Allegiant acquires three former Hamburg Airways Airbus A320s

Allegiant Travel Company (Allegiant Air) (Las Vegas) has announced that it has purchased three additional Airbus A320 aircraft. The aircraft were most recently operated by Hamburg Airways in Europe and are scheduled to enter the Allegiant operating fleet in 2015.

Specially the three aircraft are N227NV (msn 714, ex D-AHHH, N228NV (msn 716, ex D-AHHD) and N229NV (msn 730, ex D-AHHG).

On the financial side, the company reported first quarter net income of $64.9 million, up 89.8 percent from the same quarter a year ago.

The CEO commented on the results:

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“We are very proud to report our 49th consecutive profitable quarter, a record quarter for the company, both in absolute terms and on a percentage basis,” stated Maurice J. Gallagher, Jr., Chairman and CEO of Allegiant Travel Company. “I especially want to thank our team members for their contributions. Their everyday efforts delivering customers safely and reliably is critical to our continued success. It’s nice to start the year off with such strong results after coming off one of the most operationally challenging years in recent memory.

“I’m also pleased to announce our pilots will be receiving a pay increase as a result of our continued success. Excluding a $43.3 million non-cash impairment change in the fourth quarter of 2014, our trailing twelve month operating margin was 21.8 percent as of March 31st. As part of our pilots’ variable pay band structure, pilot pay scales will increase between 5 and 7 percent per hour effective May 1st.

Finally CEO Gallagher commented on the on-going dispute with its pilots and additional focus by the FAA:

“And lastly we have had recent labor/legal issues with the representative of our pilots, the IBT. We expect a successful outcome on our Preliminary Injunction request before the Las Vegas Federal court in the coming weeks. In conjunction with these labor activities, our local FAA office has stepped up surveillance of our operations. We are not aware of any findings from the FAA related to this increased surveillance. However, the FAA has indicated their heightened focus and surveillance associated with the labor activity will continue until the outcome of the litigation is known. While this increased surveillance is in place, the FAA has indicated it will not process any current or additional requests for work that may relate to our planned growth. At the current time, we do not expect any immediate effect on our operations.”

Copyright Photo: Bruce Drum/AirlinersGallery.com. Airbus A320-214 N218NV (msn 1229) in the special “Make-A-Wish” livery arrives at Sanford (near Orlando).

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easyJet celebrates the delivery of its 250th Airbus aircraft

EasyJet (UK) A320-200 D-AVVL (G-EZOL)(15-250 Airbus)(Tko) XFW (Airbus)(LRW)

EasyJet (UK) (stylized as easyJet)  (London-Luton) and Airbus celebrated their successful partnership yesterday (April 22) at a ceremony in Hamburg (Finkenwerder) to mark the delivery the airline’s 250th Airbus A320 family aircraft. Carolyn McCall, easyJet CEO, Jean-Paul Ebanga, CFM International President and CEO, Didier Evrard, Airbus EVP and Head of Programs, and Christopher Buckley, Airbus EVP Europe, Africa and Asia-Pacific were present at the event.

To celebrate the 250th delivery, easyJet unveiled its newest A320 with a unique livery featuring 250 miniature aircraft (below). As with other recent deliveries to easyJet, the A320 is equipped with the latest technology and fuel-saving Sharklets.

EasyJet (UK) A320-200 D-AVVL (G-EZOL)(15-250 Airbus)(Tail) XFW (Airbus)(LRW)

The airline flies 234 aircraft on more than 750 routes to over 130 airports across 33 countries.
easyJet operates Europe’s largest and the world’s fourth largest Airbus single aisle fleet. Since easyJet took delivery of its first Airbus aircraft (an A319) in September 2003, Airbus has delivered an aircraft on average every 16 days since the first delivery

EasyJet has 158 aircraft currently on order, and in terms of total aircraft orders is Airbus’ third biggest airline customer. Currently easyJet fly a fleet of 85 A320s (180 seats) and 149 A319s (156 seats).

Photos: Airbus. The pictured Airbus A320-214 D-AVVL (msn 6572) with the special emblems became G-EZOL on the handover on April 22.

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United Airlines reports record first quarter net income of $508 million, announces its fleet plans including 10 Boeing 777-300 ERs

United Airlines (UAL) (United Continental Holdings, Inc.) (Chicago) today reported first-quarter 2015 net income of $582 million, or $1.52 per diluted share, excluding $74 million of special items. Including special items, UAL reported first-quarter net income of $508 million, or $1.32 per diluted share. These results are a record first-quarter profit for the company.

UAL earned a 17.1 percent return on invested capital for the 12 months ended March 31, 2015.
UAL’s consolidated passenger revenue per available seat mile (PRASM) increased 0.4 percent for first-quarter 2015 compared to first-quarter 2014.

First-quarter 2015 consolidated unit costs (CASM), excluding special charges, third-party business expenses, fuel and profit sharing, decreased 1.5 percent year-over-year on a consolidated capacity increase of 0.1 percent. First-quarter 2015 CASM, including those items, decreased 13.1 percent year-over-year.

In the quarter, UAL returned approximately $200 million to shareholders as part of its previously announced $1 billion share buyback program.

In the quarter, UAL prepaid approximately $120 million of debt and announced its intention, in the second quarter, to prepay $601 million of its 6 percent notes due 2026 and 2028.

“This quarter we reported a profit of nearly $600 million, excluding special items, a $1 billion improvement compared to the first quarter of 2014, and I’d like to thank the United team for all their great work,” said Jeff Smisek, UAL’s chairman, president and chief executive officer. “We continued to improve our operational reliability and deliver products that enhance our customers’ experience, including new aircraft, improved food, new inflight entertainment options and modern facilities. We are making significant progress on our long-term plan to reduce costs, improve our margins and grow our earnings, and expect our second quarter pre-tax margin to be between 12 and 14 percent, excluding special items.”

First-Quarter Revenue and Capacity

For the first quarter of 2015, total revenue was $8.6 billion, a decrease of 1.0 percent year-over-year. First-quarter consolidated passenger revenue increased 0.5 percent to $7.4 billion, compared to the same period in 2014. Ancillary revenue per passenger in the first quarter increased 8.6 percent year-over-year to more than $23 per passenger. First-quarter cargo revenue grew 15.8 percent year-over-year to $242 million. Other revenue in the first quarter decreased 14.2 percent year-over-year, mostly due to the reduction in sales of fuel to a third party. The corresponding expense decline from this reduction appears in third-party business expense.

Consolidated revenue passenger miles increased 0.1 percent and consolidated available seat miles increased 0.1 percent year-over-year for the first quarter, resulting in a first-quarter consolidated load factor of 81.1 percent.

First-quarter 2015 consolidated PRASM increased 0.4 percent and consolidated yield increased 0.4 percent compared to the first quarter of 2014.

“This quarter our PRASM performance reflected good progress on our revenue initiatives,” said Jim Compton, UAL’s vice chairman and chief revenue officer. “We will continue to match capacity with demand while making the appropriate network, fleet and product decisions to enhance revenue and margin performance, while improving our customers’ experience.”

First-Quarter Costs

First-quarter consolidated CASM, excluding special charges, third-party business expense, fuel and profit sharing, decreased 1.5 percent compared to the first quarter of 2014. The improved cost performance was driven by the better-than-expected performance from the company’s Project Quality efficiency program and strong U.S. dollar. First-quarter consolidated CASM including those items decreased 13.1 percent.

First-quarter total operating expenses, excluding special charges, decreased $1.19 billion, or 13.2 percent, year-over-year. Including special charges, total operating expenses decreased $1.18 billion, or 13.0 percent, in the first quarter versus the same period in 2014.

First-Quarter Liquidity and Cash Flow

In the first quarter, UAL generated over $1 billion in free cash flow, and ended the quarter with $7.0 billion in unrestricted liquidity, including $1.35 billion of undrawn commitments under its revolving credit facility. During the first quarter, the company had gross capital expenditures of $794 million, excluding fully reimbursable projects. The company contributed approximately $180 million to its pension plans and made debt and capital lease principal payments of $320 million in the first quarter, including approximately $120 million of prepayments. UAL also announced its intention to prepay the remaining $303 million of 6 percent notes due 2026 on April 1, 2015 and to prepay $298 million of 6 percent notes due 2028 on May 1, 2015.

As part of UAL’s $1 billion share buyback program, the company spent approximately $200 million in share repurchases in the first quarter. Through the first quarter, UAL has returned a total of approximately $520 million to shareholders under the program.

For the 12 months ended March 31, 2015, the company’s return on invested capital was 17.1 percent.

For more information on UAL’s second-quarter 2015 guidance, please visit ir.united.com for the company’s investor update.

Fleet Updates

Today, UAL announced refinements to its fleet plan, which will allow the company to achieve longer-term network needs without increasing its outlook for capacity or gross capital expenditures over the next several years. These adjustments will accelerate the company’s network initiatives as it transitions flying into the mainline operation from the regional operation, increases average gauge and reduces reliance on 50-seat aircraft. As part of this effort, the company will:

Complete the removal of more than 130 50-seat aircraft from its schedule by the end of 2015. UAL will remove additional 50-seat aircraft in 2016 and beyond as aircraft come off lease.

Above Copyright Photo: Brian McDonough/AirlinersGallery.com. United is removing rapidly its smaller regional jets. Operated by ExpressJet Airlines, Embraer ERJ 145XR (EMB-145XR) N12166 (msn 145831) approaches the runway at Baltimore/Washington (BWI).

Exchange 10 787 orders with Boeing for 10 777-300 ERs for delivery beginning in 2016. The new 777-300 ER aircraft will provide attractive upgauge and range opportunities to the company at competitive economics.

Extend the life of 11 additional 767-300 ER aircraft. The company now plans to extend the life of all 21 767-300 ER through investments in winglets, reliability improvements and interior modifications, which will improve financial performance and make the aircraft more customer pleasing.

Above Copyright Photo: SPA/AirlinersGallery.com. United has made the decision to extend the operating life of all 21 Boeing 767-300 ER aircraft. United is also inserting some international Boeing 777-200 and 757-200 aircraft back into the domestic market.

Reconfigure and transition 10 777-200 aircraft currently used in international markets into the domestic network, and position a number of its trans-Atlantic 757-200 fleet into the domestic and Latin markets, with the extension of the 767-300 ER aircraft.

Acquire additional used narrowbody aircraft. The company is in final negotiations regarding the lease of 10 to 20 used narrowbody aircraft for delivery over the next few years. In addition, the company plans to continue to seek other opportunities to acquire used aircraft to meet its needs as market conditions allow.

These changes will not impact the company’s current 2015 capacity guidance, and are consistent with the company’s focus on capacity discipline, and will not alter the company’s current gross annual capital expenditure guidance of $2.7 billion to $2.9 billion over the next three to four years.

“These changes are part of our strategy to improve operational reliability, grow capacity with demand, and enable us to achieve our long-term goal to improve margins and return on invested capital,” said John Rainey, UAL’s executive vice president and chief financial officer. “Customers tell us they prefer larger aircraft, and these fleet modifications will provide more opportunity for our customers to travel on the type of aircraft they prefer.”

Top Copyright Photo: SPA/AirlinersGallery.com. United will exchange 10 Boeing 787 orders with Boeing for 10 777-300 ERs for delivery beginning in 2016. According to the carrier, “the new 777-300 ER aircraft will provide attractive upgauge and range opportunities to the company at competitive economics.” Boeing 787-8 Dreamliner N26910 (msn 34826) climbs away from London (Heathrow).

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Southwest Airlines reports a record first quarter profit

Southwest Airlines Company (Dallas) today reported its first quarter 2015 results:

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Record first quarter net income, excluding special items1, of $451 million, or $.66 per diluted share, compared with first quarter 2014 net income, excluding special items, of $126 million, or $.18 per diluted share. This represented a 266.7 percent increase from first quarter 2014 and exceeded the First Call consensus estimate of $.65 per diluted share.

Record first quarter net income of $453 million, or $.66 per diluted share, which included $2 million (net) of favorable special items, compared with first quarter 2014 net income of $152 million, or $.22 per diluted share, which included $26 million (net) of favorable special items.

Record first quarter operating income of $780 million. Excluding special items, record first quarter operating income of $770 million, resulting in an operating margin2 of 17.4 percent.

Strong free cash flow1 of $859 million used to return $381 million to Shareholders through dividends and share repurchases, and to repay $51 million in debt and capital lease obligations.

Return on invested capital, before taxes and excluding special items (ROIC)1, for the 12 months ended March 31, 2015, of 25.6 percent, compared with 14.2 percent for the 12 months ended March 31, 2014.

Gary C. Kelly, Chairman of the Board, President, and Chief Executive Officer, stated, “We are thrilled to report an exceptionally strong first quarter 2015 earnings performance. Our net income, excluding special items, of $451 million, or $.66 per diluted share, far surpasses any first quarter profit in our history and represents our eighth consecutive quarter of record profits. Our first quarter 2015 operating income, excluding special items, increased over 200 percent year-over-year to $770 million, resulting in a first quarter record 17.4 percent operating margin. Our ROIC for the 12 months ended March 31, 2015, was an outstanding 25.6 percent. These superb results earned our 47,000 hard-working and dedicated Employees a first quarter record $126 million profitsharing accrual, up 334.5 percent from first quarter 2014.

“Total operating revenues were a first quarter record $4.4 billion, driven by a 6.2 percent year-over-year increase in passenger revenues and double-digit year-over-year percentage growth in freight revenues. Customer demand was strong throughout first quarter 2015, resulting in a record first quarter load factor of 80.1 percent. As expected, first quarter 2015 passenger revenues grew in line with our available seat mile (ASM) growth of 6.0 percent, year-over-year. Considering the 4.1 percent increase in stage length and the 2.7 percent increase in seats per trip3 (gauge) from our fleet modernization, year-over-year, we are very pleased with our first quarter 2015 unit revenue performance. Strong revenue and booking trends have continued thus far in April. Second quarter 2015 year-over-year comparisons are more challenging, largely due to last year’s exceptional and above-trend performance. With the continuation of year-over-year increases in stage length and gauge, we currently expect our April 2015 passenger unit revenues to decline, year-over-year, approximately two percent.

“We are delighted also with our unit cost trends, which continue to benefit from increased stage length, increased gauge, lower maintenance costs, and substantially lower fuel prices. Our first quarter 2015 unit costs, excluding special items, declined 12.4 percent year-over-year. First quarter 2015 economic fuel costs were $2.00 per gallon, compared with $3.08 per gallon in first quarter 2014, resulting in over $450 million in economic fuel cost savings. Based on our existing fuel derivative contracts and market prices as of April 16, 2015, we estimate second quarter 2015 economic fuel costs per gallon will be comparable to first quarter 2015’s $2.00 per gallon.

“Setting fuel aside, the solid first quarter 2015 cost performance reflects our intense focus to control costs and maintain our competitive low-cost position. Excluding fuel and oil expense and special items, our first quarter 2015 unit costs were comparable to first quarter last year. Unit costs were down 3.6 percent, year-over-year, when also excluding first quarter 2015 profitsharing expense. Based on current cost trends, and excluding fuel and oil expense, special items, and profitsharing, we expect second quarter 2015 unit costs to decline in the one-to-two percent range, and full year 2015 unit costs to decline approximately two percent, both compared with the same year-ago periods.

“Our network optimization is producing strong financial results, and we are pleased with the performance of our markets under development. We continue to project roughly 700 aircraft by year-end, and an approximate seven percent year-over-year increase in ASMs versus 2014. The full year effect of 2015’s expansion is also estimated to increase 2016 ASMs approximately five percent, year-over-year, and we currently expect any further 2016 ASM year-over-year growth to be modest, with a focus on producing strong returns on our investments. Our incremental fleet growth in 2016 is currently expected to approximate two percent, compared with 2015.

“The Customer response to our new Dallas Love Field service, which represents the majority of 2015 year-over-year ASM growth, is very strong, and first quarter 2015 Dallas traffic has increased 145.5 percent from year-ago levels. In first quarter 2015, we acquired the rights to two additional gates, bringing our total gate occupancy to 18 at Dallas Love Field. By August 2015, we are scheduled to operate 180 weekday departures to 50 nonstop destinations, representing a more than 50 percent increase in flight activity since the lifting of the Wright Amendment restrictions4 in October 2014. We are very pleased to provide more competition, more travel options, and low fares for the Dallas market.

“Our international expansion also continued during first quarter 2015. On March 7, 2015, Costa Rica became our sixth international country served with daily nonstop service between Baltimore/Washington and San Jose, Costa Rica. We also launched international flying from Houston Hobby with seasonal Saturday service to Aruba5. We remain on track to add an additional six international destinations from Hobby later this year with the planned October completion of the international terminal. We look forward to beginning service to Puerto Vallarta, Mexico, in June 2015, and pending government approvals, Belize City, Belize, in October 2015.

“We are managing our invested capital aggressively and continue to provide healthy returns to our Shareholders. During first quarter 2015, we returned $381 million through the payment of $81 million in dividends and the repurchase of $300 million in common stock. And, we expect to complete the repurchase of the remaining $80 million under our existing $1 billion share repurchase authorization next month. Our balance sheet, liquidity, and cash flows remain strong, and we ended first quarter 2015 with $3.4 billion in cash and short-term investments, with a fully available unsecured revolving credit line of $1 billion.”

During first quarter 2015, the Company returned $381 million to its Shareholders through the payment of $81 million in dividends and the repurchase of $300 million in common stock, or 5.1 million shares, pursuant to an accelerated share repurchase (ASR) program executed during the quarter. This ASR program was completed in early April, and the Company then received an additional 1.8 million shares, bringing the total shares repurchased under the first quarter 2015 ASR program to 6.9 million. During first quarter 2015, the Company also received the remaining 1.1 million shares pursuant to the fourth quarter 2014 $200 million ASR program, bringing the total shares repurchased under that ASR program to 4.9 million. The Company intends to complete the repurchase of the remaining $80 million under its existing $1.0 billion share repurchase authorization in May 2015.

Boeing 737 Delivery Schedule:

Southwest 4.2015 737 Delivery Schedule

SWAPA logo

In other related news, the Southwest Airlines Pilots’ Association (SWAPA) announced it has joined the Partnership for Open and Fair Skies, a coalition of U.S. airlines and airline industry labor unions. These groups seek to level the playing field against heavily subsidized state-owned carriers from Qatar and the United Arab Emirates (UAE).

“These government-owned Gulf carriers are not playing by the rules their governments agreed to when they signed Open Skies agreements with the U.S.,” said SWAPA President Capt. Paul Jackson. “Qatar Airways, Etihad Airways, and Emirates Airline are being fueled by tens of billions of dollars in state subsidies and that not only puts U.S. airlines at a competitive disadvantage, but also jeopardizes jobs throughout the U.S. airline industry.”

In joining the Partnership for Open and Fair Skies, SWAPA has united with American Airlines, Delta Air Lines, United Airlines, and seven other labor organizations in asking the U.S. government to open consultations with Qatar and the UAE, as provided for within the Open Skies agreements. This step is needed to address the unfair state subsidies that are enabling Qatar, Etihad, and Emirates to rapidly expand their fleets and routes into the U.S. market. SWAPA also backed the Partnership’s call for the U.S. government to seek a freeze on any new passenger service by the Gulf carriers into the U.S. as the consultations go forward.

A 55-page white paper presented by the Partnership to the U.S. government earlier this year and released to the public in March documented $42 billion in state subsidies and other unfair benefits provided to Qatar, Etihad, and Emirates by their respective governments since 2004 alone. That massive state support is a clear violation of Open Skies policy.

“The evidence is too overwhelming and the airline industry is too important to our country for the U.S. government not to take action,” continued Jackson. “Southwest pilots are proud to stand with the other members of the Partnership in calling for a level playing field.”

Copyright Photo: Joe G. Walker/AirlinersGallery.com. Southwest continues to buy previously operated Boeing 737-700s on the open market. Formerly operated by WestJet as C-FWAD, the pictured Boeing 737-7CT is now operating as N566WN (msn 32753) for Southwest in full colors. N566WN arrives at Seattle-Tacoma International Airport.

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Alaska Air Group reports record first quarter results

Alaska Air Group, Inc., (Alaska Airlines and Horizon Air) (Seattle/Tacoma) today reported first quarter 2015 GAAP net income of $149 million, or $1.12 per diluted share, compared to $94 million, or $0.68 per diluted share in the first quarter of 2014. Excluding the impact of mark-to-market fuel hedge adjustments, the company reported record adjusted net income of $149 million, or $1.12 per diluted share, compared to adjusted net income of $89 million, or $0.64 per diluted share, in 2014.

“Our record first quarter results reflect lower fuel prices, but more importantly the tremendous loyalty of our customers in Seattle and across our system” said CEO Brad Tilden. “It is gratifying to see such strong growth and financial results given unprecedented competition. I want to thank our incredible employees who continue to rise to the challenge and deliver outstanding experiences to our customers.”

Financial Highlights:

Reported record first quarter net income, excluding special items, of $149 million – a 67% increase over the first quarter of 2014.

Reported adjusted earnings per share of $1.12 per diluted share, a 75% increase over the first quarter of 2014 and ahead of First Call analyst consensus estimate of $1.10 per share.

Earned net income for the first quarter under Generally Accepted Accounting Principles (GAAP) of $149 million or $1.12 per diluted share, compared to net income of $94 million, or $0.68 per diluted share in 2014.

Recorded $26 million of employee incentive pay in recognition of Air Group employees’ progress on meeting customer service, safety, operational and financial goals.

Increased fuel efficiency (as measured by seat-miles per gallon) by 2.5% compared to the first quarter of 2014, as part of our effort to be the airline leader in environmental stewardship.

Generated record adjusted pretax margin in the first quarter of 18.9% compared to 11.8% in 2014.

Generated 18.8% adjusted pretax margin for the trailing 12-month period ended March 31, 2015, compared to 13.6% for the same period in the prior year.

Achieved trailing 12-month after-tax return on invested capital of 20.1% compared to 14.8% in the 12-month period ended March 31, 2014.

Repurchased 1.6 million shares of common stock for $102 million in the first quarter of 2015, representing 1.2% of the total shares outstanding at the beginning of the year.

Paid a $0.20 per-share quarterly cash dividend on March 10, 2015, a 60% increase over the dividend declared in the first quarter of 2014.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Alaska Airlines’ Boeing 737-890 N535AS (msn 35200) with Split Scimitar Winglets climbs away from Los Angeles International Airport.

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Ethiopian Airlines extends its Hong Kong route to Tokyo Narita

Ethiopian Airlines (Addis Ababa), as planned, on April 21 extended the Addis Ababa – Hong Kong route to Tokyo (Narita) in association with Star Alliance partner ANA (Tokyo). The route is operated three days a week with its Boeing 787-8 Dreamliners.

Copyright Photo: AirlinersGallery.com. Boeing 787-8 ET-AOV (msn 34750) touches down in London (Heathrow).

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Flybe Finland to become Nordic Regional Airlines

Flybe (Nordic) ATR 72-500 OH-ATG (02)(Tko) HEL (Flybe.fi)(LRW)

Flybe Finland (Helsinki) will become Nordic Regional Airlines in May reflecting the recent change in ownership. The name change still requires approval by the Trade Register, which is expected to take place in early May.

Flybe.fi logo-1

According to the airline’s CEO Maunu Visuri, “The new name reflects our company’s core business, i.e. the regional flying. Our goal is to continue to be a high-quality and skilled Nordic airline to offer excellent service to their customers.”

A new look will be unveiled in the early summer and the transformation will be implemented in stages during 2015.

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All images by Flybe Finland.

Flybe (Nordic) ATR 72-500 (02)(Tail)(Fly.be)(LR)