Tag Archives: Boeing 747

Avatar Airlines wants to fly Boeing 747-400s with low fares and a lot of advertising

Avatar Airlines (Las Vegas) is a proposed new airline that wants to operate high-density Boeing 747-400s on popular domestic routes with attractive low fares. The new airline has reported its has submitted an application to the DOT and the FAA for operating authority as an air carrier. A core component of its business plan to offer corporate sponsors the opportunity to advertise on the exteriors of the aircraft as well as in the interiors of the aircraft.

Proposed Routes:

Here are some of highlights of their business plan:

Avatar is building a better airline from the ground up. Avatar will make full use of the latest technology in order to bring down the cost of air travel, without sacrificing the creature comforts of luxury flight. Exclusive use of online reservations (“straight to the gate”) is a tremendous savings for Avatar, and allows it to pass on a tremendous savings to its passengers. Not only will Avatar not sacrifice creature comforts, it will actually enhancethem. We realize that “creature comforts” may mean different things to different passengers. Some passengers may want to use their flight-time to totally unplug and relax by catching a few extra winks or by even curling up with a good book. We get it. There’s no reason these passengers should have to pay for technology they don’t plan on using. It’s one of the ways Avatar plans to keep the overall cost of flight travel at remarkably low levels.

Yet, for those passengers that wish to indulge, Avatar’s plan is to equip its fleet with on-board satellite Wi-Fi capability as part of its in-flight entertainment profit center. For a nominal cost, passengers will be able to surf the net, watch a movie , catch up on emails, or shop on the Avatar network and receive valuable discounts while flying thousands of feet in the air, giving a literal meaning to the term “cloud-based” computing.

“Seat-back technology is for the birds, not the planes.”

Ever look at some of our competitor’s seatbacks and think to yourself, “hmm… that technology sure is starting to look dated. It could use a good facelift.” Lackluster color. Not enough definition. Worn-out control buttons. Pokey connections. Technology changes so fast, why not leave it up to our passengers to decide the quality of their onboard devices? Passengers are encouraged to use their own devices, or for a nominal fee, rent a portable hi-tech device from Avatar. Avatar plans on forming strategic alliances with third party vendors to supply portable hi-tech devices and swap them out as the technology advances – insuring that Avatar’s passengers always have the option to enjoy hi-tech devices on their flight, whether that device is one of their own, or one of ours.

Luggage Handling

Ever see our competitor’s passengers struggling to get their “oversized” carry-ons into the overhead bins, to avoid costly luggage fees? (Were you one of them? Or maybe you were the one shielding yourself from a possible fallout???) A bit like trying to fit a square peg into a round hole, wouldn’t you say? Did we mention no more luggage fees? Avatar thinks it’soutrageous that passengers should have to pay to bring a reasonable amount of luggage with them on a flight. Avatar plans to “roll back the clock” to the good old days when each passenger was permitted to check two normal pieces of luggage into cargo for no fee, in addition to standard carry-on bags.

Avatar’s business plan is unique, incorporating six individual profit centers in conjunction with the exclusive use of the Boeing 747 aircraft equipped with 539 economy seats and 42 business class seats, resulting in the industry’s lowest cost per seat mile.

This allows Avatar to offer everyday fares between $19 to $99, depending on the destination and time of purchase.

Avatar profit centers include:

Passenger Ticketing
Cargo
Catering
In-flight Entertainment
Advertising & Promotions (Branding) a Avatar Vacations

Each center is responsible for earning a profit, combined they are responsible for lowering Avatar’s cost per available seat mile resulting in a cost expected to be the lowest in the industry.

It’s simple: Big airplanes carrying maximum number of seats combined with fares which are low enough and markets which are large enough to guarantee 100% load factors.

Airline Media, Inc. is solely owned by Avatar Airlines and is that profit center responsible for corporate sponsorships through branding. The Company provides the opportunity to display your ad or logo on the inside and/or the outside of one or all of Avatar’s aircraft.

Areas such as: seat upholstery, cabin walls and ceilings, over-head bins, bulkheads, tray table, exterior-wrap as well as other areas are available.

The proposed airline is also proposing to corporate sponsors to decorate their large aircraft with a full size logo jets as “Exterior Wraps”:

Here are some corporate possibilities:

All images from the Avatar Airlines 2014 press kit.

Australian government wants to relax ownership rules for QANTAS Airways, won’t back any loans for the state airline

QANTAS Airways (Sydney) may get a break on the restrictive ownership rules and allow for more foreign ownership. The Australian government under Prime Minister Tony Abbott has agreed to relax ownership rules for the state airline after it posted a large first half loss. Currently the airline is restricted to 35 percent for any foreign airline or 25 percent for any single foreign private investor.

However any reforms would need the approval of the Senate which is concerned about the possibility of any loss of jobs overseas due to increased foreign ownership. In return, the government is also ruling out guaranteeing a loan for the struggling flag carrier.

Read the full report from the Associated Press via ABC: CLICK HERE

QANTAS has issued this statement in response to several issues involving the carrier in the Australian media:

ISSUE: Potential removal of elements of the Qantas Sale Act rather than removing fundamental element that limits foreign ownership to 49 per cent.

FACTS: The government has recognized that the Qantas Sale Act puts us at a disadvantage.

The field is either levelled or it’s not; tilting it a bit won’t fix the fundamental problem, especially given Virgin has a two year head start on attracting foreign investors.

ISSUE: Claims that Qantas did not meet its obligations to consult with the Australian Services Union (ASU) on redundancies at Sydney International Airport.

FACTS: Qantas intends to run a voluntary redundancy program for full-time employees at Sydney International Airport to better align staffing levels with flight scheduling.

There will be changes to the mix of customer service staff to better suit the peak periods at the airport. This will result in an increase in part-time staff and a reduction in full-time staff. This was announced on 27 February.

Qantas met its obligation to consult and is meeting again with the ASU on our intention to offer voluntary redundancies to employees at Sydney International Terminal.

ISSUE: Claims by Senator Nick Xenophon that Qantas should open its books to prove it is not cross-subsidising Jetstar

FACTS: These claims have been made a number of times over the past few years and Qantas has categorically denied them each time.

Qantas has obligations as an ASX listed company, which require us to publish accurate financial data.

Qantas has previously offered the unions an opportunity to have our financial accounts audited independently on the condition that they would cease making baseless claims about cross subsidisation when it was shown it wasn’t occurring. They didn’t take Qantas up on this offer.

ISSUE: Claims that the carbon tax is a key issue facing Qantas

FACTS: The major issues faces Qantas are not related to carbon pricing.

We have been clear that levelling the playing field is the most important policy measure that needs to be fixed, and with some urgency.

ISSUE: Claims that Qantas’ partnership with Modern Family may have cost us up to $4 million.

FACTS: For commercial reasons we don’t disclose the cost of partnerships such as Modern Family, but the $4 million figure is grossly inflated and simply wrong. There are several partners involved in this deal and a large part of Qantas’ contribution has been providing flights.

We’re very comfortable with the investment we’ve made and the return we’re getting. This is not exactly new territory for us and we know that exposure through things like Ellen and Modern Family equals more visitors flying Qantas to Australia.

There are things we will need to cut back on as a business, but investing in Australian tourism and encouraging more people to fly here is key to running an airline.

The Queensland Government (through Tourism Queensland and Screen Queensland) has been closely involved in the Modern Family promotion.

Last year, Qantas helped to bring the Ellen DeGeneres Show to Australia in a move that saw a 22 per cent increase in inbound flights to New South Wales alone, as well as an overall boost in destination awareness for Australia.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Boeing 747-438 ER VH-OEH (msn 32912) prepares to land at Los Angeles International Airport.

QANTAS Airways:

QANTAS to cut 5,000 jobs and 50 aircraft, including 8 remaining A380s to be deferred, last 3 787s to be deferred, retirement of 747-400s to be expedited

QANTAS Airways (Sydney) has also issued its cost-reduction plan on the heels of its first half financial loss reported today (please see the separate financial report). The QANTAS Group issued this statement detailing the cuts:

QANTAS today announced detail of its $2 billion cost reduction program and capital expenditure review.

QANTAS will take action to permanently reduce costs in all parts of the QANTAS Group through to FY17, including fleet and network changes, productivity improvements, consolidation of business activities, new technology and procurement savings. More than 50 aircraft will be deferred or sold and the Group’s workforce will be reduced by 5,000 full-time equivalent positions by FY17.

The QANTAS Group’s planned capital expenditure net of operating lease liability will be reduced to $800 million in both FY15 and FY16, a total reduction of $1 billion.

QANTAS has reached agreement on the return of its Brisbane Airport terminal lease, together with related assets, to the airport owner at a cash value of $112 million. The broader structural review of the QANTAS Group portfolio continues and no final decisions have been made on other assets.

Chief Executive Officer Alan Joyce said QANTAS would do everything in its control to overcome some of the toughest market conditions it had ever faced.

Market Conditions

“It’s clear that the market QANTAS operates in has changed, with structural economic shifts exacerbated by an uneven playing field in Australian aviation policy,” Mr Joyce said.

“This situation is reflected in the financial result QANTAS announces today, an Underlying PBT¹ loss of $252 million for the half-year. This is an unacceptable and unsustainable result. Comprehensive action is needed in response.

“QANTAS’ competitors have increased capacity to Australia by 46 per cent since 2009, more than double the world average, at a time of record fuel costs and economic volatility.

“We have met these challenges head on. Over the past four years, we have been carrying out the biggest transformation since QANTAS was privatized – cutting comparable unit costs¹ by 19 per cent over four years, introducing new aircraft and technology on a large scale, modernizing work practices and revitalising service. But this is not enough for the circumstances we now face.

“The Australian domestic market has been distorted by current Australian aviation policy, which allows Virgin Australia to be majority-owned by three foreign government-backed airlines – yet retain access to Australian bilateral flying rights.

“Late last year, these three foreign-airline shareholders invested more than $300 million in Virgin Australia at a time when, as Virgin Australia reported to the ASX on 6 February, it was losing money. That capital injection has supported continued domestic capacity growth by Virgin Australia despite its growing losses.

“The Virgin Australia Group has increased capacity into the domestic market at more than twice the rate of the Qantas Group since July 2011. As a result of these combined capacity increases, the total domestic profit pool has been shrunk from more than $700 million in FY12 to less than $100 million in 1H14.

“We have been clear with the Australian Government about the uneven playing field and the measures we believe could address it. But our focus today is on the immediate steps that Qantas must take.”

Immediate Priorities

“We must take actions that are unprecedented in scope and depth to strengthen the core of the Qantas Group business.

“To reach $2 billion in cost cuts over three years, we have to work our assets harder, become more productive, retire older aircraft, and make sure that our fleet and network are the right size. We must defer growth and cut back where we can, so that we can invest where we need to.

“We have already made tough decisions and nobody should doubt that there are more ahead.

“While the implementation and pace of delivery must change, the guiding principles of our strategy will not. Safety remains our first priority and we are committed to being the airlines of choice for customers in all our markets.

“Our long-term goal remains the transformation of the Qantas Group for profitable, sustainable growth.

“Over the next three years, we aim to secure our strong Group domestic position and maximise Qantas International’s competitiveness.

“QANTAS Loyalty will continue to access new markets and revenue streams, building on its success to date.

“When it comes to Jetstar in Asia, we need to take the right decisions in accord with current market circumstances and our balance sheet. In Singapore, growth has been suspended by the Jetstar Asia Board until such time as conditions improve.

“The over-arching focus in Asia continues to be profitably bedding down existing businesses and partnerships. Jetstar has been a pioneer Australian brand across Asia and we continue to see major opportunities for it in the world’s fastest-growing aviation region.”

Commitment to Customers

“Despite the tough decisions we have to make, we will keep delivering outstanding service for our customers,” Mr Joyce said.

“Important customer investments will continue, such as the upgrade of our Airbus A330 fleet and the opening of new lounges in Hong Kong and Los Angeles, and the service that QANTAS passengers receive will not be compromised. Thanks to the skill and commitment of our people, we have earned record customer advocacy, and we plan to keep it there.”

Accelerated Qantas Transformation Program

Fleet and Network

After a detailed review of network and schedules, the QANTAS Group will re-assign aircraft to better match demand, defer aircraft orders, dispose of aircraft, increase fleet utilization and exit under-performing routes.

QANTAS Domestic will increase utilisation of narrow-body aircraft, allowing Airbus A330 aircraft in the domestic market to concentrate solely on East-West services and peak services on the Sydney-Melbourne-Brisbane triangle.

A330-200s will be freed up to enter the QANTAS International fleet as replacement aircraft, helping to accelerate the retirement of older Boeing 747 aircraft.

All six of QANTAS International’s non-reconfigured Boeing 747s will be retired ahead of schedule, by the second half of FY16. Nine reconfigured Boeing 747s with A380-standard interiors will remain.

QANTAS’ final two Boeing 737-400s have been retired this month and all Boeing 767s will be retired by the third quarter of FY15, resulting in cost and passenger benefits from fleet simplification.

QANTAS International’s eight remaining Airbus A380 orders will be deferred, with an ongoing review of delivery dates to meet potential future requirements. Schedule changes will allow maximum use of QANTAS’ current 12 A380s.

The final three of 14 Jetstar Airways Boeing 787-8s on firm order will be deferred.

Jetstar’s A320 order book has been restructured.

In total, more than 50 aircraft will be deferred or sold.

By FY16, the Group’s passenger fleet will have been simplified from 11 aircraft types to seven aircraft types, with an average age of eight years.

Over the next 12 months, QANTAS will exit underperforming routes and make aircraft changes on certain routes to better match capacity to demand.

QANTAS International will withdraw from the Perth-Singapore route (first quarter FY15).

QANTAS’ Brisbane-Singapore and Sydney-Singapore services will be operated by Airbus A330s, replacing Boeing 747s (first quarter FY15)

QANTAS services between Melbourne and London will be re-timed in November 2014 to reduce A380 ground time in Heathrow (second quarter FY15). There are no changes to overall capacity on London flights.

The Melbourne-London service change frees up an A380 for additional flying, and QANTAS will evaluate opportunities to use the aircraft on other routes.

Workforce Changes

Over the next three years, QANTAS will reduce employee numbers across the Group by the equivalent of 5,000 full-time positions, through measures including:

Reduction of management and non-operational roles by 1,500.

Operational positions affected by fleet and network changes.

Restructure of line maintenance operations.

The closure of Avalon maintenance base, as previously announced.

Restructure of catering facilities including the closure of Adelaide catering, as previously announced.

The wage freeze for executives implemented in December 2013 will continue and will be extended to all QANTAS Group employees.

The wage freeze will be:

Ongoing for executives.

Immediate for open EBAs.

Proposed for other EBA-covered staff.

This is in addition to the reduction of fees paid to the QANTAS board and a reduction in the take home pay of the QANTAS CEO by 36 per cent this financial year.

No pay rises or bonuses will be contemplated until QANTAS is profitable again on a full-year Underlying PBT basis.

Mr Joyce said these were hard but necessary decisions to protect as many QANTAS jobs as possible and build a strong business for the future.

“I regret the need for these wide-ranging job losses, but we will do everything we can to make the process easier for employees who leave the business,” Mr Joyce said.

“At the end of this transformation, QANTAS will remain an employer of more than 27,000 people, the vast majority based in Australia – and we will be a better and more competitive company.”

Capital Expenditure and Financial Position

The Group’s planned capital expenditure net of operating lease liability in FY14 will be $1 billion.

Planned capital investment, including movements in operating lease liabilities, will be $800 million per year in FY15 and FY16 – a total reduction of $1 billion over the two years. QANTAS will maintain flexibility to make further changes if needed.

Transformation through FY17 will be funded through the reprioritisation of capital, future free cash flow as benefits from the cost reduction program begin to flow, and asset sales. QANTAS continues to target positive free cash flow from FY15, with capital expenditure aligned to financial performance.

QANTAS has total liquidity of $3 billion, comprising $2.4 billion in cash and $630 million in standby debt facilities, as at 31 December 2013.

Update on Structural Review

QANTAS has reached agreement on the return of its Brisbane Airport terminal lease, together with related assets, to Brisbane Airport Corporation, with a cash value of $112 million to be recognised in the second half of FY14.

QANTAS continues to work through the broader structural review of the QANTAS Group portfolio launched in December 2013.

The review has identified a number of high-quality assets of significant value.

No final decisions have been made about other assets within the Group’s portfolio.

QANTAS will update the market as and when required.

Copyright Photo: Bernhard Ross/AirlinersGallery.com. The retirement of the on-converted Boeing 747-400s will be expedited. Boeing 747-48E VH-OEB (msn 25778) rests between flights at Frankfurt.

QANTAS Airways:

Atlas Air and QANTAS extend their ACMI agreement

Atlas Air Worldwide Holdings, Inc. (New York) today said that its Atlas Air, Inc. unit (New York) and QANTAS Airways Ltd. (Sydney) have extended their long-standing ACMI (aircraft, crew, maintenance and insurance) relationship.

Under the terms of the agreement, Atlas Air will continue to operate two Boeing 747-400 freighters in ACMI service for QANTAS on trans-Pacific routes linking Australia and Asia with the United States.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Boeing 747-47UF N492MC (msn 29253) departs from Anchorage, Alaska after a cargo and fuel stop. The freighter also carries small QANTAS Airways sub-titles.

Atlas Air:

Delta announces changes to its SkyMiles program, changes to a ticket price, not miles flown

Delta Air Lines (Atlanta) has issued this statement about changes to its SkyMiles program:

Delta Air Lines has taken another step in its ongoing commitment to improve the travel experience by unveiling changes to the SkyMiles program. The 2015 SkyMiles program will introduce a shift from today’s current model in which customers earn redeemable mileage based on distance traveled to one based on ticket price. The program updates will be effective January 1, 2015 and will also include a new mileage redemption structure that will improve Award seat availability at the lowest mileage requirement levels, offer One-Way Awards at half the price of round-trip, provide additional Miles + Cash Award options, as well as make significant improvements to delta.com and Delta reservations Award shopping tools.

A New Mileage Earning Model

Today’s method of earning redeemable miles based on the distance a customer flies will change to a model of earning redeemable miles based on the price of the ticket purchased. Delta is providing 10 months advance notice of the upcoming program changes so that customers have ample time to make travel plans.

Customers will be able to earn between five and 11 miles per dollar* spent based on their SkyMiles status, and continue to earn up to an additional two miles per dollar* when using their Delta SkyMiles Credit Card, for a total of up to 13 miles per dollar. The updated program will better reward the customers who spend more with Delta and give them improved mileage-earning opportunities.

The updated mileage-earning plan, for travel beginning January 1, 2015, will better recognize frequent business travelers and those less frequent leisure customers who purchase premium fares. The move is consistent with a trend in the travel industry of rewarding customer behavior based on price. Customers will continue to earn additional miles for purchases with a Delta SkyMiles Credit Card⁺.

MILEAGE EARNING

SkyMiles program status	Miles per dollar*	Miles earned with Credit Card*⁺	Total miles per dollar*
General member	5	+2	7
Silver Medallion	7	+2	9
Gold Medallion	8	+2	10
Platinum Medallion	9	+2	11
Diamond Medallion	11	+2	13
⁺ on Delta spend

For travel marketed and ticketed by Delta’s partner airlines, members will earn a percentage of miles flown as determined by the fare class purchased and will also earn Medallion mileage bonuses on eligible fares.

New Redemption Options

SkyMiles members will gain even more redemption options with the introduction of up to a five-tier structure to give them a wider variety of Awards and improve overall availability at the lowest price points. The lowest level for SkyMiles Saver Awards will remain at 25,000 miles for an Economy Class Award ticket for travel within the U.S. and Canada excluding Hawaii. All of Delta’s worldwide redemption charts will be updated to reflect the new options in the last quarter of 2014 and will be effective for new Award bookings beginning Jan. 1, 2015.

In addition to offering multiple new redemption levels, the SkyMiles program will also introduce One-Way Award tickets starting as low as 12,500 miles within the U.S. and Canada excluding Hawaii and will offer customers the ability to redeem Miles + Cash to provide more Award booking options for tickets purchased at delta.com or through Delta reservations.

Customers will continue to have access to every seat on any Delta flight as an Award seat with no blackout dates. In 2013, frequent flyers redeemed more than 271 billion miles in the SkyMiles program for more than 11 million Award redemptions.

Delta and the SkyMiles Program

Delta is the only major airline that offers elite perks such as unlimited complimentary upgrades, no mileage expiration, no Award fees, a published Diamond Medallion tier and rollover Medallion Qualification Miles.

Now in its 33rd year, SkyMiles is one of the longest-running and most successful loyalty programs in the travel industry. Delta offers many ways to redeem frequent flyer miles, including airline tickets on Delta and 28 partner airlines, mileage upgrades, car rentals, hotel stays and Delta Sky Club memberships, and is the only major airline with miles that don’t expire. For more information on the SkyMiles program, Medallion status and mileage-redemption options.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Boeing 747-451 N673US (msn 30268) departs from Los Angeles International Airport.

Delta Air Lines (current):

Cargolux orders an additional Boeing 747-8 Freighter

Cargolux Airlines International (Luxembourg) and Boeing (Chicago and Seattle) have announced an order for an additional 747-8 Freighter. The order, valued at $357.5 million at list prices, is the 14^th 747-8 Freighter the cargo carrier has ordered from Boeing.

“The Cargolux Board of Directors approved the order of our 14^th 747-8 Freighter almost 35 years to the day that the airline took delivery of its first 747 Freighter ever,” said Richard Forson, interim president and CEO of Cargolux. “This shows how pleased we, as an all-747 cargo operator, are with the performance and economics of this new generation aircraft and underlines the importance of the role of the 747 overall in the success of our company.”

Cargolux was the world’s first operator of the 747-8 Freighter, taking its first delivery of the airplane type in October 2011. Since then, the airline has taken a total of nine 747-8 Freighters, providing the carrier with increased cargo capacity coupled with excellent economic performance. With today’s announcement, Cargolux has a total of five unfilled orders for 747-8 Freighters.

As well as being one of the launch customers for the 747-8 Freighter, Cargolux also took delivery of the first ever 747-400 Freighter in November 1993. The all-Boeing carrier has a fleet comprised entirely of 747-400 Freighters and 747-8 Freighters.

Cargolux:

Lufthansa asks the European Commission to block any Alitalia-Etihad Airways alliance

Lufthansa (Frankfurt) has called on the European Commission to block any alliance and buy-in between Alitalia (2nd) (Rome) and Etihad Airways (Abu Dhabi). Etihad, which already has alliances with Aer Lingus, Airberlin and Air Serbia in Europe, is reportedly close to a deal with Alitalia according to Reuters. Lufthansa has lobbied against state-owned Gulf airlines (especially Emirates Etihad Airways and Qatar Airways) from expanding in Europe because of their unfair state aid.

Read the full report: CLICK HERE

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Boeing 747-830 D-ABYH (msn 37832) climbs majestically from the runway at Los Angeles International Airport (LAX).

Lufthansa:

AirBridgeCargo add its fifth Boeing 747-8 freighter, reports its growth in 2013

AirBridgeCargo-ABC (Moscow), part of Volga-Dnepr Group and Russia’s largest cargo airline, recently celebrated the delivery of the airline’s fifth 747-8 Freighter (VQ-BRJ, msn 37670) on December 27, 2013.

With delivery of the fifth 747-8 Freighter, AirBridgeCargo continues to follow its long-term fleet modernization strategy to further improve the quality of its product. The new aircraft will be used on ABC’s existing route network linking Europe, Asia and the United States via the airline’s hub in Moscow.

At present AirBridgeCargo’s fleet consists of 12 Boeing 747s, including five Boeing 747-400ERFs (Extended Range Freighters), three Boeing 747-400 Freighters and five Boeing 747-8 Freighters.

The carrier achieved a 5% growth in cargo tonnage in 2013, with its highest ever volume of 340,000 tons across its network linking Europe, Russia, Asia and North America.

The airline reported volume growth on all of its major routes and this was matched by a 5% improvement in revenue. AirBridgeCargo’s Freight Ton-Kilometers (FTK) rose 15% in 2013, while its average load factor of 72% show a marginal 1.7% gain over the previous year.

Despite challenging market conditions in 2013, ABC continued with its long-term fleet modernisation strategy and took delivery of two more new generation freighters Boeing 747-8F. With the delivery of its fifth Boeing 747-8F in December 2013, AirBridgeCargo completed its fleet renewal plan which began two years ago. This investment has reduced the average age of its aircraft fleet from nine years at the end of 2011 to three years at the end of 2013. At present, ABC’s fleet is one of the youngest in the air cargo industry.

AirBridgeCargo took delivery of its first Boeing 747-8F (VQ-BLQ) (see above) in January 2012, with the second and third aircraft joining its fleet in March and December 2012. The fourth new generation freighter entered service with ABC in September last year. As part of the modernization program, ABC removed four older aircraft from its fleet; two Boeing 747-200F, one Boeing 747-300F and a Boeing 747-400ERF. A further 747-400ERF will leave its fleet in 2014.

In 2013, AirBridgeCargo joined the Olympic movement with the delivery of 126 tons of broadcasting equipment as well as 214 tons of sports and lighting equipment for the 2014 Winter Olympics taking place in the Russia City of Sochi in February. The flights were performed using Boeing 747 and Boeing 737 cargo aircraft.

AirBridgeCargo Airlines:

Boeing introduces a special Seattle Seahawks Boeing 747-8 logo jet for the Super Bowl

Boeing (Chicago and Seattle) yesterday (January 29) revealed a 747-8 Freighter (N770BA) painted in the livery of the NFL’s Seattle Seahawks. The livery commemorates the team’s National Football Conference Championship and upcoming appearance in Super Bowl XLVIII.

Boeing is a sponsor of the Seattle Seahawks and has partnered with the team for more than a decade on programs in the Puget Sound area.

“The Seahawks have been an inspiration to our entire community throughout this incredible season,” said Boeing Commercial Airplanes President and CEO Ray Conner. “We’re honored that we could join together two Northwest icons, the Seahawks and the 747, for this special salute from the entire Boeing team.”

This 747-8 is owned by Boeing and currently being used for flight testing. The special livery features the distinctive Seahawks logo and a “12” on the tail to salute the team’s fans. The airplane will make its first flight in its new livery on Thurs., January 30.

“The 747 team is proud that one of our airplanes could be used as a tribute to the Seahawks’ success this season and a rallying cry for the team as they prepare for the Super Bowl,” said Eric Lindblad, vice president and general manager, 747 program, Boeing Commercial Airplanes. “The partnerships we have with the Seahawks and others are making a positive difference in the communities where Boeing employees live and work. We join with all Seahawks fans in wishing the team success on Sunday.”

Boeing 747-8 Seahawks Livery Fun Facts

Seattle Seahawks quarterback Russell Wilson’s longest pass this season, 80 yards (240 ft.), was almost the same length as a 747-8 fuselage (243.5 ft.)
Russell Wilson threw for 3,357 yards (10,071 ft.) this season, similar to the runway takeoff distance for a 747-8 (10,650 ft.)
Seattle Seahawks wide receiver Percy Harvin can dash the full length of the 747-8 main deck, 180 ft., in less than seven seconds
Seattle Seahawks running back Marshawn Lynch can squat with 16 economy seats (30 lbs. per seat)
A 747-8 Freighter can carry 121 million Skittles candies, or 302,400 one lb. bags
It would take 144 747-8 passenger airplanes (Intercontinentals) to carry all the Seahawks fans in CenturyLink Field (67,000 seats)
The 747-8 can cover the length of a football field in one second at takeoff
Seahawks fans’ Guinness World Record for crowd noise is approximately 38 times louder than the 747-8 at departure

On January 30 the Boeing Seattle Seahawks 747 took to the skies over Washington in advance of the team’s appearance Sunday in Super Bowl XLVIII.

The airplane’s flight pattern took it past Seattle landmarks including the Space Needle and CenturyLink Field, home of the Seahawks. The 747-8 then flew over Eastern Washington in a pattern that formed the number “12,” a salute to all Seahawks’ fans.

“You may remember that we drew a ‘747’ over the continental United States during 747-8 certification flight testing,” said Boeing 747 chief pilot Mark Feuerstein “Although the ’12’ is smaller in scale, the pride and sense of community behind it make it feel just as big for the entire Boeing team.”

Boeing is a sponsor of the Seattle Seahawks and has partnered with the team for more than a decade on programs in the Puget Sound area.

Boeing reports fourth quarter and 2013 financial results and onward guidance

The Boeing Company (Chicago) reported fourth-quarter revenue of $23.8 billion and core earnings per share (non-GAAP) that increased 29 percent* to $1.88, driven by strong performance across the company’s businesses and higher deliveries (Table 1). Fourth-quarter core operating earnings (non-GAAP) of $1.8 billion includes a $406 million non-cash charge to settle A-12 litigation dating back to 1991, retiring a longstanding risk to the company. Excluding the A-12 charge, fourth-quarter 2013 core operating earnings increased 22 percent* to $2.2 billion and core operating margin increased to 9.4 percent*. Core and GAAP earnings per share includes a charge of $0.34 per share related to A-12 partially offset by a benefit of $0.28 per share for a tax regulation change.

Revenue rose 6 percent in the full year to a record $86.6 billion and core earnings per share increased 20 percent* to a record $7.07. Full-year 2013 GAAP earnings per share was $5.96.

Core earnings per share guidance for 2014 is set at between $7.00 and $7.20, while GAAP earnings per share guidance is established at between $6.10 and $6.30. Revenue guidance is between $87.5 and $90.5 billion, including commercial deliveries of between 715 and 725. Operating cash flow before pension contributions* is expected to be approximately $7 billion, while operating cash flow guidance is set at approximately $6.25 billion.

“Strong fourth-quarter results underscored an outstanding full year of core operating performance that drove record revenue and earnings and increased returns to shareholders,” said Boeing Chairman and Chief Executive Officer Jim McNerney.

“Our Commercial Airplanes business accelerated delivery of its record backlog by successfully increasing production rates while also achieving important development milestones on the 737 MAX and 787-9 and launching the new 787-10 and 777X models with an unprecedented customer response. Our Defense, Space & Security unit overcame a tough operating environment to record expanded revenue, earnings and margins while executing to our commitments on the KC-46A tanker and developing and delivering important new capabilities to customers, such as the P-8 maritime aircraft and the Inmarsat-5 satellite,” said McNerney.

“For 2014, we remain focused on maintaining our commercial airplanes market leadership, strengthening and repositioning our defense, space and security business and continuing to meet the needs of our customers by improving productivity, executing to development plans and delivering our unmatched portfolio of innovative aerospace products and services.”


Table 2. Cash Flow	Fourth Quarter		Full Year
(Millions)	2013	2012	2013	2012
Operating Cash Flow Before Pension Contributions*	$1,409	$4,204	$9,721	$9,058
Pension Contributions	($29)	($37)	($1,542)	($1,550)
Operating Cash Flow	$1,380	$4,167	$8,179	$7,508
Less Additions to Property, Plant & Equipment	($638)	($495)	($2,098)	($1,703)
Free Cash Flow*	$742	$3,672	$6,081	$5,805

Operating cash flow in the quarter was $1.4 billion, reflecting commercial airplane production rates, strong core operating performance and timing of receipts and expenditures (Table 2). During the quarter, the company repurchased 7.6 million shares for $1.0 billion and paid $0.4 billion in dividends, reflecting a 10 percent increase in dividends paid compared to the same period of the prior year. Based on the strong cash generation and outlook, in December, the board of directors authorized an additional $10 billionshare repurchase program and raised the quarterly dividend 50 percent.


Table 3. Cash, Marketable Securities and Debt Balances	Quarter-End
(Billions)	Q4 13	Q3 13
Cash	$9.1	$10.0
Marketable Securities ¹	$6.2	$5.9
Total	$15.3	$15.9
Debt Balances:
The Boeing Company, net of intercompany loans to BCC	$7.0	$7.0
Boeing Capital Corporation, including intercompany loans	$2.6	$2.6
Total Consolidated Debt	$9.6	$9.6


¹	Marketable securities consists primarily of time deposits due within one year classified as “short-term investments.”

Cash and investments in marketable securities totaled $15.3 billion at year-end (Table 3), down from$15.9 billion at the beginning of the quarter. Debt was $9.6 billion, unchanged from the beginning of the quarter.

Total company backlog at year-end was a record $441 billion, up from $415 billion at the beginning of the quarter, and included net orders for the quarter of $48 billion. Backlog is up $51 billion from prior year-end, reflecting $135 billion of net orders in 2013.

Segment Results

Boeing Commercial Airplanes

Table 4.

Fourth Quarter

Full Year

($ in Millions)

2013

2012

Chg

2013

2012

Chg

Deliveries

172

165

648

601

Revenues

$14.6B

$14.1B

$52.9B

$49.1B

Earnings-Ops

$1,506

$1,266

19%

$5,795

$4,711

23 %

Opg Margin

10.3%

8.9%

1.4 Pts

10.9%

9.6%

1.3 Pts

Boeing Commercial Airplanes fourth-quarter revenue increased to $14.7 billion and full-year revenue increased to a record $53 billion on higher delivery volume. Fourth-quarter operating margin improved to 10.3 percent and full-year operating margin grew to 10.9 percent on the higher volume, favorable delivery mix and continued strong operating performance (Table 4).

During the quarter, the company launched the 777X with 259 orders and commitments. During the year, the 787 program completed first flight of the 787-9, successfully launched the 787-10 and began operating at a 10 per month production rate in final assembly. The 737 program delivered at a record production rate of 38 per month and has won nearly 1,800 firm orders for the 737 MAX since launch. In 2013, a record 648 commercial aircraft were delivered. In January 2014, the company reached an eight-year contract extension through 2024 with the International Association of Machinists & Aerospace Workers District 751 (IAM).

Commercial Airplanes booked 465 net orders during the quarter and 1,355 during the year. Backlog remains strong with 5,080 airplanes valued at a record $374 billion.

Boeing Defense, Space & Security


Table 5.	Fourth Quarter			Full Year
(Dollars in Millions)	2013	2012	Chg	2013	2012	Chg
Revenues
Boeing Military Aircraft	$4,395	$4,037	9%	$15,936	$16,019	(1)%
Network & Space Systems	$2,272	$2,024	12%	$8,512	$7,911	8%
Global Services & Support	$2,188	$2,282	(4)%	$8,749	$8,677	1%
Total BDS Revenues	$8,855	$8,343	6%	$33,197	$32,607	2%
Earnings from Operations
Boeing Military Aircraft	$441	$313	41%	$1,465	$1,489	(2)%
Network & Space Systems	$233	$138	69%	$719	$562	28%
Global Services & Support	$280	$300	(7)%	$1,051	$1,017	3%
Total BDS Earnings from Ops	$954	$751	27%	$3,235	$3,068	5%
Operating Margin	10.8%	9.0%	1.8 Pts	9.7%	9.4%	0.3 Pts

Boeing Defense, Space & Security’s fourth-quarter revenue increased 6 percent to $8.9 billion, while operating margin increased to 10.8 percent (Table 5). For the full year, revenue increased 2 percent to$33.2 billion, while operating margin increased to 9.7 percent.

Boeing Military Aircraft (BMA) fourth-quarter revenue increased to $4.4 billion, reflecting higher deliveries. Operating margin increased to 10.0 percent, reflecting the higher deliveries and strong performance. During the quarter, BMA achieved Initial Operating Capability (IOC) on the P-8A Poseidon aircraft.

Network & Space Systems (N&SS) fourth-quarter revenue increased to $2.3 billion, reflecting higher delivery volume and mix, and operating margin increased to 10.3 percent on strong performance. During the quarter, N&SS was awarded a contract for a fourth Inmarsat-5 satellite.

Global Services & Support (GS&S) fourth-quarter revenue was $2.2 billion, reflecting lower volume in integrated logistics. Operating margin was 12.8 percent. During the quarter, GS&S was awarded contracts for the B-52 and B-1 bomber modifications and upgrades.

Backlog at Defense, Space & Security was $67 billion, of which 37 percent represents orders with international customers.

Additional Financial Information


Table 6. Additional Financial Information	Fourth Quarter		Full Year
(Dollars in Millions)	2013	2012	2013	2012
Revenues
Boeing Capital Corporation	$105	$129	$408	$468
Other segment	$22	$27	$102	$106
Unallocated items and eliminations	$123	($358)	($65)	($610)
Earnings from Operations
Boeing Capital Corporation	$9	($12)	$107	$88
Other segment income/(expense)	($99)	$31	($156)	($186)
Unallocated items and eliminations excluding unallocated pension/postretirement expense	($532)	($200)	($1,105)	($492)
Unallocated pension/postretirement expense	($323)	($212)	($1,314)	($899)
Other income, net	$15	$23	$56	$62
Interest and debt expense	($96)	($112)	($386)	($442)
Effective tax rate	14.0%	36.3%	26.4%	34.0%

At quarter-end, Boeing Capital Corporation’s (BCC) net portfolio balance was $3.9 billion down from $4.1 billion at the beginning of the quarter. BCC’s debt-to-equity ratio was 5.0-to-1. Other segment earnings decreased $130 million in the quarter partly due to higher asset impairment expense.

Unallocated items and eliminations excluding unallocated pension/postretirement expense increased in the fourth quarter of 2013 primarily due to a $406 million charge associated with the A-12 settlement. Total pension expense for the fourth quarter was $717 million, up from $576 million in the same period last year. The company’s income tax expense was $201 million in the quarter, compared to $557 million in the same period of the prior year, due to a $212 million benefit recorded in fourth-quarter 2013 for a tax regulation change.

Outlook

The company’s 2014 financial guidance (Table 7) reflects continued strong performance in both businesses.



Table 7. Financial Outlook
(Dollars in Billions, except per share data)	2014

The Boeing Company
Revenue	$87.5 – 90.5
Core Earnings Per Share*	$7.00 – 7.20
Earnings Per Share	$6.10 – 6.30
Operating Cash Flow Before Pension Contributions*	~ $7
Operating Cash Flow ¹	~ $6.25

Boeing Commercial Airplanes
Deliveries ²	715 – 725
Revenue	$57.5 – 59.5
Operating Margin	~ 10%

Boeing Defense, Space & Security
Revenue
Boeing Military Aircraft	~ $15
Network & Space Systems	~ $7.7
Global Services & Support	~ $7.8

Total BDS Revenue	$30 – 31

Operating Margin
Boeing Military Aircraft	~ 9.5%
Network & Space Systems	~ 8.5%
Global Services & Support	~ 10.5%

Total BDS Operating Margin	~ 9.5%

Boeing Capital Corporation
Portfolio Size	Lower
Revenue	~ $0.3
Pre-Tax Earnings	~ $0.05

Research & Development	~ $3.2
Capital Expenditures	~ $2.5
Pension Expense ³	~ $3.1
Effective Tax Rate ⁴	~ 31%


¹	After discretionary cash pension contributions of $0.75 billion and assuming new aircraft financings under $0.5 billion
²	Assumes approximately 110 787 deliveries
³	Approximately $1.1 billion is expected to be recorded in unallocated items and eliminations
⁴	Assumes the extension of the research and development tax credit
*	Non-GAAP measures. Complete definitions of Boeing’s non-GAAP measures are on page 7, “Non-GAAP Measures Disclosures.”

Boeing’s 2014 revenue guidance is established at between $87.5 and $90.5 billion. Core earnings per share guidance is set at between $7.00 and $7.20, and earnings per share guidance is expected to be between $6.10 and $6.30. Total company 2014 operating cash flow before pension contributions is expected to be approximately $7 billion, while operating cash flow is expected to be approximately $6.25 billion in 2014, including $0.75 billion of discretionary pension contributions. Total company pension expense in 2014 is expected to be approximately $3.1 billion (of which approximately $2.0 billion is expected to be recorded in core operating earnings and $1.1 billion recorded in unallocated items and eliminations).

Commercial Airplanes’ 2014 deliveries are expected to be between 715 and 725, which includes approximately 110 787 deliveries. Revenue at Commercial Airplanes is expected to be between $57.5 and $59.5 billion with operating margins of approximately 10 percent. Defense, Space & Security’s revenue for 2014 is expected to be between $30 and $31 billion with operating margins of approximately 9.5 percent.

Boeing Capital Corporation expects that its aircraft finance portfolio will continue to decline in 2014, as new aircraft financing of less than $0.5 billion is expected to be lower than normal portfolio runoff through customer payments and depreciation. Boeing’s 2014 R&D forecast is approximately $3.2 billion, and capital expenditures for 2014 are expected to be approximately $2.5 billion. Boeing’s effective tax rate is expected to be approximately 31 percent in 2014, which assumes the extension of the research and development tax credit.

Non-GAAP Measures Disclosures

We supplement the reporting of our financial information determined under U.S. generally accepted accounting principles (GAAP) with certain non-GAAP financial information. The non-GAAP financial information presented excludes certain significant items that may not be indicative of, or are unrelated to, results from our ongoing business operations. We believe that these non-GAAP measures provide investors with additional insight into the company’s ongoing business performance. These non-GAAP measures should not be considered in isolation or as a substitute for the related GAAP measures, and other companies may define such measures differently. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. The following definitions are provided:

Core Operating Earnings, Core Operating Margin and Core Earnings Per Share

Core operating earnings is defined as GAAP earnings from operations excluding unallocated pension and post-retirement expense. Core operating margin is defined as core operating earnings expressed as a percentage of revenue. Core earnings per share is defined as GAAP diluted earnings per share excluding the net earnings per share impact of unallocated pension and post-retirement expense. Unallocated pension and post-retirement expense represents the portion of pension and other post-retirement costs that are not recognized by business segments for segment reporting purposes. Management uses core operating earnings, core operating margin and core earnings per share for purposes of evaluating and forecasting underlying business performance. Management believes these core earnings measures provide investors additional insights into operational performance as they exclude unallocated pension and post-retirement costs, which primarily represent costs driven by market factors and costs not allocable to government contracts. A reconciliation between the GAAP and non-GAAP measures is provided on page 14.

Core Operating Margin and the Increase in Core Operating Earnings Excluding A-12 Settlement Charge

The company is disclosing the core operating margin and the increase in core operating earnings in the fourth quarter of 2013 over the fourth quarter of 2012 excluding the A-12 settlement charge in the fourth quarter of 2013. Management believes it is useful to occasionally exclude certain items that are not reflective of underlying performance and that can distort period to period performance comparisons. Management uses similar measures for purposes of evaluating and forecasting underlying business performance. A reconciliation between the GAAP and non-GAAP measures is provided on page 14.

Operating Cash Flow Before Pension Contributions

Operating cash flow before pension contributions is defined as GAAP operating cash flow less pension contributions. Management believes operating cash flow before pension contributions provides additional insights into underlying business performance. Management uses operating cash flow before pension contributions as a measure to assess both business performance and overall liquidity. Table 2 provides a reconciliation between GAAP operating cash flow and operating cash flow before pension contributions.

Free Cash Flow

Free cash flow is defined as GAAP operating cash flow less capital expenditures for property, plant and equipment additions. Management believes free cash flow provides investors with an important perspective on the cash available for shareholders, debt repayment, and acquisitions after making the capital investments required to support ongoing business operations and long term value creation. Free cash flow does not represent the residual cash flow available for discretionary expenditures as it excludes certain mandatory expenditures such as repayment of maturing debt. Management uses free cash flow as a measure to assess both business performance and overall liquidity. Table 2 provides a reconciliation between GAAP operating cash flow and free cash flow.