Tag Archives: Boeing 737-8 MAX 8

SpiceJet brings in oxygen concentrators to India from China, defers 50% of its employee’s salaries

"White Pepper"

SpiceJet is doing its part to help in the COVID-19 surge in India. The company has brought in over 4,400 oxygen concentrators to India from China in the past two weeks. The company made this announcement on social media:

In other news, SpiceJet is reeling due to the COVID crisis in India. The airline is deferring up to 50% of its employee’s salaries for April due to a capital crunch and a severe drop in passenger traffic.

Top Copyright Photo: SpiceJet Boeing 737-8 MAX 8 VT-MXM (msn 60225) PAE (Nick Dean). Image: 948124.

SpiceJet aircraft slide show:

Blue Air goes to double daily on the London Heathrow route

Blue Air Boeing 737-8 MAX 8 YR-MXB (msn 43306) BFI (Nick Dean). Image: 953461.

Blue Air made this announcement:

Blue Air operates a double daily service between Bucharest and London Heathrow Airport T2, becoming the largest carrier on this route.

Only five months after the successful route launch, Blue Air is upgrading its service between Bucharest Otopeni – London Heathrow Terminal 2 to a twice daily, becoming the largest airline operating between Bucharest and London Heathrow, the most important airport in the UK and one of the best-connected hubs in Europe and in the world.

Top Copyright Photo: Blue Air Boeing 737-8 MAX 8 YR-MXB (msn 43306) BFI (Nick Dean). Image: 953461.

Blue Air aircraft slide show:

Air Canada to extend its sun destinations ban until the end of May

Air Canada Boeing 737-8 MAX 8 C-FSNQ (msn 61222) YYZ (TMK Photography). Image: 953407.

Air Canada has extended the ban on sun destination passenger flights to the Caribbean and Mexico from April 30 to May 31 due to COVID-19.

The carrier is operating some critical cargo-only flights to the region.

This announcement follows WestJet which is suspending similar flights until June 4.

Top Copyright Photo: Air Canada Boeing 737-8 MAX 8 C-FSNQ (msn 61222) YYZ (TMK Photography). Image: 953407.

Air Canada aircraft slide show:

American Airlines Group Inc. reports a first quarter net loss of $1.3 billion

American Airlines Boeing 737-8 MAX 8 N327SK (msn 44478) BFI (Joe G. Walker). Image: 952451.

American Airlines Group Inc. today reported its first-quarter 2021 financial results, including:

  • First-quarter revenue of $4.0 billion, down 53% year over year on a 39% year-over-year reduction in total available seat miles (ASMs).
  • First-quarter net loss of $1.3 billion, or ($1.97) per share. Excluding net special items1, first-quarter net loss was $2.7 billion, or ($4.32) per share.
  • Raised $10 billion through debt offering backed by the AAdvantage program and used a portion of the proceeds to prepay in full the secured loan from the U.S. Department of the Treasury.
  • Ended the first quarter with approximately $17.3 billion of total available liquidity. Company expects to end the second quarter with approximately $19.5 billion in total available liquidity.

“We are incredibly proud of the American Airlines team for their continued care of our customers and each other,” said American’s Chairman and CEO Doug Parker. “Our team has shown up every day throughout the pandemic and served more customers than any other airline. That focus has served as our inspiration and positions us well as even more customers return to the skies.

“Looking forward, with the momentum underway from the first quarter, we see signs of continued recovery in demand. We remain confident the network enhancements, customer-focused improvements and efficiency measures we’ve put into place will ensure American is well-positioned for the recovery.”

American continues to take steps to strengthen its business and respond to the pandemic, with an emphasis on supporting its customers, team members and communities; reducing costs; and improving its liquidity position and balance sheet.

To support its customers, team members and communities, American:

  • Enhanced its travel planning tool to help customers make informed decisions on where to travel and what to expect upon arrival. With one click, customers can view quarantine, document or testing requirements, as well as book flights.
  • Expanded acceptance of VeriFLY, the mobile health wallet that simplifies and verifies travel requirements, to include all international flights to the U.S. and flights from the U.S. to 11 countries. American’s partners Aer Lingus, British Airways, Iberia and Japan Airlines also began accepting VeriFLY during the first quarter.
  • Expanded its touchless technology trial to allow customers to use biometric scanners to check their bags prior to departure at Dallas-Fort Worth International Airport (DFW). American will utilize the same technology to allow customers to gain entrance to an Admirals Club lounge at DFW later this year and will consider additional airport solutions going forward.
  • Updated its mask requirement to align with directives from the Centers for Disease Control and Prevention and the Transportation Security Administration.
  • Expanded preflight COVID-19 testing options to give customers access to in-person testing at more than 150 local urgent care facilities and hospitals through GoHealth Urgent Care. American also now allows customers to redeem AAdvantage® miles for at-home COVID-19 testing kits through LetsGetChecked.
  • Canceled the 13,000 WARN notices sent to team members in February following the passage of the COVID-19 relief package that includes an extension of the Payroll Support Program (PSP).
  • Introduced an incentive program to encourage team members to get the COVID-19 vaccine. American’s U.S.-based mainline and wholly owned team members who get vaccinated will receive an extra vacation day in 2022 as well as $50 in recognition points.
  • Partnered with health care providers and airports to establish on-site team member vaccination locations in Chicago, Charlotte, Dallas-Fort Worth and Tulsa.
  • Continued to transport critical goods, including the COVID-19 vaccine, through strategic cargo-only flights. American helped customers move 230 million pounds of goods around the world in the first quarter, including 98 million pounds on its nearly 2,700 cargo-only flights.
  • Reached agreements with Deloitte and Kuehne+Nagel to help stimulate more production of sustainable aviation fuel and help our customers reduce their emissions from travel.

To reduce costs and conserve cash, American:

  • Incorporated more than $1.3 billion of permanent non-volume cost reductions into its 2021 plans. This includes approximately $500 million in management reductions, $600 million in labor productivity enhancements, and $200 million in other permanent cost reductions.
  • Reached an agreement with Boeing to defer and convert five 787-8 aircraft to 787-9 aircraft. These deliveries are now expected to occur in 2023 and will retain their existing financing. American’s remaining 14 787-8 aircraft will now be delivered by the end of the first quarter of 2022.
  • Exercised its remaining deferral rights on the Boeing 737 MAX aircraft that were previously scheduled to be delivered in 2021 and 2022. With this adjustment, the delivery of these 18 MAX aircraft is now expected to occur in 2023 and 2024.Photo: Joe G. Walker.
  • Accelerated its cabin-standardization program by a year with all Boeing 737s expected to be completed by the second quarter of 2021 and all Airbus A321s expected to be completed by the end of 2021.
  • Enhanced its technology capabilities through a virtual assistant for customers in the American Airlines mobile app; ConnectMe, a real-time chat tool for airport team members; and an automated crew recovery program.
  • Opened a new voluntary early out program in February, which approximately 1,600 team members opted into.

To improve its liquidity position and balance sheet, American:

  • Reduced its average cash burn rate2 to approximately $27 million per day in the first quarter. This includes approximately $9 million per day in regular debt principal and cash severance payments. For the month of March, the Company’s estimated average daily cash burn rate was approximately $4 million. Excluding approximately $8 million per day of regular debt principal and cash severance payments, the Company’s cash burn rate turned positive in March.
  • Obtained the right to access an additional $3.3 billion in financial assistance through the COVID-19 relief package passed and signed into law in early March. In addition to extending the PSP, the legislation will allow the Company to defer approximately $2 billion in pension funding over the next five years.
  • Issued $6.5 billion of bonds and entered into a new $3.5 billion term loan facility, using the AAdvantage program as collateral for both.
  • Used a portion of the proceeds from the AAdvantage financing to prepay its secured loan from the U.S. Department of the Treasury. In doing so, American has terminated its loan commitments under the secured loan agreement authorized by the CARES Act.
  • Repaid in full $2.8 billion under three separate revolving credit facilities, reducing the Company’s outstanding debt by $2.8 billion without changing its total available liquidity. American is able to draw upon the revolving commitments again or leave them undrawn, per the terms of the underlying credit agreements until such commitments expire, which is currently scheduled to occur in October 2024 for substantially all of the commitments.
  • Related to the aforementioned deferral of Boeing 737 MAX aircraft, in April the Company elected to prepay $248 million of outstanding loans under its pre-delivery payment 737 MAX credit facility with the related pre-delivery deposits to be returned to the Company from the resulting deferral.
  • Expects to end the second quarter with approximately $19.5 billion in total available liquidity.

Network and partnerships

American advanced its newly formed partnerships with Alaska Airlines and JetBlue Airways in the first quarter. Alaska officially joined oneworld as a full member, giving customers more choices and benefits and a seamless travel experience not only on the West Coast but throughout the world. American also expanded its codeshare with Alaska and launched new service between Seattle/Tacoma and London. Additionally, American and JetBlue together will introduce 57 new domestic and international routes for customers in New York and Boston beginning in June. The airlines are also significantly expanding their codeshare to include more than 100 new flights. The Alaska and JetBlue partnerships will continue to deliver significant benefits for consumers and allow for efficient growth, with new service launching later this year between Seattle and Shanghai and Bangalore, and between New York and Tel Aviv, Athens, Santiago and New Delhi.

Top Copyright Photo: American Airlines Boeing 737-8 MAX 8 N327SK (msn 44478) BFI (Joe G. Walker). Image: 952451.

American Airlines aircraft slide show:

Southwest Airlines reports its first quarter 2021 financial results, reports on its fleet plans

Southwest Airlines Company today reported its first quarter 2021 financial results:

  • First quarter net income of $116 million, or $.19 per diluted share, driven by a $1.2 billion offset of salaries, wages, and benefits expenses from the extended Payroll Support Program (PSP Extension) proceeds under the Consolidated Appropriations Act, 2021
  • Excluding special items1, first quarter net loss of $1.0 billion, or $1.72 loss per diluted share
  • First quarter operating revenues of $2.1 billion, down 51.5 percent year-over-year
  • Ended first quarter with liquidity2 of $15.3 billion, well in excess of debt outstanding of $10.8 billion

Gary C. Kelly, Chairman of the Board and Chief Executive Officer, stated, “In first quarter, we benefited from temporary cost relief as a result of PSP Extension proceeds, which offset a portion of salaries, wages, and benefits expenses, resulting in first quarter 2021 net income of $116 million, or $.19 per diluted share. We remain grateful for this much-needed federal payroll support on the heels of substantial losses in 2020, and ongoing non-GAAP losses in first quarter 2021. The payroll support from the federal government has allowed Southwest to preserve its 50-year history without involuntary layoffs or furloughs, an achievement unprecedented in the U.S. airline industry. Excluding the benefit of PSP Extension proceeds and other special items, our first quarter 2021 net loss was $1.0 billion, or $1.72 loss per diluted share. While the pandemic is not over, we believe the worst is behind us, in terms of the severity of the negative impact on travel demand. Vaccinations are on the rise, and COVID-19 hospitalizations in the United States are down significantly from their peak in January 2021. As a result, we are experiencing steady weekly improvements in domestic leisure bookings, which began in mid-February 2021.

March 2021 operating revenues decreased 9.7 percent, year-over-year, and decreased 53.5 percent compared with March 2019, representing a significant improvement from relatively stagnant revenue levels experienced from September 2020 through February 2021. Our current outlook for operating revenues indicates a sequential improvement from March to April 2021, and again from April to May 2021, based on improving bookings. We believe there is significant pent-up demand for leisure travel and are optimistic about summer 2021. In response, we are in the process of adding flights in June 2021, and we currently expect June available seat miles (ASMs, or capacity) to be only slightly less than June 2019 pre-pandemic levels.

“We had a solid cost performance in first quarter 2021, despite recently rising jet fuel prices. Spending levels in many cost categories remained muted due to the pandemic. We expect capacity-driven year-over-year cost increases in second quarter 2021, most notably as we return parked aircraft to revenue service and recall a portion of our Pilots, Flight Attendants, and Ground Operations Employees from extended time-off to support increased flight levels planned for summer 2021. We currently expect second quarter 2021 operating expenses, excluding fuel and oil expense, special items, and profitsharing, to increase in the range of 10 to 15 percent, year-over-year, but remain below second quarter 2019 levels3.

“Our liquidity is strong, and we remain the only U.S. airline with an investment-grade credit rating by all three rating agencies. As of March 31, 2021, our total liquidity was $15.3 billion, consisting of cash and short-term investments of $14.3 billion and a fully available revolving credit facility of $1.0 billion. Average core cash burn4 was approximately $9 million per day in March 2021, and approximately $13 million per day in first quarter 2021. Including changes in working capital—most notably, cash flow from future bookings—average core cash flow turned positive in March 2021, and we generated approximately $4 million per day, as revenue and booking trends improved. Our average core cash burn in second quarter 2021 is currently estimated to be in the range of $2 million to $4 million per day. Based on current booking trends and cost outlook, we are hopeful we can achieve breakeven average core cash flow, or better, by June 2021.

Southwest Airlines Boeing 737-8 MAX 8 N8815L (msn 65473) BFI (Nick Dean). Image: 953374.

Above Copyright Photo: Southwest Airlines Boeing 737-8 MAX 8 N8815L (msn 65473) BFI (Nick Dean). Image: 953374.

We returned the Boeing 737 MAX (MAX) to revenue service on March 11, 2021. To return the MAX to service, we satisfied applicable Federal Aviation Administration (FAA) requirements by modifying certain operating procedures; implementing enhanced Pilot training requirements; installing FAA-approved flight control software updates; and completing other required maintenance tasks specific to MAX aircraft, as well as completing more than 200 readiness flights. Also in March 2021, as previously disclosed, we completed discussions with The Boeing Company (Boeing) regarding the restructuring of our delivery schedule for MAX aircraft, and added 100 firm orders for MAX 7 aircraft; converted 70 MAX 8 firm orders to MAX 7 firm orders; added 155 MAX options; and extended the order book through 2031. This cost-effective MAX order book allows us to maintain the operational efficiencies of an all-Boeing 737 fleet to support our low-cost, point-to-point route network; accelerate our commitment to fleet modernization with more climate-friendly aircraft; and capitalize on future growth opportunities.

“This year marks our 50th anniversary, and we celebrate what has made Southwest Airlines the most successful airline in the world—our Employees. We applaud our People for their unwavering focus on Hospitality, which has resulted in the U.S. airline industry’s top Customer Service ranking for 27 of the past 30 years5. Never has their resilience been more vital, as we work our way through the pandemic recovery while pursuing new airports and Customers.

“It is crucial that we continue managing our business prudently in the near-term, while also positioning ourselves to thrive and prosper, once again. We are increasingly optimistic about our future, and we are in the process of updating our strategic plan with a clear set of initiatives for the next five years. Among these initiatives are the aggressive expansion of our route network, having opened or announced 17 new airports since the pandemic began; the launch of Global Distribution System (GDS) access for corporate travelers; the acceleration of fleet modernization efforts to replace our 737-700 aircraft with the MAX; and the development of tangible steps that are aimed at improving upon our environmental stewardship and supporting our environmental sustainability goal to be carbon neutral by 2050. Being a good steward of the environment is not only good for our Planet, it is good for business, and it is the right thing to do for our Employees, Customers, and Shareholders.”

Revenue Results and Outlook
The Company’s first quarter 2021 operating revenues decreased 51.5 percent, year-over-year, to $2.1 billion, as a result of negative impacts to passenger demand and bookings due to the pandemic. First quarter 2021 operating revenue per ASM (RASM, or unit revenues) was 8.86 cents, a decrease of 26.0 percent, primarily driven by a passenger revenue yield decrease of 28.4 percent and a load factor decline of 3.4 points, all year-over-year.

The Company began first quarter 2021 experiencing stalled demand and bookings in January, driven by a high level of COVID-19 cases, coupled with typical seasonal weakness. In mid-February 2021, the Company began experiencing a modest improvement in leisure passenger demand and bookings that accelerated in March 2021. Passenger fares improved throughout March as close-in leisure demand held steady. Beach and other nature-inspired destinations continued to outperform other regions in first quarter 2021. Beginning in March 2021, demand improvement was system-wide.

The following table presents selected revenue and load factor results for first quarter 2021:

January 2021

February 2021

March 2021

1Q 2021

Operating revenue year-over-year

Down 65.5%

Down 65.7%

Down 9.7%

Down 51.5%

Previous estimation

Down ~66%

Down ~66%

Down 15% to 20%

(a)

Operating revenue compared with 2019

Down 65.1%

Down 64.0%

Down 53.5%

Down 60.1%

Previous estimation

Down ~65%

Down ~64%

Down 55% to 60%

(a)

Load factor

53.4%

63.9%

72.7%

64.3%

Previous estimation

~53%

~64%

65% to 70%

(a)

(a) No previous estimation provided.

Thus far, the Company continues to experience improvements in leisure passenger demand and bookings for April and May 2021 travel, with expectations of improving passenger traffic and fares compared with March 2021. The Company continues to experience an increase in bookings farther out on the booking curve, with approximately 35 percent and 20 percent of anticipated bookings currently in place for June and July, respectively. These represent fairly typical future booking patterns; however, business travel continues to significantly lag leisure and is expected to have a significant negative impact on close-in demand and average passenger fares.

The following monthly table presents selected preliminary estimates of revenue and load factor for April and May 2021:

Estimated
April 2021

Estimated
May 2021

Operating revenue compared with 2019 (a)

Down 40% to 45%

Down 35% to 40%

Previous estimation

Down 45% to 55%

(b)

Load factor

75% to 80%

75% to 80%

Previous estimation

70% to 75%

(b)

(a) The Company believes that operating revenues compared with 2019 is a more relevant measure of performance than a year-over-year comparison due to the significant impacts in 2020 due to the pandemic.

(b) No previous estimation provided.

The Company achieved its goal of accepting corporate travel bookings in 2020 with Amadeus’s GDS platform and Travelport’s multiple GDS platforms: Apollo, Worldspan, and Galileo. In December 2020, the Company reached a full-participation GDS agreement with Sabre, anticipated to go live by Labor Day 2021. The Company also has an agreement with Airlines Reporting Corporation (ARC) to implement industry-standard processes to handle the settlement of tickets booked through Travelport and Amadeus channels. Once the new Sabre GDS connectivity is implemented, Sabre tickets are also expected to settle via ARC. The Company’s enhancement of its GDS channel strategy complements its expansion of direct connect via Airline Tariff Publishing Company’s (ATPCO) New Distribution Capability (NDC) Exchange and existing SWABIZ® options, with the goal of distributing its everyday low fares to more corporate travelers through their preferred channel.

Cost Performance and Outlook
First quarter 2021 total operating expenses decreased 57.3 percent, year-over-year, to $1.9 billion. Excluding special items, first quarter 2021 operating expenses decreased 23.5 percent, year-over-year, to $3.3 billion. Total operating expenses per ASM (CASM, or unit costs) decreased 34.9 percent, compared with first quarter 2020. Excluding special items, first quarter 2021 CASM increased 16.7 percent, year-over-year.

The following table presents economic fuel costs per gallon1, including the impact of fuel hedging premium expense and fuel derivative contracts, for first quarter 2021 and the prior year period:

First Quarter

2021

2020

Economic fuel costs per gallon

$1.70

$1.90

Fuel hedging premium expense

$25 million

$24 million

Fuel hedging premium expense per gallon

$0.09

$0.05

Fuel hedging cash settlement gains per gallon

$0.01

The Company continued to operate fewer of its oldest, least fuel-efficient Boeing 737-700 aircraft as a result of capacity reductions due to the pandemic, which resulted in a year-over-year improvement of 4.7 percent in ASMs per gallon (fuel efficiency) in first quarter 2021. While the Company expects to return more of its 737-700 aircraft to service to support planned capacity increases, second quarter 2021 fuel efficiency is currently estimated to be sequentially in line with first quarter 2021, on a nominal basis, also taking into account the return of its most fuel-efficient aircraft, the MAX, to service in March 2021.

Based on the Company’s existing fuel derivative contracts and market prices as of April 15, 2021, the following table presents estimates of economic fuel costs per gallon6, including the estimated impact of fuel hedging premium expense and fuel derivative contracts, for second quarter and annual 2021 and prior year periods:

Second Quarter

Full Year

2021

2020

2021

2020

Economic fuel costs per gallon

$1.85 to $1.95

$1.33

$1.85 to $1.95

$1.49

Fuel hedging premium expense

$25 million

$24 million

$100 million

$98 million

Fuel hedging premium expense per gallon

$0.06

$0.12

(a)

$0.08

Fuel hedging cash settlement gains per gallon

$0.01

(a) Due to continued uncertainty regarding available seat mile plans for annual 2021, the Company cannot reasonably provide an estimate for its full year 2021 fuel hedging premium expense per gallon.

As of April 15, 2021, the fair market value of the Company’s fuel derivative contracts for the remainder of 2021 was an asset of approximately $44 million, and the fair market value of the fuel hedge portfolio settling in 2022 and beyond was an asset of approximately $267 million. Additional information regarding the Company’s fuel derivative contracts is included in the accompanying tables.

Excluding fuel and oil expense, first quarter 2021 operating expenses decreased 60.2 percent, compared with first quarter 2020. The Company accrued $24 million of profitsharing expense in first quarter 2021, compared with no profitsharing accrual in first quarter 2020. The Company’s first quarter 2021 net income included special items, the largest of which was a net benefit of approximately $1.4 billion. This pre-tax benefit was comprised of approximately $1.2 billion in PSP Extension proceeds; $116 million related to the Employee Retention Tax Credit under the Coronavirus Aid, Relief, and Economic Security Act; and $115 million due to the reversal of a portion of the Company’s previous accrual related to the costs for Employees who accepted the Company’s offer to participate in its voluntary extended leave program. Due to increasing passenger demand and bookings, the Company plans to increase flight activity in summer 2021—by approximately 25 points of capacity from March to June 2021, compared with respective 2019 levels—which has prompted the early recall of a portion of the Employees who elected this program. The Company now estimates annual 2021 cost savings from voluntary separation and extended leave programs to be in the range of $1.1 billion to $1.2 billion compared with annual 2019, as compared with its previous estimation of approximately $1.2 billion.

Excluding fuel and oil expense, special items, and profitsharing, first quarter 2021 operating expenses decreased 19.1 percent, compared with first quarter 2020, which represented the favorable end of the Company’s guidance range. The significant year-over-year decrease primarily was driven by the decline in variable, flight-driven expenses, such as salaries, wages, and benefits; maintenance expense; and landing fees; combined with the Company’s continued focus on cost management. As expected, the Company realized approximately $412 million of cost savings in first quarter 2021 from voluntary separation and extended leave programs. On a unit basis, first quarter 2021 operating expenses, excluding fuel and oil expense, special items, and profitsharing expense, increased 23.4 percent, year-over-year, primarily driven by the significant reduction in capacity.

Excluding fuel and oil expense, special items, and profitsharing, second quarter 2021 operating expenses are expected to increase in the range of 10 to 15 percent, year-over-year3, which includes an estimated $325 million of salaries, wages, and benefits cost savings from voluntary separation and extended leave programs. Second quarter 2021 operating expenses, excluding fuel and oil expense, special items, and profitsharing, are also expected to increase compared with first quarter 2021, with 60 to 70 percent of the sequential increase attributable to variable, flight-driven expenses as capacity is expected to increase to near-2019 levels by June 2021. These variable, flight-driven cost increases are primarily in salaries, wages, and benefits due to staffing increases; maintenance expense to return aircraft to revenue service, along with higher flight-driven maintenance expenses as flight levels increase; landing fees; and personnel, passenger, and revenue-related costs. In addition, the Company is experiencing cost increases primarily due to airport cost inflation; higher aircraft ownership costs due to MAX deliveries; and certain favorable tax and insurance settlements realized in first quarter 2021 operating expenses that are non-recurring in second quarter 2021. Despite increasing capacity and operating expenses, both sequentially and year-over-year, second quarter 2021 operating expenses are estimated to remain below second quarter 2019 levels.

Other expenses in first quarter 2021 increased by $19 million, year-over-year, primarily due to an increase in interest expense driven by new debt issued during 2020, and lower interest income as a result of lower interest rates.

The Company’s first quarter 2021 effective tax rate was 21 percent, and the Company currently estimates its annual 2021 effective tax rate to be approximately 23 percent.

Liquidity and Capital Deployment
As of March 31, 2021, the Company had approximately $14.3 billion in cash and short-term investments, and a fully available revolving secured credit facility of $1.0 billion. The Company currently has unencumbered assets with an estimated value of more than $11 billion, including aircraft value estimated in the range of $9 billion to $10 billion, and approximately $2 billion in non-aircraft assets such as spare engines, ground equipment, and real estate. In addition to the value from aircraft and other physical assets, the Company has significant value from its Rapid Rewards® loyalty program. As of April 21, 2021, the Company’s cash and short-term investments remained at approximately $14.3 billion.

Net cash provided by operations during first quarter 2021 was $645 million, primarily driven by PSP Extension proceeds. First quarter 2021 capital expenditures were $95 million. The Company estimates its 2021 capital expenditures to be approximately $500 million, primarily driven by technology, facilities, and operational investments. Based on the Company’s recently completed aircraft purchase agreement with Boeing, the Company estimates its total contractual aircraft capital expenditures for all years 2021 through 2026, which are associated with 169 MAX firm orders (135 MAX 7 and 34 MAX 8 aircraft), to be approximately $5.1 billion. The Company currently estimates approximately $700 million of aircraft capital expenditures in 2022, based on firm orders. The Company has not finalized its 2022 fleet or capital investment plans.

During first quarter 2021, the Company reached an agreement with the U.S. Department of Treasury (Treasury) and received approximately $1.7 billion in PSP Extension proceeds under the Consolidated Appropriations Act, 2021. The Company soon expects to receive approximately $259 million as its final distribution pursuant to the PSP Extension, for a total of approximately $2.0 billion of proceeds under this program. In addition, the Company soon expects to reach agreement with Treasury to receive approximately $1.9 billion in payroll support proceeds under the American Rescue Plan Act of 2021 (PSP 3) in return for providing consideration to Treasury in the form of a promissory note and warrants. The Company intends to disclose additional details regarding PSP 3 after the agreement with Treasury is finalized.

As of March 31, 2021, the Company had current and non-current debt obligations that totaled $10.8 billion. The Company repaid approximately $67 million in debt and finance lease obligations during first quarter 2021 and is scheduled to repay approximately $153 million more in debt and finance lease obligations in 2021. Based on current debt outstanding and current market interest rates, the Company expects second quarter 2021 interest expense to be approximately $115 million. As of March 31, 2021, the Company was in a net cash position7 of $3.6 billion, and its adjusted debt8 to invested capital (leverage) was 57 percent.

Fleet and Capacity
The Company ended first quarter 2021 with 730 aircraft in its fleet, including 61 MAX 8 aircraft. During first quarter 2021, the Company took delivery of 20 MAX 8 aircraft, comprised of 12 owned and 8 leased aircraft. The Company expects delivery of eight more MAX 8 aircraft in 2021. Also during first quarter 2021, the Company returned eight leased 737-700 aircraft to lessors and expects to retire up to nine more 737-700 aircraft in 2021. In response to capacity reductions due to the effects of the pandemic, 59 737-700 aircraft were in temporary storage as of March 31, 2021. In April, the Company also removed 32 of its MAX 8 aircraft from service due to a Boeing production issue related to the electrical power system on a subset of MAX aircraft. Upon learning of the issue, the Company immediately removed these aircraft from service, out of an abundance of caution, and is currently awaiting more guidance from Boeing and the FAA regarding the appropriate corrective actions. The Company is in the process of returning its stored 737-700 aircraft to revenue service to support flight schedules in summer 2021 and beyond.

The Company’s order book with Boeing includes a total of 349 MAX firm orders (200 MAX 7 and 149 MAX 8) and 270 MAX options (MAX 7 or MAX 8) for years 2021 through 2031. Additional information regarding the Company’s aircraft delivery schedule is included in the accompanying tables.

The Company’s first quarter 2021 capacity decreased 34.5 percent, year-over-year, in line with the Company’s guidance, due to capacity reductions in light of the decrease in passenger demand and bookings as a result of the pandemic. The following table presents capacity results for first quarter 2021:

January 2021

February 2021

March 2021

1Q 2021

ASMs year-over-year

Down 40.4%

Down 48.3%

Down 14.3%

Down 34.5%

Previous estimation

Down ~40%

Down ~48%

Down ~14%

Down ~35%

ASMs compared with 2019

Down 42.1%

Down 47.4%

Down 29.0%

Down 38.9%

Previous estimation

Down ~42%

Down ~47%

Down ~28%

Down ~38%

The Company estimates its second quarter 2021 capacity to increase approximately 90 percent, year-over-year, and decrease approximately 15 percent as compared with 2019, driven by improving passenger demand and bookings. The following table presents capacity estimates for second quarter 2021:

Estimated
April 2021

Estimated
May 2021

Estimated
June 2021

Estimated
2Q 2021

ASMs year-over-year

Up ~83%

Up ~127%

Up ~70%

Up ~90%

Previous estimation

(a)

Up ~118%

(b)

(b)

ASMs compared with 2019

Down ~24%

Down ~18%

Down ~4%

Down ~15%

Previous estimation

(a)

Down ~21%

(b)

(b)

(a) Remains unchanged from the previously provided estimation.

(b) No previous estimation provided.

Passenger demand and booking trends remain primarily leisure-oriented and inconsistent by region. Despite recent improvements in leisure demand, the Company remains cautious in this uncertain environment and continues to plan for multiple fleet and capacity scenarios. The Company will continue to monitor demand and booking trends and adjust capacity, as needed. As such, the Company’s actual flown capacity may differ materially from currently published flight schedules or current estimations.

Southwest Airlines aircraft slide show:

Southwest Airlines continues its dedication to the environment through sustainable aviation fuel initiatives

Will become N8814K

Southwest Airlines announced today its ongoing support of the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL) to develop commercially viable and scalable sustainable aviation fuel (SAF).

Southwest® has undertaken multiple efforts over the years to minimize its carbon footprint and the Company continues to seek opportunities to help mitigate emissions. NREL presents one of those opportunities, as Southwest intends to continue to support NREL’s work to develop low-carbon, low-cost, high-performance aviation fuels created from wet waste. Southwest plans to work with NREL to bridge a gap between the science behind SAF and the application of these sustainable fuels on a commercial level.

“We recognize the important role SAF will play in Southwest’s journey to achieve carbon neutrality by 2050—a goal we’re dedicated to reaching,” said Stacy Malphurs, Vice President of Supply Chain Management & Environmental Sustainability. “By working with organizations like NREL, Southwest embraces a great opportunity to advance the crucial science that makes this technology possible, and more available. We’re excited to work with NREL toward commercially-viable SAF.”

According to NREL, its analysis quantifies that U.S. wet waste, including food waste, could produce enough energy content to cover about 20% of U.S. jet fuel consumption. Conventional jet fuel is a primary source of greenhouse gas emissions in the aviation industry—showing the value of creating low carbon or carbon-negative SAF (on a lifecycle carbon assessment basis) from low-cost wet waste is a step toward one day reducing reliance on traditional jet fuel.

NREL has demonstrated how to make SAF from wet waste that is compatible with existing jet engines,” said NREL scientist Derek Vardon. “It has the potential for a carbon negative footprint when diverting food waste from landfills.”

As a leading global citizen, Southwest remains dedicated to doing the right thing for its People, through its Performance, and in service to the Planet. Southwest recognizes conservation can be more impactful when we all work together for a more sustainable future.

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Top Copyright Photo: Southwest Airlines Boeing 737-8 MAX 8 N1781B (N8814K) (msn 42664) BFI (Nick Dean). Image: 953456.

Southwest Airlines aircraft slide show:

 

Grupo Aeromexico’s capacity increased 7.3% in the first quarter of 2021 while it reorganizes

AeroMexico Boeing 737-8 MAX 8 XA-MAQ (msn 43710) LAX (Michael B. Ing). Image: 953030.

AeroMexico issued this report for the first quarter 2021:

Grupo Aeromexico S.A.B. de C.V., reported its unaudited consolidated results for the first quarter 2021.

KEY FINANCIAL HIGHLIGHTS FOR THE FIRST QUARTER 2021

  • On June 30, 2020, Aeromexico announced that it and certain of its affiliates had filed voluntary Chapter 11 petitions in the United States (“Chapter 11”) to implement a financial restructuring, while continuing to serve customers. The Company intends to use the Chapter 11 process to strengthen its financial position and liquidity, protect and preserve its operations and assets and implement necessary operational changes to address the impact of the ongoing COVID-19 pandemic.
  • Grupo Aeromexico’s first quarter 2021 capacity, measured in available seat kilometers (ASKs), increased by 7.3% compared to fourth quarter 2020, primarily driven by a sequential recovery in the international market. Total ASKs for the first quarter decreased by 37.5% year-on-year due to the impact of the COVID-19 pandemic.
  • Grupo Aeromexico’s first quarter 2021 revenue reached $6.9 billion pesos, a 51.3% year-on-year decrease. During the quarter, revenue per ASK (RASK) in pesos decreased by 22.2% year-on-year.
  • EBITDAR for the period amounted to negative $398 million pesos, an improvement of $1.5 billion pesos versus fourth quarter of 2020 and a year-on-year decrease of $1.9 billion pesos. First quarter 2021 operating loss amounted to $3.4 billion pesos, an improvement of $2.9 billion pesos compared to fourth quarter 2020 and a year-on-year decrease of $1.7 billion pesos.
  • Cost per ASK (CASK) in pesos was $1.458 pesos, a 29.1% decrease compared to fourth quarter 2020 and a 4.6% year-on-year increase. CASK in dollars reached $0.072 dollars, a 27.8% decrease compared to fourth quarter 2020 and a 3.0% year-on-year increase. These results reflect efficiencies achieved after the successful implementation of initiatives aimed to reduce structural cost despite a 37.5% reduction in capacity (measured in ASKs).
  • Aeromexico’s cash position as of March 31st, 2021, amounted to $18.0 billion pesos, equivalent to approximately $881 million dollars.
  • As of March 31st, 2021, Grupo Aeromexico’s operating fleet comprised 106 aircraft.

Grupo Aeroméxico confirms that its voluntary process of financial restructuring under Chapter 11 of the legislation of the United States of America, will be carried out in an orderly manner while it continues operating and offering services to its customers with the same quality that characterizes it, contracting from its suppliers the goods and services required for its operation.

Top Copyright Photo: AeroMexico Boeing 737-8 MAX 8 XA-MAQ (msn 43710) LAX (Michael B. Ing). Image: 953030.

AeroMexico aircraft slide show:

Neos joins the IATA Travel Pass trial, gains tentative approval for routes to the United States

Neos Boeing 737-8 MAX 8 EI-RZC (msn 62872) BFI (Nick Dean). Image: 953510.

Neos is the first Italian airline to take part in the trial, which already includes other leading international names in the aviation world.
The IATA Travel Pass is a digital health passport, created to facilitate the restart of international flows and return to travel safely.
Neos officially joins the IATA Travel Pass program, created by the International Air Transport Association (IATA), which welcomed the request from the airline, the first and only Italian company currently in the project.
From May 1, 2021, passengers traveling with Neos from Milan to Tenerife will be able to use the IATA Travel Pass: a program that has given rise to a “digital passport” implemented through a mobile app and useful to help passengers manage in a simple and safe travel, in line with government and health requirements.
Inside, multiple functions to inform, address, catalog and store in your digital space the documents and the results of the COVID-19 PCR tests. An intuitive, fast and simple model to connect passengers, airlines, the affiliated healthcare network and local authorities to facilitate all control and tracking procedures before, during and after national and international flights.
Neos made a formal request to join the IATA Travel Pass in January 2021, having understood the importance of the project and the need to find new reliable formulas to regulate travel and allow people to fly safely. Together with Neos, over 25 other international companies took part in the trial, which is being progressively structured and giving excellent feedback: there are already many health and local authorities who recognize the IATA Travel Pass as a valid form of presentation of the results of PCR tests. made before leaving. Among the functions, the affiliated health facilities are indicated in which to carry out the PCR tests, then automatically loaded into your digital profile, available and verifiable by simply scanning the QRCode.
In other news, the airline has received tentative approval from the U.S. Transportation Department (DOT) for exemption authority and an amended foreign air carrier permit.

The leisure carrier already has rights to fly charter flights to the U.S., but requested this be amended so it can fly scheduled routes.

The airline will use its Boeing 787 Dreamliners.

The airline already flies from Milan (Malpensa) to Cancun and Havana.

Marco Finelli reporting from Italy.

Top Copyright Photo: Neos Boeing 737-8 MAX 8 EI-RZC (msn 62872) BFI (Nick Dean). Image: 953510.

Neos aircraft slide show:

S7 Airlines to launch Moscow – Casablanca flights

First MAX 8 for S7 Airlines

S7 Airlines will operate weekly flights from Moscow to Casablanca (Morocco). Flights will begin operating on April 30, 2021.

From May 9, flights will be operated on Sundays. Departure from Domodedovo airport is at 12:10 p.m., arrival at Casablanca airport is at 03:20 p.m. local time. The return flight departs at 05:20 p.m. and lands in Moscow at 01:10 the next day.

The flights will be operated on modern comfortable Boeing 737-800 airliners designed to carry 168 passengers in economy class and 8 travelers in business class cabins.

S7 Airlines has also started selling tickets for weekly flights from Moscow to the cities of Italy (Bologna), Greece (Iraklion), Germany (Hanover, Cologne), Ireland (Dublin), and Bulgaria (Varna). These flights will be open to those passengers who are allowed to fly under the current restrictions.

The flights are scheduled as follows:

  • On Mondays, effective on 3 May — Moscow — Hanover — Moscow;
  • On Mondays, effective on 3 May — Moscow — Bologna — Moscow;
  • On Tuesdays, effective on 4 May — Moscow — Iraklion — Moscow;
  • On Thursdays, effective on 6 May — Moscow — Cologne — Moscow;
  • On Thursdays, effective on 6 May — Moscow — Varna — Moscow;
  • On Tuesdays, effective on 8 June — Moscow — Dublin — Moscow.

S7 Airlines (a brand of Siberia Airlines, http://www.s7.ru) is a member of the oneworld® global aviation alliance.

Top Copyright Photo: S7 Airlines Boeing 737-8 MAX 8 VQ-BGW (msn 43302) BFI (Joe G. Walker). Image: 943925.

S7 Airlines aircraft slide show:

Turkish Airlines resumes Boeing 737 MAX operations, restructures its remaining orders

TC-LCN

Turkish Airlines resumed Boeing 737 MAX operations on April 15 with its 12 MAX aircraft already delivered.

According to a public disclosure, the airline has cancelled 10 out of its 75 MAX jets on order. An additional 40 aircraft will be changed to options.

Of the 13 MAX jets already built and awaiting delivery, the company has reached agreement with Boeing to delay the delivery of the aircraft until the company can handle the financial strain.

Top Copyright Photo: Turkish Airlines Boeing 737-8 MAX 8 TC-LCN (msn 60056) PAE (Nick Dean). Image: 945930.

Turkish Airlines aircraft slide show: