Tag Archives: Boeing 787

KLM to introduce the Boeing 787-9 on October 25

KLM logo

KLM Royal Dutch Airlines (Amsterdam) has updated its planned Boeing 787-9 Dreamliner routes according to Airline Route. The airline is now planning to introduce the new type on the Amsterdam – Abu Dhabi – Bahrain route on October 25. This will be followed by Amsterdam – Cairo on November 30, Amsterdam – Quito -Guayaquil on December 2, Amsterdam – Xiamen on December 3, Amsterdam – Fukuoka on February 28, 2016, Amsterdam – Rio de Janeiro on March 1, 2016 and finally Amsterdam – Chengdu on March 27, 2016.

Images: KLM.

KLM aircraft slide show: AG Airline Slide Show

KLM 787-9 (14)(Flt)(KLM)(LRW)

 

Etihad Airways fires back, claims U.S. carriers got $71.48 billion in U.S. government aid

Keep The Skies Open

Etihad Airways (Abu Dhabi), like Qatar Airways and Emirates, has rejected the argument of the “Big Three” U.S. airlines that they have an unfair advantage over the U.S. carriers due to alleged government subsidies. The airline has now issued this statement which strikes back at the argument with their own study alleging the U.S. airlines receive benefits from the U.S. government including the Chapter 11 process which allow them to shed large amounts of debt. Here is the report:

Etihad logo

Research commissioned by Etihad Airways, the national airline of the United Arab Emirates, has quantified a range of government and court-sanctioned benefits and concessions received by the three biggest US carriers, Delta Air Lines, United Airlines and American Airlines Group, and other airlines with which they have merged.

These US airlines have received benefits valued at US$71.48 billion, more than US$70 billion of which has been since 2000, enabling the nation’s three largest carriers to transition from the verge of bankruptcy to today’s industry leaders, each achieving multi-billion dollar profits.

Last year, the three big US carriers generated collective net profits of US$8.97 billion, equivalent to 45 per cent of the total US$19.9 billion profits achieved in 2014 by the global airline industry. The trend has continued into 2015, with all three major US airlines announcing strong net profits for the first quarter.

The international consultancy The Risk Advisory Group, which conducted the research for Etihad Airways, identified that the majority of benefits which accrued to Delta, United and American came from restructuring under Chapter 11 of the US Federal Bankruptcy Code, yielding them at least US$35.46 billion, and additional pension fund bailouts totalling US$29.4 billion from the US Government’s Pension Benefit Guaranty Corporation.

Etihad Airways has consistently denied claims by Delta Air Lines, United Airlines and American Airlines that it received subsidies, and has stated publicly that it has received equity and shareholder loans from its sole shareholder, the Government of Abu Dhabi, the largest emirate and capital of the UAE.

Releasing the findings by The Risk Advisory Group, the General Counsel and Company Secretary of Etihad Airways, Jim Callaghan, said today: “We do not question the legitimacy of benefits provided to US carriers by the US government and the bankruptcy courts.

“We simply wish to highlight the fact that US carriers have been benefitting and continue to benefit from a highly favorable legal regime, such as bankruptcy protection and pension guarantees, exemptions from certain taxes, and various other benefits. These benefits, which are generally only available to US carriers, have created a highly distorted market in which carriers such as Etihad Airways have to compete.”

Mr Callaghan said the figures produced by The Risk Advisory Group were conservative, quantifiable and credible, and obtained from public records and statements.

Mr Callaghan referred to a 2011 interview, published by America’s National Public Radio, in which a former Vice President of Continental Airlines, Pete Garcia, was quoted as saying: “Bankruptcy, for the airline industry in particular, is just a way to refinance the business. It is a financial move to keep you in business and give you time to renegotiate with your lenders.”

The Risk Advisory Group identified the largest beneficiaries of Chapter 11 restructuring and bailouts from the Pension Benefit Guaranty Corporation as:

United Airlines, with combined benefits estimated at US$44.4 billion;
Delta Air Lines with combined benefits estimated at US$15.02 billion; and
American Airlines with combined benefits estimated at US$12.05 billion.

Of these figures:

United achieved one-time bankruptcy debt relief totalling US$26 billion, and pension termination benefits totalling US$16.8 billion;
Delta Air Lines achieved bankruptcy debt relief totalling US$7.9 billion, and pension termination benefits totalling US$4.55 billion; and
American Airlines achieved bankruptcy debt relief totalling US$1.56 billion, and pension termination benefits of US$8.08 billion.

These figures include restructuring and bailout benefits achieved by other US airlines, since absorbed by Delta Air Lines, United Airlines and American Airlines.

Mr Callaghan said the current claims by United Airlines, Delta Air Lines and American Airlines that they were being harmed by Etihad Airways were baseless, and an attempt to obstruct higher-quality competition.

“There is no evidence whatsoever of any harm caused by Etihad Airways to any of the three big US airlines,” Mr Callaghan said.

“The US Open Skies policy has delivered more choice and better service for millions of consumers, more airline access to and from America, and record profits for the biggest airlines in the US. It is time to refocus on the real issue here – that the Open Skies policy is delivering the benefits it was designed to deliver, and that everyone is a winner.”

Read the analysis by Reuters: CLICK HERE

Copyright Photo: Andi Hiltl/AirlinersGallery.com. Etihad Airways, along with Qatar Airways and Emirates, are buying the latest and newest aircraft from both Airbus and Boeing. Etihad Airways’ Boeing 787-9 Dreamliner A6-BLA (msn 39646) departs from Zurich.

Etihad Airways aircraft slide:

TUI Group finalizes its order for one Boeing 787-9, converts two 787-8 orders to the larger 787-9

Boeing logo (medium)

Boeing (Chicago, Seattle and Charleston) and TUI Group, one of the world’s largest integrated leisure travel companies, have finalized an order for one 787-9 Dreamliner with an option for one further 787-9. The order is valued at $257 million at current list prices. TUI Group also announced that it will substitute two unfilled orders for 787-8s for two 787-9s.

TUI Group logo-1

The European leisure group will operate a fleet of 13 787-8s from this summer and with today’s announcement will add three 787-9s to its fleet within the next three years.

The 787-9 complements and extends the 787 family. With the fuselage stretched by 6 meters (20 feet) over the 787-8, the 787-9 will fly up to 40 more passengers an additional 830 kilometers (450 nautical miles) with the same exceptional environmental performance – 20 percent less fuel use and 20 percent fewer emissions than the airplanes they replace.

There are six airlines in the TUI Group operating 144 medium and long-haul aircraft, including the 787. The airlines are TUIfly, Thomson Airways, TUIfly Nordic, Jetairfly, Corsair International and ArkeFly (Arke), serving more than 180 destinations around the world. Throughout its history, Boeing has delivered more than 165 airplanes to TUI Group airlines. As well as the orders for 787s, TUI Group also has ordered 60 737 MAXs.

In addition to TUI Group’s selection of the efficient 787 Dreamliner and 737 MAX, TUI Group is a partner on the Boeing ecoDemonstrator 757, which is currently testing new technologies to reduce airplane carbon emissions and noise.

Videos: The Thomson Boeing 787-8.

Video: Flight review: Thomson Boeing 787-8 to Puerto Plata: This is a flight review of our Thomson Airways Boeing 787-8 Dreamliner flight to Puetro Plata (Gregorio Luperón International Airport) in the Dominican Republic in the Caribbean. We flew in economy class called “Dreamliner Class” on the Dreamliner. All footage of the journey is filmed from the economy class cabin. Our flight crew was mainly British with a Scandinavian stewardess on board too. Our Thomson Airways Dreamliner (Boeing 787-8) had registration number G-TUIA and was named “Living the Dream”. Our flight started at Copenhagen Airport in Denmark and the aircraft passengers where mainly Scandinavians (Swedish and Danish nationality). Our charter holiday trips where booked via Star Tour (name for TUI in Denmark) (Fritidsresor as TUI are called in Swedish) which is the same as TUI travel in the UK and Germany.

Copyright Photo below: Evert Keijzer Ironbird Photography/AirlinersGallery.com. Jetairfly (TUI Airlines Belgium) Boeing 787-8 Dreamliner OO-JDL (msn 34425) beautifully flies over the English Channel in the 2012 TUI livery.

Jetairfly aircraft slide show: AG Airline Slide Show

 

 

 

Air Canada reports a first quarter net profit of $122 million

Air Canada logo-1

Air Canada (Montreal) today (May 12) reported first quarter adjusted net income of $122 million (all amounts are in Canadian dollars) or $0.41 per diluted share compared to an adjusted net loss of $132 million or $0.46 per diluted share in the first quarter of 2014, an improvement of $254 million or $0.87 per diluted share. EBITDAR(1) (earnings before interest, taxes, depreciation, amortization and aircraft rent) amounted to $442 million compared to EBITDAR of $147 million in the same quarter in 2014, an increase of $295 million or 200 per cent year-over-year.

Here is the rest of the financial report:

 

On a GAAP basis, Air Canada reported operating income of $200 million in the first quarter of 2015 compared to an operating loss of $62 million in the first quarter of 2014, an improvement of $262 million. The airline recorded an operating margin of 6.2 per cent compared to a negative operating margin of 2.0 per cent in the first quarter of 2014, an improvement of 8.2 percentage points.

“I am delighted to report the best first quarter financial performance in Air Canada’s history,” said Calin Rovinescu, President and Chief Executive Officer. “Record results in adjusted net income, operating income, operating margin, EBITDAR, passenger revenues and passenger load factor for the quarter all underscore our team’s success in executing on our value-enhancing strategies. We have continued to see a strong demand environment, and in the first quarter our margins expanded dramatically, bolstered by strong cost control, with adjusted CASM declining 1.8 per cent despite the weaker Canadian dollar, and solid traffic growth particularly on leisure sun routes.

“While fuel prices remain volatile, in 2015 we expect to continue to expand margins, increase adjusted net income, strengthen our balance sheet and create value for shareholders. We also expect to set a new record for second quarter operating income this year; however year-over-year improvements will likely be modest when compared to the first quarter improvement. This is due to a particularly strong revenue performance in the second quarter of 2014 and higher projected maintenance expense, the absence of favourable tax-related provisions adjustments of $41 million recorded in the second quarter of 2014, as well as higher relative fuel prices in the second quarter versus the first quarter of 2015.

“I would like to thank Air Canada’s 27,000 employees for their hard work earning the loyalty of our customers as we continue to implement our commercial strategy focused on international growth with a renewed fleet and onboard product.”

First Quarter Income Statement Highlights

In the first quarter of 2015, on capacity growth of 9.3 per cent, system passenger revenues of $2.786 billion increased $178 million or 6.9 per cent from the first quarter of 2014. The increase in system passenger revenues was due to traffic growth of 10.9 per cent partly offset by a yield decline of 4.2 per cent. An increase in average stage length of 2.7 per cent versus the same quarter in 2014, reflecting international long-haul growth, had the effect of reducing system yield by 1.6 percentage points. On a stage length adjusted basis, system yield decreased 2.6 per cent year-over-year. Modest yield declines are an anticipated and natural consequence of the successful implementation of Air Canada’s strategy to profitably increase long-haul international and leisure flying.

Passenger revenue per available seat mile (PRASM) decreased 2.7 per cent from the first quarter of 2014 as the lower yield was partly offset by a passenger load factor improvement of 1.2 percentage points.

In the first quarter of 2015, operating expenses of $3.049 billion decreased $78 million or 2 per cent from the first quarter of 2014 on capacity growth of 9.3 per cent. The decline in operating expenses reflected the impact of lower jet fuel prices largely offset by the impact of the weaker Canadian dollar and capacity-related cost increases. The unfavourable impact of a weaker Canadian dollar on foreign currency denominated operating expenses (mainly U.S. dollars) in the first quarter of 2015, when compared to the first quarter of 2014, increased operating expenses by approximately $135 million. This currency impact was partly offset by a favourable currency impact of $38 million on passenger revenues and realized currency derivatives gains of $51 million.

Air Canada’s adjusted cost per available seat mile (adjusted CASM(1)), which excludes fuel expense, the cost of ground packages at Air Canada Vacations® and unusual items, decreased 1.8 per cent from the first quarter of 2014, better than the 0.5 to 1.5 per cent increase projected in Air Canada’s news release dated February 11, 2015. The better than expected adjusted CASM performance was largely due to:

Lower than anticipated aircraft maintenance expenses, primarily driven by the acceleration of aircraft lease extensions and certain favourable lease return condition provision adjustments, reducing maintenance expenses by $22 million in the first quarter of 2015;
The impact of the new Jazz CPA, effective January 1, 2015, whereby certain costs, such as ground handling services performed by Air Canada, are no longer recovered from Jazz and passed through to Air Canada under the Jazz CPA as capacity purchase fees, thereby reducing both other revenues and capacity purchase fees; and

Lower than expected employee benefits expense due to lower benefit payments and improved plan experience.

Financial and Capital Management Highlights

At March 31, 2015, unrestricted liquidity (cash, short-term investments and undrawn lines of credit) amounted to over $3.1 billion (March 31, 2014 – $2.5 billion). Air Canada’s principal objective in managing liquidity risk is to maintain a minimum unrestricted liquidity level of $1.7 billion.

At March 31, 2015, adjusted net debt(1) amounted to $5.19 billion, an increase of $58 million from December 31, 2014, as higher long-term debt and finance lease balances were largely offset by higher cash and short-term investments balances. The airline’s adjusted net debt to EBITDAR ratio was 2.6 at March 31, 2015 versus a ratio of 3.1 at December 31, 2014. Air Canada uses this ratio to manage its financial leverage risk and its objective is to maintain the ratio below 3.5.

In the first quarter of 2015, free cash flow(1) of $383 million was $349 million higher than in the first quarter of 2014, reflecting higher cash flows from operating activities partly offset by an increase in capital expenditures which included the acquisition of two Boeing 787-8 aircraft in the first quarter of 2015.

For the 12 months ended March 31, 2015, return on invested capital (ROIC(1)) was 15.2 per cent versus 10.9 per cent for the 12 months ended March 31, 2014. Air Canada’s goal is to maintain a sustainable ROIC of 10 to 13 per cent.

Further to Air Canada’s foreign exchange risk management practices (which are more fully described in Air Canada’s 2014 MD&A dated February 11, 2015), foreign denominated revenues essentially act as a natural hedge against U.S. dollar denominated non-fuel operating expenses. As such, net U.S. dollar operating expenses are largely attributable to the airline’s fuel purchases which are currently at a much lower cost in Canadian dollars despite the impact of a weaker Canadian dollar.

U.S. dollar currency derivatives and U.S. dollar cash reserves which, as at March 31, 2015, amounted to US$2.2 billion and US$711 million, respectively, are employed to offset approximately 65 per cent of the net U.S. dollar currency exposure over the next 18 months. The currency derivatives enable Air Canada to purchase U.S. dollars at a weighted average price of C$1.1784 (subject to various option pricing features, such as knock-out terms and profit cap limitations). These derivatives and U.S. dollar cash reserves would be available to mitigate certain cash flow exposure from the currency movements over the next 18 months; however the benefit of these hedging activities is recorded as a foreign exchange gain and not within operating income.

Current Outlook

Capacity

Air Canada expects second quarter 2015 system ASM capacity, as measured by available seat miles (ASMs), to increase 8.75 to 9.75 per cent when compared to the second quarter of 2014, and to be comprised of an increase in the total number of seats dispatched (system) of 5.5 to 6.5 per cent and an increase in system average stage length (measured by ASMs divided by seats dispatched) of approximately 3.0 per cent when compared to the same quarter in 2014.

Air Canada continues to expect its full year 2015 system ASM capacity to increase by 9.0 to 10.0 per cent. For the full year 2015, Air Canada continues to expect an increase in the total number of seats dispatched (system) of 6.0 to 7.0 per cent and an increase in average stage length (system) of approximately 3.0 per cent when compared to the full year 2014. Approximately 55 per cent of the 2015 forecasted capacity increase will be through the continued lower-cost growth of Air Canada rouge® while approximately 38 per cent of the capacity growth will be targeted to international markets operated by the mainline carrier.

Air Canada continues to expect its full year 2015 domestic ASM capacity to increase 3.5 to 4.5 per cent when compared to 2014, with a large part of the growth focused on the airline’s transcontinental services. The increase on transcontinental services is partly driven by the positioning of certain Boeing 777 and 787 aircraft at Air Canada’s major hubs in Toronto and Vancouver. Furthermore, in 2015, an overlap of the aircraft brought into the fleet to replace the exiting Embraer 190 aircraft is expected to account for approximately 30 per cent of the projected domestic capacity growth in 2015. This overlap is designed to better match capacity with expected 2015 summer season demand. For the full year 2015, Air Canada continues to expect an increase in the total number of seats dispatched (domestic) of 2.5 to 3.5 per cent and an increase in average stage length (domestic) of approximately 1.0 per cent when compared to the full year 2014.

Adjusted CASM

For the second quarter of 2015, Air Canada expects adjusted CASM (which excludes fuel expense, the cost of ground packages at Air Canada Vacations and unusual items) to increase 0.25 to 1.25 per cent when compared to the second quarter of 2014.

For the full year 2015, Air Canada now expects adjusted CASM to decrease 1.5 to 2.5 per cent from the full year 2014 (as opposed to the decrease of 0.75 to 1.75 per cent projected in Air Canada’s February 11, 2015 news release). This improvement is largely driven by the impact of the new Jazz CPA, effective January 1, 2015, whereby certain costs, such as ground handling services performed by Air Canada, are no longer recovered from Jazz and passed through to Air Canada under the Jazz CPA.

Major Assumptions

Air Canada’s outlook assumes annual Canadian GDP growth of 1.75 to 2.25 per cent for 2015. Air Canada also expects that the Canadian dollar will trade, on average, at C$1.22 per U.S. dollar in the second quarter of 2015 and for the full year 2015 and that the price of jet fuel will average 69 cents per litre for the second quarter of 2015 and 70 cents per litre for the full year 2015.

(1) Non-GAAP Measures

Below is a description of certain non-GAAP measures used by Air Canada to provide additional information on its financial and operating performance. Such measures are not recognized measures for financial statement presentation under Canadian GAAP and do not have standardized meanings and may not be comparable to similar measures presented by other public companies. Refer to Air Canada’s First Quarter 2015 MD&A for reconciliation of non-GAAP financial measures.

Adjusted net income (loss) and adjusted net income (loss) per diluted share are used by Air Canada to assess its performance without the effects of foreign exchange, net financing expense on employee benefits, mark-to-market adjustments on fuel and other derivatives and unusual items.

EBITDAR is commonly used in the airline industry and is used by Air Canada to assess earnings before interest, taxes, depreciation, amortization, impairment and aircraft rent as these costs can vary significantly among airlines due to differences in the way airlines finance their aircraft and other assets.

Adjusted CASM is used by Air Canada to assess the operating performance of its ongoing airline business without the effects of fuel expense, the cost of ground packages at Air Canada Vacations and unusual items, as such expenses may distort the analysis of certain business trends and render comparative analysis to other airlines less meaningful.

Adjusted net debt is a key component of the capital managed by Air Canada and provides a measure of the airline’s net indebtedness. Adjusted net debt is calculated as the sum of total long-term debt and finance lease obligations and capitalized operating leases less cash and cash equivalents and short-term investments.

Free cash flow is used by Air Canada as an indicator of the financial strength and performance of its business because it shows how much cash is available for such purposes as repaying debt, meeting ongoing financial obligations and reinvesting in Air Canada.

Return on invested capital (ROIC) is used by Air Canada to assess the efficiency with which it allocates its capital to generate returns. Return is based on Adjusted net income (loss) (as referred to in the above paragraph), excluding interest expense and implicit interest on operating leases. Invested capital includes average year-over-year total assets, net of average year-over-year non-interest-bearing operating liabilities, and the value of capitalized operating leases (calculated by multiplying annualized aircraft rent by 7).

Copyright Photo below: SPA/AirlinersGallery.com. Air Canada acquired two Boeing 787-8 aircraft in the first quarter of 2015. C-GHPQ (msn 35257) departs from London (Heathrow).

Air Canada aircraft slide show: AG Airline Slide Show

Hainan Airlines to lease two Boeing 787-9 Dreamliners from ALC

ALC logo

Air Lease Corporation-ALC (Los Angeles) announced long term lease agreements with Hainan Airlines (Haikou and Beijing) for two new Boeing 787-9 aircraft, both from ALC’s order book with Boeing. ALC has ordered 46 new Boeing 787-9 and 787-10 aircraft in total for deliveries beginning in spring 2016.

Hainan logo

“We are pleased to announce that the first of these two new Boeing 787-9s leased to Hainan Airlines will be ALC’s very first Boeing 787-9 delivery. As the longest-range wide-body aircraft in Hainan’s fleet, these 787-9s will offer additional range and capacity capabilities beyond the airline’s Boeing 787-8 aircraft already in operation. This placement marks our third and fourth aircraft placed on long term lease with Hainan, following two 737-800s in 2010. We look forward to the continued growth of our relationship with this world-class airline,” said Jie Chen, ALC’s Executive Vice President and Managing Director, Asia.

Copyright Photo below: TMK Photography/AirlinersGallery.com. The new and larger Boeing 787-9 Dreamliners will compliment the existing smaller 787-8 Dreamliners. Boeing 787-8 B-2750 (msn 34942) departs from Toronto (Pearson).

Hainan Airlines aircraft slide show: AG Airline Slide Show

United to drop service to Stockholm and Oslo this winter from Newark

United logo-1

United Airlines (Chicago) plans to suspend winter service to Stockholm (Arlanda) and Oslo from its Newark hub between September 5, 2015 and May 4, 2016 according to a report by Reuters quoting a statement by the carrier.

United also expects to suspend one of its two daily flights between Newark and Paris from October 25 through March 26, 2016.

The carrier is reacting to weaker demand this coming winter season due to the strong U.S. dollar.

In other news, with additional Boeing 787-9 Dreamliner (below) deliveries, United will start to assign the new type to the Houston (Bush Intercontinental) hub on its routes to Latin America and Europe, replacing older Boeing 767-300 ERs.

Copyright Photo below: Michael B. Ing/AirlinersGallery.com. Boeing 787-9 Dreamliner N38950 (msn 36401) climbs away from Los Angeles International Airport.

United Airlines aircraft slide show: AG Airline Slide Show

AG Watch us grow

 

ANA introduces the Boeing 787-9 on its first international route

ANA Inspiration of Japan logo

ANA (All Nippon Airways) (Tokyo) on May 5 inaugurated its first long-haul configured Boeing 787-9 on the Tokyo (Haneda) – Munich route. Flight NH 217 was operated by JA836A, ANA’s third delivery of the stretched Dreamliner according to our partner ZipanguFlyer. Jakarta will be added in May.

Read the full report from ZipanguFlyer: CLICK HERE

Copyright Photo below: Steve Bailey/AirlinersGallery.com. Boeing 787-9 Dreamliner JA833A (msn 34524) lands at Paine Field.

ANA aircraft slide show: AG Airline Slide Show