Airbus brings the A350-900 to five U.S. cities including Oshkosh

Airbus (Toulouse) kicked off the U.S. leg of its tour of the Americas by arriving in Atlanta yesterday. The demo tour features a flight test version of the A350-900 XWB, which Airbus is showing off to investors and airlines in Atlanta, Newark, Chicago (O’Hare) and Milwaukee before the general public can experience the A350 XWB at EAA’s AirVenture air show in Oshkosh, Wisconsin.

While it is was in Atlanta, Delta Air Lines employees toured the aircraft, familiarizing themselves with its layout and features. For many of them it will be their first opportunity to get a closer look at what will become the newest member of its fleet in 2017, when Delta accepts the first delivery of its 25 A350 XWBs. Delta currently operates Airbus A319, A320 and A330 aircraft, with additional outstanding orders for each type.

The A350-900 that is in the U.S. this week is a flight test aircraft featuring a two-class cabin. It seats 42 in lie-flat, business-class seats, which are four abreast, and 210 economy-class seats. For passengers, the aircraft will provide new levels of comfort, with extra space in all classes. It features wider panoramic windows, larger overhead stowage compartments and the latest in-flight entertainment and connectivity.

Copyright Photo: Eurospot/AirlinersGallery.com. The pictured Airbus A350-941 F-WWCF (msn 002) in the Caron Fiber livery is the tour aircraft.

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Embraer reports a record order backlog

Embraer (Sao Jose dos Campos) has issued this update:

Embraer logo-1

In the end of the second quarter of 2015 (2Q15), Embraer’s  firm order backlog reached $22.9 billion (USD), the highest level in the Company’s history. At the end of the previous quarter, in March 2015, the firm order backlog totaled $20.4 billion.

During 2Q15, the Company delivered 27 jets to the commercial aviation market and 33 jets to the business aviation market, for a total of 60 aircraft – compared to 58 aircraft delivered the same period last year.

Embraer Orders Graph 1

The main highlights of the quarter were $2.6 billion in firm orders at current list prices, announced at the Paris International Air Show. This included seven E190 for China’s Colorful Guizhou Airlines, eight E175 for SkyWest Airlines, which will be operated for Alaska Airlines, ten E175 for United Express and 15 E190-E2 and ten E195-E2 for the lessor Aircastle – excluding options and purchase rights under the contracts.

In May, Embraer had already announced an order for 22 aircraft (20 E195 and two E190-E2) from Tianjin Airlines, making it the first Chinese airline to order the E-Jets E2. In the same period, another contract was announced with Azul Linhas Aereas Brasileiras SA for the firm order of 30 E195-E2 jets.

Embraer Orders Graph 2

Delta reports adjusted earnings of $1 billion in the second quarter, up 22%, expects capacity to decrease 3% in the 3Q

Delta Air Lines (Atlanta) today reported its best second quarter financial results in its history:

Delta Air Lines today reported financial results for the second quarter (June) 2015 quarter, including adjusted net income of $1.0 billion or $1.27 per diluted share, up 22% from the same quarter in 2014.

“Delta’s record results have allowed the company to invest in its employees through higher wage rates and profit sharing; improve the experience for our customers through new aircraft and innovative partnerships with global carriers; and uniquely deliver value for our shareholders by accelerating our capital returns while also paying down debt,” said Richard Anderson, Delta’s chief executive officer. “We have more work and opportunity ahead of us on all of these fronts as we continue to execute on our long-term plan.”

Anderson continued, “Our significant fuel savings in the September quarter should allow us to produce another record quarter with more than 30% EPS growth, a 19-21% operating margin and $1.9 billion of operating cash flow.”

Delta 2Q Graph

Revenue Environment

Delta’s operating revenue for the June quarter increased 1%, despite $160 million in foreign currency pressures which reduced unit revenues by approximately 2 points. Passenger unit revenues declined 4.6% on a 3.9% decline in yields.

Delta saw solid progress with several of its revenue initiatives, including Branded Fares, which increased passenger revenues by $56 million, and its enhanced agreement with American Express, which produced an incremental $60 million in revenue.

“Our commercial initiatives continue to gain traction in the marketplace and we will produce summer margins in excess of any achieved in our history,” said Ed Bastian, Delta’s president. “However, unit revenue growth is an important component of our long-term plan to expand margins. We continue to project flat system capacity growth for the fourth quarter of 2015 – a level in line with current demand expectations, which should put the business on the right trajectory to stem the erosion in unit revenues by the end of the year.”

Investment Strengthens Partnership and Expands Global Reach

Strengthening its existing partnership with Gol, Delta recently agreed to purchase up to $56 million in preferred shares as part of a larger rights offering by the Brazilian carrier. In addition to the equity, Delta will guarantee up to $300 million in borrowings by Gol under a term loan with third-party lenders. Delta’s guarantee will be secured by Gol’s interest in SMILES, Gol’s publicly-traded loyalty program. Delta and Gol have also agreed to extend their exclusive commercial agreement for flights between the United States and Brazil, the largest aviation market in Latin America. This transaction is subject to normal closing conditions, including regulatory approvals.

Cost Performance

Adjusted fuel expense2 declined over $463 million compared to the same period in 2014, as 39% lower market fuel prices and a $77 million increase in profit at the refinery offset nearly $600 million in settled hedge losses. For the remainder of 2015, Delta expects its fuel expense to be $1.90 – $2.00 per gallon, a significant reduction to the $2.65 per gallon it realized in the first six months of the year.

CASM-Ex3 decreased 0.8% for the June quarter on a year-over-year basis, with foreign exchange and the benefits of Delta’s domestic refleeting and other cost initiatives offsetting the company’s investments in its employees, products and operations. This marks the eighth consecutive quarter of CASM growth below 2%, in line with the company’s long-term goals.

Delta’s debt reduction initiative continued to improve the company’s interest expense, producing $46 million in interest savings for the quarter compared to the same period in 2014.

“Because of the momentum we’ve built with our cost reduction initiatives, we expect to post our ninth consecutive quarter of sub-2% unit cost growth in September,” said Paul Jacobson, Delta’s chief financial officer. “Cost efficiency has contributed to the record results that allowed us to return $1 billion to shareholders in the June quarter while investing in our employees and customer experience.”

Cash Flow, Shareholder Returns, and Adjusted Net Debt

Delta generated $2.5 billion of adjusted operating cash flow and $1.6 billion of free cash flow during the quarter. The company used this strong cash generation to reinvest nearly $1 billion back into the business, primarily for aircraft purchases. The company returned $1.0 billion to its owners through $72 million of dividends and $925 million of share repurchases, while also strengthening its balance sheet by reducing its adjusted net debt to $7.1 billion.

September 2015 Quarter Guidance

Following are Delta’s projections for the September 2015 quarter:

3Q15 Forecast

Unit Revenue (compared to 3Q14)

(4.5%) – (6.5%)

Operating margin

19% – 21%

Fuel price, including taxes, settled hedges and refinery impact

$1.90-$1.95

CASM – Ex (compared to 3Q14)

Flat

System capacity (compared to 3Q14)

~3%

Special Items

Special items, net of taxes, in the June 2015 quarter totaled $458 million, including:

$454 million for mark-to-market adjustments and settlements on fuel hedges;

a $16 million charge for fleet and other items, primarily associated with Delta’s domestic fleet restructuring initiative; and

$20 million for mark-to-market adjustments on hedges owned by Virgin Atlantic.
Special items, net of taxes, in the June 2014 quarter totaled $88 million, including:

a $69 million charge for debt extinguishment associated with Delta’s debt reduction initiative; and

a $20 million charge associated with Delta’s domestic fleet restructuring.

Top Copyright Photo: Fred Freketic/AirlinersGallery.com. Delta has been introducing the former AirTran Airways Boeing 717s around the country including the West Coast. Boeing 717-2BD N966AT (msn 55027) departs from the New York (JFK) hub. All 717s are leased from Southwest Airlines.

Delta Air Lines aircraft slide show (current livery):

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WestJet Encore to launch new Atlantic services today

WestJet Encore (Calgary) today (July 15) will launch new daily nonstop flights from Halifax Stanfield International Airport to Deer Lake and Gander, Newfoundland, and Sydney, Nova Scotia, on board its fleet of 78-seat Bombardier Q400 NextGen aircraft. The airline will also inaugurate new daily nonstop service between Moncton, New Brunswick, and Ottawa.

WestJet logo

WestJet Encore 7.2015 New Routes Schedule

Effective today, WestJet will also increase frequency between Halifax and St. John’s from twice to three times daily, and between Halifax and Ottawa from once to twice daily.

New WestJet routes launched in 2015 include Edmonton-Kamloops, Toronto-Fredericton, Toronto-Gander, Calgary-Terrace, Calgary-Yellowknife, Calgary-Loreto and Halifax-Glasgow. New daily non-stop service between Calgary and Houston begins September 8, 2015, while new twice-weekly service between Abbotsford and Las Vegas launches October 29, 2015.

Top Copyright Photo: Ton Jochems/AirlinersGallery.com. Bombardier DHC-8-402 (marketed as the Q400) C-FNEN (msn 4453) taxies at Calgary.

WestJet Encore aircraft slide show: AG Airline Slide Show

WestJet and WestJet Encore System Route Map (click map for the full view):

WestJet 7.2015 Route Map

Video: Celebrating Bombardier’s 500th Q400 Delivery:

Delta to lead off the 2Q airline sector earnings reports today

DELTA AIR LINES LOGO

Delta Air Lines (Atlanta) today leads off all U.S. airlines with the financial results for the second quarter. Lately the U.S. airline sector has been hit hard on Wall Street over growing concerns about overcapacity and “discipline”. Many investors will be keying on Delta’s announcement today.

Delta is webcasting its conference call and will be discussing its second quarter (“June Quarter”) results at 1000 (10 am) EDT with CEO Richard Anderson, President Ed Bastian and CFO Paul Jacobson.

To listen you must register: CLICK HERE

We will have the full 2Q financial details when they are released.

Other known airline and manufacturing reporting dates (others are welcome):

Boeing July 22

Alaska Air Group July 23

JetBlue Airways July 23

Southwest Airlines July 23

United Airlines July 23

Spirit Airlines July 24

American Airlines Group July 24

Ryanair July 27

UPS July 28

Hawaiian Airlines July 28

European Commission approves with concerns IAG’s proposed acquisition of Aer Lingus

The European Commission (Brussels) has issued this statement concerning the proposed acquisition of Aer Lingus (Dublin) by the International Airlines Group (IAG) (London):

European Commission logo

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of Irish airline Aer Lingus by International Consolidated Airlines Group (IAG).

IAG is the holding company of British Airways, Iberia and Vueling. The clearance is conditional upon commitments offered by the parties to address the Commission’s concerns regarding the transaction as notified.

The Commission had concerns that the merged entity would have faced insufficient competition on several routes.

The Commission also found that the merged entity would have prevented Aer Lingus from continuing to provide traffic to the long-haul flights of competing airlines on several routes.

European Commissioner in charge of competition policy Margrethe Vestager said: “By obtaining significant concessions from the airlines the Commission has ensured that air passengers will continue to have a choice of airlines at competitive prices after IAG’s takeover of Aer Lingus.

The five million passengers travelling each year from Dublin and Belfast to London will be able to choose among several strong carriers.

And we are also protecting passengers travelling on connecting flights between Ireland and the rest of the world.”

The clearance decision is conditional upon the following commitments, which address the Commission’s concerns:

The release of five daily slot pairs at London-Gatwick airport to facilitate the entry of competing airlines on routes from London to both Dublin and Belfast ; and Aer Lingus continuing to carry connecting passengers to use the long-haul flights of competing airlines out of London- Heathrow, London-Gatwick, Manchester, Amsterdam, Shannon and Dublin .

The Commission’s investigation

The Commission’s investigation found that the transaction, as initially notified, would have led to high market shares on the Dublin-London, Belfast-London and Dublin-Chicago routes. The merged entity would have faced insufficient competitive constraints from the remaining players which could ultimately lead to higher prices.

The Commission also analysed whether there was a risk that IAG would prevent passengers flying on Aer Lingus’ short-haul flights, from Dublin, Cork, Shannon, Knock and Belfast, from

connecting with long-haul flights operated by competing airlines out of other European airports, including Heathrow, Gatwick, Manchester, Dublin and Amsterdam.

IAG submitted commitments to release five daily slot pairs at London Gatwick which can be used on the specific routes of concern, namely Dublin-London and Belfast-London.

The availability of these slots, and other incentives such as the acquisition of grandfathering rights after a certain period of time, facilitate the entry of competing airlines.

Furthermore, IAG made a commitment to enter into agreements with competing airlines which operate long-haul flights out of London Heathrow, London Gatwick, Manchester, Amsterdam, Shannon and Dublin so that Aer Lingus will continue to provide these airlines with connecting passengers.

Passengers will therefore continue to have a choice to use other airlines than IAG when connecting at these airports, for instance on Heathrow-New York, Gatwick-Las Vegas, Manchester-Orlando, Amsterdam-Singapore, Shannon-Chicago, and Dublin-Chicago.

These commitments adequately address all competition concerns identified by the Commission.

The Commission therefore concluded that the proposed transaction would not significantly impede effective competition in the European Economic Area (EEA) or a substantial part of it. The transaction was notified to the Commission on 27 May, 2015.

Companies and products International Consolidated Airlines Group (“IAG” ) of the United Kingdom, is the holding company of British Airways, Iberia Líneas Aéreas de España S.A. and Vueling Airlines S.A.

Aer Lingus of Ireland is currently mainly owned by the Republic of Ireland and Ryanair, a competing carrier. Other significant shareholders include Etihad Airways.

Both IAG and Aer Lingus provide air transport for passengers, air transport for cargo, airport ground handling services and landside cargo handling services.

Merger control rules and procedures

The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.

The vast majority of mergers do not pose competition problems and are cleared after a routine review.

From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).

The commitments offered by the Parties will be made available as of 16 July under the case number

The International Airlines Group (IAG) issued this statement:

IAG logo

International Consolidated Airlines Group (IAG) welcomes the decision by the European Commission to approve its Offer for Aer Lingus.

IAG has offered the following remedies to the EC as part of the regulatory process:

  • Five daily slot pairs will be made available to other airlines at London Gatwick for flights between the airport and Dublin or Belfast.
  • Specifically, two of the five daily frequencies must be operated between Gatwick and Dublin.
  • One daily frequency must be operated between Gatwick and Belfast.
  • The other two frequencies can be operated between Gatwick and either Dublin or Belfast.
  • Other airlines can apply for seats on Aer Lingus’ shorthaul network for their transfer passengers, on normal commercial terms.

Copyright Photo: SPA/AirlinersGallery.com. London’s Gatwick Airport was the main competitive concern for the EC. Aer Lingus’s Airbus A320-214 EI-DEE (msn 2250) arrives at LGW.

Aer Lingus aircraft slide show: AG Airline Slide Show

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WestJet will now introduce the Boeing 767-300 on August 17

WestJet (Calgary) has updated its planned Boeing 767-300 ER introduction. The airline will now introduce daily wide-body service on August 17 between Toronto (Pearson) and Calgary per Airline Route.

Image: WestJet.

Video: WestJet.

WestJet aircraft slide show: AG Airline Slide Show

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