Tag Archives: Baltimore-Washington Thurgood Marshall International Airport

Delta explains its aircraft fleet strategy, follows-up on CEO Anderson’s “aircraft bubble” comment

Delta Air Lines (Atlanta) has issued this statement explaining its fleet strategy is driven by opportunity and flexibility:

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Delta does things differently than most airlines, and that includes the way it buys airplanes.

While most big carriers replenish and expand their fleets with brand new jets, which are either leased or purchased, Delta has purchased a mix of new and used aircraft over the past several years.

Ed Lohr, Delta’s Managing Director of Fleet Strategy, explained that the airline looks at the entire cost of jet – the purchase price, the maintenance costs, fuel efficiency and other factors – before making decisions. Often, used aircraft make the most economic sense for the airline.

And thanks to Delta’s TechOps aviation maintenance team, used planes can be maintained and retrofitted with entirely new interiors, providing a superior customer experience even though the jet may be a few years old.

And Delta typically purchases planes outright rather than leasing them.

“We do have a different strategy than most of our competitors,” Lohr said. “When you have a strong balance sheet like we do, a great TechOps organization like we do, it gives you a lot more flexibility to take advantage of opportunities when they come up.”

Above Copyright Photo: Brian McDonough/AirlinersGallery.com. Ex-AirTran Airways Boeing 717-231 N925AT (msn 55079) arrives at Baltimore/Washington (BWI). N925AT was formerly painted in the special “The Wizarding World of Harry Potter” (Universal) livery.

For example, Delta acquired 88 used Boeing 717 (above) after Southwest inherited them in its merger with AirTran Airways. Those jets fill a critical role in Delta’s domestic network, and were given nose-to-tail revamps before entering service.

Delta has similarly scoured the world for used MD-90 jets, reliable narrowbodies that are also dramatically upgraded and brought into the fleet at a very reasonable price.

Still, Delta will buy new when it makes sense. For example, the airline recently ordered 25 fuel-efficient Airbus A350-900s to fly primarily long-haul trans-Pacific routes starting in 2017.

The aircraft strategy is one of the reasons Delta has been able to pay off more than $10 billion in debt since 2008, and has seen its credit rating rise to just one notch below investment grade. Less money is tied up in expensive new jets, and instead can be invested in airport facilities, operational performance, new technology and on-board improvements to enhance the customer experience.

“The days of buying just one brand of aircraft, or signing huge orders all at once, those are definitely over,” Lohr said. “At least, they are for us.”

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Graph:

Delta Mainline Fleet Graph (Delta)(LRW)

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In a related story, Delta also issued this further clarification after CEO Richard Anderson’s recent comment about an “aircraft bubble” (also reported by us):

The aviation world was buzzing last week after Delta CEO Richard Anderson discussed an “aircraft bubble” that has been dramatically pushing down prices of used widebody aircraft.

“We’re seeing a huge bubble in excess wide-body airplanes around the world,” Anderson said during Delta’s third quarter earnings conference call. Anderson said he had seen mid-life Boeing 777-200 aircraft being available in the market at about $10 million.

Delta’s aircraft experts, Greg May, Senior Vice President – Supply Chain Management, and Ed Lohr, Managing Director – Fleet Strategy, told Delta News Hub that several trends have conspired over the last few years to create a “perfect storm” driving down prices.

The major factors:

A large number of leased widebody aircraft are being returned to lessors and manufacturers, causing a glut in the market.

Boeing 777While Delta generally purchases both new and used aircraft, many carriers lease new planes, turning them in when the lease ends, usually after seven to 10 years. Those aircraft often end up on the used airplane market.

One factor driving the large number of leased aircraft now being sold is the nearly four-year delay in deliveries of Boeing’s 787 jet, Lohr said. The delay caused many airlines to lease Airbus A330 and Boeing 777 aircraft (left) to bridge the gap while waiting for their orders to be fulfilled. Many of those aircraft are now nearing the end of their leases and being returned.

One aircraft in particular – the Boeing 777-200ER powered by Rolls-Royce Trent engines –will be entering the used market in significant numbers over the next couple years, May said. He also cited the new Airbus A350 (below), a twin-engine long-haul competitor to the Boeing 787, which has reduced demand for the 777.

“There was a time when the 777 had that market all to itself,” May said. “With the A350 and the 787 that’s no longer the case, so it’s not as attractive.”

Softness in the international economy has slowed capacity growth and reduced demand for wide-body aircraft, pushing down prices.

Economic softness in Asia and Latin America has caused many foreign airlines to tamp down growth plans. That has resulted in leased widebody aircraft being returned earlier than expected.

“They are paying the rent on those planes every month, so it’s very expensive to park them,” Lohr said. “That’s why they are not extending leases and in some cases are willing to pay a penalty to get out of other lease early, in each case, increasing the availability of used aircraft in the market.”

In addition, lower fuel prices have blunted a major advantage of new planes, which tend to be more fuel efficient.

Cheap financing created a demand for new aircraft, lowering the value of used jets.

Historically airlines in small and developing nations primarily leased or purchased used aircraft because they couldn’t afford new jets. But a wave of cheap financing, some from export credit agencies, has made it much easier for those airlines to buy new planes. Less demand for used aircraft means lower prices.

Airbus A350Lohr likened the widebody jet bubble to the housing bubble in the U.S. that burst in 2008 and collapsed the real estate market.

“Why did we have a real estate bubble? Because anyone and his brother could get a loan,” he said. “It’s the same story with new airplanes.”

While these factors have primarily impacted the widebody market, the narrowbody market is likely to be affected as well, Lohr said.

“The economics and the trends will eventually get to the narrowbodies,” he said.

After Anderson’s comments, Boeing’s stock value plunged. Analysts issued a flurry of reports debating the issue, and the question will likely be in the spotlight this week when Boeing announces its third quarter earnings.

Reuters reported Friday that Boeing may need to slow production of its Boeing 777 because of the weakness in the used aircraft market. Orders for the current generation 777 have fallen from 194 in 2011 to 63 in 2014 and just 34 this year, according to the report.

“Boeing is going to have to slow down the production rate,” Gueric Dechavanne of appraisal firm Collateral Verifications told Reuters.

Despite the attention that Anderson’s remarks received, Delta isn’t in negotiations to purchase used planes for the airline to fly right now, May said.

During the earnings call, Anderson said that he expects prices to decline further.

“Prices are going to get lower,” he said. “You wouldn’t strike a deal now.”

Delta Air Lines aircraft slide show (current livery): AG Airline Slide Show

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450 Southwest Airlines flights impacted yesterday due to computer systems, may persist today

Southwest Airlines (Dallas) yesterday (October 11) experienced computer problems that delayed approximately 450 flights (out of 3,600 scheduled flights). The airline is warning the problems could persist today. The airline has issued this statement:

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We’re continuing to use back-up systems around the country to check-in Customers arriving at our airports without printed or mobile boarding passes. Intermittent performance issues continue impacting our in-airport Customer Service technology systems and across our online platforms (Southwest.com, Southwest Mobile App and site).

We have teams working around the country to support getting our Customers and their checked luggage to their destinations tonight; other groups are troubleshooting multiple applications to determine the cause of some technical challenges experienced Sunday which, as of 6:30pm CDT, have delayed approximately 450 flights (out of 3600 scheduled on Sunday); other groups are making operational decisions to minimize impacts for those who are checking in for travel tomorrow.

We urge Customers traveling Monday to visit Southwest.com to check-in and print boarding passes before coming to the airport. We also encourage Customers to arrive at least two hours prior to their scheduled departures to help minimize delays. Finally, if checking luggage, visit a self-service kiosk adjacent a ticket counter to print bag tags where applicable and present your luggage and identification to Southwest Employees.

We thank our Employees for their tireless efforts to take care of our Customers, and we appreciate our Customers’ patience as we work towards a solution.

Copyright Photo: Tony Storck/AirlinersGallery.com. The former Sea World “Shamu” logo jet, now Boeing 737-7H4 WL N715SW (msn 27849) in the new 2014 livery, arrives at Baltimore/Washington (BWI).

Southwest Airlines aircraft slide show (current livery): AG Airline Slide Show

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Southwest Airlines and its pilots reach a tentative agreement on a new contract

Southwest Airlines (Dallas) has announced a new tentative agreement with the Southwest Airlines Pilots’ Association (SWAPA), the Union that represents the Company’s Pilots. SWAPA’s Board of Directors reviewed an Agreement in Principle that negotiators reached earlier this month and decided to conduct a ratification vote that could end more than three years of negotiations.

The Company said the agreement offers wage increases and work-rule changes that will benefit the pilot group and position Southwest to continue its expansion both domestically and internationally.

Union Leaders will communicate with Pilots over the next few weeks to share the details and terms of the agreement. The ratification vote will close November 4. If Pilots approve the deal, the contract will become amendable April 1, 2019.

Southwest employs more than 8,000 Pilots. They operate a growing fleet of 737s and fly roughly 3,600 flights a day to 95 destinations across the United States and six international destinations.

Copyright Photo: Brian McDonough/AirlinersGallery.com. The Triple Crown One special livery is now on a Boeing 737-700 with the updated tail markings. Boeing 737-7H4 N409WN (msn 27896) arrives at Baltimore-Washington Thurgood Marshall International Airport (BWI).

Southwest Airlines aircraft slide show (current livery): AG Airline Slide Show

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American to start Dallas/Fort Worth – Quito flights

American Airlines (Dallas/Fort Worth) will start a new route from its Dallas/Fort Worth (DFW) hub to Ecuador in December. The carrier will start DFW – Quito flights five days a week starting on December 18 per Airline Route.

Copyright Photo: Tony Storck/AirlinersGallery.com. Airbus A319-112 N756US (msn 1340) prepares to land at Baltimore-Washington Thurgood Marshall International Airport (BWI).

American Airlines aircraft slide show (current livery only): AG Airline Slide Show

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Southwest’s flight attendants vote down the tentative agreement

Southwest Airlines‘ (Dallas) flight attendants have turned down the tentative contract by a large 87 percent margin. The airline issued this statement:

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Southwest Airlines (LUV) has announced that its Flight Attendants have voted down a tentative agreement that would have ended two years of negotiations. Representatives for Transport Workers Union (TWU) Local 556 say Flight Attendants rejected the deal by 87 percent of those casting ballots. Nearly 89 percent of eligible Flight Attendants voted.

“This agreement ensured that our Flight Attendants would stay atop the industry in pay and benefits,” said Randy Babbitt, Southwest Senior Vice President Labor Relations. “It improved the Company’s competitiveness with certain work-rule changes and supported our evolving network, both domestically and in international markets. So naturally we’re disappointed that it didn’t pass.”

The deal was slated to run through May 2019 and contained fixed wage increases, cash bonuses, and quality of life improvements. Southwest says it remains committed to reaching an agreement that best serves the interests of both the Company and its Flight Attendants.

“Knowing how volatile our industry can be, I can’t imagine a better time to secure an agreement,” said Vice President Cabin Services Mike Hafner. “But together we will find a way to move forward. Southwest Flight Attendants are the finest in the industry, and I am continuously proud of their consistent efforts and the caring service they provide our Customers.”

Southwest expects TWU leadership will take some time to evaluate the results prior to returning to direct bargaining. But for now, Southwest Flight Attendants will continue working under the terms of their current agreement, which became amendable May 31, 2013.

Copyright Photo: Tony Storck/AirlinersGallery.com. Boeing 737-76N N7718B (msn 32665) approaches the runway at Baltimore-Washington Thurgood Marshall International Airport (BWI).

Southwest Airlines aircraft slide show: AG Airline Slide Show

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Southwest to hire an additional 650 customer service representatives

Southwest Airlines (Dallas) has issued this statement:

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Southwest Airlines is on a mission to hire an additional 650 Customer Service Representatives at call centers in Albuquerque, N.M.; Phoenix; and San Antonio. Southwest Airlines Customer Service Representatives provide the legendary Customer Service Southwest Airlines is known for while resolving Customer concerns, providing information, and assisting with reservations.

“A passion for helping people is a key to success in Southwest’s Customer Service Representative role,” said Julie Weber, Vice President People. “We are looking for hardworking, fun-loving, and caring people who will give their all to help connect our Customers to what’s important in their lives.”

Southwest is frequently recognized as a best place to work. Most recently: 21 consecutive years on FORTUNE’s list of World’s Most Admired Companies (#7 in 2015); ranked as the top airline employer and one of the top 20 best employers overall on Forbes’ list of America’s Best Employers; and named One of the Best Places to Work in 2015 by Glassdoor.

More than just a paycheck, a career at Southwest Airlines comes with several perks, from Southwest’s legendary Culture to travel privileges for Employees and their eligible dependents. Southwest offers an excellent benefits package, including a very generous dollar-for-dollar match in the 401(k) plan, subject to vesting requirements, as well as a ProfitSharing Plan, which, for 2014, contributed approximately five weeks of pay toward retirement accounts for eligible Employees.

Experience working in customer service is preferred. Interested applicants should apply now at Southwest.com/careers.

Copyright Photo: Tony Storck/AirlinersGallery.com. Boeing 737-790 N560WN (msn 30542) approaches the runway at Baltimore/Washington (BWI).

Southwest Airlines aircraft slide show (current livery): AG Airline Slide Show

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Southwest Airlines crosses the 100 flight milestone to Latin America and the Caribbean

Southwest Airlines (Dallas) for the first time will operate a summer Saturday schedule of 104 scheduled flights among a dozen airports in the continental United States and ten cities across the Caribbean, Mexico, and Central America.

At Los Cabos International Airport (SJD) near San Jose del Cabo, Mexico, Southwest flight 394 touched down on June 13 from Baltimore/Washington International Thurgood Marshall Airport (BWI), and was welcomed with a ceremonial water arch and a reception at the gate. The nonstop service to/from BWI and the international airport in Baja California Sur operates weekly on Saturdays, and is the carrier’s fourth nonstop market to the Cabo San Lucas region.

The carrier began service in its 95th city, Puerto Vallarta, Mexico, via Lic. Gustavo Diaz Ordaz International Airport (PVR) on Sunday, June 7, with daily, nonstop service to/from Orange County/Santa Ana (SNA) and connecting points across the U.S. The carrier has also announced daily, nonstop service between PVR and both Denver and Houston (Hobby). The Ministers of Tourism for both Mexican States of Jalisco and Nayarit are expected to welcome Southwest Airlines in its first month of serving Puerto Vallarta on June 18, the carrier’s 44th birthday.

Southwest spread its wings beyond the 48 contiguous United States in April 2013 with service to San Juan, Puerto Rico. The carrier’s international operations began less than a year ago on July 1, 2014, and include daily, near-international or longer-distance/over-water flights from a dozen gateway cities: Atlanta, Austin, Baltimore/Washington, Chicago (Midway), Denver, Houston (Hobby), Fort Lauderdale, Milwaukee, Orange County/Santa Ana, Orlando, San Antonio, and Tampa Bay. Southwest offers service between the U.S. mainland and San Juan, Puerto Rico, along with these destinations in six countries: Cancun, Mexico City, San Jose del Cabo/Los Cabos, and Puerto Vallarta, Mexico; San Jose, Costa Rica; Oranjestad, Aruba; Nassau, The Bahamas; Montego Bay, Jamaica; and Punta Cana, Dominican Republic.

Next up for Southwest is previously announced scheduled service to the carrier’s seventh near-international country and 96th destination, Belize City, Belize, made possible by a $156 million international terminal facility at Houston (Hobby) scheduled to open October 15, 2015. Then, on November 1, Southwest begins previously announced scheduled service between Houston and the carrier’s 97th city, Liberia, Costa Rica. Both routes are subject to foreign government approval.

Top Copyright Photo: Brian McDonough/AirlinersGallery.com. Boeing 737-7H4 N909WN (msn 32458) in the special Beats Music motif arrives at Baltimore-Washington Thurgood Marshall International Airport (BWI).

Southwest Airlines aircraft slide show (current livery): AG Airline Slide Show

Route Map: Southwest Airlines’ foreign expansion to Mexico, Central America and the Caribbean (click on the map for the larger view):

Southwest 6.15 Foreign Route Map