Tag Archives: 747451

Delta wins Seattle/Tacoma-Tokyo Haneda rights

Delta Air Lines (Atlanta) has received final approval from the U.S. Department of Transportation (DOT) to operate new nonstop service between Seattle/Tacoma and Tokyo International Airport, also known as Haneda Airport. The new flights will begin on June 1, 2013.

The Haneda flight adds to Delta’s growing Asian gateway in Seattle/Tacoma. In addition to Tokyo-Haneda, Delta will begin new service to Shanghai on June 17, and also operates flights to Beijing, Tokyo-Narita and Osaka, Japan.

Seattle is the largest West Coast city without nonstop service to Haneda, which is the preferred Tokyo airport for many business travelers due to its proximity to the city’s central business district.

The new Haneda flight will complement Delta’s nonstop flight between Seattle/Tacoma and Tokyo-Narita, which will be expanded and upgraded to Boeing 747-400 service on June 1. Delta’s Boeing 747-400 fleet was recently retrofitted with new interiors featuring full flat-bed seats in BusinessElite, Delta’s popular Economy Comfort seating and in-flight entertainment in every seat throughout the aircraft.

Once the Boeing 747-400 is deployed on the Seattle/Tacoma-Narita route, all of Delta’s trans-Pacific flights will feature full flat-bed seats in BusinessElite as well as Economy Comfort and individual in-flight entertainment throughout the aircraft.

In addition to its Asian gateway, Delta operates nonstop service to Paris and Amsterdam from Seattle/Tacoma. By next summer the airline will operate more than 40 daily flights to 15 destinations worldwide from Seattle.

Delta’s international growth in Seattle/Tacoma is possible because of its partnership with Alaska Airlines (Seattle/Tacoma), which operates a domestic hub at Seattle-Tacoma International Airport. Customers of both carriers enjoy access to an expanded network under a major codesharing agreement, as well as reciprocal frequent flier benefits and airport lounge access. The new Tokyo-Haneda flight will benefit from easy connections to 55 U.S. cities on Delta and Alaska’s domestic networks.

Delta Air Lines:

Delta Air Lines and Virgin Atlantic Airways to form a strategic alliance, Delta to buy 49% of Virgin Atlantic from Singapore Airlines

Delta Air Lines (Atlanta) and Virgin Atlantic Airways Ltd. (London) have reached an agreement for a new joint venture that will create an expanded trans-Atlantic network and enhance competition between the U.K. and North America, offering greater benefits for customers traveling on those routes.

As part of this joint venture agreement, Delta will invest $360 million in Virgin Atlantic, acquiring a 49 percent stake currently held by Singapore Airlines. Virgin Group and Sir Richard Branson will retain the majority 51 percent stake and Virgin Atlantic Airways will retain its brand and operating certificate.

Highlights of the agreement include:

A fully integrated joint venture that will operate on a “metal neutral” basis with both airlines sharing the costs and revenues from all joint venture flights.
A combined trans-Atlantic network between the United Kingdom and North America with 31 peak-day round-trip flights.
Enhanced benefits for customers including cooperation on services between New York and London, with a combined total of nine daily round-trip flights from London-Heathrow to John F. Kennedy International Airport and Newark Liberty International Airport.
Reciprocal frequent flyer benefits.
Shared access to Delta Sky Club and Virgin Atlantic Clubhouse airport lounges for elite passengers.

The airlines will file an application with the U.S. Department of Transportation for antitrust immunity, which will allow a closer relationship and coordination on schedules and operations. The transaction also will be reviewed by the U.S. Department of Justice and the European Union’s competition regulator and other relevant authorities. The share purchase and the joint venture are expected to be implemented by the end of 2013.

“Our new partnership with Virgin Atlantic will strengthen both airlines and provide a more effective competitor between North America and the U.K., particularly on the New York-London route, which is the largest airline route between the U.S. and Europe,” said Delta CEO Richard Anderson. “By combining the strengths of our two companies in a joint venture, we can provide customers with a seamless network between North America and the U.K., and continue building a better airline for our customers, employees and shareholders.”

Steve Ridgway, Virgin Atlantic Chief Executive, added: “Consumers will reap the rewards of this partnership between two great airline brands on services from the UK to the USA, Canada and Mexico through a shared ethos in the highest standards of customer service. This joint venture will deliver much more effective competition at Heathrow.

“Both airlines are confident that the Department of Transportation will be as convinced as we are of the extensive consumer benefits arising from this joint venture, with expedited approval being granted by the end of 2013. The trans-Atlantic market is Virgin Atlantic’s heartland – it’s where we started. By aligning with Delta we can continue to grow our North American network and offer greatly enhanced connectivity across the USA.”

Virgin Atlantic President, Sir Richard Branson, commented: “This is an exciting day in Virgin Atlantic history. It signals the start of a new era of expansion, financial growth and many opportunities for our customers and our business. I truly look forward to the possibilities our partnership with Delta will offer. We have always been known for our innovation and service and have punched above our weight for 28 years. That is why our customers love us so much. We will retain that independent spirit but move forward in a strengthened partnership with Delta.”

Delta and Virgin Atlantic customers will be able to earn and redeem miles across Delta’s SkyMiles and Virgin Atlantic’s FlyingClub frequent flyer programs. Premium customers also will have reciprocal access to the Delta Sky Club and Virgin Atlantic Clubhouse airport lounges. Full details will be announced as services become available.

The partnership allows both carriers to offer a greatly expanded network at Heathrow and to overcome slot constraints, which have limited the growth and competitive capability of both airlines. The two carriers will operate a total of 31 peak-day round-trip flights between the U.K. and North America, 23 of which operate at London-Heathrow. The enlarged network will benefit customers of both carriers by providing greater access to a broader network, improved connectivity and convenient booking options.

As part of a $3 billion investment in enhanced global products, services and airport facilities, all of Delta’s flights between the U.S. and London-Heathrow feature full flat-bed seats offering direct aisle access in the BusinessElite cabin. These flights also offer Delta’s popular Economy Comfort seating in the forward section of the economy cabin. Economy Comfort offers four additional inches of legroom and 50 percent more recline compared to standard economy seats. All cabins offer in-seat audio and video on demand with a broad range of in-flight entertainment options. Delta also will begin introducing in-flight WiFi service on international flights beginning in 2013.

Virgin Atlantic has recently completed a £150m upgrade program. A new Upper Class cabin has been introduced across its Airbus A330 aircraft, which features the longest fully flat bed in the sky. This is complemented by a redesigned onboard bar and new Clubhouses at both JFK and Newark airports. The airline’s Boeing 747 leisure fleet has been completely refitted and features onboard connectivity and VERA Touch – Virgin Atlantic’s award-winning touch screen in-flight entertainment system – offering passengers hours of entertainment at their fingertips.

Top Copyright Photo: Michael B. Ing. Boeing 747-451 N668US (msn 24223) completes its final approach into Tokyo (Narita).

Delta Air Lines:

Virgin Atlantic Airways:

Bottom Copyright Photo: Keith Burton. Airbus A340-642 G-VWEB (msn 787) arrives at the London (Heathrow) hub.

Delta Air Lines completes the flat-bed installations on its Boeing 747-400s

Delta Air Lines (Atlanta) has completed the installation of full flat-bed seats in the BusinessElite® cabin of all Boeing 747-400 type aircraft.

The last of 16 Boeing 747 aircraft, each with 48 BusinessElite seats, has been retrofitted with full flat-bed seats. It entered scheduled service this week on a flight between Singapore and Tokyo’s Narita airport, before making its way to Atlanta.

Delta previously completed installation of the full flat-bed modification on its Boeing 777 and 767-400 ER aircraft types. To date, 13 767-300 ER aircraft have received the modification and three more will be complete by month’s end. In total, approximately 50 percent of Delta’s widebody international fleet has received the upgrade. In addition to flat-bed seats in BusinessElite, the cabin overhaul includes upgraded seats in the Economy cabin with personal entertainment at every seat. The airline’s entire widebody international fleet of more than 140 aircraft will receive the full aircraft modification in both cabins by the middle of 2014.

Delta recently announced plans to install full flat-bed seats on its transcontinental flights between New York – JFK and Los Angeles, San Francisco and Seattle.

This autumn, Delta announced plans to add Wi-Fi to its entire international fleet. The airline is already the largest operator of Wi-Fi-equipped aircraft on more than 3,000 flights serving more than 400,000 customers every day. When complete, Delta will offer Wi-Fi on more than 950 aircraft, from 747s to two-class regional jets.

Delta Air Lines:

Delta reports a $768 million net profit in the third quarter, excluding special items

Delta Air Lines (Atlanta) today reported:

net income, excluding special items¹, for the September 2012 quarter was $768 million, or $0.90 per diluted share.
Delta’s September 2012 quarter GAAP net income was $1.0 billion, or $1.23 per diluted share, including mark-to-market gains on open fuel hedges and other special items.
Delta’s unit revenues were up 3 percent for the quarter and the company has produced a unit revenue premium to the industry for eighteen consecutive months.
Results included $174 million in profit sharing expense, for a total of $309 million year to date, in recognition of Delta employees’ efforts toward the company’s financial targets. In addition, Delta people have received $67 million in Shared Rewards in 2012 for hitting the company’s operational and customer service targets.
Delta ended the September 2012 quarter with $5.1 billion in unrestricted liquidity and adjusted net debt of $11.9 billion.

Revenue Environment

Delta’s operating revenue grew $107 million, or 1 percent, on 1.5 percent lower capacity in the September 2012 quarter compared to the September 2011 quarter. Load factor for the quarter increased 0.3 points year over year to 86.4 percent.

Passenger revenue increased 1 percent, or $124 million, compared to the prior year period. Passenger unit revenue (PRASM) increased 3 percent, driven by a 3 percent improvement in yield.
Cargo revenue decreased 5 percent, or $14 million, with lower cargo yields partially offset by higher volumes.
Other revenue decreased $3 million as lower third-party maintenance revenues were partially offset by higher codeshare revenue.

Comparisons of revenue-related statistics are as follows:

			Increase (Decrease)
			3Q12 versus 3Q11

Passenger Revenue		3Q12 ($M)	Change YOY	Unit Revenue	Yield	Capacity
	Domestic	$ 3,690	4%	3%	4%	1%
	Atlantic	1,751	(2)%	3%	2%	(5)%
	Pacific	1,108	5%	6%	3%	(1)%
	Latin America	468	3%	-%	(3)%	3%
	Total mainline	7,017	2%	3%	3%	(1)%
	Regional	1,675	(2)%	6%	6%	(8)%
	Consolidated	$ 8,692	1%	3%	3%	(2)%

“Our solid revenue performance reflects the benefits of capacity discipline, strong operational performance and the investments we have made in our products and service,” said Ed Bastian, Delta’s president. “We expect our revenue performance to benefit from our continued capacity discipline and further corporate travel gains and we are forecasting our October unit revenues to increase 4 – 5% year over year.”

Fuel

Excluding mark-to-market adjustments, Delta’s average fuel price² was $3.14 per gallon for the September quarter, which includes 3 cents per gallon in settled losses from its fuel hedging program. On a GAAP basis, which includes $440 million of mark-to-market gains on out of period hedges, the company’s average fuel price was $2.71 per gallon.

During the September quarter, jet fuel production began at Delta’s wholly-owned Trainer Refinery and the company expects the plant to be fully operational in the December quarter. For the December quarter, Delta expects Trainer’s production to generate a contribution of breakeven to $25 million.

Non-Fuel Cost Performance

Consolidated unit cost (CASM³), excluding fuel expense, profit sharing and special items, was 5.6 percent higher in the September 2012 quarter on a year-over-year basis, driven by the impact of capacity reductions, higher maintenance expense, wage increases and service investments. GAAP consolidated CASM decreased 2 percent primarily due to mark-to-market gains on open fuel hedges.

“With consistent investment in the business, our non-fuel costs have grown in the past few quarters and we expect that trend to continue into the first half of next year,” said Paul Jacobson, Delta’s chief financial officer. “However, we are in the process of implementing a $1 billion program of structural initiatives that we anticipate will generate significant savings in the second half of 2013, while maintaining the high quality product, network and operation we have built.”

Cash Flow and Liquidity

As of September 30, 2012, Delta had $5.1 billion in unrestricted liquidity, including $3.2 billion in cash and short-term investments and $1.9 billion in undrawn revolving credit facilities.

Operating cash flow during the September 2012 quarter was $545 million, driven by the company’s profitability, which was offset by the normal seasonal decline in advance ticket sales. Free cash flow for the September 2012 quarter was $120 million.

Capital expenditures during the quarter were $425 million, including $275 million for fleet, including advance payments for 737-900ERs, induction costs for MD-90s and interior modifications to Delta’s international fleet.

During the September quarter, Delta paid $270 million in net debt maturities and capital lease obligations. At September 30, the company’s adjusted net debt was $11.9 billion, a reduction of $5 billion since the end of 2009.

Subsequent to the end of the quarter, Delta refinanced $1.7 billion in debt and undrawn revolving credit facilities secured by the company’s Pacific routes and slots. As a result of this transaction, the company has maintained its revolving credit capacity and lowered the interest rate. Delta expects the transaction will generate more than $30 million in annual interest expense savings.

December 2012 Quarter Guidance

Delta’s projections for the December 2012 quarter are below.

	4Q 2012 Forecast

Average fuel price, including taxes and settled hedges	$ 3.15 – $3.20
Operating margin	4 – 6%
Capital expenditures	$450 – 550 million
Total liquidity at end of period	$ 5.2 billion


	4Q 2012 Forecast (compared to 4Q 2011)

Consolidated unit costs – excluding fuel expense and profit sharing	Up 5 – 7%
System capacity	Down 1 – 3%
Domestic	Down 1 – 3%
International	Down 2 – 4%

Special Items

Delta recorded special items totaling a $279 million gain in the September 2012 quarter, including:

a $440 million gain on mark-to-market adjustments on fuel hedges settling in future periods;
a $39 million gain associated with the exchange of slots at New York-LaGuardia and Washington-Reagan National;
a $12 million loss on extinguishment of debt;
a $66 million charge for severance and related costs; and
a $122 million charge for facilities, fleet and other, including charges resulting from the closure of Comair.

Delta recorded special items totaling a $216 million charge in the September 2011 quarter, primarily related to mark to market adjustments for open fuel hedges.

Notes:

(1) Note A to the attached Consolidated Statements of Operations provides a reconciliation of non-GAAP financial measures used in this release and provides the reasons management uses those measures.

(2) Average fuel price per gallon: Delta’s September 2012 quarter average fuel price of $3.14 per gallon reflects the consolidated cost per gallon for mainline and regional operations, including contract carrier operations, and includes the impact of fuel hedge contracts with original maturity dates in the September 2012 quarter. Settled hedge losses for the quarter were $26 million, or 3 cents per gallon. On a GAAP basis, fuel price includes $440 million in fuel hedge mark-to-market adjustments recorded in periods other than the settlement period.

(3) CASM – Ex: Delta excludes from consolidated unit cost ancillary businesses which are not related to the generation of a seat mile, including aircraft maintenance and staffing services which Delta provides to third parties and Delta’s vacation wholesale operations (MLT). The amounts excluded were $214 million and $232 million for the September 2012 quarter and September 2011 quarter, respectively.

Copyright Photo: Tony Storck. Boeing 747-451 N669US (msn 24224) lands at Baltimore/Washington International Thurgood Marshall Airport (BWI).

Delta Air Lines: