Monthly Archives: October 2012

Virgin Australia makes three bold moves

Virgin Australia Holdings Limited (Virgin Australia Airlines) (Brisbane) is making three bold moves. The company issued the following statement:

Virgin Australia Holdings Limited today announced three transactions designed to accelerate the growth of the business, diversify its earnings and increase competition in Australia.

The transactions include:

making a placement of shares to Singapore Airlines (Singapore), which will see Singapore Airlines owning a 10% interest in Virgin Australia Holdings;
entering a Share Purchase Agreement to acquire 60% of the existing shares in Tiger Airways Australia (Melbourne) from Tiger Airways; and
entering an in-principle agreement with Skywest Airlines (Perth) to acquire 100% of its business.

Virgin Australia Chief Executive Officer John Borghetti said: “The transactions announced today are in line with Virgin Australia’s strategy to become the airline of choice in all markets, in order to diversify our earnings and drive growth opportunities for the business.

“The acquisition of Tiger Australia and Skywest provides Virgin Australia with a strong presence in the budget, Fly-in Fly-Out (FIFO) and regional markets, enabling us to fast-track our expansion in these areas and become a stronger competitor”, Mr Borghetti said.

“These transactions will bring important benefits to Australia, driving growth in jobs, tourism and competition”, Mr Borghetti said.

If approved, following the completion of the transactions, the Virgin Australia Group will expand to 139 aircraft and over 9,000 employees .

Virgin Australia will keep the market updated regarding progress on these transactions.

Meanwhile partner Singapore Airlines (Singapore) has ordered 20 Airbus A350-900s and five A380s and will assign its 20 Boeing 787-9 Dreamliners to subsidiary Scoot (Singapore).

Top Copyright Photo: Lloyd Fox. If approved, Skywest Airlines (Perth) will become a 100% subsidiary of Virgin Australia. The regional carrier is already operating ATR 72-500s for Virgin Australia in their livery. The Skywest brand used for other Western Australia routes is now likely to disappear.

Virgin Australia:

Skywest Airlines:

Tiger Airways (Australia):

Bottom Copyright Photo: Micheil Keegan. Since Singapore Airlines and its Tiger Airways (Australia) subsidiary are now partners with Virgin Australia, it is unclear if Tiger Airways (Australia), a competitor of Virgin Australia, will continue to use the the Tiger Airways brand in Australia or operate now under the Virgin Australia name. Airbus A320-232 VH-VNO (msn 4053) climbs away from Sydney.

Blue Panorama Airlines enters into bankruptcy protection and reorganization

Blue Panorama Airlines (Rome-Fiumicino) has entered into the equivalent of Chapter 11 (bankruptcy protection and reorganization). On October 23, the company issued the following statement (translated from Italian):

BLUE PANORAMA AIRLINES TAKES ADVANTAGE OF NEW REGULATORY TOOLS CONTAINED IN THE “ORDER OF DEVELOPMENT” TO INCREASE ITS COMPETITIVENESS ‘

Blue Panorama Airlines S.p.A. announces that it has applied for admission to the composition procedure in continuity under the Development Decree, according to the U.S. model of highly effective better known as “Chapter 11”.
Blue Panorama has decided to use this tool accessible to even a few weeks to Italian companies to consolidate their financial and capital structure in order to deal in the best position possible to the challenges posed by the current economic environment in the field of aviation and leisure travel. This is to continue to play in this respect the leading role that for over 14 years, is recognized by its customers. The start of the procedure has been notified to ENAC, which provided for the issuance of temporary license pursuant to article 9 of the Regulation 1008/2008.

The objectives that arises Blue Panorama Airlines through this new route are to:

– Continue to offer passengers excellent service, safe and reliable;
– Improve the industrial and commercial efficiency;
– To ensure the normal operation of domestic and international flights;
– Continue to offer competitive air links for the benefit of users;
– Make Blue Panorama Airlines and Blu-express a new benchmark in the sector.

During the reorganization process, Blue Panorama Airlines will carry out normal operations, while maintaining the commitment of its management team and operational. In addition to the consolidation of traditional connections will also be triggered new international services of great interest both outgoing and incoming flows.

Blue Panorama Airlines and Blu-express continue to operate their respective flight schedules, honoring tickets and reservations as usual, and to continue the industrial partnerships with carriers, tour operators and travel agent partners.
The President and founder of the company, Franco Pecci, maintains and increases its commitment to the holding in the firm belief that customers, which have always been the company’s priority will continue to use the Blue Panorama flights and Blu-express for quality service competitive and constantly delivered by the carrier in all years.

Copyright Photo: Lucio Alfieri. The company operates under both the Blue Panorama Airlines and blu-express names and brands. Boeing 737-4K5 EI-CUN (msn 27074) carries both names at Bologna.

Blue Express Airlines:

Frameable Color Prints and Posters:

British Airways launches London Gatwick-Las Vegas flights

British Airways (London) today (October 29) began its second London-Las Vegas service, helping high rollers travel from London Gatwick to the Nevada city.

The three-times-a-week service will be operated by a three-class Boeing 777 offering three cabins: Club World (business class), World Traveller Plus (premium economy) and World Traveller.

Together with the Heathrow service, British Airways will operate 10 flights a week from Las Vegas.

Copyright Photo: Michael B. Ing. Boeing 777-336 ER G-STBF (msn 40543) completes its final approach into London (Heathrow).

British Airways:

Hurricane Sandy cancels over 7,000 flights in the Mid Atlantic region

Airline operations in the Mid Atlantic region of the United States, especially the New York and Philadelphia areas, are being severely impacted today due to the approaching Hurricane Sandy which is expected to make landfall today on the coast of New Jersey. Airlines are canceling thousands of flights due to the large wind field (please see the map above). The approaching storm is affecting operations all the way to the Great Lakes due to expected high winds, storm surge and heavy rain. Most airlines have canceled their entire operations in the affected areas and moved aircraft away from this large region. According to media reports, over 7,000 flights have been canceled.

Due to the nature of this slow-moving storm moving over a large area (see map below), airline operations in this large region could be impacted for a week. This storm will affect the bottom lines of many carriers in this region.

Read the full story from the Washington Post: CLICK HERE

Read the full story from the New York Times: CLICK HERE

Many of our readers are in this area, so please be safe.

Above: The expected winds in the area for today from The National Hurricane Center (NOAA).

Below: The hurricane forecast track from the The Hurricane Center (NOAA).

Lufthansa cancels its contract with Augsburg Airways, will launch Munich-Vancouver flights on May 16

Lufthansa (Frankfurt) has cancelled the regional feeder contract with the Augsburg Airways (Munich) effective on October 26, 2013.

The five Embraer ERJ 190-200s (ERJ 195s) assigned to Augsburg will be transferred to CityLine also on October 26, 2013.

The company was established in 1980 as Interot Airways. Revenue operations commenced in 1986. In 1996 the airline became Augsburg Airways. In 2003 Augsburg started operating as an Lufthansa Regional carrier. It was the last independent feeder operating for LH.

In other news, Lufthansa is expanding its long-haul services from its Munich hub and next year, for the first time, will offer a nonstop flight from Munich to Vancouver. From May 16, 2013, the new route to the largest city in British Columbia will be served daily with an Airbus A330. The service will complement Lufthansa’s daily flights from Frankfurt.

Read the full report about Augsburg from augsburger-allgemeine.de (in German) : CLICK HERE

Copyright Photo: Arnd Wolf. Augsburg Airways’ Embraer ERJ 190-200LR (ERJ 195) D-AEMD (msn 19000305) approaches the Munich hub for landing.

Lufthansa:

Finnair and Marimekko launch a design collaboration, the first “Marimekko A340” is launched

Finnair (Helsinki) and Finnish design house Marimekko are teaming up to enhance the air travel experience with a new design partnership. From spring 2013 all Finnair aircraft will feature a Marimekko for Finnair collection of textiles and tableware, featuring Marimekko’s classic patterns. The Marimekko for Finnair collection is specially designed to add a light and fresh visual and tactile dimension to the onboard experience, while lightening the airline’s carbon footprint as well.

Two of Finnair’s long-haul aircraft will also wear livery based on Marimekko designs. An Airbus A340-300 (A340-313X OH-LQD) featuring Maija Isola’s iconic Unikko floral print from 1964 is already operating between Helsinki and Finnair’s Asian destinations, and it will be followed by another aircraft in Marimekko livery in spring 2013. OH-LQD was unveiled on October 21 at Helsinki.

Marimekko is a Finnish textile and clothing design company renowned first and foremost for its original prints and colors. The company designs and manufactures high-quality household goods ranging from interior decoration textiles to tableware as well as clothing, bags, and other accessories. When Marimekko was founded in 1951, its unprecedented printed fabrics gave it a strong and unique identity. Marimekko products are sold in about 40 countries. In 2011, sales of the company’s brands were some EUR 170 million with net sales of EUR 77 million. At the end of the year, there were 90 Marimekko stores. The key markets are North America, Northern Europe and the Asia-Pacific region. The Group has about 500 employees. Marimekko’s shares are quoted on NASDAQ OMX Helsinki Ltd.

Video and Image: Finnair.

Finnair:

Nippon Cargo Airlines is coming to Dallas/Fort Worth

Nippon Cargo Airlines-NCA (Tokyo) has announced it will launch new freighter flights connecting Tokyo’s Narita International Airport and DFW International Airport, starting November 5. Nippon Cargo’s twice weekly flights will be the first direct freighter connections for the Dallas/Fort Worth area into Japan, and will bolster DFW cargo lift capacity to Asia while also providing a new connection to a strategically important destination.

Nippon Cargo Airlines will operate the route from Tokyo Narita to Chicago O’Hare, then to DFW Airport, Anchorage, Alaska, and then back to Narita. Nippon Cargo Airlines will fly 747-400 aircraft on the route, and the carrier ultimately plans to phase-in 747-8’s, the most fuel-efficient planes in the industry.

Copyright Photo: Michael B. Ing. Boeing 747-481F JA04KZ (msn 34283) in the special “NCA Green Freighter” scheme climbs majestically away from Anchorage International Airport.

NCA-Nippon Cargo Airlines:

United Continental Holdings reports third quarter net income of $520 million excluding special charges, only $6 million with the charges

United Continental Holdings, Inc. (United Airlines) (Chicago) reported third-quarter 2012 net income of $520 million, or $1.35 per diluted share, excluding $514 million of net special charges. Including special charges, UAL reported third-quarter 2012 net income of $6 million, or $0.02 per diluted share.

UAL third-quarter consolidated passenger revenue decreased 2.6 percent year-over-year. Third-quarter consolidated passenger revenue per available seat mile (PRASM) decreased 1.3 percent compared to the same period in 2011.
Consolidated unit costs (CASM) holding fuel rate and profit sharing constant and excluding special charges and third-party business expense increased 2.5 percent year-over-year on a consolidated capacity reduction of 1.4 percent. Third-quarter consolidated CASM increased 6.6 percent year-over-year.
UAL ended the third quarter with $7.2 billion in unrestricted liquidity.

Third-Quarter Revenue and Capacity

For the third quarter of 2012, total revenue was $9.9 billion, a decrease of 2.6 percent year-over-year. Third-quarter consolidated passenger revenue decreased 2.6 percent to $8.8 billion, compared to the same period in 2011.

Consolidated revenue passenger miles (RPMs) decreased 1.5 percent on a consolidated capacity (available seat miles) decrease of 1.4 percent year-over-year for the third quarter, resulting in a third-quarter consolidated load factor of 85.2 percent.

Consolidated yield for the third quarter of 2012 decreased 1.2 percent year-over-year. Third-quarter 2012 consolidated PRASM decreased 1.3 percent compared to the same period in 2011.

Mainline RPMs in the third quarter of 2012 decreased 1.9 percent on a mainline capacity decrease of 1.4 percent year-over-year, resulting in a third-quarter mainline load factor of 85.7 percent. Mainline yield for the third quarter of 2012 decreased 1.5 percent compared to the same period in 2011. Third-quarter 2012 mainline PRASM decreased 2.0 percent year-over-year.

Passenger revenue for the third quarter of 2012 and period-to-period comparisons of related statistics for UAL’s mainline and regional operations are as follows:

	3Q 2012 Passenger Revenue (millions)	Passenger Revenue vs. 3Q 2011	PRASM vs. 3Q 2011	Yield vs. 3Q 2011	Available Seat Miles vs. 3Q 2011

Domestic	$3,325	(5.8%)	(4.2%)	(2.6%)	(1.7%)

Atlantic	1,591	(8.0%)	(4.5%)	(3.7%)	(3.7%)
Pacific	1,450	11.0%	9.9%	7.2%	1.0%
Latin America	627	(6.8%)	(8.3%)	(9.4%)	1.6%
International	3,668	(1.1%)	0.0%	(0.7%)	(1.1%)

Mainline	6,993	(3.4%)	(2.0%)	(1.5%)	(1.4%)
Regional	1,781	0.5%	1.6%	(0.9%)	(1.1%)

Consolidated	$8,774	(2.6%)	(1.3%)	(1.2%)	(1.4%)

Year-over-year cargo and other revenue in the third quarter of 2012 decreased 2.3 percent, or $27 million, to $1.1 billion.

Third-Quarter Costs

Total operating expenses, including special charges, increased $473 million, or 5.1 percent, in the third quarter compared to the same period of 2011. Third-quarter 2012 operating expenses, excluding fuel, profit sharing, special charges and third-party business expense, increased $92 million, or 1.7 percent, year-over-year. Third-party business expense was $55 million in the third quarter.

Both consolidated and mainline CASM, excluding special charges and third-party business expense, increased 2.3 percent in the third quarter of 2012 compared to the same period of 2011. Third-quarter consolidated and mainline CASM, including special charges, increased 6.6 and 7.5 percent year-over-year, respectively.

In the third quarter, consolidated and mainline CASM, excluding special charges and third-party business expense and holding fuel rate and profit sharing constant, increased 2.5 percent and 2.0 percent, respectively, compared to the results for the same period of 2011.

Third-Quarter Liquidity and Return on Invested Capital

UAL ended the third quarter with $7.2 billion in unrestricted liquidity, including $500 million of undrawn commitments under a revolving credit facility. During the third quarter, the company had gross capital expenditures of $412 million. The company made debt and principal payments under capital lease of $487 million including $104 million of prepayments in the third quarter. The company’s return on invested capital for the 12 months ended Sept. 30, 2012, was 9.3 percent, below the company’s goal of a 10 percent return over the business cycle.

Third-Quarter 2012 Events

United recorded a U.S. Department of Transportation domestic on-time arrival rate of 72.4 percent and a system completion factor of 98.6 percent for the quarter. For international flights, United recorded an on-time arrival rate of 71.0 percent. The on-time arrival rates are based on flights arriving within 14 minutes of scheduled arrival time.
On Aug. 2, the company reached an agreement in principle for a joint collective bargaining agreement with the Air Line Pilots Association representing pilots from the company’s United and Continental subsidiaries. Flight attendants from the company’s Continental and Continental Micronesia subsidiaries ratified new labor agreements, and the company began the joint collective bargaining process with the Association of Flight Attendants, which represents all flight attendants. The company and the International Association of Machinists announced that they would engage in expedited joint collective bargaining agreement negotiations for fleet service employees, passenger service employees and certain other work groups. The company is also in the process of commencing joint negotiations with the International Brotherhood of Teamsters, which represents maintenance technicians.
United employees earned cash incentive payments totaling $5 million for exceeding 80 percent domestic on-time arrival performance for the month of September.
United took delivery of its first Boeing 787. United is the first North American carrier to take delivery of the 787, and the aircraft is the first of five new Dreamliners the airline expects to receive this year from its total order for 50 of the aircraft.
United announced routes for its Boeing 787 aircraft, in addition to the previously announced service from its Denver hub to Tokyo Narita, including service between its Houston hub and Lagos, Nigeria, and from its Los Angeles hub to Tokyo Narita and Shanghai. The airline will also operate Dreamliner service from its Houston hub to Amsterdam and London Heathrow on a temporary basis.
The company announced an order to purchase 150 narrowbody Boeing 737 aircraft, including 100 Boeing 737 MAX 9 aircraft and 50 Boeing 737-900ER aircraft for delivery between 2013 and 2022. These new aircraft will allow United to replace older, less-efficient aircraft to reduce fuel and operating costs, enhance the customer experience and maximize network opportunities.
During the quarter, United launched service from Newark to Istanbul. In addition, the carrier launched service from San Francisco to Raleigh-Durham, N.C., from Denver to Shreveport, La., and from Newark to Columbia, S.C. United also announced 12 new routes during the quarter, including flights from its San Francisco hub to Taipei, Taiwan, and Paris, as well as from Washington, D.C. to San Salvador, from Cleveland to Nashville and from Chicago to Monterrey, Mexico, Thunder Bay, Canada, and Nassau, Bahamas.
Emphasizing the importance of service and reliability, United awarded new Ford vehicles to 11 employees for their perfect attendance. Thousands of employees were eligible, and United selected the winners during a random drawing.
United now has 180 airplanes featuring DIRECTV®, offering customers more live television access than any other airline in the world.
United Economy Plus seating is now on 90 percent of United’s entire mainline fleet, and the company continues to install flat-bed seats in premium cabins on its international fleet. United now has 159 aircraft featuring flat-bed seats, more than any other U.S. carrier.
United launched its MileagePlus Digital Media Store, a first-of-its-kind in the airline industry, giving MileagePlus members the opportunity to use miles for music tracks, albums and movies.

United Airlines:

Republic to operate five Embraer ERJ 190s for Caesars

Republic Airways Holdings Inc. (Indianapolis) and Caesars Entertainment Corporation (Las Vegas) has signed a three-year contract under which Republic’s Republic Airlines (2nd) (Indianapolis) subsidiary will operate five Embraer ERJ 190 aircraft to provide more than 1,500 flights annually for Caesars’ customers throughout the United States.

Copyright Photo: Michael B. Ing. Republic Airlines’ (2nd) Embraer ERJ 190-100 IGW N173HQ (msn 19000206) arrives at Los Angeles.

Republic Airways/Republic Airlines:

JetBlue reports net income of $45 million in the third quarter

JetBlue Airways Corporation (JetBlue Airways) (New York) reported its results for the third quarter 2012:

Operating income for the quarter was $113 million, resulting in an 8.6% operating margin, compared to operating income of $108 million and a 9.0% operating margin in the third quarter of 2011.
Pre-tax income of $73 million in the third quarter. This compares to pre-tax income of $56 million in the third quarter of 2011.
Net income for the third quarter was $45 million, or $0.14 per diluted share. This compares to JetBlue’s third quarter 2011 net income of $35 million, or $0.11 per diluted share.

Operational Performance

JetBlue reported record operating revenues in the third quarter of $1.3 billion, an increase of 9.4% versus the same period last year. Revenue passenger miles for the third quarter increased 8.9% to 9.07 billion on a capacity increase of 8.6%, resulting in a third quarter load factor of 84.8%, an increase of 0.3 points year over year.

Yield per passenger mile in the third quarter was 13.15 cents, up 0.8% compared to the third quarter of 2011. Passenger revenue per available seat mile (PRASM) for the third quarter 2012 increased 1.1% year over year to 11.15 cents and operating revenue per available seat mile (RASM) increased 0.7% year over year to 12.21 cents.

Operating expenses for the quarter increased 9.8%, or $108 million, over the prior year period. JetBlue’s operating expense per available seat mile (CASM) for the third quarter increased 1.1% year-over-year to 11.16 cents.

Excluding fuel, CASM increased 3.7% to 6.67 cents, driven primarily by higher maintenance expense due to the aging of JetBlue’s fleet.

Fuel Expense and Hedging

JetBlue continued to hedge fuel to manage price volatility. Specifically, during the third quarter JetBlue hedged approximately 27% of its fuel consumption and additionally managed approximately 18% of its fuel consumption using fixed forward price agreements (FFPs), resulting in a realized fuel price of $3.17 per gallon, a 2% decrease over third quarter 2011 realized fuel price of $3.25. JetBlue’s fuel expense reflects approximately $2 million in gains on fuel hedges settling during the third quarter.

JetBlue has hedged approximately 27% of its fourth quarter projected fuel requirements using a combination of collars, crude call options, and jet fuel swaps. In addition, JetBlue has managed approximately 19% of its fourth quarter projected fuel consumption using FFPs. Based on the fuel curve as of October 19th, JetBlue expects an average price per gallon of fuel, including the impact of hedges, FFPs and fuel taxes, of $3.25 in the fourth quarter and $3.22 for the full year 2012.

Balance Sheet Update

JetBlue ended the third quarter with approximately $1.1 billion in unrestricted cash and short term investments. Since December 31, 2011, JetBlue has increased the number of unencumbered A320 aircraft to seven and decreased the total debt balance by approximately $213 million.

Fourth Quarter and Full Year Outlook

For the fourth quarter of 2012, CASM is expected to increase between 2.0% and 4.0% over the year-ago period. JetBlue expects roughly half of this year over year increase to be driven by maintenance expense. Excluding fuel, CASM in the fourth quarter is expected to increase between 2.0% and 4.0% year over year.

CASM for the full year is expected to increase between 1.5% and 3.5% over full year 2011. Excluding fuel, CASM in 2012 is expected to increase between 2.0% and 4.0% year over year.

Capacity is expected to increase between 5.0% and 7.0% in the fourth quarter and to increase between 7.0% and 9.0% for the full year.

On the aircraft side, Jetblue is scheduled to take delivery of four Airbus A320s and one Embraer ERJ 190 before the end of the year. All four A320s will be paid in cash as it is believed this is best for the ROIC (Return On Investment Commitment).

Copyright Photo: Stephen Tornblom. Airbus A320-232 N598JB (msn 2314) at the New York (JFK) hub presents a nice ramp portrait in the Barcode tail design.

JetBlue Airways: