Monthly Archives: February 2014

Alaska Airlines is again the official airline of the Iditarod Dog Race

Alaska Airlines (Seattle/Tacoma) will again serve as the official airline sponsor of the Iditarod Trail Sled Dog Race, marking the 36th year the carrier has supported the event.

As the official airline of the Iditarod, Alaska continues its tradition of presenting the Leonhard Seppala Humanitarian Award, which recognizes one musher for providing exemplary dog care and is considered the highest honor a competitor can receive. Voted on by trail veterinarians, the Leonhard Seppala award is named after one of Alaska’s most-celebrated mushers, whose 1925 sled-dog team traveled the longest distance to transport diphtheria serum to Nome.

As part of its sponsorship, Alaska Airlines also will help provide air transportation and dog-care supplies for 45 Iditarod veterinarians who come to Alaska from across the United States to care for the race dogs’ health and safety.

In addition, many Alaska Airlines employees contribute their time at the event. Among them are several pilots who lead the Iditarod Air Force, flying veterinarians, supplies and volunteers to remote checkpoints along the trail.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Boeing 737-490 N705AS (msn 29318) in the “Spirit of Alaska Statehood” special color scheme departs from Anchorage, Alaska.

Alaska Airlines: AG Slide Show

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Air Annobón to take delivery of its first BAe RJ85

Air Annobón (San Antonio de Pale, Annobón Island, Equatorial Guinea) is getting ready to take delivery of its first BAe (Avro) RJ85. The pictured RJ85 EI-RJS (msn E2365) was painted in Shannon and has repositioned back to Dublin pending delivery as 3C-MAA. The jetliner is named “Mebana”

Annobón Island (named after “ano bom”, Portuguese for “good year”), also known as Pagalu or Pigalu, is an island of the coast of Equatorial Guinea and is part of the Cameroon Line archipelago according to Wikipedia.

The remote airline was established in 2012 and currently wet leases two 99-seat BAe 146-300s (ZS-SBR and ZS-SOR) from Fair Aviation (Lanseria) in order to operate the daily Malabo-Bata route according to The African Aviation Tribune. According to this report the airline started operations on this route on January 25, 2013. The new addition is expected to replace this wet lease agreement.

Read the full report: CLICK HERE

Copyright Photo: Greenwing/AirlinersGallery.com. EI-RJS arrives at Dublin.

Air Annobón: AG Slide Show

QANTAS to cut 5,000 jobs and 50 aircraft, including 8 remaining A380s to be deferred, last 3 787s to be deferred, retirement of 747-400s to be expedited

QANTAS Airways (Sydney) has also issued its cost-reduction plan on the heels of its first half financial loss reported today (please see the separate financial report). The QANTAS Group issued this statement detailing the cuts:

QANTAS today announced detail of its $2 billion cost reduction program and capital expenditure review.

QANTAS will take action to permanently reduce costs in all parts of the QANTAS Group through to FY17, including fleet and network changes, productivity improvements, consolidation of business activities, new technology and procurement savings.  More than 50 aircraft will be deferred or sold and the Group’s workforce will be reduced by 5,000 full-time equivalent positions by FY17.

The QANTAS Group’s planned capital expenditure net of operating lease liability will be reduced to $800 million in both FY15 and FY16, a total reduction of $1 billion.

QANTAS has reached agreement on the return of its Brisbane Airport terminal lease, together with related assets, to the airport owner at a cash value of $112 million. The broader structural review of the QANTAS Group portfolio continues and no final decisions have been made on other assets.

Chief Executive Officer Alan Joyce said QANTAS would do everything in its control to overcome some of the toughest market conditions it had ever faced.

Market Conditions

“It’s clear that the market QANTAS operates in has changed, with structural economic shifts exacerbated by an uneven playing field in Australian aviation policy,” Mr Joyce said.

“This situation is reflected in the financial result QANTAS announces today, an Underlying PBT1 loss of $252 million for the half-year.  This is an unacceptable and unsustainable result.  Comprehensive action is needed in response.

“QANTAS’ competitors have increased capacity to Australia by 46 per cent since 2009, more than double the world average, at a time of record fuel costs and economic volatility.

“We have met these challenges head on.  Over the past four years, we have been carrying out the biggest transformation since QANTAS was privatized – cutting comparable unit costs1 by 19 per cent over four years, introducing new aircraft and technology on a large scale, modernizing work practices and revitalising service.  But this is not enough for the circumstances we now face.

“The Australian domestic market has been distorted by current Australian aviation policy, which allows Virgin Australia to be majority-owned by three foreign government-backed airlines – yet retain access to Australian bilateral flying rights.

“Late last year, these three foreign-airline shareholders invested more than $300 million in Virgin Australia at a time when, as Virgin Australia reported to the ASX on 6 February, it was losing money.  That capital injection has supported continued domestic capacity growth by Virgin Australia despite its growing losses.

“The Virgin Australia Group has increased capacity into the domestic market at more than twice the rate of the Qantas Group since July 2011.  As a result of these combined capacity increases, the total domestic profit pool has been shrunk from more than $700 million in FY12 to less than $100 million in 1H14.

“We have been clear with the Australian Government about the uneven playing field and the measures we believe could address it.  But our focus today is on the immediate steps that Qantas must take.”

Immediate Priorities

“We must take actions that are unprecedented in scope and depth to strengthen the core of the Qantas Group business.

“To reach $2 billion in cost cuts over three years, we have to work our assets harder, become more productive, retire older aircraft, and make sure that our fleet and network are the right size.  We must defer growth and cut back where we can, so that we can invest where we need to.

“We have already made tough decisions and nobody should doubt that there are more ahead.

“While the implementation and pace of delivery must change, the guiding principles of our strategy will not.  Safety remains our first priority and we are committed to being the airlines of choice for customers in all our markets.

“Our long-term goal remains the transformation of the Qantas Group for profitable, sustainable growth.

“Over the next three years, we aim to secure our strong Group domestic position and maximise Qantas International’s competitiveness.

“QANTAS Loyalty will continue to access new markets and revenue streams, building on its success to date.

“When it comes to Jetstar in Asia, we need to take the right decisions in accord with current market circumstances and our balance sheet.  In Singapore, growth has been suspended by the Jetstar Asia Board until such time as conditions improve.

“The over-arching focus in Asia continues to be profitably bedding down existing businesses and partnerships.  Jetstar has been a pioneer Australian brand across Asia and we continue to see major opportunities for it in the world’s fastest-growing aviation region.”

Commitment to Customers

“Despite the tough decisions we have to make, we will keep delivering outstanding service for our customers,” Mr Joyce said.

“Important customer investments will continue, such as the upgrade of our Airbus A330 fleet and the opening of new lounges in Hong Kong and Los Angeles, and the service that QANTAS passengers receive will not be compromised.   Thanks to the skill and commitment of our people, we have earned record customer advocacy, and we plan to keep it there.”

Accelerated Qantas Transformation Program

Fleet and Network

After a detailed review of network and schedules, the QANTAS Group will re-assign aircraft to better match demand, defer aircraft orders, dispose of aircraft, increase fleet utilization and exit under-performing routes.

    • QANTAS Domestic will increase utilisation of narrow-body aircraft, allowing Airbus A330 aircraft in the domestic market to concentrate solely on East-West services and peak services on the Sydney-Melbourne-Brisbane triangle.
    • A330-200s will be freed up to enter the QANTAS International fleet as replacement aircraft, helping to accelerate the retirement of older Boeing 747 aircraft.
    • All six of QANTAS International’s non-reconfigured Boeing 747s will be retired ahead of schedule, by the second half of FY16.  Nine reconfigured Boeing 747s with A380-standard interiors will remain.
    • QANTAS’ final two Boeing 737-400s have been retired this month and all Boeing 767s will be retired by the third quarter of FY15, resulting in cost and passenger benefits from fleet simplification.
    • QANTAS International’s eight remaining Airbus A380 orders will be deferred, with an ongoing review of delivery dates to meet potential future requirements.  Schedule changes will allow maximum use of QANTAS’ current 12 A380s.
    • The final three of 14 Jetstar Airways Boeing 787-8s on firm order will be deferred.
    • Jetstar’s A320 order book has been restructured.

In total, more than 50 aircraft will be deferred or sold.

By FY16, the Group’s passenger fleet will have been simplified from 11 aircraft types to seven aircraft types, with an average age of eight years.

Over the next 12 months, QANTAS will exit underperforming routes and make aircraft changes on certain routes to better match capacity to demand.

    • QANTAS International will withdraw from the Perth-Singapore route (first quarter FY15).
    • QANTAS’ Brisbane-Singapore and Sydney-Singapore services will be operated by Airbus A330s, replacing Boeing 747s (first quarter FY15)
    • QANTAS services between Melbourne and London will be re-timed in November 2014 to reduce A380 ground time in Heathrow (second quarter FY15).  There are no changes to overall capacity on London flights.
    • The Melbourne-London service change frees up an A380 for additional flying, and QANTAS will evaluate opportunities to use the aircraft on other routes.

Workforce Changes

Over the next three years, QANTAS will reduce employee numbers across the Group by the equivalent of 5,000 full-time positions, through measures including:

    • Reduction of management and non-operational roles by 1,500.
    • Operational positions affected by fleet and network changes.
    • Restructure of line maintenance operations.
    • The closure of Avalon maintenance base, as previously announced.
    • Restructure of catering facilities including the closure of Adelaide catering, as previously announced.

The wage freeze for executives implemented in December 2013 will continue and will be extended to all QANTAS Group employees.

The wage freeze will be:

    • Ongoing for executives.
    • Immediate for open EBAs.
    • Proposed for other EBA-covered staff.

This is in addition to the reduction of fees paid to the QANTAS board and a reduction in the take home pay of the QANTAS CEO by 36 per cent this financial year.

No pay rises or bonuses will be contemplated until QANTAS is profitable again on a full-year Underlying PBT basis.

Mr Joyce said these were hard but necessary decisions to protect as many QANTAS jobs as possible and build a strong business for the future.

“I regret the need for these wide-ranging job losses, but we will do everything we can to make the process easier for employees who leave the business,” Mr Joyce said.

“At the end of this transformation, QANTAS will remain an employer of more than 27,000 people, the vast majority based in Australia – and we will be a better and more competitive company.”

Capital Expenditure and Financial Position

The Group’s planned capital expenditure net of operating lease liability in FY14 will be $1 billion.

Planned capital investment, including movements in operating lease liabilities, will be $800 million per year in FY15 and FY16 – a total reduction of $1 billion over the two years.  QANTAS will maintain flexibility to make further changes if needed.

Transformation through FY17 will be funded through the reprioritisation of capital, future free cash flow as benefits from the cost reduction program begin to flow, and asset sales.  QANTAS continues to target positive free cash flow from FY15, with capital expenditure aligned to financial performance.

QANTAS has total liquidity of $3 billion, comprising $2.4 billion in cash and $630 million in standby debt facilities, as at 31 December 2013.

Update on Structural Review

QANTAS has reached agreement on the return of its Brisbane Airport terminal lease, together with related assets, to Brisbane Airport Corporation, with a cash value of $112 million to be recognised in the second half of FY14.

QANTAS continues to work through the broader structural review of the QANTAS Group portfolio launched in December 2013.

The review has identified a number of high-quality assets of significant value.

No final decisions have been made about other assets within the Group’s portfolio.

QANTAS will update the market as and when required.

Copyright Photo: Bernhard Ross/AirlinersGallery.com. The retirement of the on-converted Boeing 747-400s will be expedited. Boeing 747-48E VH-OEB (msn 25778) rests between flights at Frankfurt.

QANTAS Airways: AG Slide Show

Atlas Air and QANTAS extend their ACMI agreement

Atlas Air Worldwide Holdings, Inc. (New York) today said that its Atlas Air, Inc. unit (New York) and QANTAS Airways Ltd. (Sydney) have extended their long-standing ACMI (aircraft, crew, maintenance and insurance) relationship.

Under the terms of the agreement, Atlas Air will continue to operate two Boeing 747-400 freighters in ACMI service for QANTAS on trans-Pacific routes linking Australia and Asia with the United States.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Boeing 747-47UF N492MC (msn 29253) departs from Anchorage, Alaska after a cargo and fuel stop. The freighter also carries small QANTAS Airways sub-titles.

Atlas Air: AG Slide Show

Alitalia CEO: Etihad Airways will decide in 3-4 weeks whether to invest

Alitalia’s (2nd) (Rome) CEO Gabriele Del Torchio stated Etihad Airways (Abu Dhabi) is doing its due diligence (reviewing all of the data) which will take between three and fours week according to this report by Reuters. After its review, Etihad will then decide whether it will invest in the faltering flag carrier.

Alitalia is facing increased low-fare competition on its home turf and any rescue will face stiff opposition from other carriers and will need European Union approvals. Etihad, if it proceeds with an acquisition, is likely to ask for drastic cuts to personnel and costs (like Air France-KLM did).

Is there Alitalia 3 on the horizon?

Read the full report: CLICK HERE

Copyright Photo: Paul Bannwarth/AirlinersGallery.com. Embraer ERJ 170-200LR (ERJ 175) EI-RDO (msn 17000348) approaches the runway at Zurich.

Alitalia (2nd): AG Slide Show

QANTAS Group reports a first half loss, attacks ownership of Virgin Australia, tough decisions ahead to reduce costs

QANTAS Group (Sydney) (QANTAS Airways and Jetstar Airways) today issued its first half financial report:

QANTAS announced an Underlying PBT loss of A$252 million ($225.1 million USD) and a Statutory Loss After Tax of A$235 million ($209.9 million USD) for the six months ending on December 31, 2013.

The underlying result is in line with guidance and reflects fundamental changes in the Australian aviation market, with a significant deterioration in earnings during the half.

Chief Executive Officer Alan Joyce said the result was unacceptable and comprehensive action would be taken in response.

“We are facing some of the toughest conditions QANTAS has ever seen,” Mr Joyce said.

“Australia has been hit by a giant wave of international airline capacity, with a 46 per cent increase in competitor capacity since 2009 – more than double the global increase of 21 per cent over the same period.

“The Australian domestic market has been distorted by current Australian aviation policy, which allows Virgin Australia to be majority-owned by three foreign government-backed airlines and yet retain access to Australian bilateral flying rights.

“Late last year, these three foreign-airline shareholders invested more than $300 million in Virgin Australia at a time when, as Virgin Australia reported to the ASX on February 6, it was losing money. That capital injection has supported continued domestic capacity growth by Virgin Australia despite its growing losses.

“QANTAS has been undertaking its biggest ever transformation over the past four years, cutting comparable unit costs by 19 per cent over four years, but this is not enough for the circumstances we face now.

“With structural economic changes being exacerbated by the uneven playing field in domestic aviation, we must now take actions that are unprecedented in scope and depth.

“We will accelerate our QANTAS Transformation program to achieve $2 billion in cost reductions by FY17. Hard decisions will be necessary to overcome the challenges we face and build a stronger business.”

Summary of Results

QANTAS Domestic

QANTAS Domestic reported Underlying EBIT1 of A$57 million, down from A$218 million in 1H13.

Competitor capacity growth in the domestic market continued to outpace QANTAS Group capacity growth, as it has since FY12. At the same time, demand was lower than market growth, putting pressure on yields and passenger loads.

Overall, the total domestic profit pool has shrunk from more than $700 million in FY12 to less than $100 million in 1H14. During this period the Virgin Australia Group added 4.5 billion Available Seat Kilometers (ASKs), compared to 4.3 billion ASKs added by the QANTAS Group.

A softening resources market, corporate account pricing pressure, and fuel and foreign exchange impacts also affected the QANTAS Domestic result.

Despite the challenging market conditions, QANTAS Domestic continues to deliver outstanding service, earning record customer advocacy. It was the most punctual major domestic airline in 12 out of 12 months during 2013, while its ongoing fleet renewal program helped reduce unit costs and improve the customer experience.

QANTAS Domestic remains the airline of choice for business travellers, holding more than 80 per cent of the corporate market by revenue in the half.

QANTAS International

Qantas International reported an Underlying EBIT loss of A$262 million, compared with a loss of A$91 million in 1H13.

The trend of intense competitor capacity growth in the Australian international market continued in the half. Total international market capacity growth for FY14 is expected to be 9 per cent, well above the global average, resulting in particularly strong yield pressure for QANTAS’ Asian and European markets.

QANTAS International made continued progress in reducing comparable unit costs (by 4 per cent in the half) and maintained record customer advocacy.

However, the lower Australian dollar has meant higher fuel costs, with a significant impact on the long-haul sectors flown by QANTAS International.

Jetstar Airways

The Jetstar Group reported an Underlying EBIT loss of A$16 million, down from an Underlying EBIT profit of A$128 million in 1H13.

Competitive pressure on yields (especially in South East Asia), a A$29 million share of associate losses, and fuel price and foreign exchange impacts were the main factors behind the result. Jetstar’s domestic operations in Australia remained profitable.

The fundamentals of Jetstar’s low-cost carrier model remain strong, with a 2 per cent improvement in unit costs1 and increased ancillary revenue1 during the half, and customer advocacy is at record levels. The introduction of the Boeing 787-8 into Jetstar’s long-haul network is delivering cost and customer service benefits.

QANTAS Loyalty

QANTAS Loyalty reported Underlying EBIT of A$146 million, a record result , up from Underlying EBIT of A$137 million in 1H13. The business continues to perform very strongly, with billings up 9 per cent in the half, three million awards redeemed and record customer advocacy. There are currently 9.8 million QANTAS Frequent Flyer members , with a target of 10 million for the full year.

QANTAS Loyalty’s growth initiatives are exceeding expectations, with a positive customer response to both the new QANTAS Cash member card and the AQUIRE small-to-medium enterprise loyalty platform.

QANTAS Freight

QANTAS Freight reported Underlying EBIT of A$11 million, down from A$22 million in 1H13, in the context of reduced capacity, consolidation and a weak global cargo market.

 Financial Position and Capital Expenditure

QANTAS has strong liquidity of A$3 billion, comprising A$2.4 billion in cash and A$630 million in undrawn debt facilities, as at December 31, 2013. There are no major unsecured debt maturities until April 2015.

Approximately 30 per cent of the QANTAS Group’s passenger fleet is debt-free. The Group has added 31 new unencumbered aircraft since FY10, including seven added in the first half of FY14. Twenty mid-life aircraft become debt-free in FY14. The Group’s average passenger fleet age is 7.6 years, the youngest in two decades.

Capital expenditure in FY14 is weighted to the first half, with $900 million invested in the six months to December 31, 2013 and a further A$300 million planned for the second half.

Following the review launched in December, planned capital investment has been aligned with financial performance, with a total reduction of A$1 billion over FY15 and FY16. Capital expenditure in FY15 and FY16 will be A$800 million in each year, including movements in operating lease liabilities1, while the Group maintains flexibility to make further changes if needed.

Outlook

The Group’s 2H14 operating environment remains very challenging and volatile. Soft underlying domestic demand is continuing in the seasonally weaker half, with domestic and international yields and loads expected to remain depressed.

The Group’s current operating expectations are as follows:

• Group capacity to increase by 3-3.5 per cent in 2H14 compared to 2H13.

• Group domestic capacity to increase by 3-4 per cent in 2H14 compared to 2H13, while maintaining flexibility.

• Underlying fuel costs expected to be approximately A$4.6 billion in FY14.

No Group profit guidance can be provided at this time due to major transformation being undertaken by Qantas, the high degree of volatility and uncertainty in the competitive environment, global economic conditions, fuel prices and foreign exchange rates.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Airbus A380-842 VH-OQK (msn 063) with “The Modern Family Flyer” sub-titles arrives in Los Angeles.

In January 2014 QANTAS issued this announcement:

QANTAS has announced a partnership with Twentieth Century Fox Television and Twentieth Century Fox Consumer Products to bring the top rated American comedy series “Modern Family” to film in Australia.

QANTAS will fly the cast and crew from Los Angeles in February as the Pritchett-Dunphy-Tucker clan takes a vacation down under for an episode to be broadcast later this season. Filming in Australia is expected to take two weeks.

Lauded for revitalizing the television sitcom, “Modern Family” is one of the largest critical and commercial hits of the past decade.  The recipient of four consecutive Emmy Awards for Outstanding Comedy Series and a Golden Globe Award for Best Comedy Television Series, “Modern Family” is both Network Ten and the ABC Television Network’s top-rated comedy series.

The partnership between QANTAS and Twentieth Century Fox Television’s “Modern Family” and Twentieth Century Fox Consumer Products follows the airline’s support in 2013 for a visit by The Ellen DeGeneres Show, which provided a 22 per cent increase in inbound flights to New South Wales alone, as well as overall boost in destination awareness for Australia.

The entire “Modern Family” cast, including, Ed O’Neill (Jay), Julie Bowen (Claire), Ty Burrell (Phil), Sofía Vergara (Gloria), Jesse Tyler Ferguson (Mitchell), Eric Stonestreet (Cameron), Sarah Hyland (Haley), Nolan Gould (Luke), Ariel Winter (Alex), Rico Rodriguez (Manny) and Aubrey Anderson-Emmons (Lily) will join co-creator and executive producer Steven Levitan for the visit to Australia.

“Modern Family” producers will travel to Australia in advance of the shoot in January to scout and identify preferred filming locations and potential storylines.

The series is produced by Twentieth Century Fox Television in association with Picador Productions and Steven Levitan Prods. Steven Levitan and Christopher Lloyd are the creators/executive producers. Danny Zuker, Dan O’Shannon, Bill Wrubel, Paul Corrigan, Brad Walsh, Abraham Higginbotham, Jeffrey Richman and Jeff Morton also serve as executive producers.

QANTAS Airways: AG Slide Show

Jetstar Airways: AG Slide Show

Hawaiian to drop the Fukuoka, Japan route

Hawaiian Airlines (Honolulu) has announced it will suspend its daily service to Fukuoka this summer.  Hawaiian Airlines flight HA 453 will make its final trip from Honolulu to Fukuoka on June 29, 2014, and HA 454 will make its final return from Fukuoka to Honolulu on June 30, 2014.

Passengers with reservations to fly after June 30 will be re-accommodated. The airline’s reservations department will be contacting affected passengers in the next several weeks. The airline will continue to accept reservations for travel between Honolulu and Fukuoka prior to June 30, 2014.

The Fukuoka daily service was launched on April 16, 2012.  Hawaiian Airlines also provides daily service to Tokyo and Osaka, and thrice-weekly service to Sendai and Sapporo.

Fukuoka was the third destination in Japan, following Tokyo (November 2010) and Osaka (July 2011).

Copyright Photo: Ton Jochems/AirlinersGallery.com. Airbus A330-243 N382HA (msn 1171) taxies at Los Angeles.

Hawaiian Airlines: AG Slide Show