Malaysia Airlines accepted its first Boeing 737-8 MAX 8 (9M-MVA) on November 15.
The new airliner is adorned with the new livery featuring a songket motif that pays tribute to the country’s vibrant cultural heritage.
All photos by Boeing.
Vietnam Airlines and Boeing announced today the carrier has selected the 737 MAX family to expand its single-aisle fleet, with a commitment to order 50 737-8 airplanes. With enhanced fuel efficiency and environmental performance, the 737 MAX will provide best-in-class flexibility for Vietnam’s growing aviation market. The commitment was announced during a signing ceremony with President Joe Biden, Secretary of State Antony Blinken, White House officials and Vietnamese government leaders on Monday, Sept. 11.
U.S. and Vietnam officials said the commitment will bolster jobs in both countries and strengthen the bilateral economic partnership. Building on Boeing’s long history of collaboration with Vietnam’s civil aviation industry, the carrier’s 737 MAX fleet will support the country’s goal of becoming a leading aviation hub.
Since the launch, more than 100 customers around the world have placed firm orders for more than 5,600 737 MAX airplanes. The 737 MAX reduces fuel use and carbon emissions by 20% and has a smaller noise footprint than airplanes it replaces. The jets offer increased comfort and relaxation for passengers, with modern sculpted sidewalls, LED lighting that enhances the sense of spaciousness and larger pivoting overhead storage bins.
The 737 MAX family will allow Vietnam Airlines to fly up to 3,500 nautical miles (6,480 km) to serve increasingly popular international and regional routes. The carrier currently operates a fleet of 15 787 Dreamliner jets and serves over 50 destinations in 17 countries. A member of the SkyTeam Alliance, passengers flying on Vietnam Airlines or any of its 18 partners can earn and redeem miles for travel to 1,000 destinations worldwide.
Southwest Airlines Company today reported its second quarter 2023 financial results:
Bob Jordan, President and Chief Executive Officer, stated, “We are pleased to report a solid quarter amid continued strong demand. We generated all-time record quarterly operating revenues, produced a very strong operational performance, and delivered healthy net income. The resilient demand environment, especially for close-in leisure travel, drove second quarter 2023 operating revenue per available seat mile to the high end of our expectations. Further, we continue to expect $1.0 billion to $1.5 billion of pre-tax profit contribution in full year 2023 from strategic initiatives outlined at our Investor Day last December. Based on current revenue and cost trends, we expect record operating revenue and a profitable outlook again for third quarter 2023 and continue to expect year-over-year margin expansion for full year 2023.
“Our People delivered a very smooth and reliable operation in second quarter 2023, despite disruptive weather. We operated a record number of flights and carried a record number of Customers and bags, all while achieving a completion factor of more than 99 percent—our highest second quarter performance in the past 10 years. This solid operating performance has continued into July, where we have been able to minimize cancellations amid continued weather challenges throughout the network.”I am very proud of, and grateful for, our amazing People and the great progress they made towards our goals in the first half of the year. To name only a few, we have largely restored our network, developed and are on-track with a robust winter operations plan, implemented a new revenue management system, and added necessary staffing to fully utilize our fleet, ahead of schedule, by the end of third quarter.”Although our network is largely restored, it is not yet optimized. We are working to align our network, fleet plans, and staffing to better reflect the current business environment. While business revenues continue to recover, they are not back to pre-pandemic levels—therefore, we are revamping our 2024 flight schedules to reflect post-pandemic changes to Customer travel patterns. We estimate these meaningful network optimization efforts and the continued maturation of our development markets will contribute roughly $500 million in incremental year-over-year pre-tax profits in 2024, which we believe will support another year of margin expansion. As ever, we are committed to our goals of achieving industry-leading operational and financial performance, boosting our operational resilience, and widening our Customer Service advantage by enhancing our digital Hospitality.”
Guidance and Outlook:
The following tables introduce or update selected financial guidance for third quarter and full year 2023, as applicable:
| 3Q 2023 Estimation | ||||||||||||||||||||||||||
| RASM (a), year-over-year | Down 3% to 7% | |||||||||||||||||||||||||
| ASMs (b), year-over-year | Up ~12% | |||||||||||||||||||||||||
| Economic fuel costs per gallon1,3 | $2.55 to $2.65 | |||||||||||||||||||||||||
| Fuel hedging premium expense per gallon | $0.05 | |||||||||||||||||||||||||
| Fuel hedging cash settlement gains per gallon | $0.08 | |||||||||||||||||||||||||
| ASMs per gallon (fuel efficiency) | 79 to 80 | |||||||||||||||||||||||||
| CASM-X (c), year-over-year1,4 | Up 3.5% to 6.5% | |||||||||||||||||||||||||
| Scheduled debt repayments (millions) | ~$8 | |||||||||||||||||||||||||
| Interest expense (millions) | ~$63 | |||||||||||||||||||||||||
| 2023 Estimation | Previous estimation | |||||||||||
| ASMs (b), year-over-year | Up 14% to 15% | No change | ||||||||||
| Economic fuel costs per gallon1,3 | $2.70 to $2.80 | $2.60 to $2.70 | ||||||||||
| Fuel hedging premium expense per gallon | $0.06 | No change | ||||||||||
| Fuel hedging cash settlement gains per gallon | $0.09 | $0.10 | ||||||||||
| CASM-X, year-over-year1,4 | Down 1% to 2% | Down 2% to 4% | ||||||||||
| Scheduled debt repayments (millions) | ~$83 | ~$85 | ||||||||||
| Interest expense (millions) | ~$255 | ~$250 | ||||||||||
| Aircraft (d) | 814 | No change | ||||||||||
| Effective tax rate | 23% to 24% | No change | ||||||||||
| Capital spending (billions) | ~$3.5 | No change | ||||||||||
| (a) Operating revenue per available seat mile (“RASM” or “unit revenues”). |
| (b) Available seat miles (“ASMs” or “capacity”). The Company’s flight schedule is currently published for sale through March 6, 2024. The Company continues to expect fourth quarter 2023 capacity to increase in the range of 20 percent to 22 percent, year-over-year, and currently expects first quarter 2024 capacity to increase in the range of 14 percent to 16 percent, year-over-year, of which nearly 90 percent is from the carryover effect of capacity growth in 2023. |
| (c) Operating expenses per available seat mile, excluding fuel and oil expense, special items, and profitsharing (“CASM-X”). |
| (d) Aircraft on property, end of period. The Company continues to plan for approximately 70 Boeing 737-8 (“-8”) aircraft deliveries and 26 Boeing 737-700 (“-700”) aircraft retirements in 2023, ending the year with 814 aircraft. The delivery schedule for the Boeing 737-7 (“-7”) is dependent on the Federal Aviation Administration (“FAA”) issuing required certifications and approvals to The Boeing Company (“Boeing”) and the Company. The FAA will ultimately determine the timing of the -7 certification and entry into service, and Boeing may continue to experience supply chain challenges, so the Company therefore offers no assurances that current estimations and timelines are correct. |
Revenue Results and Outlook:
The Company’s second quarter 2023 revenue performance was an all-time quarterly record driven primarily by strong leisure demand. Second quarter 2023 managed business revenues also improved sequentially compared with first quarter 2023, which was attributable to growth in corporate accounts and passengers as the Company continued to see gains in business travel market share. The Rapid Rewards® program continues to be a point of strength, with record second quarter new Member additions, a record level of Member engagement, and record second quarter spend on the Company’s co-branded Chase® Visa credit card.
Second quarter 2023 also saw a record for ancillary revenue.Second quarter 2023 RASM decreased 8.3 percent, year-over-year, driven largely by a five point headwind from approximately $300 million of additional breakage revenue in second quarter 2022. The higher breakage in second quarter 2022 was driven by higher than normal flight credits issued during the pandemic that were set to expire unused, prior to the Company’s July 2022 policy change to eliminate expiration dates on qualifying flight credits5. The percentage of breakage revenue normalized to historical levels beginning in third quarter 2022.Thus far, the Company has experienced strong leisure demand and yields for July travel. Based on current booking and revenue trends, the Company anticipates a third quarter 2023 RASM decline of 3 percent to 7 percent, year-over-year, driven by challenging comparisons from the pent-up travel demand surge in 2022, and higher than seasonally-normal growth, as the Company works to close out the restoration of the network and normalizes the utilization of the fleet.
Fuel Costs and Outlook:
The Company’s multi-year fuel hedging program continues to provide protection against spikes in energy prices. The Company’s current fuel derivative contracts contain a combination of instruments based in West Texas Intermediate and Brent crude oil, and refined products, such as heating oil. The economic fuel price per gallon sensitivities3 provided in the table below assume the relationship between Brent crude oil and refined products based on market prices as of July 19, 2023.
| Estimated economic fuel price per gallon, including taxes and fuel hedging premiums | |||||||||
| Average Brent Crude Oil price per barrel | 3Q 2023 | 4Q 2023 | |||||||
| $60 | $2.00 – $2.10 | $2.00 – $2.10 | |||||||
| $70 | $2.30 – $2.40 | $2.30 – $2.40 | |||||||
| Current Market (a) | $2.55 – $2.65 | $2.50 – $2.60 | |||||||
| $90 | $2.80 – $2.90 | $2.80 – $2.90 | |||||||
| $100 | $3.00 – $3.10 | $3.00 – $3.10 | |||||||
| $110 | $3.25 – $3.35 | $3.25 – $3.35 | |||||||
| Fair market value | $47 million | $55 million | |||||||
| Estimated premium costs | $30 million | $30 million | |||||||
| (a) Brent crude oil average market prices as of July 19, 2023, was $79 per barrel for each of third quarter and fourth quarter 2023. |
In addition, the Company is providing its maximum percentage of estimated fuel consumption6 covered by fuel derivative contracts in the following table:
| Period | Maximum fuel hedged percentage (a) | |||||||||||||||||
| 2023 | 51 % | |||||||||||||||||
| 2024 | 54 % | |||||||||||||||||
| 2025 | 41 % | |||||||||||||||||
| 2026 | Less than 10% | |||||||||||||||||
| (a) Based on the Company’s current available seat mile plans. The Company is currently 49 percent hedged for third quarter 2023 and 47 percent hedged for fourth quarter 2023. |
Non-Fuel Costs and Outlook:
The majority of the Company’s second quarter 2023 CASM-X increase, year-over-year, was attributable to general inflationary cost pressures, in particular higher labor rates for all Employee workgroups, including market wage rate accruals, as well as the timing of planned maintenance expenses for the Company’s Boeing 737-800 fleet.The Company expects third quarter 2023 CASM-X to increase in the range of 3.5 percent to 6.5 percent, year-over-year, primarily due to continued inflationary cost pressures, including higher labor rates for all Employee workgroups and increased market wage rate accruals. Overall, nominal cost trends are expected to remain fairly consistent sequentially from second quarter 2023.The Company currently expects its full year 2023 CASM-X to decrease in the range of 1 percent to 2 percent, year-over-year. The one and a half points of pressure, relative to prior expectations, are driven primarily by an increase in market wage rate accruals for the Company’s open collective bargaining agreements as the Company continues to adjust to the dynamic market environment.Second quarter 2023 other expenses decreased $213 million, year-over-year. The decrease was primarily due to a $116 millionincrease in interest income driven by higher interest rates, coupled with a $28 million decrease in interest expense driven by various debt repurchases and repayments throughout 2022.
Capacity, Fleet, and Capital Spending:
The Company’s flight schedule is currently published for sale through March 6, 2024. Taking into consideration the efforts to revamp its 2024 flight schedules, the Company currently expects first quarter 2024 capacity to increase in the range of 14 percent to 16 percent, year-over-year, of which nearly 90 percent is from the carryover effect of capacity growth in 2023.
The Company expects its remaining 2024 year-over-year capacity growth to ease sequentially each quarter relative to first quarter 2024 levels as the Company works toward its long-term goal of mid-single-digit year-over-year capacity growth.
During second quarter 2023, the Company received 21 -8 aircraft and retired 11 -700 aircraft, ending second quarter with 803 aircraft.
The Company continues to plan for approximately 70 -8 aircraft deliveries from Boeing and 26 -700 retirements in 2023.
The Company’s planned deliveries continue to differ from its order book displayed in the table below. As a result of the currently planned aircraft deliveries and retirements, the Company continues to expect to end the year with 814 aircraft.
The Company’s second quarter 2023 capital expenditures were $925 million, driven primarily by aircraft-related capital spending, as well as technology, facilities, and operational investments.
The Company continues to estimate its 2023 capital spending to be roughly $3.5 billion, which includes approximately $2.3 billion in aircraft capital spending, assuming approximately 70 -8 aircraft deliveries in 2023, and $1.2 billion in non-aircraft capital spending, including tens of millions in operational investments related to the Company’s winter operations plan.
The Company also estimates its total annual capital spending to be approximately $4 billion, on average, for the five years 2023 through 2027.Since the Company’s previous disclosure on April 27, 2023, the Company exercised 19 -7 options for delivery in 2024 and converted 16 2024 -7 firm orders to -8 firm orders.
The following tables provide further information regarding the Company’s order book and compare its order book as of July 27, 2023 with its previous order book as of April 27, 2023.
For purposes of the delivery schedule below, the Company continues to include the remaining 46 of its 2022 contractual undelivered aircraft (14 -7s and 32 -8s) within its 2023 commitments. The Company is working to reflow its order book with Boeing in a way that provides orderly and measured growth in 2024 and beyond.
| Current 737 Order Book as of July 27, 2023: | |||||||||||||||||||||||
| The Boeing Company | |||||||||||||||||||||||
| -7 Firm Orders | -8 Firm Orders | -7 or -8 Options | Total | ||||||||||||||||||||
| 2023 | 31 | 105 | — | 136 | (c) | ||||||||||||||||||
| 2024 | 51 | 35 | — | 86 | |||||||||||||||||||
| 2025 | 30 | — | 56 | 86 | |||||||||||||||||||
| 2026 | 30 | 15 | 40 | 85 | |||||||||||||||||||
| 2027 | 15 | 15 | 6 | 36 | |||||||||||||||||||
| 2028 | 15 | 15 | — | 30 | |||||||||||||||||||
| 2029 | 20 | 30 | — | 50 | |||||||||||||||||||
| 2030 | — | 55 | — | 55 | |||||||||||||||||||
| 2031 | — | — | — | — | |||||||||||||||||||
| 192 | (a) | 270 | (b) | 102 | 564 | ||||||||||||||||||
| (a) The delivery timing for the -7 is dependent on the FAA issuing required certifications and approvals to Boeing and the Company. The FAA will ultimately determine the timing of the -7 certification and entry into service, and the Company therefore offers no assurances that current estimations and timelines are correct. |
| (b) The Company has flexibility to designate firm orders or options as -7s or -8s, upon written advance notification as stated in the contract. |
| (c) Includes 51 -8 deliveries received year-to-date through June 30, 2023. In addition, the Company has included the remaining 46 of its 2022 contractual undelivered aircraft (14 -7s and 32 -8s) within its 2023 commitments. The Company continues to plan for approximately 70 -8 aircraft deliveries in 2023. The 2023 order book detail is as follows: |
| The Boeing Company | |||||||||||
| -7 Firm Orders | -8 Firm Orders | Total | |||||||||
| 2022 Contractual Deliveries Remaining | 14 | 32 | 46 | ||||||||
| 2023 Contractual Deliveries | 17 | 73 | 90 | ||||||||
| 2023 Total | 31 | 105 | 136 | ||||||||
| Previous 737 Order Book as of April 27, 2023 (a): | |||||||||||||||||||||||
| The Boeing Company | |||||||||||||||||||||||
| -7 Firm Orders | -8 Firm Orders | -7 or -8 Options | Total | ||||||||||||||||||||
| 2023 | 31 | 105 | — | 136 | |||||||||||||||||||
| 2024 | 48 | 19 | 19 | 86 | |||||||||||||||||||
| 2025 | 30 | — | 56 | 86 | |||||||||||||||||||
| 2026 | 30 | 15 | 40 | 85 | |||||||||||||||||||
| 2027 | 15 | 15 | 6 | 36 | |||||||||||||||||||
| 2028 | 15 | 15 | — | 30 | |||||||||||||||||||
| 2029 | 20 | 30 | — | 50 | |||||||||||||||||||
| 2030 | — | 55 | — | 55 | |||||||||||||||||||
| 2031 | — | — | — | — | |||||||||||||||||||
| 189 | 254 | 121 | 564 | ||||||||||||||||||||
| (a) The ‘Previous 737 Order Book’ is for reference and comparative purposes only. It should no longer be relied upon. See ‘Current 737 Order Book’ for the Company’s current aircraft order book. |
Liquidity and Capital Deployment:
Top Copyright Photo: Southwest Airlines Boeing 737-8 MAX 8 N1806U (msn 60652) HNL (Michael B. Ing). Image: 961023.
Southwest Airlines aircraft photo gallery:
Cabo Verde Airlines this week is calebrating the delivery of their first Boeing 737-8 MAX 8 (D4-CCJ, msn 60432, ex ZS-ZCA) in its colorful livery named “Morabeza”. The airliner was handed over on July 18, 2023.
Boeing made this announcement:
Boeing and Cabo Verde Airlines on July 20 celebrated the delivery of the airline’s first fuel-efficient 737 MAX jet with a special event at its home base with officials and employees.
As part of its new “take-off” rebranding, the airline’s 737-8 will reconnect the Cape Verdean diaspora and boost tourism for the island nation from Africa, Europe, North America and South America.
Cabo Verde Airlines connects four continents with nonstop flights from its hubs in Praia and Sal. The
The Boeing 737-8 is part of the airline’s new “take-off” relaunch strategy. It aims to renew its fleet and expand its network to previously operated routes following the pandemic.
LOT Polish Airlines is supporting the Third European Games in Krakow, Poland with a special logo jet.
Kraków is the stage for the third European Games. Athletes from 48 countries, competing in 29 disciplines, will converge on this prestigious event that will become a key stop for the continent’s athletes on their #RoadToParis.
From Wikipedia:
The 3rd European Games (Polish: III Igrzyska Europejskie, Igrzyska Europejskie 2023), informally known as Kraków-Małopolska 2023, is an international multi-sport event that is being held from June 21 to July 2, 2023 in Kraków and Małopolska, Poland.
This is the first time that Poland has hosted the European Games. All Olympic sports held at the 2023 European Games will provide qualification opportunities for the 2024 Summer Olympics in Paris, France.
Above Copyright Photo: LOT Polish Airlines Boeing 737-8 MAX 8 SP-LVH (msn 43306) PMI (Javier Rodriguez).
Boeing and Akasa Air have announced an order for four additional 737-8 jets at the Paris Air Show. Akasa Air, which launched operations in 2022 with its first 737-8, has rapidly grown its market share and fleet to 19 airplanes across 16 destinations to support the fast-growing market in India.
With the order of four additional aircraft, the Indian carrier’s order book comprises 76 jets, which include 23 737-8s and 53 high-capacity 737-8-200 airplanes.
The Indian carrier is operating 19 737-8s today with high-capacity 737-8-200 airplanes on order. As passenger traffic rises above pre-pandemic levels in India, the versatile 737-8 is supporting Akasa Air’s growth strategy and domestic network and positions the airline for future regional expansion.
Flair Airlines has announced it has leased two new Boeing 737 MAX aircraft. The leases were facilitated by SMBC Aviation Capital, the world’s second largest aircraft leasing company. These Canadian-registered aircraft will enter service and fly Flair’s summer 2023 schedule, which has grown 35% year-over-year.
One aircraft (C-FBLG) was delivered to Flair Airlines on June 13 and a second aircraft will follow later this summer. The aircraft are delivered new to Flair Airlines from Boeing Commercial Airplanes.
This announcement follows Flair Airlines’ recent announcements related to its operational performance. The airline has committed to releasing monthly operational performance metrics, including completion factor, on-time performance, load factor, passengers and emissions — a Canadian first. In May 2023, Flair Airlines demonstrated a 99.1% completion factor, on-time performance that leads the Canadian airline industry (82.1% of flights arrived within 15 minutes of the scheduled arrival time), coupled with a load factor of 90%. In May 2023, more than 436,000 passengers experienced Canada’s leading ultra-low cost airline.
Top Copyright Photo: Flair Airlines Boeing 737-8 MAX 8 C-GFOF (msn 44302) YYZ (TMK Photography). Image: 960801.
Flair Airlines aircraft photo gallery:
In February 2023, IAG, the owner of British Airways and Iberia, announced its intention to acquire the remaining 80% of the shares in Air Europa that it did not already own for 400 million euros ($431.2 million).
IAG is now facing roadblocks on the acquisition from the European Commission and may be forced to give up some important slots to gain approval.
Ryanair is expressing interest in acquiring the slots if they become avaialble.
Go deeper. Read the full report from Reuters:
Top Copyright Photo: Ryanair Boeing 737-8 MAX 8 (200) EI-IHE (msn 67084) BFI (Nick Dean). Image: 960779.
Ryanair aircraft photo gallery:
Will not be delivered.
Copyright Photo: Ural Airlines Boeing 737-8 MAX 8 VP-BHR (msn 66147) BFI (Brian Worthington). Image: 960773.
Copyright Photo: Qatar Airways Boeing 737-8 MAX 8 A7-BSI (msn 43312) PAE (Nick Dean). Image: 960772.