BlueSky Airlines to wet lease two Bombardier Q400s from EuroLOT in order to start operations

BlueSky DHC-8-400 (BlueSky)(LR)

BlueSky Airlines (Grand Cayman, Cayman Islands) is a new proposed airline. According to the Polish passer.com news site, the new airline will wet lease two Bombardier DHC-8-402s (Q400s) from EuroLOT (eurolot.com) (Warsaw) starting in October in order to commence scheduled passenger operations.

Images: BlueSky Airlines.

BlueSky Airlines logo-1

 

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Delta Air Lines reports a first quarter net profit of $281 million despite more than 17,000 cancelled flights

Delta Air Lines (Atlanta) today reported financial results for the first (March) quarter. Key points include:

Delta’s pre-tax income for the March 2014 quarter was $444 million, excluding special items1, an increase of $363 million over the March 2013 quarter on a similar basis.

Delta’s net income for the March 2014 quarter was $281 million, or $0.33 per diluted share, excluding special items1. This is $196 million higher year over year despite $163 million of non-cash tax expense now recognized after the reversal of the company’s valuation allowance.

On a GAAP basis including special items, Delta’s pre-tax income was $335 million and net income was $213 million, or $0.25 per diluted share.

Delta cancelled more than 17,000 flights due to severe weather in January and February, double the number of flights cancelled for weather in 2013. These cancellations resulted in $90 million of lost revenue and $55 million lower pre-tax income.

Results include $99 million in profit sharing expense in recognition of Delta employees’ contributions toward achieving the company’s financial goals.

Delta generated $951 million of operating cash flow and $390 million of free cash flow in the March 2014 quarter. This strong cash generation allowed the company to reduce its adjusted net debt to $9.1 billion, contribute more than $600 million of funding to its defined benefit pension plans, and return $176 million to shareholders through dividends and share repurchases.

“The March quarter’s record results in the face of unprecedented weather show the strength and resilience of Delta. By delivering the industry’s best customer service, operational reliability and financial performance, Delta people continue to show that they are the very best in the business,” said Richard Anderson, Delta’s chief executive officer. “Our work is not finished, and there is great opportunity ahead as we expect the June quarter to produce 14% – 16% operating margins. We are transforming Delta into a high-quality S&P 500 company that consistently delivers strong earnings growth and shareholder returns.”

Revenue Environment

Delta’s operating revenue improved 5 percent, or $416 million, in the March 2014 quarter compared to the March 2013 quarter, despite $90 million of lost revenue due to weather-related cancellations. Traffic increased 3.5 percent on a 1.7 percent increase in capacity.

Passenger revenue increased 5 percent, or $357 million, compared to the prior year period. Passenger unit revenue (PRASM) increased 3.2 percent year over year with a 1.3 percent improvement in yield.

Cargo revenue decreased 9 percent, or $21 million, driven by lower freight volumes and lower yields.
Other revenue increased 8 percent, or $80 million, driven by higher joint venture and SkyMiles revenues.”March quarter’s top line growth of 5 percent shows the strength of Delta’s revenue momentum even through the revenue loss from weather and a shift of the Easter holiday traffic into April,” said Ed Bastian, Delta’s president. “We see continued revenue strength as we move through the year from corporate revenue gains, the benefits of the Virgin Atlantic joint venture and improved ancillary revenues. These initiatives, coupled with a solid demand environment, should lead to unit revenue growth in the mid-single digits for the June quarter.”

Cost Performance

Total operating expense in the quarter increased $18 million year-over-year driven by the impact of employee investments including $79 million higher profit sharing expense. These cost increases were almost fully offset by lower fuel expense, savings from Delta’s structural cost initiatives, and receipt of a $25 million insurance claim related to Superstorm Sandy.

Consolidated unit cost excluding fuel expense, profit sharing and special items (CASM-Ex2), was 0.3 percent higher in the March 2014 quarter on a year-over-year basis, driven by the impact of employee investments and 1 point of pressure from weather-related cancellations. GAAP consolidated CASM decreased 1.4 percent.

Fuel expense, excluding mark-to-market adjustments, declined $167 million as a result of lower market fuel prices and better settled hedge performance. Delta’s average fuel price3 was $3.03 per gallon for the March quarter, which includes $107 million in settled hedge gains. On a GAAP basis, consolidated fuel expense for the March quarter decreased $109 million year-over-year, driven by lower market fuel prices and mark-to-market adjustments on fuel hedges.

Operations at the Trainer refinery produced a $41 million loss for the March quarter as a result of the same lower market fuel prices that lowered Delta’s overall fuel spend. During the quarter, one of the major crude units at the refinery was taken offline for scheduled modifications which lowered throughput levels. These modifications will yield a higher level of jet and diesel distillates going forward and improve the profitability of Trainer. In addition, refinery profitability was negatively impacted by an increase in Renewable Identification Numbers (RINs) expense.

Non-operating expense for the quarter increased by $66 million, driven by a $31 million seasonal loss associated with Delta’s 49% ownership stake in Virgin Atlantic, an $18 million loss on extinguishment of debt driven by Delta’s debt reduction initiatives, and $39 million higher foreign exchange impact, including a $23 million loss associated with the devaluation of the Venezuelan currency. These losses were offset by $34 million lower interest expense.

“The March quarter marks another quarter with non-fuel unit cost growth below 2 percent, and the growing momentum of our domestic refleeting and other cost initiatives provide the platform to maintain this performance,” said Paul Jacobson, Delta’s chief financial officer. “We are addressing all parts of our cost base through executing our structural cost initiatives, lowering our fuel expense with the refinery and hedging, and reducing our interest burden with additional debt reduction.”

Cash Flow

Cash from operations during the March 2014 quarter was $951 million, driven by the company’s March quarter profit and the normal seasonal increase in advance ticket sales. Cash from operations is net of $605 million of contributions made by Delta to its defined benefit pension plans during the quarter. The company generated $390 million of free cash flow.

Capital expenditures during the March 2014 quarter were $570 million, including $514 million in fleet investments. During the quarter, Delta’s net debt maturities and capital leases were $353 million.

In the March quarter, the company returned $176 million to shareholders. On March 14, the company paid $51 million to shareholders, which represents a $0.06 per share quarterly dividend. In addition, the company repurchased four million shares at an average price of $30.94 for a total of $125 million. The company has completed $375 million of the $500 million share repurchase plan authorized by Delta’s Board of Directors in May 2013.

Delta ended the quarter with $5.6 billion of unrestricted liquidity and adjusted net debt of $9.1 billion. The company has now achieved nearly $8 billion in net debt reduction since 2009.

June 2014 Quarter Guidance

Following are Delta’s projections for the second (June) 2014 quarter:

2Q 2014 Forecast

Operating margin
14% – 16%

Fuel price, including taxes, settled hedges and refinery impact
$2.97 – $3.02

2Q 2014 Forecast

(compared to 2Q 2013)

Consolidated unit costs – excluding fuel expense and profit sharing
Up 0% – 2%

System capacity
Up 2% – 3%

Special Items
Delta recorded a net $68 million special items charge in the March 2014 quarter, including:

a $31 million charge associated with Delta’s domestic fleet restructuring;

a $21 million mark-to-market adjustment on fuel hedges; and

a $16 million charge for debt extinguishment and other.

Delta recorded a net $78 million special items charge in the March 2013 quarter, including:

a $102 million charge for facilities, fleet and other, primarily associated with Delta’s domestic fleet restructuring; and

a $24 million mark-to-market adjustment on fuel hedges.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Boeing 777-232 ER N862DA (msn 29734) departs from Los Angeles International Airport (LAX).

Delta Air Lines: AG Slide Show

Regional 1 Airlines becomes R1 Airlines

Regional 1 Airlines logo

Regional 1 Airlines (Regional 1 Airlines Limited) (Calgary), which merged with Air Georgian (Toronto) on November 15, 2013 creating a new parent company, Regional Express Aviation Limited (REAL), has changed its mission and operating name to R1 Airlines with the theme of “Boundless”.

R1 Airlines logo

 

The regional carrier quit the scheduled airline business on September 11, 2005 and since then has been focusing on worldwide charter work.

Here is how the redefined airline now describes its services:

R1 Boundless logo

Experience a new standard in charter aviation. R1 Airlines Ltd. provides a new level of service, capacity, and aviation expertise on a regional and international scale. Convenience and comfort. Customized schedules, in-flight services and cargo capacity tailored to your unique business or leisure charter needs with the world’s largest private fleet of Dash 8 and CRJ series aircraft at our disposal. Maintenance facilities in strategic centres around the globe. The ultimate in personal service. R1 introduces you to charter aviation services that are – quite simply – boundless.

Read the full article for Canadian Aviator: CLICK HERE

 

Shandong Airlines plans to finalize an order for 50 Boeing 737 aircraft

Shandong Airlines (Jinan, Shandong Province, China) has announced its intention to order 50 Boeing 737 aircraft including 16 Next-Generation 737s and 34 737 MAXs for delivery between 2016 and 2020. The order has not yet been finalized.

Boeing issued this short statement:

Shandong Airlines’ commitment to order 50 Boeing 737s, including 16 Next-Generation 737s and 34 737 MAXs. The airline plans to expand its capacity to meet growing demand in China and Northeast Asia, one of the most dynamic markets for commercial airplanes.

Copyright Photo: Joe G. Walker/AirlinersGallery.com. Shandong is already a large Boeing 737 operator with three Boeing 737-300s (which are being retired), three 737-700s and 58 of the pictured 737-800. Boeing 737-85N B-5785 (msn 39113) in the special DEEJ taxies at Seattle’s Boeing Field (BFI).

Shandong Airlines: AG Slide Show

 

Hawaiian Holdings reduces its first quarter net loss to $5.1 million

Hawaiian Holdings, Inc. (Honolulu), parent company of Hawaiian Airlines, Inc. (Honolulu), today reported its financial results for the first quarter of 2014.
Operating income grew to $10.0 million in the first quarter compared to an operating loss of $11.9 million in the prior year period.

GAAP net loss in the first quarter of $5.1 million or $(0.10) per diluted share compared to a loss of $17.1 million in the prior year period or $(0.33) per diluted share.

Adjusted net loss, reflecting economic fuel expense, in the first quarter of $0.9 million or $(0.02) per diluted share compared to $14.8 million in the prior year period or $(0.29) per diluted share.

Unrestricted cash, cash equivalents and short-term investments of $479 million compared to $438 million in the prior year period.

Liquidity and Capital Resources

As of March 31, 2014 the Company had:

Unrestricted cash, cash equivalents and short-term investments of $479 million.

Available borrowing capacity of $69.5 million under Hawaiian’s Revolving Credit Facility.

Outstanding debt and capital lease obligations of approximately $940 million consisting of the following:

$570 million outstanding under secured loan agreements to finance a portion of the purchase price for nine Airbus A330-200 aircraft.

$150 million outstanding under secured loan agreements to finance a portion of the purchase price for 15 Boeing 717-200 aircraft.

$108 million in capital lease obligations to finance the acquisition of an Airbus A330-200, two Boeing 717-200 aircraft and aircraft-related equipment.

$34 million outstanding under floating rate notes for two Boeing 767-300 ER aircraft (above).

$78 million of outstanding Convertible Senior Notes.

Copyright Photo: Jacques Guillem Collection/AirlinersGallery.com.

Hawaiian Airlines: AG Slide Show

 

JetBlue Airways’ pilots select ALPA to represent them

JetBlue Airways Corporation (New York) today issued the following statement from CEO Dave Barger responding to the unionization vote among JetBlue’s 2,529 pilots, in which a majority of JetBlue pilots who cast a vote elected ALPA as their representative.

The National Mediation Board will authorize ALPA as the representative body for JetBlue pilots, and then both JetBlue and ALPA will organize negotiating committees.

Read the analysis by Bloomberg Businessweek: CLICK HERE

Copyright Photo: Jay Selman/AirlinersGallery.com. Embraer ERJ 190-100 IGW N318JB (msn 19000364) prepares to land at Charlotte Douglas International Airport (CLT).

JetBlue Airways: AG Slide Show

Delta completes the installation of full flat-bed seats for its entire international wide body fleet

Delta Air Lines (Atlanta) has completed the installation of full flat-bed seats with direct-aisle access in BusinessElite across its entire international widebody fleet, making it the only U.S. carrier to offer full flat-bed seats and the convenience of direct-aisle access on all overseas flights.

The completed interior fleet modifications include all Delta Airbus A330-200/300, Boeing 767-300ER/400ER, 747-400 and 777-200ER/LR aircraft, which represents Delta’s largest interior fleet modification investment in more than a decade. With these modifications complete, Delta also is the only U.S. domestic carrier to offer personal, on-demand entertainment at every seat on all long-haul international flights.

The fleet modifications are Delta’s latest investment in improving the customer experience. Since 2010, Delta also has:

Launched international Wi-Fi service and completed the installation of Wi-Fi on all domestic, two-class mainline and regional jets, offering more than 400,000 customers per day access to the Internet above 10,000 feet on more than 870 aircraft.

Transformed the sleep experience in the air by offering Westin Heavenly In-Flight bedding for customers in the BusinessElite cabin.

Updated BusinessElite amenity kits with stylish cases from Tumi and skincare product brand Malin+Goetz.
Built a team of celebrity chefs and James Beard Award winners to offer customers great food and wine selections at 30,000 feet.

Introduced International Economy Sleep Kits and added new amenities for its Economy customers on transoceanic flights.

Beginning July 1, 2014, Delta also will operate three updated Boeing 757 aircraft with full flat-bed seats on the trans-continental route between New York’s John F. Kennedy International Airport and Los Angeles International Airport. These will be the first 757 aircraft in service to feature Delta’s previously announced upgrades including full flat-bed seats in BusinessElite on trans-con flights between New York-JFK and Los Angeles, San Francisco and Seattle. All trans-con flights on these routes will feature full flat-bed seats by summer 2015.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Beginning July 1, 2014, Delta also will operate three updated Boeing 757 aircraft with full flat-bed seats on the trans-continental route between New York’s John F. Kennedy International Airport and Los Angeles International Airport. Boeing 757-232 N699DL (msn 29970) departs the runway at Los Angeles International Airport (LAX).

Delta Air Lines: AG Slide Show

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