Boeing (Chicago, Seattle and Charleston) and SF Airlines (ShenzHen) on December 18 celebrated the delivery of the airline’s first 767-300 Boeing Converted Freighter (BCF), which is also the first owned by an airline in China. The 767-338 ER was formerly operated by QANTAS Airways.
The delivery took place at Boeing supplier ST Aerospace Services Co. in Singapore, where the conversion work was performed. It is the first of five 767BCFs the airline will receive during the next year.
SF Airlines currently operates an all-Boeing fleet of 25 airplanes, and has signed a letter of intent to purchase 737-800BCFs following a program launch. The addition of the wide-body freighter to SF Airlines’ fleet of Boeing 737s and 757s is one example of changes being made by the airline to better support the rapid e-commerce growth in the China market. Moving forward, the plan is to continue to add more routes and expand the company’s transportation network, Liang said.
The China air express market is forecast to be among the fastest growing segments of the world air cargo market, largely due to e-commerce. According to the Boeing World Air Cargo Forecast, world air cargo traffic will grow 4.7 percent per year over the next 20 years, with domestic China and intra-Asia markets expanding 6.7 percent and 6.5 percent per year, respectively.
Kalitta Air (2nd) (Ypsilanti) is planning to add two Boeing 767-300F freighters according to Cargo Facts. The company has been a Boeing 747 operator. However this decision may be impacted by a strike vote by its pilots.
On December 9 the International Brotherhood of Teamsters issued this statement:
Pilots employed by Kalitta Air, LLC, have voted overwhelmingly, 213-7, to authorize a strike against the Ypsilanti, Michigan-based cargo airline.
Kalitta Air operates a fleet of Boeing 747 aircraft in support of the global network of DHL Express, a division of the German logistics company, Deutsche Post DHL. Ninety-two percent of eligible pilots voted in the referendum. Ninety-seven percent of voting pilots voted to authorize a strike. The pilot group is represented by the International Brotherhood of Teamsters, Airline Division, Airline Professionals Association Teamsters Local 1224.
“The pilots of Kalitta Air have sent a strong message to the airline’s management and their customers, including DHL, and potential customers,” said Scott Nelson, the elected chairman of the APA Teamsters Local 1224 Kalitta Air Executive Council. “Our members are prepared to strike over management delay tactics, violations of federal law, mistreatment of pilots and their continuing refusal to agree to a significantly-improved labor contract.”
Negotiations between the union and management started in October 2010. The company delayed responding to union wage and benefit proposals for more than two-and-half years. On Oct. 30, 2015, the United States District Court for the Eastern District of Michigan issued an injunction against the carrier for violating federal labor laws. Union communications have complained about persistent unprofessional conduct by managers and expressed alarm over the number of pilots that are considering leaving Kalitta Air for other airlines.
ABX Air, Inc., Atlas Air, Inc. and Southern Air, Inc. also perform flight operations in support of the DHL Express global network. Following the announcement of the strike authorization vote, union leadership at those carriers pledged to support the Kalitta pilots in the event of a strike.
“Gone are the days when pilots viewed one another as competitors in a race to the bottom that benefits our employers at the expense of our own paychecks and profession,” said Daniel C. Wells, president of APA Teamsters Local 1224. “Carriers like Kalitta need to make major improvements to pilot pay, benefits and working conditions if they are to retain and attract quality pilots and ultimately survive the worsening pilot shortage. This is true for all of the carriers where Local 1224 represents pilots. Status quo violations and uncompetitive pay and benefits will produce strikes and disruptions of customer networks, not labor peace and stability.”
Contract negotiations are currently subject to mediation efforts by the National Mediation Board, the federal agency that oversees labor relations in the airline and railroad industries.
“Kalitta pilots want to be treated with professional respect and work under a labor contract that is comparable to those of our peers at other airlines,” Nelson said. “Unfortunately, management seems stuck in the past and continues to insist on substandard terms and conditions of employment as a better course of action. They need to change course before it’s too late.”
The union has several initiatives planned for early 2016 aimed at publicizing the escalating labor dispute with Kalitta Air.
UPS (United Parcel Service) (UPS Airlines) (Atlanta and Louisville) today announced second quarter 2015 diluted earnings per share of $1.35, a 12% increase over adjusted results for the same period last year. All three segments improved operating profit and margin, led by International and Supply Chain and Freight performance.
The company continued:
All Segments Improve Profitability and Expand Margins
International Operating Profit Jumps 17%
Export Shipments up 5.5% with Strong Intra-Europe Growth
Supply Chain and Freight Operating Profit Climbs 18%
Revenue Growth Dampened by Changes in Currency and Fuel Prices
2015 EPS Growth at Higher End of 6%-to-12% Guidance Range
Currency exchange rates and lower fuel surcharges reduced total reported revenue growth. Total revenue declined 1.2% from the same quarter last year to $14.1 billion. Pricing initiatives continue to drive base rates higher.
“During the quarter, UPS continued to invest for the future by expanding capacity and launching new capabilities that provide higher value to customers,” said David Abney, UPS chief executive officer. “The strong momentum in our International segment is expected to continue and gives us confidence in achieving the upper end of our guidance range.”
On a reported basis, operating profit increased $1.2 billion, and diluted earnings per share was up $0.86. In the second quarter of 2014, UPS reported diluted earnings per share of $0.49, which included a $665 million after-tax charge for the transfer of certain post-retirement liabilities to defined contribution healthcare plans.
Total company shipments increased 2.1% over the second quarter last year to 1.1 billion packages, led by U.S. Deferred Air products and International Export shipments.
For the six months ended June 30, UPS generated $3.3 billion in free cash flow. The company paid dividends of $1.3 billion, an increase of 9.0% per share over the prior year. UPS also repurchased 13.5 million shares for approximately $1.4 billion.
U.S. Domestic Package
U.S. Domestic revenue increased $140 million over the second quarter last year to $8.8 billion. Shipment growth was led by Deferred Air products up 15% and UPS SurePost which increased more than 8%. Total daily deliveries grew 1.8% due to a slower pace of B2C (business-to-consumer) growth.
Operating profit was $1.2 billion, up $35 million or 3.0% over prior-year adjusted results. Operating margin expanded to 13.6% as improved pricing and productivity offset higher benefit costs.
On a reported basis, operating profit increased $992 million after the transfer of certain post-retirement liabilities to defined contribution healthcare plans, which occurred in the second quarter of last year.
Continued improvements in base rates were offset by lower fuel surcharges. Revenue per package was flat, as changes in fuel surcharges dropped reported yield by almost 300 basis points.
Currency-adjusted International revenue was up 1.5% over the same period last year. UPS daily Export shipments increased 5.5%, primarily due to an 8.5% increase in intra-Europe shipments. The strong dollar drove U.S. imports higher, while U.S. exports were down slightly.
International operating profit increased $81 million, or 17% over the adjusted results for the same period in 2014. Network improvements, volume growth and pricing initiatives all contributed to expanded operating margin and increased profitability. The segment experienced growth from middle-market accounts and improved premium product sales.
On a reported basis, operating profit increased $108 million after the transfer of certain post-retirement liabilities to defined contribution healthcare plans in the second quarter of last year.
Underlying base rates were up across all regions, though revenue per package decreased 2.4% on a currency-neutral basis. Lower fuel surcharges reduced reported revenue per package by about 350 basis points.
Supply Chain & Freight
Supply Chain & Freight revenue declined 4.5% to $2.2 billion, due to Forwarding revenue management initiatives, currency and lower fuel surcharges at UPS Freight. Operating profits improved $31 million, or 18% over the adjusted results for the same quarter 2014, driven by gains in Forwarding.
On a reported basis, operating profit increased $113 million after the transfer of certain post-retirement liabilities to defined contribution healthcare plans that occurred in the second quarter of 2014.
UPS Forwarding operating profit and margin expanded as the business unit continued to implement a disciplined pricing strategy across key trade lanes. The unit also benefited from improved market conditions and customer mix. Forwarding tonnage and revenue dropped during the quarter, primarily due to revenue management initiatives and the impact of currency fluctuations.
Distribution revenue increased at a mid-single digit growth rate. Growth in Mail services, Healthcare and Aerospace industries contributed to revenue improvements.
UPS Freight revenue declined 2.5% due to lower fuel surcharges and a drop in tonnage driven by changes in customer mix and slowing market growth. LTL (less-than-truckload) revenue per hundredweight growth remained positive, with a 1.4% gain.
“The second quarter results reflect continuing gains in our International business,” said Richard Peretz, UPS chief financial officer. “Even though the U.S. economy appears to be growing at a slower pace, our global portfolio and performance reinforces our expectations to attain the higher-end of the guidance range.”
The company’s guidance for 2015 full-year diluted earnings per share is $5.05 to $5.30, a 6% to 12% increase over adjusted 2014 results.
Copyright Photo: Michael B. Ing/AirlinersGallery.com. Boeing 767-34AF N302UP (msn 27240) arrives in Anchorage, Alaska.
FedEx Express (Memphis), a wholly owned subsidiary of FedEx Corporation (Memphis), has agreed to purchase 50 additional 767-300F aircraft from The Boeing Company. In addition to the 50 confirmed orders, FedEx also has options to purchase a total of 50 767F aircraft.
The 50 firm-order aircraft will be delivered from fiscal 2018 through fiscal 2023. Total capital spending for fiscal 2016 remains at $4.6 billion. The impact to capital spending in fiscal 2017 from this new order is immaterial. With this order, FedEx Express now holds a total of 106 firm orders for 767Fs from The Boeing Company through fiscal 2023.
The newer 767Fs will help the company retire its older aircraft. From this fleet plan as of May 31, 2015, the company was planning to retire the Airbus A310s in 2016 and the McDonnell Douglas MD-10-10s and MD-10-30s in 2021. This may now be expedited with this order.
The order will also help Boeing keep the 767 line going.
Copyright Photo: James Helbock/AirlinersGallery.com. Boeing 767-3S2F ER N102FE (msn 42707) approaches the runway at San Diego.
Cargojet Airways (Hamilton) has painted the first aircraft for the new Purolator contract.
Cargojet is taking over all Canada Post/Purolator flying after beating out Kelowna Flightcraft for the new contract.
On February 19, 2014 Cargojet announced they have been awarded the Domestic Air Cargo Network Services contract and have signed a Master Services Agreement with the Canada Post Group of Companies (CPGOC) for an initial seven-year (7) term with three (3) thirty-six month (36) renewal options. Projected revenues are estimated to be approximately one billion dollars during the initial seven-year agreement based on projected volumes.
Cargojet will provide comprehensive Canada-wide air cargo services for the Group of Companies, including Purolator’s national air cargo network. Cargojet’s domestic overnight network will be expanded and enhanced significantly to handle the additional volumes and provide a virtual dedicated Air Cargo Network to the Canada Post Group of Companies.
Purolator is Canada’s leading integrated freight and parcel solutions provider.
Copyright Photo: Chris Sands/AirlinersGallery.com. Former Star Air Boeing 767-39H ER C-FGSJ (msn 26256, ex OY-SRS) departs majestically from Calgary International Airport.
Southern Air Holdings, Inc. has announced that its affiliate, Worldwide Air Logistics Group, Inc., will expand and diversify its ACMI and CMI air cargo service offerings through the acquisition of new fleet platforms, expanded markets and growth of existing operations.
Southern Air Inc., a critical and growing provider of airlift services for DHL Express and other customers, will continue its operations as a subsidiary of Worldwide. Southern Air’s headquarters will remain in Florence, Kentucky.
As part of its efforts to expand service capacity, Worldwide also announced its agreement to acquire Florida West International Airways, Inc., a leading provider of 767-300 ACMI air cargo services. Florida West operates scheduled and charter services, primarily in Latin America, the Caribbean and the U.S. for its primary customer LAN Cargo. Florida West is based in Miami, Florida, where its headquarters will remain. Worldwide’s acquisition of Florida West is subject to regulatory approval.
Southern Air and Florida West will remain separate air carrier operating companies. Each carrier will continue to deliver on a standalone basis the outstanding performance and superior service their customers have grown to expect.
Copyright Photo: Brian McDonough/AirlinersGallery.com. The second Florida West operates Boeing 767-300F freighters. Boeing 767-346F N411LA (msn 35818) departs from Miami International Airport.
Aloha Air Cargo (Honolulu) is breaking out of the inter-Hawaii market. The company has announced it will acquire a Boeing 767-300F freighter and launch services to Los Angeles on October 23. The airline issued this statement:
Aloha Air Cargo is expanding their air cargo service with the addition of a direct, wide-body Boeing 767-300F aircraft from Los Angeles (LAX) to Honolulu (HNL). The new, five-times weekly roundtrip flight is scheduled to begin service October 23, 2014 adding needed capacity into and out of Los Angeles, CA. The new air cargo service will be geared toward freight forwarders, consolidators, passenger carrier partners, and businesses looking to sync up with Aloha’s existing interisland network, for seamless movement of through cargo shipments to the Neighboring Hawaiian Islands.
Aloha Air Cargo will be operating a Boeing 767-300F, with a maximum payload of 125,000 pounds, from Los Angeles International Airport on a Tuesday through Saturday rotation, departing at 2 am (0200) PST, and arriving into Honolulu International Airport at approximately 5 am HST (0500). Return flights will operate Monday through Friday, departing Honolulu at 2:30 pm HST (1430) and arriving into Los Angeles at approximately 10:45 pm PST (2245).
The flight will significantly increase Aloha’s domestic capacity between North America and the Pacific region, and improve service reliability and frequency for onward shipments into Kailua-Kona (KOA), Kahului (OGG), and across the State of Hawaii. Likewise, the wide-body capability will further strengthen the platform and service performance that the Aloha network offers customers and carriers shipping from Asia to the Americas.
ANA-All Nippon Airways (Tokyo) and Lufthansa Cargo AG (Frankfurt) will launch a strategic air cargo joint venture on routes between Japan and Europe and vice versa. This is the first worldwide cargo joint venture of its kind. ANA has received antitrust immunity, i. e. approval for the joint venture from the Japanese Ministry of Land Infrastructure and Transport after filing for it in the spring of 2014. In addition, the joint venture has been positively assessed by external counsel for compliance with relevant EU antitrust regulations.
Now ANA and Lufthansa Cargo can jointly manage activities covered by the joint venture including network planning, pricing, sales and handling on all routes between Japan and Europe and vice versa. Based on a joint contract which shall be signed in the next weeks, the two carriers aim to introduce the joint approach on shipments originating from Japan to Europe in winter 2014/2015 and for shipments from Europe to Japan mid-2015.
The joint venture will benefit customers by generating a greater selection of routings and a wider range of service options. Customers will especially profit from a larger and faster network with more direct flights, more destinations and more frequencies. By their moving under one roof at major stations, such as the airports Tokyo Narita and Nagoya in Japan and Dusseldorf and Frankfurt in Germany, customers will enjoy the services of both airlines at a single location.
Top Copyright Photo: Michael B. Ing/AirlinersGallery.com. ANA Cargo’s Boeing 767-381F ER JA602F (msn 33509) arrives at bthe Tokyo (Narita) base.
Bottom Copyright Photo: Rob Skinkis/AirlinersGallery.com. Boeing 777-FBT D-ALFC (msn 41676) of Lufthansa Cargo lands at Manchester.
Atlas Air Worldwide Holdings, Inc. (New York) today (August 27) said that its Atlas Air, Inc. (New York) unit will provide expanded operating service for DHL Express’ North American route network using four additional Boeing 767-200 freighter aircraft owned by DHL. Atlas Air expects to start flying the first incremental aircraft in December 2014, and to operate all four by the end of January 2015.
The operation represents a continued expansion of Atlas Air’s non-asset-intensive CMI (Crew, Maintenance and Insurance) service solution, as well as its Boeing 767 platform. With the addition of the aircraft to Atlas Air’s operating certificate, the company’s fleet of Boeing 767s will increase to 15 aircraft, including nine operated for DHL in North America and two for DHL in the Asia-Pacific region.
Copyright Photo: Michael B. Ing/AirlinersGallery.com. Atlas Air also operates Boeing 767-300F freighters for DHL. Atlas Air’s Boeing 767-3JHF N644GT (msn 37810) dressed in DHL’s well-known yellow and red livery arrives in Tokyo (Narita).