Singapore Airlines’ new cabin products to debut on Singapore-Sydney route

Singapore Airlines Airbus A380-841 9V-SKR (msn 082) ZRH (Rolf Wallner). Image: 908399.

Singapore Airlines’ eagerly awaited new cabin products, which will be revealed at global launch events in Singapore over November 2-4, 2017, will debut on the Singapore-Sydney route in December.

The introduction of the new cabin products – in Suites, Business Class, Premium Economy Class and Economy Class – follows four years of development involving extensive customer feedback. They will initially be fitted on five new A380s that the Airline has on firm order with Airbus.

The first of the Airbus A380s with the new products will operate daily from 18 December as flight SQ221, departing Singapore at 2040hrs and arriving into Sydney at 0740hrs the following day. It will return as flight SQ232, departing Sydney at 1215hrs and arriving into Singapore at 1735hrs. Additional destinations for the new products will be revealed in the coming months.

The A380 entered service with Singapore Airlines in October 2007. In addition to Sydney, the Airline’s superjumbos serve Beijing, Frankfurt, Hong Kong, London, Melbourne, Mumbai, New Delhi, New York, Osaka, Paris, Shanghai and Zurich.

Copyright Photo: Singapore Airlines Airbus A380-841 9V-SKR (msn 082) ZRH (Rolf Wallner). Image: 908399.

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Swiss to add new destinations in Summer 2018

"Swiss Romandy" special livery

Swiss International Air Lines is to further expand its route network in its 2018 summer schedules with attractive new destinations served from Zurich. New flights will be introduced to the French cities of Bordeaux and Marseille; service will be resumed to Kiev, the capital of Ukraine; and Swiss will also offer summer service for the first time to Wroclaw in Southern Poland.

Swiss International Air Lines will offer travellers from Zurich services to four attractive new destinations in its 2018 summer schedules.

New flights to Bordeaux, Marseille, Kiev and Wroclaw

Swiss will offer 12 weekly services to Bordeaux in Southwest France from the end of next March onwards. The first such flight will operate on March 26, 2018. The new services will consist of two daily flights on Mondays to Fridays and single daily Saturday and Sunday flights. Bordeaux lies in a popular tourist region that is famed for both its wines and its extensive cultural attractions. The region is important in economic terms, too, and has become particularly prominent in recent years in the field of future technologies such as molecular sciences and space research.

Swiss will also be introducing a new thrice-weekly service between Zurich and Marseille on 21 April 2018. The flights will operate on Tuesdays, Thursdays and Saturdays. The Mediterranean port city is the gateway to Provence, one of Europe’s most attractive and popular holiday regions, and is also the starting point for many cruise vacations.

Nonstop Swiss services to the Ukrainian capital of Kiev will resume on 26 March 2018. SWISS withdrew its previous Zurich-Kiev flights in October 2014. The new service will consist of four weekly flights operating on Mondays, Wednesdays, Fridays and Sundays.

The new thrice-weekly service to Wroclaw in Southern Poland which will commence with the start of the 2017/18 winter schedules will also be continued in the 2018 summer timetable period. The service, which will operate on Mondays, Wednesdays and Fridays, is being introduced in response to strong demand from the growing Swiss-Polish business community.

Swiss’ new 2018 summer destinations from Zurich will be served using various aircraft types including its new Bombardier CS100s and CS300s.

Copyright Photo: Swiss International Air Lines Bombardier CS300 (BD-500-1A11) HB-JCA (msn 55010) (Swiss Romandy) ZRH (Rolf Wallner). Image: 939552.

 

flydubai expands its footprint in Moscow with new service to Sheremetyevo International Airport

Flydubai Boeing 737-8KN WL A6-FEU (msn 40273) BFI (Brandon Farris). Image: 926389.

Dubai-based flydubai has announced the start of its new daily flights to Sheremetyevo International Airport (SVO) in Moscow from November 29, 2017. This will increase the airline’s frequency to the Russian capital to double daily with the existing service to Vnukovo International Airport (VKO).

flydubai first started operating to Moscow in 2014 and has grown its network in Russia to 11 unique points.  Makhachkala, Ufa and Voronezh being the latest additions with operations commencing in October 2017. Along with these newest points on flydubai’s network the airline operates direct flights to Kazan, Krasnodar, Mineralnye Vody, Moscow (VKO), Rostov-on-Don, Samara and Yekaterinburg.

The airline, which recorded a 45% growth in passenger numbers to Russia in the first half of 2017 compared to the same period in 2016 and is the first carrier to operate direct flights to Sheremetyevo International Airport from the UAE. The airport is one of the three airports serving the city of Moscow, along with Domodedovo International Airport and Vnukovo International Airport, and is one of the largest airports in Russia.

flydubai operates flights to more than 95 destinations in 44 countries offering passengers from Russia greater opportunity to connect onwards on the flydubai network to popular routes like Male (Maldives), Colombo (Sri Lanka) and Zanzibar (Tanzania) via Dubai’s aviation hub. Business Class and WiFi are available on flydubai’s flights to Russia.

Top Copyright Photo: Flydubai Boeing 737-8KN WL A6-FEU (msn 40273) BFI (Brandon Farris). Image: 926389.

Flight Details

Flights between Dubai (DXB) and Sheremetyevo (SVO) will start on November 29, 2017. flydubai’s FZ 917/918 will operate daily between Dubai International, Terminal 2 and Sheremetyevo International Airport.

Flight Number Route Departure Time Arrival Time
FZ 917 DXB – SVO 00:55 Local Time 05:25 Local Time
FZ 918 SVO – DXB 06:25 Local Time 12:40 Local Time

 

Ethiopian Airlines takes delivery of its first Boeing 787-9 Dreamliner on October 27, 2017

Ethiopian Airlines has issued this statement:

Leading the way once again, Ethiopian Airlines, the largest and most profitable airline group in Africa, will become the first in the continent to receive and operate the Boeing 787-9 Dreamliner on October 27, 2017.

The Boeing 787-9 Dreamliner is the second member of the technologically advanced, ultra-comfortable, fuel-efficient and environment-friendly 787 family that Ethiopian will be receiving. Ethiopian was the first in the world outside Japan to receive and operate the 787-8 back in August 2012.

Both the 787-8 and 787-9 offer superior and unmatched on-board comfort thanks to their unique features such as the biggest windows in the sky, high ceiling, less noise, distinctive lighting, higher air humidity as well as 20 percent less fuel. The 787-9 is 20 feet or 6 meters longer than the 787-8 and has more passenger capacity with 315 seats and more cargo space.

Group CEO Ethiopian Airlines, Mr. Tewolde GebreMariam, said: “Continuing our legacy of pioneering aviation technology in Africa, we are proud to celebrate yet another first with the introduction of the cutting-edge 787-9 into our young and fast growing fleet. Today, the 787 is our core fleet with 20 aircraft in service. Our investment in latest technology aircraft such as the 787 and A350, which makes us among the very few airlines in the world to simultaneously operate these two most cutting edge airplanes, is part and parcel of our Vision 2025 strategy and our commitment to our esteemed customers to offer the ultimate on-board comfort. We will continue to invest in latest technology aircraft with the view to avail to our customers the best possible travel experience. We invite the travelling public to join us in one of our flights to enjoy the new level of comfort of the B-787-9.”

Ethiopian Airlines currently flies to more than 100 international destinations in five continents using 93 most modern and youngest fleet, 20 of which are Boeing 787 Dreamliner, deployed on its long haul routes. It was back in 2012 that Ethiopian took delivery of its Boeing 787 Dreamliner fleet.

About Ethiopian

Ethiopian Airlines (Ethiopian) is the fastest growing Airline in Africa. In its seventy plus years of operation, Ethiopian has become one of the continent’s leading carriers, unrivalledin efficiency and operational success.

Ethiopian commands the lion’s share of the pan-African passenger and cargo network operating the youngest and most modern fleet to more than 100 international passenger and cargo destinations across five continents. Ethiopian fleet includes ultra-modern and environmentally friendly aircraft such as Airbus A350, Boeing 787, Boeing 777-300ER, Boeing 777-200LR, Boeing 777-200 Freighter, Bombardier Q-400 double cabin with an average fleet age of five years. In fact, Ethiopian is the first airline in Africa to own and operate these aircraft.

Ethiopian is currently implementing a 15-year strategic plan called Vision 2025 that will see it become the leading aviation group in Africa with seven business centers: Ethiopian Express & Ancillary Services; Ethiopian International Services; Ethiopian Cargo Services; Ethiopian MRO Services; Ethiopian Aviation Academy; ET In-flight Catering; and Ethiopian Ground Services. Ethiopian is a multi-award winning airline registering an average growth of 25% in the past seven years.

Boeing issued this statement:

Ethiopian Airlines and Boeing celebrated the delivery of the carrier’s first Boeing 787-9. Ethiopian is leasing the Dreamliner through an agreement with AerCap.

Ethiopian’s newest 787 touched down in Addis Ababa following a nonstop 8,354 mile (13,444 km) delivery flight from Boeing’s Everett, Wash., facility. Ethiopian becomes the first carrier in Africa to operate the 787-9 and extends a tradition of setting aviation milestones. Ethiopian became Africa’s first carrier to fly the 787-8 in 2012, and similarly introduced the 777-200LR (Longer Range), 777-300ER (Extended Range) and 777 Freighter.

Ethiopian Airlines conducted its 32nd Humanitarian Delivery Flight as part of the 787-9 delivery. In conjunction with the non-profit Seattle Alliance Outreach, Ethiopian transported goods donated by medical organizations in the U.S. to Black Lion Hospital and St. Paul Hospital in Ethiopia.

Ethiopian Airlines operates a Boeing fleet of 737, 767, 777, and 787 airplanes in passenger service and six 777 and two 757-200 airplanes in cargo operations.

Top Photos: Ethiopian Airlines.

Bottom Photo: Boeing. Boeing 787-9 Dreamliner ET-AUO (msn 38778) is named “Beijing” and was officially handed over on October 26, 2017.

Boeing reports third quarter results; raises cash flow and EPS guidance

The Boeing Company reported third-quarter revenue of $24.3 billion with GAAP earnings per share of $3.06 and core earnings per share (non-GAAP)* of $2.72 reflecting strong deliveries, services and delivery mix, and overall solid execution (Table 1).

The company’s cash flow guidance is increased to $12.5 billion from $12.25 billion, driven by improved performance. Full year EPS guidance is increased to between $11.20 and $11.40 from $11.10 and $11.30 and core earnings per share (non-GAAP)* guidance is increased to between $9.90 and $10.10 from $9.80 and $10.00 driven by a lower-than-expected tax rate. Full year segment guidance is updated, reflecting the realignment of the company’s services businesses into Boeing Global Services (BGS).

“Our teams across all three business segments are driving execution with a focus on both productivity and growth, which has enabled Boeing to deliver solid third quarter financial results, grow cash flow, and raise our 2017 outlook,” said Chairman, President and Chief Executive Officer Dennis Muilenburg.

“In the third quarter we successfully launched our newest business segment, Boeing Global Services, leveraging our unique One Boeing advantages to offer complete lifecycle support across the commercial, defense and space sectors. We achieved a number of key milestones in the quarter with the delivery of a record 202 commercial airplanes, including 24 737 MAXs as we continue the smooth introduction of that airplane. On the defense side, we booked $6 billion in new orders, including an initial contract award for the Ground Based Strategic Deterrent program and an award from the U.S. Navy for 14 F/A-18 Super Hornet aircraft.”

“We remain focused on accelerating productivity, quality and safety improvements across the company, executing on our future development programs, and capturing new business to ensure our continued growth.”

First Airbus A320neo assembled in Tianjin delivered to AirAsia

AirAsia (Malaysia) has taken delivery of the first Airbus A320neo (9M-AGK) assembled at the Airbus Final Assembly Line Asia (FALA) at a dedicated ceremony in Tianjin, China. The aircraft, powered by CFM LEAP-1A engines, seats comfortably 186 passengers and is equipped with the innovative Space-Flex cabin.

AirAsia is the largest airline customer of the A320 Family with orders for 578 aircraft. These include 404 A320neo Family aircraft.

Aireen Omar, AirAsia Berhad Chief Executive Officer said: “We are very proud to receive the first Airbus A320neo fully assembled in Tianjin, China and we would like to congratulate Airbus, as well as the Chinese Government  for achieving yet another milestone. China is today one of the world’s most important markets for aviation, and we are honoured to be part of the development and rapid growth of China’s civil aviation. We are certainly proud to take delivery of this aircraft fully assembled in Tianjin and have this historic aircraft as part of our fleet”.

“The Airbus A320 aircraft has contributed immensely towards our business model and our operations. We received our first A320neo last year and this is our thirteenth Airbus A320neo that we are receiving for the group, which is also the 184th aircraft delivered by Airbus. As we expand our network and grow our fleet, it is important for us to stay at the forefront of our business. We are very pleased with the A320neo, which provides up to 15 percent fuel savings and an additional range of 500 nautical miles, which translates to a lower fares for our guests.” she added.

“I am very pleased to hand over the first A320neo to be assembled in Tianjin to AirAsia.  AirAsia will continue to benefit from the unique commonality between all variants of the Airbus Family and enjoy efficiencies throughout its existing fleet.” said Eric Chen, President of Airbus Commercial Aircraft China. “The delivery of the NEO is a milestone for our Asia Final Assembly Line, which will help to meet the robust demand of our customers in China and the Asia-Pacific region.”

The FALA in Tianjin, inaugurated in 2008 became the third single-aisle aircraft final assembly line location of Airbus worldwide, following Toulouse and Hamburg. It was also the first Airbus Final Assembly Line outside Europe. Today, some 340 aircraft have been assembled and delivered from Tianjin, China.

The A320neo Family incorporates the very latest technologies including new generation engines and Sharklets, which together deliver at least 15 percent fuel savings at delivery and 20 percent by 2020. With more than 5,200 orders received from 95 customers since its launch in 2010, the A320neo Family has captured some 60 percent share of the market.

Copyright Photo: Airbus.

Southwest reports a third quarter net profit

Southwest Airlines Boeing 737-8 MAX 8 N8714Q (msn 36934) LAX (Michael B. Ing). Image: 939561.

Southwest Airlines Company on October 26, 2017 reported its third quarter 2017 results:

  • Net income of $503 million, diluted earnings per share of $.84, operating income of $834 million, and operating margin1 of 15.8 percent
  • Excluding special items2, net income of $528 million, diluted earnings per share of $.88, operating income of $871 million, and operating margin3 of 16.5 percent
  • Third quarter operating cash flow of $996 million and third quarter free cash flow2 of $358 million
  • Returned $375 million to Shareholders through a combination of dividends and share repurchases
  • Return on invested capital (ROIC)2 for 12 months ended September 30, 2017, of 26.8 percent

Gary C. Kelly, Chairman of the Board and Chief Executive Officer, stated, “We are very pleased to report another quarter of strong profits and margins, particularly considering the impact of the unprecedented natural disasters. As a result of Hurricanes Harvey and Irma and the earthquakes, we canceled 5,000 flights which reduced revenues by approximately $100 million in third quarter 2017. Our People’s efforts to provide humanitarian flights, supplies, and financial assistance to Coworkers, Customers, and the communities impacted were truly heroic. Our hearts continue to go out to those impacted. During the quarter, our Employees also managed the retirement of the remaining Boeing 737-300 (Classic) fleet and simultaneous introduction of the Boeing 737 MAX 8 into our fleet. With the launch of the MAX, we were excited to announce our intention to serve Hawaii, which is another exciting milestone for Southwest. I am grateful to our Employees for these significant accomplishments and their extraordinary efforts during these operational challenges.”

Revenue Results and Outlook

The Company’s third quarter 2017 total operating revenues increased 2.6 percent, year-over-year, to $5.3 billion, driven largely by third quarter record passenger revenues of $4.7 billion despite an approximate $100 million reduction as a result of the natural disasters. Third quarter 2017 passenger revenue yield decreased 0.9 percent, year-over-year, due to the competitive yield environment. Third quarter 2017 operating unit revenues (RASM) decreased 0.5 percent, year-over-year. Third quarter 2017 unit revenue results included headwinds of less than a point from the Company’s new reservation system that is not expected to continue in fourth quarter 2017. The Company continues to expect the benefits from the new reservation system capabilities to produce incremental improvements in pre-tax results of approximately $200 million in 2018. Thus far in fourth quarter, overall revenue trends remain stable, and the Company is encouraged by the rebound in passenger booking trends in Houston and Florida. While the revenue yield environment remains competitive, passenger revenue yields thus far in October, on a year-over-year basis, have improved sequentially from August and September year-over-year trends, and travel demand remains solid. Based on these trends and current bookings, the Company expects fourth quarter 2017 RASM to increase in the range of up slightly to up 1.5 percent, as compared with fourth quarter 2016.

Cost Performance and Outlook

Third quarter 2017 total operating expenses decreased 0.2 percent to $4.4 billion, or 3.2 percent on a unit basis, as compared with third quarter 2016. As expected, the Company recorded aircraft grounding and lease termination charges of $83 million (before profitsharing and taxes) as a special item associated with the Classic fleet retirements during third quarter 2017. Third quarter 2016 included $356 million of accrued ratification bonuses (before profitsharing and taxes) as a special item associated with tentative collective-bargaining agreements reached with multiple unionized workgroups, as well as lease termination charges totaling $18 million as a special item. Excluding special items in both periods, total third quarter 2017 operating expenses increased 5.6 percent to $4.4 billion, or 2.5 percent on a unit basis, year-over-year.

Third quarter 2017 economic fuel costs2 were $2.00 per gallon, including $.31 per gallon in unfavorable cash settlements from fuel derivative contracts, compared with $2.02 per gallon in third quarter 2016, which included $.56 per gallon in unfavorable cash settlements from fuel derivative contracts. Based on the Company’s existing fuel derivative contracts and market prices as of October 20, 2017, fourth quarter 2017 economic fuel costs are estimated to be approximately $2.10 per gallon4. As of October 20, 2017, the fair market value of the Company’s fuel derivative contracts settling during fourth quarter 2017 was a net liability of approximately $129 million, and the fair market value of the hedge portfolio settling in 2018 and beyond was a net asset of approximately $126 million. Additional information regarding the Company’s fuel derivative contracts is included in the accompanying tables.

Excluding fuel and oil expense and special items in both periods, third quarter 2017 operating expenses increased 7.1 percent, as compared with third quarter 2016. Third quarter 2017 profitsharing expense was $127 million, as compared with $101 million for third quarter 2016. Excluding fuel and oil expense, special items, and profitsharing expense, third quarter 2017 operating expenses increased 6.5 percent, or 3.3 percent on a unit basis, year-over-year. The primary drivers of this year-over-year unit cost increase in third quarter 2017 were the impacts from the natural disasters and the significant snap-up in wage rates due to Flight Attendant and Pilot amended collective-bargaining agreements that became effective in fourth quarter 2016, partially offset by benefits from the Company’s fleet modernization efforts.

Based on current cost trends, the Company estimates fourth quarter 2017 unit costs, excluding fuel and oil expense, special items, and profitsharing expense, to be in the range of flat to up 1.5 percent, year-over-year5. This continued sequential improvement in unit cost trends is aided by the retirement of the Classic fleet, the lapse of the step-up in wage rates from labor collective-bargaining agreements ratified in fourth quarter 2016, and the wind-down of temporary costs associated with the May 2017 implementation of the new reservation system. The Company’s year-over-year estimate of fourth quarter 2017 unit costs, excluding fuel and oil expense, special items, and profitsharing expense, is higher than previously expected due largely to a shift in advertising spend from third quarter 2017 to fourth quarter 2017 and incremental costs associated with technology investments including the Company’s Extended Operations (ETOPS) authorization in preparation for Hawaii service.

Third Quarter Results

Third quarter 2017 operating income was $834 million, compared with $695 million in third quarter 2016. Excluding special items, third quarter 2017 operating income was $871 million, compared with $972 million in third quarter 2016.

Other expenses in third quarter 2017 were $43 million, compared with $77 million in third quarter 2016. The $34 million difference resulted primarily from $39 million in other losses recognized in third quarter 2017, compared with $64 million in third quarter 2016. In both periods, these losses included ineffectiveness and unrealized mark-to-market amounts associated with a portion of the Company’s fuel hedging portfolio, which are special items. Excluding these special items, other losses were $35 million in third quarter 2017, compared with $33 million in third quarter 2016, primarily attributable to the premium costs associated with the Company’s fuel derivative contracts. Fourth quarter 2017 premium costs related to fuel derivative contracts are currently estimated to be approximately $34 million, compared with $36 million in fourth quarter 2016. Net interest expense in third quarter 2017 was $4 million, compared with $13 million in third quarter 2016.

Third quarter 2017 net income was $503 million, or $.84 per diluted share, compared with third quarter 2016 net income of $388 million, or $.62 per diluted share. Excluding special items, third quarter 2017 net income was $528 million, or $.88 per diluted share, compared with third quarter 2016 net income of $582 million, or $.93 per diluted share, and compared with First Call third quarter 2017 consensus estimate of $.87 per diluted share.

Liquidity and Capital Deployment

As of September 30, 2017, the Company had approximately $3.0 billion in cash and short-term investments, and a fully available unsecured revolving credit line of $1 billion. During third quarter, Standard & Poor’s upgraded the Company’s investment grade credit ratings to “BBB+” from “BBB.” Net cash provided by operations during third quarter 2017 was $996 million, capital expenditures were $638 million, and free cash flow was $358 million2. The Company repaid $106 million in debt and capital lease obligations during third quarter 2017, and expects to repay approximately $57 million in debt and capital lease obligations during fourth quarter 2017.

During third quarter 2017, the Company returned $375 million to its Shareholders through the payment of $75 million in dividends and the repurchase of $300 million in common stock. The Company repurchased $300 million in common stock pursuant to an accelerated share repurchase (ASR) program launched during the quarter and received approximately 4.1 million shares, representing an estimated 75 percent of the shares expected to be repurchased under that ASR program. During third quarter 2017, the Company also received approximately 1.6 million shares, which remained pursuant to a $400 millionsecond quarter 2017 ASR program, bringing the total shares repurchased under that ASR program to approximately 6.6 million. The Company has $1.7 billionremaining under its May 2017 share repurchase authorization.

For the nine months ended September 30, 2017, net cash provided by operations was approximately $3.4 billion, capital expenditures were approximately $1.6 billion, and free cash flow was a strong $1.8 billion2. This enabled the Company to return approximately $1.5 billion to Shareholders through the payment of $274 million in dividends and the repurchase of approximately $1.25 billion in common stock.

Fleet and Capacity

The Company ended third quarter 2017 with 687 aircraft in its fleet. This reflects the third quarter 2017 delivery of six new Boeing 737-800s, six pre-owned Boeing 737-700s, and nine new Boeing 737 MAX 8 aircraft, as well as the retirement of the Boeing 737-300 Classic fleet, which was completed on September 29, 2017. The Company continues to expect to end 2017 with 707 aircraft and 2018 with 750 aircraft in its fleet. Additional information regarding the Company’s aircraft delivery schedule is included in the accompanying tables. The Company currently expects its fourth quarter 2017 available seat miles to increase in the one to two percent range, compared with the same year-ago period.

During third quarter 2017, the Company continued its investment in California by adding nearly 20 new nonstop routes, increasing frequency to 27 existing routes, and opening new international gateways, in each case beginning in 2018. The Company also recently announced plans to begin selling tickets in 2018 for service to Hawaii and announced its intention to launch an application process for Federal Aviation Administration authorization for ETOPS. The Company continues to expect its 2018 available seat mile year-over-year growth to be less than 5.7 percent, with first half 2018 year-over-year growth in the range of three to four percent.

737 Delivery Schedule

As of September 30, 2017

The Boeing Company

-800 Firm
Orders

MAX 7
Firm
Orders

MAX 8
Firm
Orders

MAX 8
Options

Additional

 -700s

Total

2017

39

14

18

71

(b)

2018

26

13

4

43

2019

15

5

20

2020

14

8

22

2021

1

13

20

34

2022

15

21

36

2023

34

23

57

2024

41

23

64

2025

40

36

76

2026

36

36

2027

23

23

65

30

170

(a)

195

22

482

(a) The Company has flexibility to substitute 737 MAX 7 in lieu of 737 MAX 8 aircraft beginning in 2019.

(b) Includes 28 737-800s, 14 737-700s, and 9 737 MAX 8s delivered as of September 30, 2017.

The Company’s GAAP results in the applicable periods include other charges or benefits that are also deemed “special items,” that the Company believes make its results difficult to compare to prior periods, anticipated future periods, or industry trends. Financial measures identified as non-GAAP (or as excluding special items) have been adjusted to exclude special items. Special items include:

  1. Union contract bonuses recorded for certain workgroups. As the bonuses would only be paid at ratification of the associated tentative agreement and would not represent an ongoing expense to the Company, management believes its results for the associated periods are more usefully compared if the impacts of ratification bonus amounts are excluded from results. Generally, union contract agreements cover a specified three- to five- year period, although such contracts officially never expire, and the agreed upon terms remain in place until a revised agreement is reached, which can be several years following the amendable date;
  2. Expenses associated with the Company’s acquisition and integration of AirTran Holdings, LLC, the parent company of AirTran Airways, Inc. (“AirTran”). Such expenses were primarily incurred during the acquisition and integration period of the two companies from 2011 through 2015 as a result of the Company’s acquisition of AirTran, which closed on May 2, 2011. The exclusion of these expenses provides investors with a more applicable basis with which to compare results in future periods now that the integration process has been completed;
  3. A noncash impairment charge related to leased slots at Newark Liberty International Airport as a result of the Federal Aviation Administration announcement in April 2016 that this airport was being changed to a Level 2 schedule-facilitated airport from its previous designation as Level 3 (a “slot” is the right of an air carrier, pursuant to regulations of the Federal Aviation Administration, to operate a takeoff or landing at a specific time at certain airports);
  4. Lease termination costs recorded as a result of the Company acquiring 13 of its Boeing 737-300 aircraft off operating leases as part of the Company’s strategic effort to remove its Classic aircraft from operations on or before September 29, 2017, in the most economically advantageous manner possible. The Company had not budgeted for these early lease termination costs, as they were subject to negotiations being concluded with the third party lessors. The Company recorded the fair value of the aircraft acquired off operating leases, as well as any associated remaining obligations to the balance sheet as debt; and
  5. An aircraft grounding charge recorded in third quarter 2017, as a result of the Company grounding its remaining Boeing 737-300 aircraft on September 29, 2017. The loss was a result of the remaining lease payments due and certain lease return requirements that may have to be performed on these leased aircraft prior to their return to the lessors as of the cease-use date. The Company had not budgeted for the lease return requirements, as they are subject to negotiation with third party lessors.

Copyright Photo: Southwest Airlines Boeing 737-8 MAX 8 N8714Q (msn 36934) LAX (Michael B. Ing). Image: 939561.