar asked. "Hell no."

SkyTeam is led by Air France-KLM and Delta Air Lines, which last year merged with Northwest Airlines.

Antitrust immunity accelerated this decade to meet exploding world travel demand, allowing alliance members to operate as one flight on certain routes. Carriers are able to share pricing and scheduling information as well as ticketing and facilities.

Immunity is an easier way for carriers to build networks without running afoul of US law that discourages mergers between domestic and overseas airlines. The arrangements also can be lucrative and are cheap to operate, compared to a merger.

The airlines also argue that the alliances provide crucial flexibility with the recession eroding transatlantic travel, the most important overseas market for many American carriers.

Flights between the US and Europe fell 14 percent in the year ending January 2009, according to industry figures. Much of the drop in premium paying passenger traffic, especially between New York and London, corresponds closely to the financial services industry meltdown. Fares are also falling on overseas routes.

Four Groups Interested In Czech Airline

2009-03-23T10:29:00.000-07:00

The Czech Finance Ministry closed the first round of tendering in the CSA Czech Airlines sale on Monday with four preliminary bids received.

Air France-KLM, Aeroflot, private equity firm Odien and a consortium comprising Czech Unimex Group and Travel Service all submitted applications in the tendering, the ministry said.

It also said the winner should be known by the end of September at the latest.

The Czech government is selling a 91.5 percent stake in the airline as a global economic slowdown has sapped travel demand, putting airlines under heavy pressure.

Analyst expect the sale of what is a relatively small European airline hit by leasing costs as well as the economic downturn to fetch up to CZK5 billion koruny (USD$255 million).

Aeroflot had announced earlier on Monday it had entered the tender competition while Air France-KLM said it would file a letter of interest in order to access the airline's data.

Bidders need to meet conditions such as keeping CSA's national identity status to prevent the airline losing any of its international routes outside Europe.

That could happen if the company is sold to a foreign buyer because of the global system of bilateral agreements between countries which govern which airlines can fly where around the world.

Non-Czech bidders will therefore have to combine with Czech entities in consortia to fulfill that condition.

Aeroflot said it planned to create a partnership with a Czech or a European company but did not specify which.

The government will also assess bidders' security risks with Czech politicians having voiced concerns about Aeroflot's ownership structure. Aeroflot has not commented on the matter.

The Russian carrier has long been on the lookout for acquisitions in Europe and chief executive Valery Okulov, son-in-law of Russia's first president, Boris Yeltsin, said in September last year the company was eyeing two possible acquisitions, including Czech Airlines.

Air France, which sees itself as a major player in European industry consolidation, said Czech Airlines' flight network was highly complementary to its own and would enable it to strengthen its position in central and eastern Europe.

Air France has described Czech Airlines as a close partner, particularly through their membership of the global SkyTeam alliance of airlines since 2001.

CSA made a pre-tax profit of USD$550,000 million in 2008 on operating revenue of CZK23.2 million.

Management ended three years of losses in 2007 after cutting costs and boosting revenue by selling off non-core assets, including its catering division, and by selling and leasing back planes.

Lufthansa CEO Expects Go-Ahead For Austrian Deal

2009-03-23T06:19:00.000-07:00

Lufthansa still expects the European Union will approve its planned takeover of Austrian Airlines without conditions, the German airline's chief executive Wolfgang Mayrhuber said at the weekend.

European Transport Commissioner Antonio Tajani had said he was interested in consolidating airlines but had to review the deal properly, Mayrhuber told ORF Austrian radio.

"(Tajani) pointed out to me that it was in his interest too that airline consolidation could progress, but that he also had to make sure that there was a proper legal review," said Mayrhuber, who met Tajani last week in Brussels.

The European Commission is probing two aspects of the deal: whether it hampers airline competition and whether a EUR500 million euro (USD$685 million) subsidy by the Austrian government which is part of the deal constitutes illegal state aid.

Mayrhuber said that he was now more cautious than six months ago, when he would have said that there was absolutely no doubt the deal would be approved. But he still thought the reasons for approving it were overwhelming.

"It would be clearly logical that we'll get approval without conditions," he said. "On the other hand I take note that it takes a long time, that it is investigated very closely."

US Airways Pilot Sullenberger Signs Book Deal

2009-03-22T09:54:00.000-07:00

Chesley "Sully" Sullenberger, who brought a crippled US Airways jet to a textbook emergency landing on New York City's Hudson River, will write a book about his life, but he won't give up flying.

Publisher William Morrow said on Friday the pilot would work with a writer to produce two books.

The first, scheduled for release late this year, will be his autobiography. It will touch on his childhood, military service and the events that made him a hero. The second book is yet to be determined.

All 155 people survived the emergency landing after the Airbus A320 was struck by birds, blowing out the engines of the plane, moments after take-off from New York's LaGuardia Airport in January.

The former US Air Force pilot's grace under pressure made him a hero during glum economic times.

"Sully believes his life experience prior to the emergency landing was a preparation for that success; and that life's greatest challenges can be met if we're ready for them," William Morrow said in a statement.

A spokesman for Sullenberger's family, Alex Clemens, said in the statement that the pilot would be returning to his job with US Airways in June or July.

"While he has agreed to write a book about his life and the dramatic events of January 15, 2009, he is eager to return to his profession and the US Airways family of 34,000 employees in the near future," Clemens said.

Emirates To Pull A380 From NY Routes On Downturn

2009-03-20T23:31:00.000-07:00

Emirates said on Wednesday it would stop using Airbus A380 double-decker aircraft to fly passengers between Dubai and New York because demand for the route had been hit by the global recession.

The Dubai-based carrier said it would redeploy the two A380s it uses for two daily flights to New York onto routes between the emirate and Toronto and Bangkok, starting June 1.

"As the global economy has affected international air travel, this aircraft redeployment was based solely on a change in capacity demands in these three markets," an Emirates official said in a statement.

Emirates would use Boeing 777s for the Dubai-New York route, it said, adding the A380s would fly twice daily to Bangkok and three times a week to Toronto under the revised plan.

"The A380 will allow Emirates to address some of the unmet need in Toronto while on Bangkok, the A380 will help support the Thai government's new tourism initiatives," Emirates President Tim Clark said in a separate statement.

Gulf airlines had placed billion-dollar orders for planes from Airbus and Boeing, banking on regional economic growth to boost traffic through the hub linking East Asia, Europe and Africa.

The global financial crisis and slump in oil prices has drastically dimmed the prospects for growth in the Gulf region, where Dubai is suffering from a sharp real estate downturn.

Dubai is building a new airport with an ultimate passenger capacity of about 120 million people, almost 65 percent more than Atlanta Airport, which had 90 million passengers in 2008 and is the world's busiest passenger airport.

Emirates has ordered 58 of the A380, the world's largest passenger aircraft, of which it was due to have five of the jumbo aircraft delivered by next month.

German Airports See Bleak 2009

2009-03-20T23:30:00.000-07:00

Germany's airports expect passenger numbers to decline in 2009 by more than the 3 percent estimated by industry association ADV as businesses and consumers spend less on travel amid the global economic crisis.

"We are currently posting a decline of 10 percent, on average," said Michael Kerkloh, head of Munich Airport, at a press briefing late on Wednesday.

Airport operator Fraport has seen passenger numbers at its main airport in Frankfurt move sideways in the past two weeks, after a 4.8 percent decline in February.

"The 3 percent are not achievable," said Fraport's Chief Financial Officer Matthias Zieschang on Wednesday.

Germany's airports posted a slide in passenger numbers of around 12 percent, with bigger declines in cargo volumes, according to ADV. The association's president Ralph Beisel has said the situation is not about to improve, either.

"We are being hit on two sides," said Michael Garvens, chief executive of Cologne/Bonn airport. Not only were there fewer passenger coming through the airport, but they were also spending less while they were there, he said.

Airports rely heavily on passenger's retail spending in shops and restaurants in the terminals.

Ferrovial Told To Sell British Airports, May Appeal

2009-03-20T23:29:00.000-07:00

Spain's Ferrovial has been ordered by Britain's competition regulator to sell three of its seven British airports within two years, but the company said this may be impractical and it would consider an appeal.

The company, which bought British airports monopoly BAA for more than GBP10 billion pounds (USD$13.89 billion) at the top of the market in 2006, must now sell London's Stansted and either Edinburgh or Glasgow once it has completed the on-going auction of Gatwick, which was put on the block last year.

Britain's Competition Commission delivered the ruling in a final report on the issue published on Thursday. It said the move to have airports managed under different owners would benefit both passengers and airlines.

BAA chief executive Colin Matthews said the group would spend the next two months considering the ruling, but warned that it would challenge the order if it was deemed impractical.

"Selling one airport is one thing, selling three is another. You can't assume we will appeal... (but) we might have to if we reach the conclusion that it is simply not practical to proceed," he said.

He added that the Competition Commission analysis was flawed, and that customer service was improving across the company's airports.

Analysts have previously said the expected decision would not favour Ferrovial, which had over EUR24 billion euros (USD$31.3 billion) of debt at the end of last year.

"The value of the assets are going down, and its debt is going up. Ideally they would not want to sell the airports right now," Collins Stewart airlines analyst Andrew Fitchie had said ahead of the announcement.

BAA may keep Heathrow, Aberdeen and Southampton and either Edinburgh or Glasgow, but must sell Gatwick and Stansted to different buyers.

"We expect that the new airport owners, with the operating capabilities and financial resources to develop them as effective competitors, will have a much greater incentive than BAA to be more responsive to their customers," head of the Commission's enquiry Christopher Clarke said in a statement.

Dassault Aviation Profits Fall, Cuts Dividend

2009-03-20T23:28:00.001-07:00

France's Dassault Aviation unveiled lower profits and halved its dividend on Thursday as it became the latest plane maker to bear the scars of a global financial and aviation crisis.

The maker of Rafale warplanes and Falcon business jets said 2008 net profit fell to EUR373 million euros (USD$486.4 million) from EUR382 million in 2007 and slashed its dividend to 5.8 euros per share from 10.6 euros "after taking into account the economic crisis".

Operating profit fell to EUR434 million from EUR503 million on revenues down to EUR3.748 billion from EUR4.085 billion.

Dassault delivered 72 Falcon jets in 2008, up from 70 in 2007 but lower than an initial target of 90-100 planes announced by top executives a year ago.

Business jet demand has been damaged by recent economic turmoil as well as a row in the United States over perks after US automakers were criticised for travelling to Washington in private jets to ask for financial bailouts.

Dassault said new orders for Falcon planes plunged to 115 jets from 212 in 2007. The value of total new orders fell to EUR5.82 billion from EUR6.265 billion.

Family-controlled Dassault, which agreed in December to increase its share in defence firm Thales to 27 percent from 5 percent, said its board had appointed Alain Garcia as a new member.

Louis Gallois, chief executive of Airbus parent EADS, which owns 46 percent of Dassault, recently resigned from the Dassault board in what was seen as a rift over the deal. EADS had been a rival suitor for control of Europe's largest defence electronics group

Ferrovial's Airport Sale Timeframe Could Be Extended

2009-03-20T23:26:00.000-07:00

Spain's Ferrovial could be allowed more time than the prescribed two years to sell three of its British airports depending on future market conditions, Britain's competition regulator said.

"The decision taken on timescale is based on our view of the market at the moment, but we will review it if circumstances change. We will be flexible," Competition Commission deputy chairman Christopher Clarke said.

He added that unsuccessful bidders for London's Gatwick airport, which is already up for sale and being stalked by three interested parties, were likely to go on to look at London's Stansted airport.

The Commission ordered Ferrovial to sell three of its seven-strong British airports portfolio earlier on Thursday to boost competition.

UAL Sees USD$80 Million Fuel Hedge Loss In Q1

2009-03-20T23:23:00.000-07:00

United Airlines parent UAL said on Friday it expects an USD$80 million cash loss related to fuel hedge contracts that settled in the first quarter.

The airline recently has taken large one-time quarterly accounting losses related to its fuel hedges, which became less valuable as energy prices fell from peaks in July.

UAL said its mainline non-fuel unit costs, excluding some items, were expected to be up 1 percent to 1.5 percent in the first quarter, a smaller rise than previously forecast.

On a consolidated basis, which includes all UAL units, unit costs were seen up 1.5 percent to 2 percent for the quarter.

This compares with an earlier estimate for an increase of 4 percent to 5 percent for both mainline and consolidated operations.

"The reduction in estimate reflects both the results of continued efforts to drive cost savings across the company and the impact of softening demand on revenue-driven and traffic-driven expenses," UAL said in a regulatory filing.

UAL expected consolidated passenger unit revenue to be down 11 percent to 12 percent in the first quarter, while consolidated capacity is expected to be down 11.7 percent.

Head Of Air China Bid Target Goes Missing - Reports

2009-03-18T08:16:00.002-07:00

Air China's acquisition bid for East Star Airlines, a small struggling carrier, has been thrown into confusion after the East Star chairman went missing, Chinese media and the Financial Times reported on Wednesday.

An Air China news department official told the China Securities Journal that the flag carrier's merger offer had yet to receive a reply from East Star, a private airline that has been grounded because of unpaid debts.

The official securities newspaper said that an anonymous letter from East Star stated that its chairman, Lan Shili, could not be accounted for.

Caijing, a financial magazine, reported on its web site that Lan Shili had been placed under house detention after East Star's operating license was suspended on Sunday.

The Financial Times also said Lan Shili had "disappeared".

Air China and East Star officials were not available for comment.

Air China Chairman Kong Dong said earlier this week that the flag carrier would press ahead with its planned acquisition of East Star, which is based in the central Chinese city of Wuhan and has a fleet of nine aircraft.

Slumping air traffic due to slowing domestic demand has made it difficult for China's small private airlines to compete with state-owned Air China, China Eastern and China Southern.

More Business Passengers Flying Economy - IATA

2009-03-18T08:16:00.001-07:00

Increasing numbers of business travellers are foregoing executive class seats and flying economy, especially in Europe, an industry body said on Tuesday.

Airline revenues from business and first class tickets were down by at least a quarter in January from the same month a year ago, due to lower demand amid gloomy economic prospects, according to the International Air Transport Association (IATA).

"There is evidence that business passengers are trading down to cheaper tickets," the Geneva-based body said in its latest Premium Traffic Monitor.

While European business travellers have been shifting to cheaper seats on short-haul flights in recent years, alongside a proliferation of low-cost airlines such as easyJet and Ryanair, IATA said economic distress had amplified this trend.

Promotional fares meant to encourage continued travel in spite of increasing job cuts and financial turbulence have exacted further pain on the industry's bottom line, according to IATA, which represents 230 airlines.

"Fares are also now falling sharply, as well as passenger numbers," it said.

Economy travel demand has also slumped in response to the global financial crisis, but at a slower rate than the premium segment airlines depend on for their bottom line.

The weakest business class market in January was in Asia, where premium travel on flights within the region decreased 23 percent year-on-year and flights across the Pacific dropped 25 percent. Business class demand on flights between Europe and Asia fell 21 percent.

Intra-European premium travel dropped 22 percent in January, compared to the same month in 2008, and on flights across the North Atlantic there was a 15 percent fall. In the Middle East, where many airlines added flights during the financial boom, IATA said increasing numbers of seats were also empty.

Africa was the only region to record an increase in business class passenger travel in January. Premium travel within the continent was 19 percent higher in January "and fares also appeared to be holding up," according to IATA, whose member airlines run 93 percent of scheduled international air traffic.

Its data excludes domestic flights.

IATA has forecast that global carriers are set to post USD$2.5 billion in losses in 2009, after losses of up to USD$8 billion last year.

Ryanair Pilots Agree 12 Month Pay Freeze

2009-03-18T08:13:00.000-07:00

Irish budget airline Ryanair said on Tuesday that its pilots had agreed to a 12 month pay freeze as an alternative to a 10 percent cut in salary.

Ryanair had originally sought a pay cut to address the current downturn and two consecutive quarters of trading losses at the airline.

"Management at Ryanair has already accepted significant pay cuts. Now our pilots have rowed in with a pay freeze and better productivity enhancements," David O'Brien, Ryanair's director of flight operations and ground operations, said in a statement.

Earlier this week, Europe's largest low-cost carrier said that from the summer it would reduce the number of aircraft based in Dublin to 17 from 22, closing four routes and cutting the frequency of flights on eight others due to an increase in airport charges and taxes.

The group's full-year guidance is for a net profit of between EUR50 million and EUR80 million euros versus an earlier projection of break-even as lower fuel costs boost the bottom line.

The airline expects to increase overall passenger numbers across the network by about 9 million to 67 million this year.

US Airlines May Have Reached Limit On New Fees

2009-03-18T08:04:00.000-07:00

It's been a long time coming, but it seems US airlines finally may have reached a limit on new fees they can charge for in-flight perks that used to be included in the ticket price.

After adding fees for things like checking-in bag, seat assignments, pillows and blankets, there simply aren't many more complimentary items and services airlines can pry loose from the base fare, experts say.

That's welcome news for travellers who find the avalanche of new fees tedious.

"If people knew that this was the extent to which this is going to go, that would make them feel better," said Kevin Mitchell, chairman of the Business Travel Coalition (BTC). "(But) they should also know that there's no reversing it."

Mitchell also noted that airlines are creative and that there may yet be some elements of the reservation or check-in process that they can still unbundle.

Major airlines, battered in recent years by high costs, low-fare competition and economic recession, have generated billions of dollars in new revenue from sales of items and services that previously had been free.

Last year, for example, airlines unveiled a particularly unpopular charge, for checking-in a single bag. Passengers baulked, but now that fee is common among major US carriers such as American Airlines and United Airlines.

SCRAPING THE BOTTOM

When implementing the new fees, US airlines took their cues from foreign carriers that use the so-called "a la carte" model that charges passengers for items and services that are not absolutely essential to travel.

Ryanair, Europe's largest budget carrier, last month rankled travellers when its chief executive said the airline might even charge passengers to use aircraft toilets. A company spokesman later said the fee had been discussed internally but Ryanair has no immediate plans to introduce it.

Passengers in the United States also have pushed back. US Airways recently rescinded a fee for soft drinks on its flights after customers complained and rivals declined to match.

In general, however, the fees have paid off well for US carriers, which have reported big increases in the ancillary revenue they earn from sales of goods and services.

American Airlines, the second largest US airline, saw its ancillary revenue increase 60 percent to USD$2.1 billion in 2008 from USD$1.3 billion in 2002.

"That's been a pretty big success story," AMR Chief Financial Officer Tom Horton said last week.

He said the company is always looking for new revenue streams, but he declined to say whether AMR was planning to unveil a new fee or service.

FINDING NEW REVENUE

Experts generally agree that airlines are running out of ways to charge for items that customers currently take for granted. But that won't stop carriers from introducing new items and services to sell on flights, said Andrew Watterson, an airline consultant at Oliver Wyman, a management consulting company.

"Unbundling was the trend, and that did create lots of value in the airlines. The future is in re-bundling," said Watterson.

He noted the influx into economy cabins of superior-quality meals, day passes to airport lounges and the option to purchase frequent flyer miles. All these can be purchased on some airlines for additional fees.

BTC's Mitchell agreed. He said that airlines are beefing up their merchandising and soon will sell many more perks in cabins that previously did not have access to them.

"They're going to use the cabin for all manner of merchandising," Mitchell said. "There's all kinds of opportunities. You have a captive audience."

Air Berlin, TUIfly To Enter Cross-Shareholding

2009-03-17T08:50:00.000-07:00

Air Berlin said it was in advanced negotiations for a cross-shareholding with TUI Travel's TUIfly that would give it access to the unit's route network.

Under the planned deal, TUI Travel's unit would take a stake of up to 20 percent in Air Berlin via a capital increase, and the German carrier would acquire a corresponding percentage of TUIfly, Air Berlin said on Tuesday.

Air Berlin would then take over TUIfly's city route sector, while the charter sector would remain with TUIfly.

Final approval of the TUI Travel and Air Berlin board was still outstanding, Air Berlin said.

TUI Travel was formed in 2007 from the merger of TUI's travel division and Britain's First Choice.

JAL 747 Makes Emergency Landing In China

2009-03-16T10:54:00.000-07:00

A Japan Airlines Boeing 747-400 bound for Tokyo made an emergency landing in Shanghai shortly after take-off due to "engine problems", Xinhua news agency said on Sunday.

Ten minutes after taking off from Shanghai's Hongqiao Airport on Saturday afternoon, the crew "noticed engine problems and the plane began to shake slightly," Xinhua said, citing border inspection authorities.

The plane landed at Shanghai's other international airport in Pudong about 45 minutes later. No injuries were reported among its 208 passengers and 14 crew, Xinhua said.

An initial probe showed the aircraft had hit birds after take-off, but the cause was being investigated, Xinhua said.

Marfin To Buy Olympic Air Ground Handling

2009-03-16T10:53:00.000-07:00

Greece's Marfin Investment will buy Olympic Airways' ground handling unit, days after it sealed the sale of the carrier's flying and maintenance operations to the firm.

Greece approved the sale of ailing Olympic's flying and technical base operations to Marfin Investment Group (MIG) on Wednesday, ending years of wrangling with Brussels and a major drain on its troubled budget.

The sale has also the approval of the European Commission, which said the deal did not breach EU competition rules.

"The Greek state's advisors and MIG begin discussions immediately to finalise the deal for the sale of the ground handling assets to MIG," Development Minister Costis Hatzidakis said in a statement.

Swissport, a subsidiary of Spain's Ferrovial, had also bid for the ground handling operation but failed to reach a deal before a set deadline which expired on Friday.

MIG, whose main shareholder is Dubai Financial, emerged as a last minute rescuer for Olympic after Greece's attempt to attract a good offer from a major European carrier failed in December.

The firm will pay EUR44.8 million euros (USD$57.66 million) for Olympic's ground handling, with the total cost for buying the whole carrier coming at EUR107.2 million.

Airbus Working To Solve Emirates A380 Issues

2009-03-16T09:59:00.000-07:00

Airbus said on Sunday it was taking very seriously the issues Dubai airline Emirates had raised about its A380 superjumbos and was working on solving any problems.

Germany's Der Spiegel weekly said Emirates officials had presented Airbus managers with a list of defects in the world's largest aircraft at a meeting in Toulouse in February.

"We take the criticism and the feedback from Emirates very seriously," an Airbus spokeswoman said. "We are doing everything we can to overcome the issues and we are working very closely with our customers to solve that."

"We have a lot of minor, unrelated issues. We are working with them to solve the issues as quickly as we can," she said, adding that Airbus held regular meetings with its customers to get feedback on its aircraft and discuss any issues.

Emirates, the biggest buyer of the A380, has ordered 58 of the superjumbos and received its fourth plane in December.

An Emirates spokeswoman confirmed on Sunday that the carrier had met Airbus executives to give them feedback on the A380's reliability performance.

"Technical issues are expected with new aircraft, particularly one that uses many new technologies," she said. "Emirates has a good relationship with Airbus and we continue to work closely with them to address these technical matters. Airbus is pulling out all stops to sort things out."

The spokeswoman said that Emirates' remained confident in the A380, adding that it was an "excellent" aircraft and that feedback from its customers had been "very positive". She said the company had no plans to cancel any orders.

Der Spiegel said said that Emirates gave a 46-page presentation in Toulouse, telling Airbus officials about heat-damaged power cables, defective engines and numerous malfunctions.

The planes have lost 500 hours of flying time due to grounding to deal with problems, Der Spiegel said.

Fitch Cuts AMR To Deeply Distressed Rating

2009-03-14T09:46:00.000-07:00

Fitch Ratings on Friday cut its ratings on American Airlines parent AMR to a deeply speculative grade, and warned the airline operator is "more likely to face a liquidity squeeze" in 2010 when it will need to refinance debt.

Fitch cut AMR two notches to "CCC," eight steps below investment grade, from "B-minus." The outlook is negative, indicating an additional downgrade is more likely over the next one-to-two years.

"The 'CCC' rating reflects Fitch's view that AMR is now more likely to face a liquidity squeeze moving into 2010 as historically tight capital market conditions continue to limit the carrier's ability to refinance very heavy upcoming debt maturities," Fitch said in a statement.

Airline revenues are being hurt from reduced travel demand, which is offsetting gains from lower fuel prices.

"In the absence of a stabilization of revenue per available seat mile trends, AMR is likely to report another year of negative free cash flow at a time when scheduled debt maturities are heavy (USD$1.8 billion in 2009 alone) and access to the capital markets remains very constrained," Fitch said.

AMR also faces heavy debt maturities in 2010 and 2011 in addition to pension funding requirements, Fitch said. The company has USD$5.3 billion debt maturing from 2009 to 2011.

European Air Body Says Boeing 777s Safe To Fly

2009-03-14T09:45:00.000-07:00

Europe's air safety authority said on Friday Boeing's 777 passenger jet was safe to fly, despite concerns from a US transport authority that versions with Rolls-Royce engines could lose power in freezing weather.

"If there was a risk to fly the plane we would ground it", said Daniel Holtgen, a spokesman for the European Aviation Safety Agency.

"You can fly it safely and it is being flown safely, if you undertake the operational procedures that we have mandated," he said.

British Airways said it would continue to fly its 15 Rolls-Royce-equipped Boeing 777 aircraft despite America's National Transportation Safety Board (NTSB) ordering an urgent redesign to part of the engines.

"There have been no specific safety recommendations... that airlines should stop operating the aircraft," a British Airways spokeswoman said.

She said the airline had adopted mandatory changes to flying procedures designed to prevent a repeat of the fuel blockage believed to have caused the crash of a BA Boeing 777 at London's Heathrow Airport in January last year, seriously injuring one passenger.

The NTSB said on Wednesday a Delta Air Lines Boeing 777 suffered a similar loss of engine power or "rollback" while flying between Shanghai and Atlanta in November.

The pilot followed a standard procedure to recover engine power and landed the jet safely at its planned destination.

"With two of these rollback events occurring within a year, we believe that there is a high probability of something similar happening again," NTSB Acting Chairman Mark Rosenker said on Wednesday in a statement widely reported in the British media.

The NTSB ordered a redesign of the Rolls-Royce engine's fuel/oil heat exchanger as a permanent way of stopping ice forming and restricting fuel flow.

It said the mandatory flying procedures ordered after the Heathrow and Delta incidents did reduce the risk of ice blocking the fuel supply.

It said the changes also added complexity to flight crew operations and could cause other hazards as they required the pilot to bring the plane lower.

Rolls-Royce is working on the component change but it may not be ready for installation for another 12 months, the NTSB said.

"We are working closely with the relevant air worthiness authorities to certify and deliver the modification as soon as possible," a Rolls-Royce spokesman said.

Lufthansa Summer Capacity To Rise On Italia Unit

2009-03-14T09:43:00.000-07:00

Lufthansa said its summer capacity would rise due to its new Lufthansa Italia carrier, offsetting capacity cuts at its existing route network as slumping demand hits airlines around the world.

Including the Italia unit's additional flights to cities such as Barcelona and Paris from Milan, overall capacity would rise by 0.6 percent, said Thierry Antinori, Lufthansa's head of marketing, at the ITB travel fair on Friday.

The number of seats on offer in Lufthansa's summer schedule starting March 29, excluding Lufthansa Italia, would decline 0.5 percent, he added. For the full-year 2009, the company has said it would cut capacity by 0.2 percent.

Airlines are struggling to remain profitable as businesses and consumers rein in their spending on travel during the recession. The world's airlines lost up to USD$8 billion in 2008, the International Air Transport Association said last week.

Amadeus, a booking system provider to travel agencies, said on Wednesday it had seen holiday bookings reach their trough, while business travel bookings were still getting worse.

Virgin America’s US Investors Sell Out. Are They Running an Illegal Airline?

2009-03-13T11:58:00.000-07:00

The Wall Street Journal is reporting that the two funds that owned 77% of Virgin America have exercised their right to sell their stakes back to the Virgin Group, getting back an 8% return (plus their initial capital) on their investment. Nice deal.

Why does this matter? Because US airlines are required to have US interests controlling at least 75% of the company. Virgin America has not found a new investor for the 77% of the company that was sold to Virgin Group, meaning that it is at least almost entirely controlled by a foreign entity (they argue that because the original investors remain on the board without a financial stake, that they still have 77% US control. Good luck selling that to the DoT.)

Will hte US shut them down tomorrow? No. But given how much difficulty they had getting approval when they launched, this could prove to be a very real problem in 2009. And with airlines (and the state of the industry) where it is, finding an investor or buyer will provide to be incredibly difficult.

Delta Responds to Shrinking Demand with Significant International Capacity Cuts

2009-03-13T10:32:00.000-07:00

We were just mentioning the extraordinary drop in demand for international travel as evidenced by Delta’s February metrics. Unlike past years, they’re taking little time in making changes: The carrier will cut international capacity next winter by 10% over 2008, with 11-13% cuts Trans-Atlantic and 12-14% cuts across the Pacific. They haven’t announced specifics, but there’ll be a combination of departures from certain markets, moving some routes to seasonal (summer only), and shrinking planes on others.

Back in October, November, December when things were first getting bad, the airlines didn’t seem to see the full extent of the disaster coming. They’re seeing it now. This is going to be an awful, awful year for demand.

The WSJ has an article today giving an overview of the industry, and it’s not pretty: United’s February international traffic shrunk 22% over last year. Airlines are projected to see a 15% revenue decline in 2009. And so on. The question is whether they can shrink quickly enough to stay profitable.

Turkish Air's Jan-Feb Passenger Numbers Up 9 Pct

2009-03-12T06:45:00.000-07:00

THY Turkish Airlines carried 3.1 million passengers in the first two months of the year, a rise of 9 percent from a year earlier, the company said on Thursday.

The Turkish flag carrier said available seat kilometres rose 11.6 percent to 7.2 billion, and revenue passenger kilometres rose 8.8 percent to 4.8 billion during the two-month period.

The Istanbul-based airline has launched a large-scale expansion programme, with plans to buy up to 105 wide-bodied and single-aisle aircraft from Boeing and Airbus.

THY said business class passenger numbers on its international flights rose 7.8 percent in January-February, while international transit passengers were up 51 percent.

The load factor fell 1.7 percentage points to 66.2 percent, while landings rose 8 percent to 28,606, and cargo-mail increased 3.4 percent to 28,839 tonnes.

Air France-KLM To Order USD$20 Bln Of Planes - Report

2009-03-12T06:42:00.000-07:00

Air France-KLM plans to order Airbus or Boeing long-haul aircraft worth over USD$20 billion at list prices, French newspaper La Tribune reported.

The carrier will order around 100 Airbus A350s or Boeing 787 Dreamliners as early as the end of 2009, the paper said in a preview of its Thursday edition, not naming its sources.

A spokeswoman for the carrier declined to comment on the report on Wednesday.

The world's two biggest aircraft makers are locked in a tough battle for orders for their new mid-sized, twin-aisle models as airlines cut capacity to cope with falling demand caused by the global economic crisis.

The delayed 787 has so far won 878 firm orders from 57 customers, with the first delivery planned in the first quarter of next year following an initial test flight due in the second quarter of 2009.

Airbus's rival A350 is not expected to enter service until three years later, in 2013, and had notched up 478 orders as of January. Both aircraft rely on a leap in technology allowing planes to be built to a greater degree out of composite carbon materials that reduce weight and cut fuel bills.

Airbus is keen to avoid a repeat of costly days to its A380 superjumbo by sticking to its schedule for the A350.

Airbus overtook Boeing to reclaim the top spot in total plane orders last year, but 2009 is expected to see a sharp drop in aircraft sales.

American Airlines to Move Its Operations to Terminal 2 at Shanghai's Pudong International Airport

2009-03-12T06:40:00.000-07:00

Terminal 2 Location Offers Enhanced Convenience, Amenities, and Proximity to American's oneworld Alliance Partners.

American Airlines, a founding member of the oneworld(R) Alliance, will soon relocate its operations in Shanghai, China, from Pudong International Airport's Terminal 1 to Terminal 2. The move is scheduled for March 29, and will greatly improve the level of comfort and convenience for American's customers.

"In the air or on the ground, American Airlines is dedicated to providing our customers with a quality travel experience," said Victor Lee, American's Regional Director - Greater China. "We look forward to having our customers experience, before and after their flight, the improved convenience of our new facilities in Shanghai's Terminal 2."

The move also means American will be closer to its oneworld Alliance partners at Pudong, making connections smoother and faster. In addition, the larger space at the new location allows separate arrival and departure areas. American's customers will benefit from more ticket counters, which are conveniently located near vital access points such as Customs and Immigration, which will expedite the departure process.

A wide array of services and amenities, including more dining and shopping options, highlight the enhanced convenience of American's new location in Terminal 2.

The new location will allow American Airlines premium class customer to enjoy lounge facilities operated by oneworld member carriers Dragonair and Cathay Pacific. The lounge seats 218 people and features computers, televisions and wireless Internet access. Also operating from Terminal 2 are oneworld partners British Airways, Qantas, and Finnair.

American began service from Chicago O'Hare International Airport to Shanghai in April 2006 and will begin service from O'Hare to Beijing, China, in April 2010.

Delta To Cut International Capacity

2009-03-12T06:37:00.000-07:00

Delta Air Lines said on Tuesday it would cut its international capacity by an additional 10 percent starting in September as the global economic downturn batters the industry.

The airline also indicated it might need to pare more jobs.

The Atlanta-based carrier also said that while it expects a first-quarter loss, it should post profits for the second quarter and full year.

Its shares rose almost 8 percent.

Delta said the latest cuts are planned for its Atlantic and Pacific networks, which have seen the most revenue weakness. They come on top of a system-wide capacity decrease announced late last year.

"While flying held up somewhat in the second half of last year, it was just a matter of time until the rest of the world started to slow down," said Basili Alukos, a Morningstar analyst.

"From the international perspective, most of the airlines are just late to the game," he added.

Delta said its trans-Atlantic capacity this coming winter would be down 11 to 13 percent compared with the winter of 2008, while its trans-Pacific capacity would be down 12 to 14 percent. It said it would exit low-performing markets and move some to seasonal service.

The airline industry is grappling with weaker travel demand as economies sag around the world and businesses trim costs. Carriers slashed seat capacity in the second half of 2008 to compensate for volatile fuel prices and falling demand, and analysts have been expecting further cuts.

UAL, the parent of United Airlines, is cutting international capacity by 15 percent in the first quarter from year-earlier levels.

"Our geographic dispersion is heavily weighted in the Pacific," UAL Chief Financial Officer Kathryn Mikells said during a presentation at a JP Morgan aviation conference on Tuesday. "Those markets have been under more pressure than other markets."

Still, Delta said it is beginning to see normal sequential demand growth heading into the spring and summer.

"Revenue is stabilizing; by no means are we out of the woods," President Edward Bastian told the conference. "The demand picture continues to be soft, but it's not getting worse from what we've seen."

Delta, which merged last year with Northwest Airlines, said in December its domestic capacity would fall 8 to 10 percent in 2009, and international capacity would fall 3 to 5 percent. Systemwide, that meant a reduction of 6 to 8 percent.

The new round of downsizing means Delta must "reassess our staffing needs," the company said in a memo to workers. The carrier has eliminated 2,100 jobs through voluntary exit programs and hopes to achieve its next target also through voluntary separation. Delta has more than 70,000 employees.

Delta forecast operating margin would be down 6 to 7 percent in the first quarter. Excluding one-time items, the carrier said it sees quarterly operating margin down 5 to 6 percent. Delta said it expects to end the first quarter with a liquidity position of USD$4.4 billion.

Air France-KLM Deepens Capacity Cut

2009-03-12T06:32:00.001-07:00

Air France-KLM extended planned capacity cuts on Wednesday, pushing up its share price, as the economic downturn hurts demand for flying.

The Franco-Dutch airline group said it would cut seating capacity on its summer 2009 flight schedule by an average 3.4 percent on both its long-haul and medium-haul routes, up from a previous planned reduction of 2 percent.

The summer schedule runs from March 29 until October 25.

Air France-KLM said last month it would cut both its summer and winter schedules by an average of 2 percent.

Air France-KLM shares rose more than 5 percent to 7.14 euros.

The changes particularly affect routes to North America and Asia as well as domestic routes where Air France also faces rising competition from high-speed trains, the carrier said.

"The Air France-KLM group's summer 2009 schedule has been adjusted in line with the sharp decline in demand caused by the unprecedented global economic crisis which is affecting all corners of the world," it said in a statement.

Air France-KLM will start operating a key transatlantic joint-venture with Skyteam partner Delta Air Lines in April, exposing its brand to the North American market.

Following a merger last year, now includes Northwest Airlines which had a longstanding similar venture with Dutch carrier KLM, which merged with Air France in 2004.

Delta said on Tuesday it would cut its international capacity by an additional 10 percent from September as the global economic downturn batters the industry.

Air Berlin Looking Into Sale Of LTU Airline

2009-03-12T06:31:00.001-07:00

Germany's second-biggest airline, Air Berlin, is looking into a possible sale of its LTU charter airline unit due to a deteriorating economic environment and pilots' pay raise demands, it said on Wednesday.

"This is not a change in strategy," chief executive Joachim Hunold told a news conference, adding that Air Berlin may sell the LTU operation but would continue to market its long-haul flights via the airline.

Hunold said there were no interested parties for LTU yet and Air Berlin was under no pressure to decide on LTU's future.

The reason for this move was "unacceptable demands of the pilots' pay commission", Air Berlin said.

Air Berlin is in wage talks with the pilots' union over pay raises and Air Berlin said the demands put forward by the commission -- dominated by LTU representatives -- were "in no way economically in keeping with the times".

This is why Air Berlin now decided to examine a possible divestment of LTU.

Air Berlin took over LTU in 2007, adding most of its long-haul capacities. Air Berlin operates 125 planes and flies to 127 destinations worldwide, among them flights to southeast Asia, the United States and the Caribbean.

In light of rising fuel costs, it began last year to reduce its long-haul flights and is now like other airlines faced by fallout from the financial crisis as companies spend less on business travel and consumers tighten their purse strings.

Air Berlin's passenger numbers fell 8.5 percent in February as it cut back its capacity by 6.3 percent.

Cathay Pacific Posts Record Loss, Sees Challenging '09

2009-03-12T06:29:00.000-07:00

Cathay Pacific Airways, Hong Kong's dominant airline, on Wednesday posted a bigger-than-expected USD$1 billion second-half net loss, a record, and warned that the year ahead will be "extremely challenging."

"Passenger and cargo demand are expected to remain weak and, if fuel prices remain at their present levels, further losses on fuel hedging contracts will be incurred," Chairman Christopher Pratt said in a statement.

Cathay, Asia's fifth-largest airline by market value, said unrealised mark-to-market losses on fuel hedging was HKD$1.9 billion as of the end of February compared with HKD$7.6 billion for the whole of 2008.

But if the annual average price of Brent crude oil over each of the next three years is about USD$75 per barrel, there will be no further net cash impact and mark-to-market losses recognised in 2008 would then be released in subsequent periods, Pratt said.

ICE Brent crude oil futures rose 0.57 percent on Wednesday to USD$44.21 a barrel.

Cathay reported a HKD$7.9 billion (USD$1.02 billion) net loss in the July-December period, based on previously reported figures. That compared with a net profit of HKD$4.4 billion in the same period a year ago.

For the full year, Cathay posted a record net loss of HKD$8.6 billion, its first shortfall in a decade, compared with a net profit of HKD$7.02 billion in 2007.

Cathay's results followed news that Singapore Airlines has asked staff to take unpaid leave for up to two years in a bid to reduce costs, and Japan Airlines plans to cut annual procurement costs.

Cathay -- which had always been among the world's most profitable airlines and is controlled by Hong Kong conglomerate Swire Pacific -- saw its fortunes take a turn for the worse in 2008, as volatile oil prices and a gloomy economic climate weighed on earnings.

The carrier, like many of its peers, had not anticipated the substantial reduction in oil prices that started in the second half of last year and had locked in supply contracts when fuel prices were higher.

Demand growth was weak last year. Cathay said its passenger load factor fell one percentage point in 2008 to 78.8 percent, while its cargo load factor was down 0.8 point at 65.9 percent.

Revenues rose 14.9 percent to HKD$86.6 billion last year.

Singapore Airlines Asks Staff To Take Unpaid Leave

2009-03-12T06:27:00.000-07:00

Singapore Airlines, the world's biggest airline by market value, has asked staff to take unpaid leave for up to two years in a bid to reduce costs.

The scheme, which is voluntary, applies to the carrier's 14,000 employees, the Straits Times newspaper said on Wednesday.

An SIA spokesman confirmed the report.

The Singapore carrier, which last month announced plans to cut its capacity by 11 percent and has grounded 17 of its 100-plus aircraft, has already asked pilots at its cargo arm to volunteer for unpaid leave.

The carrier said last month its quarterly profit fell 43 percent, hurt by hedging losses and slowing demand for travel and cargo.

Delta Air Lines and Midwest Airlines Announce Expanded Alliance

2009-03-10T06:03:00.001-07:00

Delta Air Lines and Midwest Airlines today announced a multi-faceted alliance agreement that will include reciprocity between the two airlines' frequent flyer programs, new joint marketing efforts and expanded access to airport lounges throughout North America.

The agreement extends Midwest's long-standing marketing agreement with Northwest Airlines to the new Delta Air Lines, which acquired Northwest last year. Under the new agreement, Midwest and Delta frequent flyers will be able to earn or redeem frequent flyer miles on either airline's network through the Delta SkyMiles, Northwest WorldPerks and Midwest Miles programs. The addition of Delta's route system to the previously available Northwest network increases to 379 the number of frequent flyer destinations available to Midwest customers.

It is expected that the new codeshare arrangement will go into effect in June 2009, while the frequent flyer portion of the agreement will go into effect later this year.

As part of the agreement, both airlines have agreed to engage in expanded marketing and advertising campaigns to promote the new alliance with their frequent flyers. It will also expand the existing Midwest-Northwest airport club membership agreement to include Delta Sky Clubs in the near future.

'This alliance with Delta, the world's largest airline, brings tremendous added value to our customers,' said Timothy E. Hoeksema, Midwest chairman and chief executive officer. 'Midwest customers now have access to the world's most extensive flight network, a worldwide alliance of airline partners and other valuable benefits of being associated with the power of the Delta brand.'

'Expanding our alliance relationships to include Midwest Airlines is another customer benefit created by Delta's merger with Northwest Airlines,' said Richard Anderson, Delta's chief executive officer. 'Delta and Midwest make natural alliance partners given both airlines' focus on delivering excellent service and a quality product. Midwest customers are known as some of the most loyal in the industry and we look forward to welcoming them and earning their trust onboard Delta flights from Milwaukee to Madrid to Manila.'

Midwest's existing codeshare agreement with Northwest Airlines will be phased out and replaced with the new Delta agreement. Both Delta and Northwest will be using the Midwest code on flights they operate on mutually agreed flights and city pairs. The Delta and Northwest codes will not be available for use by Midwest on the flights it operates.

Ten trends affecting business travel in 2009

2009-03-10T06:01:00.000-07:00

One year ago, rising oil prices were taking travel costs to new heights and business travelers were feeling the pinch. Now travel prices are falling again, fueled by the global recession, and airlines, hoteliers and car rental companies are taking evasive actions to survive. Here are ten trends caused by the global economic meltdown, and what they will mean for business travelers in 2009:

1. Air travel on sale. With fewer travelers in this sputtering economy, airlines are desperately trying to fill seats. From January 2007 through July 2008, U.S. airlines raised fares 32 times, according to FareCompare.com. Less than two months into the new year, U.S. airlines have initiated 25 fare sales and prices are back to pre-2007 levels in many markets. If you still have funds in your travel budget, this is a good time to fly.

2. Capacity cuts continue. To counteract declining travel demand, U.S. airlines continue to trim their schedules. Most have already eliminated 10% to 20% of domestic flights and the Air Transport Association projects the seven largest U.S. airlines will cut another 3% to 10% this year. This means fewer seats available for last-minute purchase and more involuntarily denied boardings on oversold flights.

External Source - For the complete article click here

Source - USATODAY

Alaska Airlines and Air Line Pilots Association Reach Agreement in Concept on New Pilot Contract

2009-03-10T05:59:00.000-07:00

Alaska Airlines announced it has reached an agreement in concept with the Air Line Pilots Association (ALPA) on the terms of a new, four-year contract for the airline's 1,500 pilots.

Negotiating committee members from the pilots union and airline will meet starting next week to finalize the agreement language. Terms are being withheld pending final language.

After the contract language has been finalized and approved by the union's elected representatives, it will become a tentative agreement that will be presented to Alaska's pilots for review and a ratification vote.

The current contract became amendable on May 1, 2007. ALPA and Alaska Airlines began contract negotiations in January 2007.

American Airlines and Aviation Partners Boeing Announce First Revenue Flight of a Boeing 767-300ER Featuring Blended Winglets

2009-03-10T05:56:00.000-07:00

Annual Fuel Savings of up to 500,000 Gallons Per Aircraft

American Airlines and Aviation Partners Boeing (APB) announced today the first revenue flight of a Boeing 767-300ER with APB's Blended Winglets(TM). American Flight #78 left Dallas/Fort Worth International Airport Sunday, March 8, at 8:35 p.m. with 204 passengers onboard and arrived ahead of schedule at London Heathrow Airport on Monday, March 9, at 10:26 a.m.

"We are pleased that APB chose to partner with American to develop and install these Blended Winglets, and we are especially happy that we also operated the first flight with customers onboard a winglet-equipped 767-300ER," said Bob Reding, American's Executive Vice President - Operations. "The fuel savings and emissions reductions that we will achieve are one more step in our efforts to both moderate costs and shrink the impact we have on our environment - two goals that go hand-in-hand."

The increased lift provided by the winglets, without a corresponding increase of engine power, improves fuel efficiency. Each airplane equipped with the winglets is expected to save up to 500,000 gallons of fuel annually depending on miles flown, according to APB. American plans to install winglets on its entire 58 aircraft fleet of 767-300ERs, which could result in a total savings of up to 29 million gallons of fuel per year. That represents a significant potential increase to the 111 million gallons of fuel that American currently saves through its Fuel Smart efficiency program.

In addition to the fuel cost savings, this 767-300ER fuel efficiency improvement will result in a reduction of up to 277,000 metric tons of carbon dioxide (CO2) emissions annually, according to APB. The 11-foot high winglets could also extend the range of an aircraft by as much as 360 nautical miles and improve take-off performance, providing as much as 12,000 pounds of additional payload.

"The 767-300ER Blended Winglets have been the most complicated product development program in the history of Aviation Partners Boeing. We owe a huge debt of gratitude to our launch partner, American Airlines, and our other pre-certification customers for their continued faith in APB and Blended Winglet technology and their patience and support through a challenging certification process. These winglets represent the largest piece of structure ever retrofitted to a commercial aircraft wing and will dramatically change forever both the appearance and performance of the 767-300ER," said John Reimers, Aviation Partners Boeing President and CEO.

The winglet installation work was accomplished by American's Maintenance & Engineering organization at its maintenance base in Kansas City, Mo. American expects to modify all of its 767-300ER aircraft by 2011. American has already completed Blended Winglet installation on its fleets of 124 Boeing 757s and 77 Boeing 737s.

American's in-house maintenance organization accomplishes more than 90 percent of American's maintenance. American Maintenance Services will also install the B-767 as well as B-757 and B-737 Blended Winglets on other Aviation Partners Boeing customers' aircraft at its existing base maintenance facilities in Tulsa, Okla., Kansas City, or Fort Worth, Texas.

"Our mechanics and engineers are highly experienced, and we have outstanding facilities and the resources necessary to excel at this kind of complex structural installation," said Carmine Romano, Senior Vice President - Maintenance & Engineering, for American. "The efficiency that allows us to do this kind of work in house also allows us to provide the same service to our customers, and they simply can't get that anywhere else."

APB began the flight test certification program in February 2008 with a leased American Airlines 767-300ER. The two companies jointly began the winglet development program early in 2007.

Delta Air Lines Announces New Flights between Atlanta and Brasilia, Brazil, Starting in December

2009-03-10T05:54:00.002-07:00

Delta will be the only U.S. airline to fly nonstop to Brasilia, Brazil's capital city, increasing to six the number of cities served by Delta in the country.

Delta has offered service between Atlanta and Sao Paulo for more than ten years, and has continued expanding throughout the years with nonstop flights between Atlanta and Rio de Janeiro, New York City-JFK and Sao Paulo, Atlanta and Manaus, and a direct one-stop flight connecting Atlanta to Recife and Fortaleza.

On May 21, Delta also will begin nonstop service between Los Angeles and Sao Paulo.

"As Delta continues to grow in Latin America, this new flight to Brasilia becomes a significant step in our expansion given the governmental and diplomatic activity in Brazil's capital," said Jim Cron, Delta's senior vice president of Global Sales and Distribution. "Of course, Brasilia also is a base for some of the most important companies in South America, and we look forward to better serve the travel needs of the business sector by offering more direct flights and connections between Brazil and the United States, Europe and Asia."

Machinists Reach Tentative Pact with Hawaiian Airlines

2009-03-10T05:54:00.001-07:00

The International Association of Machinists and Aerospace Workers (IAM) District 141 today announced a tentative agreement with Hawaiian Airlines covering the carrier's 1,500 customer service, reservation, ramp and clerical employees.

The proposed two-year contract provides wage increases ranging from three to ten percent, freezes current employee healthcare contributions, provides an incentive compensation program and enables performance and profit bonuses. Additional contract adjustments recognize the challenges facing the industry.

"This tentative agreement puts more money into our members' pockets during extremely difficult economic times," said IAM District 141 President Rich Delaney. "Our negotiating committee unanimously recommends ratification of the agreement."

The tentative accord, the first since the airline emerged from bankruptcy in 2005, is subject to a membership ratification vote. Ratification results will be available after March 25, 2009. Complete terms of the tentative agreement are available on the District 141 website, www.iam141.org.

Separate negotiations between Hawaiian Airlines and IAM District 142, which represents the airline's 560 mechanic & related employees, are continuing.

Boeing, Mexicana Group Agree to 25-Airplane 717 Leasing Deal

2009-03-10T05:52:00.000-07:00

Boeing (NYSE:BA) and Mexicana Group today announced a lease agreement for 25 Boeing 717-200 airplanes to be used by its MexicanaClick operation.

Under a multi-year arrangement, MexicanaClick will begin receiving the 717s from Boeing Capital Corporation in March, making Mexicana the first North American 717 operator outside the U.S. Boeing Capital is the world's largest lease provider of the modern, fuel-efficient twin jet.

In addition to the airplanes, Boeing through its Commercial Aviation Services group will provide training for flight crew, cabin crew and maintenance staff as well as spare parts provisioning. In total this approach represents a comprehensive Boeing solution to Mexicana Group's fleet renewal needs.

"With these 25 airplanes, we give a strong boost to MexicanaClick and a better way to improve the passengers' experience and the airline's operating efficiency to maintain its leadership both in quality of equipment as well as on-board services," said Manuel Borja, Mexicana Group director general.

The Boeing 717 has distinguished itself in service to nine airlines on four continents. Designed for quick turnaround, high-frequency and short- range markets (up to 1,500 nautical miles), the 717 offers big-jet passenger comfort with the lowest noise and emissions in its class. The Rolls Royce-powered 717s will replace Fokker F-100s operated by the airline.

"At a time when economic conditions pose challenges to airline operators and travelers, the 717 offers a wealth of value - greater fuel efficiency, lower maintenance costs, a modern flight deck and spacious interior," said Tim Myers, Boeing Capital Corp. vice president for structured financing. "We're pleased to join forces with Mexicana to bring the 717 to the region."

Click's 717 fleet will be configured to carry 104 passengers with 20 in Mexicana Elite class, with two-by-two seating, allowing all passengers to enjoy either aisle or window seats, and 84 in tourist class where the five-abreast, wide leather seats will appeal to travelers.

Boeing and Mexicana have worked together for decades. The airline was among the world's largest operators of the Boeing 727 and its current long-haul routes depend on the Boeing 767.

"We congratulate MexicanaClick on joining the ranks of airlines that depend on the 717's high dispatch reliability and low maintenance costs to compete successfully," said Ihssane Mounir, vice president for Latin American sales, Boeing Commercial Airplanes. "Add to that a quiet and fuel-efficient airplane, with great comfort and passenger appeal and an average fleet age of less than five years, and the result is a great platform to grow Click's market success."

China Eastern May Get CNY2 Bln Injection

2009-03-10T05:50:00.000-07:00

The parent of China Eastern Airlines, is likely to receive a capital injection of CNY2 billion yuan (USD$292.4 million) from the government, the official Shanghai Securities News quoted a senior official of the company as saying.

Li Jun, deputy general manager of the parent group China Eastern Air Holding, said the injection would bring the total government aid to CNY9 billion, but the move still needs approval from authorities.

China Eastern Airlines, one of the country's three biggest carriers, has received a capital injection of CNY7 billion from the government.

There is no timetable as to when the funds would be injected into the listed company, said Luo Zhuping, board secretary of China Eastern.

After years of robust growth, China's airlines face declining passenger demand and intensifying competition as the economy slows from the impact of the global financial crisis.

But Liu Shaoyong, chairman of China Eastern, said domestic air traffic could be on its way to recovery later this year.

Mexicana To Lease 25 New Boeing 717s

2009-03-10T05:49:00.000-07:00

US aircraft maker Boeing and one of Mexico's largest commercial airlines, Mexicana de Aviacion, have reached a leasing agreement for 25 new 717 twin engine jets, Boeing said on Monday.

The planes, made to carry 104 passengers, will be used by Mexicana's low fare airline Click starting this month. The agreement comes as passenger traffic for Mexican airlines has been slumping because of a sluggish economy.

"At a time when economic conditions pose challenges to airline operators and travellers, the 717 offers a wealth of value -- greater fuel efficiency, lower maintenance costs," said Boeing in a statement.

Several low-cost airlines started up in Mexico in recent years, but heavy competition, high fuel prices and slow economic growth have forced five carriers out of business.

Mexican airport operator OMA, which has 13 airports, said on Monday its February passenger traffic dropped nearly 18 percent from a year ago, citing weaker business due to fewer airlines flying.

AirTran Sees Profitable 2009

2009-03-10T05:46:00.000-07:00

AirTran said it still expects to be profitable this year, given the decline in fuel costs, even as March suffers because of the Easter holiday shift.

"We had one of the worst years of any airline in 2008 and the flip side is we will recover faster and rebound more quickly than any carrier," AirTran Holdings chief executive Bob Fornaro said on Monday.

The parent of AirTran Airways said it expects first-quarter passenger unit revenue to be down 7 percent to 8.5 percent, compared with a previous forecast calling for a decline of 2.5 percent to 5.5 percent.

Total unit revenue is now forecast to be down 2 percent to 3.5 percent in the period, versus the previous forecast of up 1 percent to down 2 percent.

Though March will be a weaker month because Easter is celebrated on April 12 this year, April will be a strong month, Fornaro said.

"We expect to be profitable in every quarter this year," he said.

Fornaro added that bigger, global carriers would suffer most in the recession and added there would be more industry capacity cuts later this year.

UBS analyst Kevin Crissey said in a research note on Monday that US airlines could make announcements on additional capacity cuts as early as next week.

"On our estimates none of the airlines have a liquidity issue but a materially worse revenue environment combined with stable fuel prices and continued closed credit markets could challenge this view," Crissey wrote. "We believe this outcome is what the market is pricing."

Crissey added he expects American Airlines parent AMR and UAL, United's parent, to post a per-share loss in 2009.

Rival Delta Air Lines said in its annual report filed with the US Securities and Exchange Commission earlier this month that it expects to post a "significant loss" for the March 2009 quarter mainly because of fuel-hedge losses.

Earlier this year, Delta said it expects a profitable 2009 because of factors including lower fuel prices and merger synergies.

Dornier Aviation of North America Bankruptcy Trustee Announces Settlement of Litigation with China's Hainan Airlines

2009-03-09T09:17:00.000-07:00

Payment of $14,950,000 to Fund Full Payment of Claims in Bankruptcy Case

Wiley Rein partner H. Jason Gold, the court-authorized liquidating trustee for the bankruptcy estate of Dornier Aviation (North America), Inc. (DANA), announced today that the bankruptcy court has approved a full and final settlement of all litigation and disputes with Hainan Airlines, a major international airline based in China. Hainan has paid the trustee $14,950,000 in consideration of the settlement and Gold is now moving to dismiss all legal actions filed against Hainan. The trustee had brought suit back in December 2003 and final judgment was obtained in August of last year to recover unpaid accounts. U.S. Bankruptcy Judge Steven S. Mitchell presided over the case and approved the settlement.

"We are pleased to have reached this compromise and settlement with Hainan. The funds recently paid will now allow us to pay in full the claims asserted by the creditors of the bankrupt company Dornier Aviation of North America, including numerous individuals and American companies, large and small," said Gold.

Mr. Gold is head of Wiley Rein's Bankruptcy & Financial Restructuring Practice. The firm served as Mr. Gold's counsel in the DANA/Hainan Airlines litigation.

Delta Technicians to Remain Union-Free

2009-03-09T08:54:00.000-07:00

NMB accepts union's request to terminate its certification - Northwest technicians to immediately receive Delta's higher pay rates, union dues cease

Delta Air Lines (NYSE:DAL) today issued the following memo from Delta TechOps President Tony Charaf to the more than 6,700 aircraft maintenance technicians and related colleagues of the new Delta. The memo responds to the Aircraft Mechanics Fraternal Association's (AMFA) filing with the National Mediation Board (NMB) yesterday to terminate its certification. Today the NMB accepted the union's request.

"Yesterday the Aircraft Mechanics Fraternal Association (AMFA) filed with the National Mediation Board (NMB) to resolve representation issues among our Technician and related employees. Specifically, AMFA requested that the NMB terminate AMFA's certification to represent the Mechanics and Related craft or class at Northwest. This morning the NMB accepted AMFA's request and has revoked the union's certification.

This marks another significant merger milestone for Delta and its TechOps team. Resolving union representation issues has been on the minds of the men and women in Technical Operations in recent months and the NMB's swift ruling allows us to start aligning pay, benefits and work rules and implementing the already agreed on combined seniority list.

We have committed to a transition plan, which will be available on the TechOps portal later today. Let me share a few important details about how we will align pay, benefits and work rules:

• Pre-merger Northwest technicians will come up to the Delta pay scales and applicable license, skill and line premiums, effective with the next pay period.

• Union dues will be eliminated effective immediately.

• Pre-merger Northwest technicians will be eligible for Delta's profit sharing and Shared Rewards programs in 2009.

• The transition to Delta's benefits programs -- including medical, retirement, time off and disability -- will occur starting in January 2010.

As you know, the TechOps Seniority Integration Committee and AMFA partnered together to establish a fair and equitable seniority list. A subcommittee is now in the process of reviewing seniority disputes. A final list will be published soon. Our new AMT colleagues from Northwest can begin bidding on jobs as soon as Sunday, March 1. Additional communications about this process will be communicated to all TechOps employees tomorrow.

This is fantastic news for Delta and the new TechOps team. As I've said many times in the past, our flexible workforce has always been an advantage as we grow our global customer base. And now we have even more Airbus capabilities to offer our customers.

Thank you for staying focused on maintaining safe, reliable airplanes for Delta and our customers worldwide."

Delta Renames Airport Lounges 'Delta Sky Clubs' Following Merger with Northwest

2009-03-09T08:52:00.001-07:00

Delta Air Lines (NYSE:DAL) today announced a name change for the airline's more than 50 airport lounges worldwide as part of the merger with Northwest. The new moniker, Delta Sky Club(TM), will replace the current Delta Crown Room Club and Northwest Airlines WorldClubs names.
New Delta Sky Club signage will begin appearing in airports in early April and is expected to be completed by the end of 2009.

"Creating the largest global lounge network under the Delta Sky Club brand is the first in a series of lounge changes designed to provide our customers with one consistent, world-class lounge experience," said Ranjan Goswami, Delta's director of Customer Experience.

Throughout 2009, the lounges will continue to offer existing amenities, including complimentary beverages and snacks, personalized flight assistance, satellite TV, Wi-Fi access and other connectivity options. By early 2010, Delta plans to harmonize all Delta Sky Club offerings to provide customers with one consistent service and product experience, adopting customer favorites from both lounge programs.

Crown Room Club and WorldClubs members may continue to use their current credentials and One-Day passes until the end of 2009, when the conversion of all Delta Sky Club locations will be complete.

The introduction of Delta Sky Club is part of the airline's integration of Delta and Northwest operations worldwide following last year's merger. Other upcoming merger milestones include outfitting all pre-merger Northwest flight attendants, airport customer service agents and Delta Sky Club employees in Delta uniforms designed by Richard Tyler, as well introducing a consistent on-board experience, including food choices and in-flight entertainment, on Delta and Northwest flights.

Delta Air Lines Reports February Traffic

2009-03-09T08:50:00.000-07:00

On a combined basis, system traffic in February 2009 decreased 11.0 percent compared to February 2008 on a 7.8 percent decrease in capacity, and load factor declined 2.7 points to 74.3 percent.

Delta and Northwest Combined

On a combined basis, system traffic in February 2009 decreased 11.0 percent compared to February 2008 on a 7.8 percent decrease in capacity, and load factor declined 2.7 points to 74.3 percent.

Domestic traffic decreased 11.5 percent year over year on an 11.0 percent decrease in capacity. Domestic load factor decreased 0.4 points to 78.0 percent. International traffic decreased 10.1 percent year over year on a 1.9 percent decrease in capacity, and load factor declined 6.2 points to 68.3 percent.

Delta

Delta's system traffic in February 2009 decreased 9.2 percent compared to February 2008 on a capacity decrease of 6.2 percent. Delta's system load factor decreased 2.4 points to 72.5 percent.

Northwest

Northwest's system traffic in February 2009 decreased 13.6 percent compared to February 2008 on a capacity decrease of 10.2 percent. Northwest's system load factor decreased 3.0 points to 77.2 percent.

Delta’s Trans-Atlantic Strategy: Uh Oh

2009-03-09T08:44:00.000-07:00

We’re starting to get some data that suggests Delta’s strategy of shifting capacity to trans-Atlantic routes may not hold up during the downturn: The airline released its February traffic figures, and the trans-Atlantic flights are ugly. Very, very ugly.

Stripping out the Northwest operations, Delta’s trans-Atlantic load factor (roughly the percent of seats filled) in February was 60.7%, down 6.6% from last year. However, they had grown the available seat miles in that market by 9.1%. These routes make up about 2/3 of all international traffic for the airline, and about 1/4 of all available seat miles.

Certainly, the busy summer season won’t look like that (one hopes), but it’s going to be a very rough few months getting to there (which is why you can fly to Europe for less than $400 all-in through May). But even those very low fares don’t appear to be stimulating demand.

The worst part? I’m not sure where else they can turn. The focus on trans-Atlantic made sense before the world fell apart, but that won’t recover for a while. Northwest’s Asian operations look great by comparison, but how long will that last? And can you really throw more capacity at that? (Answer: No. No you can’t.) They’re getting hammered in every direction.

Anyone have any ideas what to do?

Oman Air to Grow Significantly in 2009

2009-03-09T08:40:00.001-07:00

The CEO of Oman Air said yesterday that the carrier will grow significantly over the next 3 years, including adding about 10 additional cities in 2009 (to a total of 40). I bring this up because Oman is the last of the Gulf states without a significant airline presence. Emirates has grown to a global powerhouse, while Qatar Airways and Etihad (based in Abu Dhabi) have re-created themselves as world-class carriers over the past few years. Oman Air has remained a regional player - until now.

This move actually seems to re-affirm one of my predictions for 2009 (that Oman will become a major player in the region), as they roll out flights to Paris and Frankfurt. With 787s coming in 3 years, I’m certain we’ll see Oman’s flag carrier on US shores by then. With the region’s economy in turmoil, it seems to be a nutty time to be growing an airline in the area, but with the full backing of Oman’s government (and basically no competition on nonstop routes) I expect them to be a major addition to the area within 3 years.

Air Berlin Considers Sale Of Long Haul Business

2009-03-09T04:56:00.000-07:00

Germany's second biggest airline Air Berlin is considering whether to divest the long haul business of its charter airline subsidiary LTU, a spokesman said.

"The whole long haul (business) is under review," the spokesman said, pointing to decreasing demand and high wage claims by pilot union VC. He added that a divestment or selling the business would be two options.

Air Berlin had offered to increase wages by 3.5 percent as well as job guarantees until 2010, which was rejected by VC, the spokesman said.

German magazine WirtschaftsWoche cited unidentified sources as saying that the Vereinigung Cockpit union could launch strikes at the company starting the last weekend of March.

The magazine cited company sources as saying that the union has initiated a strike ballot in February.

Air Berlin took over LTU in 2007, whereby the company added most of its long-haul capacities. Air Berlin, among other destinations, offers flights to Southeast Asia, the United States and the Caribbean.

US Airlines Pin Hopes On Summer Travel

2009-03-09T04:54:00.002-07:00

As business travel bookings plummet in the economic recession, US airlines are looking hungrily at the summer travel season for a bump in their leisure bookings.

That may be wishful thinking, however.

Carriers must fight the uphill battle of persuading people to hand over cash for holidays at a time when job losses mount and personal investments in homes and retirement plans shed value.

"Everybody is wondering if there's another shoe to drop," said Rick Seaney, chief executive of air fare researcher Farecompare.

Seaney said that while there is no reliable way to gauge forward airline bookings, evidence suggests a gloomy outlook for leisure travel this year.

Travellers are booking trips closer to their departures, which indicates more shopping and less buying, he said.

Furthermore, airlines now offer deeply discounted tickets in hopes of luring thrifty passengers. The sales, which last much longer this year than last year, typically shave 25 percent to 50 percent off the high fares of last summer, Seaney said.

"These are not prices that we're going to see outside of a recession," Seaney said.

Discretionary travel spending is highly dependent on an economy that consumers can trust. And the US economy offers very little good news these days.

The US Labor Department on Friday said non farm payrolls shed 651,000 jobs in February, while the jobless rate climbed to 8.1 percent. Since the recession started in December 2007, the economy has shed 4.4 million jobs. More than half of those jobs were eliminated in the last four months.

Despite massive downsizing last year and in 2009, airlines still struggle to keep planes full and fares supported.

Monthly reports on airline operations released this week showed sharp declines in traffic as carriers slashed capacity. Most troubling for the airlines, however, was the shrinking load factors, which measure how full a plane is.

American Airlines, for example, said its load factor was 73.9 percent, down 2.9 percentage points from February 2008. Continental Airlines reported a load factor of 72.9 percent, a decline of 3.1 percentage points from a year ago.

Airline leaders link the shrinking load factors to a slowdown in business travel after politicians attacked lavish corporate trips in recent months.

Airline leaders such as Doug Parker, chief executive at US Airways, hold out hope that leisure travel will not take the same hit.

"What we see... right now is that the softness is mostly in business, as opposed to leisure," Parker said on Tuesday. "You stimulate leisure somewhat with lower fares."

Lufthansa Gives Bleak Outlook For Non-Airline Units

2009-03-09T04:54:00.001-07:00

Lufthansa expects its cargo and maintenance businesses to continue feeling the impact of the global economic crisis until at least 2010, reports in company employee newspapers show.

The company has taken two MD-11 cargo planes out of service as part of a plan to cut capacity by 20 percent, the Lufthanseat newspaper reported this week. The company had already said it would shorten working hours for cargo employees.

A spokesman for the company said the two planes would remain grounded until October 2010. Another two cargo planes are currently not being used but have not been taken out of service.

Engine maintenance business Lufthansa Technik expects to see its industry environment remain difficult until the end of 2010, the division's sales head Walter Heerdt told employee newspaper Lufthansa Technik News.

In the first nine months of 2008, the cargo division generated about 16 percent of Lufthansa's group operating profit, and Lufthansa Technik contributed 23 percent. Lufthansa is scheduled to publish full-year 2008 results on Wednesday.

Airlines around the world have cut capacity and grounded aircraft in response to a drop in demand for air travel. Businesses are reducing their travel budgets and consumers are also keeping a tighter hold of their purse strings.

"Older aircraft or those needing an overhaul are taken out of service first," Heerdt said.

He said that from 2011, there would be slight market growth, though the impact of the crisis would still be felt for several years.

Lufthansa Technik is the world's third-largest company offering engine maintenance, repairs and overhauls, with a market share of around 8 percent, according to 2007 figures published by rival MTU Aero Engines.

To generate new business, the company planned to expand in the Middle East and Africa.

S&P Cuts British Airways' Rating To Junk Status

2009-03-09T04:52:00.000-07:00

Standard & Poor's on Friday cut its rating on British Airways to junk status and said it may cut the rating again, citing a deteriorating outlook for airlines as the global recession drags on.

British Airways' risk profile will likely not meet the standards for an investment-grade rating for several years, Standard & Poor's said in a statement.

S&P cut British Airways' corporate credit rating by one notch to "BB-plus," the highest junk rating, from "BBB-minus."

The downgrade came a day after British Airways predicted a second year of operating losses and said it would make further job cuts.

"British Airways has reported a progressive weakening of demand in recent quarters, most notably for high-yielding premium traffic," S&P said. "Slowing demand appears to be having the most effect on important transatlantic and Asia-Pacific routes."

A weaker British pound is also hurting profits, S&P said.

"We see the weak pound as further dampening domestic demand for foreign travel and raising the US dollar-based part of British Airways' costs," S&P said. "This, in our view, far outweighs the effects of the sharp decline in fuel prices from their mid-2008 highs."

British Airways also has significant fuel hedging contracts in place, which will delay the positive effects of falling fuel prices, the agency said.

Frontier Airlines Gets USD$40 Mln DIP Commitment

2009-03-09T04:51:00.000-07:00

Frontier Airlines said on Thursday it received a commitment for USD$40 million debtor-in-possession financing from Republic Airways Holdings.

The airline, which filed for Chapter 11 bankruptcy protection on April 10, 2008, said the new financing, which matures in April, preserves its stability as it seeks a plan to emerge from bankruptcy later this year.

It said that the financing comes with a condition that Frontier allow Republic a stipulated damage claim in the amount of USD$150 million. The agreement also needs to be approved by bankruptcy court.

Frontier already received USD$30 million in DIP funding from Republic and Credit Suisse Securities and AQR Capital in August 2008.

Republic said in the statement that Frontier is on the right path to emerge from bankruptcy this summer.