Tag Archives: Boeing

Japan Transocean Air introduces its new “Jinbei Jet” Whale Shark

Japan Transocean Air-JTA (JAL) (Naha, Okinawa) in December introduced this striking new Whale Shark logojet named “Jinbei Jet”.

Top Copyright Photo: Shige Sakaki. Boeing 737-4Q3 JA8939 (msn 29486) is pictured at its Okinawa home in the motif.

JTA-Japan TransOcean Air-JAL 737-400 JA8939 (12-Jinbei Jet)(Flt) OKA (JTA)(LR)

JTA-Japan Transocean Air:ย AG Slide Show

Ryanair reports third quarter profits of $24.1 million

Ryanair (Dublin) announced third quarter profits of $24.1 million (โ‚ฌ18 million), up $4 million (โ‚ฌ3 million) on last year despite an $109 million (โ‚ฌ81 million) increase in fuel costs.ย Revenues rose 15% to $1.3 billion (โ‚ฌ969 million) as traffic grew 3% to 17.3 million passengers.ย Unit costs rose 11% mainly due to a 24% (โ‚ฌ81 million) increase in fuel.ย Excluding fuel third quarter unit costs rose by 4%, while average fares improved by 8%.

Summary Q3 Results (IFRS) in Euro.
Q3 Results (IFRS) โ‚ฌ
Dec 31, 2011
Dec 31, 2012
% Change
Passengers
16.7m
17.3m
ย  +3%
Revenue
โ‚ฌ844m
โ‚ฌ969m
ย  +15%
Profit after Tax
โ‚ฌ14.9m
โ‚ฌ18.1m
ย  +21%
Basic EPS(euro cent)
1.02
1.25
ย  +23%
Ryanairโ€™s CEO Michael Oโ€™Leary said:
โ€œOur Q3 profit of โ‚ฌ18m was ahead of expectations due to strong pre-Christmas bookings at higher yields.ย The 8% rise in avg. fares reflects our improved customer service, record punctuality and the successful roll out of our reserved seating service.ย Our fuel costs rose โ‚ฌ81m, (+24%), slightly less than expected as oil prices increased 22% (from $84pbl) to $102pbl.ย Excluding fuel, Q3 unit costs rose 4% due to excessive increases in Italian ATC costs, Spanish airport charges, and the strength of Sterling to the Euro.ย Ancillary revenue performed strongly and rose 24% to approx. โ‚ฌ13 per pax.
New Routes and Bases.
Our new routes and bases are performing well in their first winter, although some smaller bases such as Budapest and Warsaw are doing so at very low prices.ย Our 51st base Maastricht opened in December, and we will open 6 new bases (total 57) from April in Eindhoven, Krakow, Zadar (Croatia), Chania (Greece), Marrakesh and Fez (Morocco).ย Significant capacity cuts by Legacy and other struggling EU carriers continue to offer us substantial growth opportunities across Europe.ย  We expect further capacity cuts and restructurings in Europe as high fare, loss making carriers struggle to compete with Ryanairโ€™s expansion at low prices. During Q.3 Iberia, AFKLM, Air Berlin, and Lufthansa all announced major restructurings.ย Both LOT and SAS are seeking further state support while the Swiss charter airline โ€œHelloโ€ has closed.ย These trends will create more growth opportunities for Ryanair to grow profitably to 120m passengers over the next decade.
Customer Service.
Our industry leading customer service continues to improve as demonstrated by the following YTD milestones:-
ยทย ย 93% of all Ryanair flights arrived on time (a new record).
ยทย ย Lost bags have fallen to less than 1 per 3,000 pax.
ยทย ย We cancel less than 4 flights in every 1,000.
No other EU airline can match Ryanairโ€™s fares or this level of passenger service.ย The addition of reserved seating to our priority boarding service in 2012 has been very well received and a recent survey of Ryanairโ€™s traffic in Spain (where Ryanair is the largest carrier) highlighted that 22% of our passengers were travelling on business.ย A survey of 10,000 passengers in December also yielded the following results:-
ย ยทย ย 87% were satisfied or very satisfied with their Ryanair flight.
ยทย ย 93% said they would fly Ryanair again.
ยทย ย 95% said Ryanair provide excellent value for money.
Ryanair Strengths.
Ryanairโ€™s ex fuel passenger cost of โ‚ฌ27 (ytd) is lower than any carrier in Europe.ย Our average fare of โ‚ฌ50 is (by some distance) lower than any other EU carrier.ย Our tight cost management, at a time when competitor costs are rising faster, will enable Ryanair to expand our price and cost leadership over all other EU airlines for the foreseeable future.ย The combination of Ryanairโ€™s industry leading costs and customer service, strong cash flows and balance sheet, gives Ryanair a unique platform to deliver its next decade of growth as we target a 20% share of the EU short-haul market by growing to over 120m pax p.a.
Stansted Airport Sale
The sale of Stansted should be completed by the end of Spring.ย We welcome its purchase by MAG and look forward to working with them (as we do currently in Manchester, East Midlands, and Bournemouth) to grow Stanstedโ€™s low fare traffic back over 23m, where it was in 2007 before the BAA monopoly doubled Stanstedโ€™s fees.ย We also welcome the CAAโ€™s announcement that is โ€œminded toโ€ rule that Stansted has market power, and will needย effectiveย regulation to protect Stansted users from exploitation by the airport monopoly particularly when โ€œthere is evidence to suggest that Stansted is pricing above the competitive levelโ€.
Aer Lingus Update.
Under Irish Takeover Panel rules we are unable in these results to update on our offer to acquire Aer Lingus.ย Accordingly we are issuing a separate announcement on this matter today.
Ryanairโ€™s CEO Michael Oโ€™Leary said:

โ€œRyanair has submitted a radical and unprecedented remedies package to the EU in support of its offer for Aer Lingus.ย We believe these remedies address every current Ryanair\Aer Lingus crossover route and all other competition issues raised by the Commission in its Statement of Objections. The remedies involve two upfront buyers each basing aircraft in Ireland to takeover and operate a substantial part of Aer Lingusโ€™ existing route network and short-haul business.ย This will be the first EU airline merger which will deliver structural divestitures and multiple upfront buyers.ย We look forward to completing our offer for Aer Lingus subject to receiving approval from the EU competition authorities in early Marchโ€.
Hedging & Balance Sheet.
We have recently extended our fuel hedges to 75% of FY 14 at $97pbl and hedges on our fuel exposures at $1.32.ย At current rates our FY14 fuel cost per passenger will rise by approx. 5%, compared to a 14% increase in FY13.
A 2ndย special dividend of โ‚ฌ492m (โ‚ฌ0.34 per share) was paid to shareholders in Q3, bringing to โ‚ฌ1.53bn the funds returned by Ryanair to shareholders over the last five years.ย Ryanairโ€™s balance sheet remains one of the strongest in the industry, with closing Q3 gross cash of โ‚ฌ3.15bn.ย We expect the year end net cash to be positive despite directly owning over 70% of our fleet of 305 young Boeing 737-800s.
Outlook.
Our Q3 yields were boosted by stronger pre-Christmas bookings, while lower than expected operating costs delivered slightly better profits than forecast.ย However Q4 traffic (as previously guided) will drop by approx.400,000 passengers (-3%)below last yearโ€™s Q4, due to our grounding up to 80 aircraft which limits the impact of high oil prices, high airport fees at Stansted and Dublin, and seasonally weaker Q4 demand.ย On the basis of this improved Q3 result, our capacity cuts and limited visibility over Easter bookings and yields, (although we have seen some yield softness in January), we now expect our full year profits to exceed our previous guidance (of โ‚ฌ490m to โ‚ฌ520m) and rise close to โ‚ฌ540m, a 7% increase on last yearโ€™s profits despite a 19% increase in our oil costs.
Copyright Photo: Antony J. Best. Boeing 737-8AS EI-CSA (msn 29916) arrivs at the London (Stansted) hub with promotional Scotland stickers.
Ryanair:ย AG Slide Show

SunExpress to expand operation at Izmir next summer

SunExpress Airlines (Antalya) will add four new destinations from Izmir this coming summer. Bremen (April 3), Hahn (July 4), Oslo (May 2) and Stockholm (April 28) will be added bringing to 35 the number of destinations from IZmir.

Read the full report from turizmdebusabah (in Turkish):ย CLICK HERE

Copyright Photo: Paul Denton. Celebrating 20 Years of operations with this special livery, Boeing 737-85F TC-SUM (msn 28826) arrives at Antalya, Turkey.

SunExpress:ย AG Slide Show

Frameable Color Prints and Posters:ย AG All Photos Available

NTSB “very concerned”, 787 battery fire investigation continues, 787s remain grounded

NTSB logo

The National Transportation Safety Board (NTSB) (Washington) investigation of the battery fire on board a Boeing 787-8 of JAL-Japan Airlines (Tokyo) at Boston continues.

Deborah Hersman, chairman of the National Transportation Safety Board briefed the media yesterday (January 24) and according to this report by Reuters made it clear that “investigators have found a series of “symptoms” in the battery damaged in a January 7 fire in Boston, but not the underlying cause of the problem. She also said the agency would be looking at the design of the battery compartment area of the plane and whether the certification standards had been strong enough.”

“This is an unprecedented event. We are very concerned. We do not expect to see fire events on board aircraft. This is a very serious air safety concern.” as stated by Hersman.

According to Reuters, “Hersman, talking to reporters after the news conference, confirmed that there is no fire suppression system in the area where the battery burned, nor any way to access it in-flight.”

Bottom line: the 787 could be grounded for a while. Fires on board aircraft should not be happening and this statement now raises concerns about the FAA certification process of the aircraft.

Meanwhile Boeing issued this statement:

Boeing (Chicago) welcomes the progress being made in the 787 investigation discussed today by the U.S. National Transportation Safety Board (NTSB) in Washington, D.C. The regulatory and investigative agencies in the U.S. and Japan have dedicated substantial resources to these investigations, and we appreciate their effort and leadership.

Boeing continues to assist the NTSB and the other government agencies in the U.S. and Japan responsible for investigating two recent 787 incidents. The company has formed teams consisting of hundreds of engineering and technical experts who are working around the clock with the sole focus of resolving the issue and returning the 787 fleet to flight status. We are working this issue tirelessly in cooperation with our customers and the appropriate regulatory and investigative authorities. The safety of passengers and crew members who fly aboard Boeing airplanes is our highest priority.

In order to ensure the integrity of the process and in adherence to international protocols that govern safety investigations, we are not permitted to comment directly on the ongoing investigations. Boeing is eager to see both investigative groups continue their work and determine the cause of these events, and we support their thorough resolution.

Boeing deeply regrets the impact that recent events have had on the operating schedules of our customers and their passengers.

Read the full report: CLICK HERE

Japan Airlines to operate the Tokyo Narita-San Diego route again on January 30

JAL-Japan Airlines (Tokyo) will operate a Boeing 777 flight on the Tokyo (Narita)-San Diego route on January 30. It is unclear at this time if the flight will continue beyond this single roundtrip flight. The route has been suspended since the Boeing 787-8 was grounded.

Read the full report from U-T San Diego: CLICK HERE

Copyright Photo: James Helbock. Tokyo meets San Diego. Flying over an appropriate JAL advertising billboard about the new service, Boeing 787-8 JA827J (msn 34837) completes its final approach over downtown San Diego.

JAL-Japan Airlines:ย AG Slide Show

United Continental Holdings reports a 4Q net loss of $190 million but a 2012 net profit of $589 million

United Continental Holdings, Inc. (United Airlines) (Chicago) today reported full-year 2012 net income of $589 million, or $1.59 per diluted share, excluding $1.3 billion of special charges. Including special charges, UAL reported a full-year 2012 net loss of $723 million, or $2.18 per share. UAL reported a fourth-quarter 2012 net loss of $190 million, or $0.58 per share, excluding $430 million of special charges. Including special charges, UAL reported a fourth-quarter 2012 net loss of $620 million, or $1.87 per share.

  • UAL full-year 2012 consolidated passenger revenue increased 0.2 percent year-over-year. Consolidated passenger revenue per available seat mile (PRASM) increased 1.7 percent in 2012 compared to 2011.
  • Superstorm Sandy reduced fourth-quarter revenue by approximately $140 million and profit by approximately $85 million.
  • Full-year 2012 consolidated unit costs (CASM), holding fuel rate and profit sharing constant and excluding special charges and third-party business expense, increased 2.5 percent year-over-year on a consolidated capacity reduction of 1.5 percent. Full-year 2012 consolidated CASM increased 6.7 percent year-over-year.
  • UAL ended 2012 with $7.0 billion in unrestricted liquidity.
  • Co-workers earned $119 million in profit sharing for full-year 2012, which will be distributed on Feb. 14, 2013.

Fourth-Quarter Revenue andย Capacity

For the fourth quarter of 2012, total revenue was $8.7 billion, a decrease of 2.5 percent year-over-year. Fourth-quarter consolidated passenger revenue decreased 3.6 percent to $7.5 billion, compared to the same period in 2011.

Consolidated revenue passenger miles (RPMs) decreased 3.2 percent on a consolidated capacity (available seat miles) decrease of 4.2 percent year-over-year for the fourth quarter, resulting in a fourth-quarter consolidated load factor of 82.3 percent.

Fourth-quarter 2012 consolidated PRASM increased 0.6 percent compared to the same period in 2011. Consolidated yield for the fourth quarter of 2012 decreased 0.4 percent year-over-year.

Mainline RPMs in the fourth quarter of 2012 decreased 3.7 percent on a mainline capacity decrease of 4.3 percent year-over-year, resulting in a fourth-quarter mainline load factor of 82.5 percent. Mainline yield for the fourth quarter of 2012 decreased 0.9 percent compared to the same period in 2011. Fourth-quarter 2012 mainline PRASM decreased 0.3 percent year-over-year.

“While we didn’t meet our revenue goals in 2012, we have addressed the integration issues that drove our underperformance,” said Jim Compton, UAL’s vice chairman and chief revenue officer. “We’re now positioned to capitalize on market opportunities across our network, and to earn back our share of revenue, based on solid operations and great customer service.”

Passenger revenue for the fourth quarter of 2012 and period-to-period comparisons of related statistics for UAL’s mainline and regional operations are as follows:

4Q 2012PassengerRevenueย ย 

(millions)

Passenger Revenue vs.

4Q 2011

PRASMย  vs. 4Q 2011 Yield vs. 4Q 2011 Available Seat Milesย vs.
4Q 2011
Domestic $2,953 (6.2%) (1.8%) (1.9%) (4.5%)
Atlantic 1,214 (7.5%) (0.3%) (0.3%) (7.2%)
Pacific 1,156 4.1% 5.9% 3.8% (1.7%)
Latin America 590 (5.4%) (4.2%) (6.5%) (1.3%)
International 2,960 (2.8%) 1.3% 0.0% (4.1%)
Mainline 5,913 (4.6%) (0.3%) (0.9%) (4.3%)
Regional 1,620 0.0% 3.7% 0.4% (3.6%)
Consolidated $7,533 (3.6%) 0.6% (0.4%) (4.2%)

Year-over-year cargo and other revenue in the fourth quarter of 2012 increased 5.0 percent, or $56 million, to $1.2 billion.

Fourth-Quarter Costs

Total operating expenses, excluding special charges, increased $94 million, or 1.1 percent, in the fourth quarter versus the same period in 2011. Including special charges, fourth-quarter total operating expenses increased $284 million, or 3.2 percent, year-over-year. Third-party business expense was $118 million in the fourth quarter.

Consolidated and mainline CASM, excluding special charges and third-party business expense, increased 4.8 percent and 5.0 percent, respectively, in the fourth quarter of 2012 compared to the same period of 2011. Fourth-quarter consolidated and mainline CASM, including special charges, increased 7.7 and 8.5 percent year-over-year, respectively.

In the fourth quarter, consolidated and mainline CASM, excluding special charges and third-party business expense and holding fuel rate and profit sharing constant, increased 4.8 percent and 4.7 percent, respectively, compared to the results for the same period of 2011.

“While we reported a full-year profit in 2012, these results clearly fell short of our expectations and the return goals we have set,” said John Rainey, UAL’s executive vice president and chief financial officer. “2013 will be an important year for us as we take the necessary steps to create economic value and achieve a sufficient level of profitability.”

Liquidity, Cash Flow and Return on Invested Capital

UAL ended the year with $7.0 billion in unrestricted liquidity, including $500 million of undrawn commitments under a revolving credit facility. During the fourth quarter, the company generated $31 million of operating cash flow and had gross capital expenditures and purchase deposits of $1.0 billion, which included the delivery of 11 aircraft. The company made debt and capital lease principal payments of $270 million in the fourth quarter. For the full year, the company made debt and capital lease principal payments of $1.5 billion, including prepayments. The company’s return on invested capital for the year ended Dec. 31, 2012, was 8.0 percent, below the company’s goal of a 10 percent return over the business cycle.

2012 Events

  • For the fourth quarter, United recorded a U.S. Department of Transportation domestic on-time arrival rate of 80.1 percent, exceeding its goal for the quarter. For the full year, United recorded a domestic on-time arrival rate of 77.3 percent and a system completion factor of 98.6 percent. For international flights, United recorded an on-time arrival rate of 73.7 percent. The on-time arrival rates are based on flights arriving within 14 minutes of scheduled arrival time.
  • United co-workers earned cash incentive payments for on-time performance totaling $26 million during 2012.
  • Pilots ratified a new joint labor agreement for all United Airlines pilots, and flight attendants from the company’s United, Continental and Continental Micronesia (CMI) subsidiaries ratified new labor agreements. United also reached an agreement with technicians from the CMI subsidiary. The company began the joint collective bargaining process with its flight attendants, technicians, dispatchers and airport and reservation agents.
  • United introduced its Outperform Recognition Program, awarding cash prizes each quarter to employees for excellence in customer service.
  • The company took delivery of six Boeing 787-8 Dreamliners in 2012 and launched its first commercial 787 flight in early November. United also took delivery of 19 Boeing 737-900 ERs, and removed from service 19 Boeing 737-500s, one Boeing 757-200 and three Boeing 767-200s. In addition, the company sold or returned to lessors 37 aircraft that had been parked in long-term storage.
  • United announced an order to purchase 100 Boeing 737 MAX 9 aircraft and 50 Boeing 737-900 ER aircraft for delivery beginning in 2013. These new aircraft will allow United to replace older, less-efficient aircraft to reduce fuel and operating costs, enhance the customer experience and maximize network opportunities.
  • UAL raised $2.2 billion of debt financing through multiple issuances of enhanced equipment trust certificates at an average interest rate of approximately 4.5 percent, with each issuance setting new average interest rate lows for this type of security. The debt proceeds are being used to finance the acquisition of seven new Boeing 787-8 and 32 new Boeing 737-900ER aircraft and to refinance the debt relating to three Boeing 737-900ER aircraft delivered in 2009.
  • The company expanded its industry-leading global route network, launching nonstop flights to numerous international destinations including Istanbul; Manchester, England; Dublin; Buenos Aires, Argentina; Monterrey, Mexico; San Salvador, El Salvador; Kelowna, British Columbia, Canada; and Doha, Qatar, via Dubai, United Arab Emirates. United also announced new nonstop international flights beginning in 2013 to Taipei, Taiwan; Shannon, Ireland; Paris; Edmonton, Alberta, Fort McMurray, Alberta, and Thunder Bay, Ontario, Canada; and Denver’s first service to Asia with non-stop service to Tokyo. The company started 18 new domestic routes in 2012, including the company’s first service to Fairbanks, Alaska; Grand Forks, N.D.; Williston, N.D.; and Sarasota, Fla.ย United also announced eight new domestic markets for 2013 including the company’s first service to Fayetteville, N.C. and Santa Fe, N.M.
  • United opened its new Network Operations Center in downtown Chicago with leading technology and tools for employees who manage the 24/7 global operation.
  • United converted to a single passenger service system, launched a single website, united.com, and a single loyalty program, MileagePlus, and made policy and procedure changes to become a single airline for its customers.
  • The company continued to install flat-bed seats in premium cabins on its international fleet and now has the new seats on 176 aircraft, more than any otherย U.S. carrier.
  • United continued to install Economy Plus seating, and it is now on 91 percent of the mainline fleet.
  • The company began installing global satellite-based Wi-Fi on its mainline fleet and expects to have more than 300 aircraft equipped with Wi-Fi by the end of 2013.
  • United and Chase launched the premium MileagePlus Club co-brand card, building on the strong performance of the MileagePlus Explorer card launched in 2011.

Copyright Photo: Michael B. Ing. United Airlines is again getting to retire its last Boeing 737-500s this year for the second time. Previously the airline retired it original 737-522s but reacquired the type with the United-Continental merger with Continental 737-524s. 737-524 N16648 (msn) 28909) completes its final approach into Los Angeles International Airport.

United Airlines:ย AG Slide Show

Southwest Airlines achieves its 40th consecutive year of profitability

Southwest Airlines Company (Southwest Airlines and AirTran Airways) (Dallas) today reported its fourth quarter and full year 2012 results.ย  Fourth quarter 2012 net income was $78 million, or $.11 per diluted share, which included $13 million (net) of favorable special items.ย  This compared to net income of $152 million, or $.20 per diluted share, in fourth quarter 2011, which included $86 million (net) of favorable special items.ย  Excluding special items, fourth quarter 2012 net income was $65 million, or $.09 per diluted share, which was comparable to fourth quarter 2011.ย  This exceeded the First Call consensus estimate of $.08 per diluted share.ย  Additional information regarding special items is included in this release and in the accompanying reconciliation tables.

For the full year of 2012, net income was $421 million, or $.56 per diluted share, which included $4 million (net) of favorable special items. This compared to $178 million, or $.23 per diluted share, in full year 2011, which included $152 million (net) of unfavorable special items.ย  Excluding special items, full year 2012 net income was $417 million, or $.56 per diluted share, compared to net income of $330 million, or $.43 per diluted share, for full year 2011.ย  Operating income for full year 2012 was $623 million, compared to $693 million for full year 2011.ย  Excluding special items, operating income for full year 2012 was $838 million, which was comparable to full year 2011.

Gary C. Kelly, Chairman of the Board, President, and Chief Executive Officer, stated, “2012 was a year of tremendous progress.ย  Our profits (excluding special items) of $417 million grew 26 percent as compared to 2011 and represented our 40thย consecutive year of profitability.ย  Without a doubt, this is a remarkable feat and a record unmatched in the airline industry.ย  These solid earnings were achieved despite significant efforts and costs related to critical strategic initiatives.ย  I expect these initiatives to produce substantial returns over the next several years.ย  For 2012, these initiatives contributed to the 49 percent surge in our cash flow from operations to $2.1 billion. We ended the year with fourth quarter profits (excluding special items) of $65 million, which was in line with our year ago performance.

“I was very pleased with our operational performance for the year and our Customer Service delivery. Both were exceptional, especially considering the amount of work involved with our initiatives.ย  I am deeply grateful to all of our People for their extraordinary efforts and a truly remarkable year.

“Our fourth quarter 2012 operating revenues were a fourth quarter record $4.2 billion, bringing full year 2012 operating revenues to more than $17 billion.ย  Our strong fourth quarter 2012 operating revenue performance was driven by record yields, continued high load factors, and an impressive freight revenue performance.ย  As with the full year profits, these strong revenues were achieved despite the transitional state of the AirTran route network.ย  While there was much change in 2012, significant optimization efforts are planned in 2013 for the AirTran network.ย  As we enter 2013, bookings and revenue trends, thus far, suggest a year-over-year improvement in January 2013 passenger unit revenues in the two to three percent range.ย While the effect of U.S. tax increases on the domestic economy remains uncertain, bookings for the remainder of first quarter, thus far, are strong.

“Our economic fuel costs, including fuel taxes, were $3.32 per gallon for fourth quarter 2012, and $3.28 per gallon for full year 2012, compared to $3.29 per gallon and $3.19 per gallon for the respective year-ago periods.ย  Based on market prices as of January 18th, our first quarter 2013 economic fuel costs, including fuel taxes, are estimated to be approximately $3.30 per gallon, as compared to $3.44 per gallon for first quarter 2012.ย  While current fuel price levels are very high, the year-over-year decline estimated for first quarter 2013 economic fuel costs is an encouraging trend.

“As expected, our fourth quarter 2012 unit costs, excluding fuel, profitsharing, and special items, increased 5.8 percent, as compared to fourth quarter 2011.ย  While we expect a similar trend in first quarter 2013, year-over-year unit cost inflation, excluding fuel, profitsharing, and special items, is expected to significantly ease for full year 2013 as we complete ourย Evolveย interior cabin retrofits and begin to more fully realize benefits from our fleet modernization efforts.

“While we continue to transform our Company with a bold five-year strategic plan that began in 2011, we remain committed to the pillars of our successโ€”outstanding Customer Service; safe, reliable, and efficient operations; and low costs. We are on track with our plan to fully integrate AirTran into Southwest Airlines by the end of 2014.ย  We realized $142 million of net, annualized, pre-tax synergies during 2012, and we expect to achieve our $400 million target in 2013 (excluding acquisition and integration expenses).ย  This month, we are on track to begin testing connecting itineraries between the Southwest and AirTran networks in a handful of markets, with significant offerings planned in February and more in March.ย  Once fully implemented in April, we expect the connected networks to contribute incremental revenue in 2013 and provide significant opportunities to optimize the combined network.ย  Our fleet modernization initiatives are on schedule with 259 Southwest 737-700 aircraft retrofitted with our new 143-seatย Evolveย cabin.ย  We expect to have all 372 of Southwest’s 737-700 aircraft retrofitted withย Evolveย by June and 78 of our 737-300 aircraft retrofitted by the end of 2013. We currently have 34 737-800s in our fleet with plans to grow to 54 this year and 78 next year.ย  We have equipped 400 Southwest aircraft with Row 44 WiFi technology, providing our Customers access to satellite-based WiFi and live television.ย  We intend to significantly grow our inflight entertainment offerings in 2013.ย  We are thrilled with the Customer feedback and incremental revenue generated from our All-New Rapid Rewards frequent flyer program that was installed in 2011.ย  Our international reservation system implementation is on track for 2014, and we continue to make great progress on implementing our new revenue management program in 2013.ย  Also, we’ve announced new 2013 revenue streams: selling open A1 through A15 premium boarding positions and a new service charge for reuse of funds associated with restricted tickets that are not canceled (or changed) prior to departure.ย  Collectively, we expect our strategic initiatives and new revenue streams to contribute the majority of the planned $1.1 billion year-over-year revenue increase in 2013.ย  I am enthused about our 2013 plan and believe our transformation efforts will make us better, stronger, and more competitive.

“Our financial position remains strong with $3 billion in cash and short term investments.ย  We generated $716 million in free cash flow* during 2012, and we expect healthy free cash flow* in 2013.ย  We remain focused on enhancing Shareholder value through capital efficiency and our targeted 15 percent pretax return on invested capital.

“We believe in our strategic plan.ย  And, the outstanding efforts, commitment, and dedication of our People exhibited in 2012 gives me confidence in our ability to successfully execute this plan. The year 2012 was a year of dramatic accomplishments that I believe positions us to be stronger than ever.”

Notable 2012 accomplishments for Southwest Airlines include:

  • 40thย consecutive year of profitability
  • 83.1 percent Ontime Performance
  • Recognized with numerous awards and recognitions, most notably being named Customer Service Champions by JD Powers, included in the 2012 Customer Service Hall of Fame by MSN Money, and named one of America’s Top 500 Companies by Barrons
  • Received Single Operating Certificate in March 2012; ten months after AirTran acquisition close
  • Launched 737-800 operations in March (34 aircraft currently in service)
  • Converted 259 Southwest 737-700s to new 143-seatย Evolveย configuration (including progress thus far in 2013)
  • Continued equipping aircraft with satellite-based WiFi technology, reaching the 400thinstallation in January 2013 (including AirTran conversions)
  • Earned flag status and began selling service to Puerto Rico (to be launched April 2013)
  • Launched Southwest service to Atlanta, Akron-Canton, and Dayton
  • Received slots at Ronald Reagan Washington National Airport and began service
  • Launched AirTran service to Austin, Orange County, Mexico City, and Cabo San Lucas
  • Discontinued AirTran service to 14 airports
  • Resolved all seniority list integrations
  • Converted 11 AirTran 737-700s to the Southwest livery withย Evolveย configuration
  • Converted four AirTran stations to Southwest: Seattle, Dulles, Des Moines, and Key West
  • Announced plans to convert seven more AirTran stations in 2013: Phoenix, Branson, Charlotte, Flint, Portland (Maine), Rochester, and Wichita
  • Converted 26 percent of the AirTran workforce to Southwest
  • Harmonized all Customer policies between Southwest & AirTran
  • Opened new Pilot and Flight Attendant crew bases at Denver International Airport
  • Selected Amadeus for International Reservation system for 2014 implementation
  • Completed 717 sublease/lease deal with Delta
  • Received Houston City Council approval for Hobby international terminal
  • Deferred $1 billion in capital spending
  • Returned $422 million to Shareholders through repurchasing $400 million of common stock (approximately 46 million shares) and distributing $22 million in dividends

Financial Results and Outlook

AirTran Airways, Inc. became a wholly-owned subsidiary of the Company on May 2, 2011. Results discussed in this release and provided in the accompanying unaudited Condensed Consolidated Financial Statements and Comparative Consolidated Operating Statistics include the results of operations and cash flows for AirTran beginning May 2, 2011, including the impact of purchase accounting.ย  Full year 2011 results do not include AirTran’s results prior to the acquisition date.ย  However, the Company believes the analysis of specified financial results on a “combined basis” provides more meaningful year-over-year comparability.ย  Full year 2011 financial information presented on a “combined basis” is the sum of the historical financial results of the Company and AirTran for periods prior to the acquisition date, but includes the impact of purchase accounting beginning May 2, 2011.ย  Supplemental financial information presented on a “combined basis” and the accompanying reconciliations are included in this release.

The Company’s total operating revenues in fourth quarter 2012 increased 1.6 percent to $4.2 billion, compared to $4.1 billion in fourth quarter 2011.ย  Operating unit revenues increased 1.9 percent from fourth quarter 2011. Based on current bookings and revenue trends, the Company expects a solid year-over-year increase in its first quarter 2013 unit revenues.

Total fourth quarter 2012 operating expenses were $4.1 billion, compared to $4.0 billion in fourth quarter 2011.ย  Excluding special items in both periods, fourth quarter 2012 operating expenses increased 2.4 percent from fourth quarter 2011.

Fourth quarter 2012 economic fuel costs, including fuel taxes, were $3.32 per gallon, including $.09 per gallon in unfavorable cash settlements for fuel derivative contracts, compared to $3.29 per gallon in fourth quarter 2011, including $.12 per gallon in unfavorable cash settlements for fuel derivative contracts.ย  Based on market prices as of January 18, 2013, the Company expects first quarter 2013 economic fuel costs, including fuel taxes, to be approximately $3.30 per gallon, including $.05 per gallon in unfavorable cash settlements for fuel derivative contracts.ย  First quarter 2013 premium costs related to fuel derivative contracts, recorded in Other (gains) losses, are currently estimated to be approximately $5 million, compared to premium costs of $6 million in first quarter 2012.ย  As of January 18, 2013, the fair market value of the Company’s hedge portfolio through 2017 was a net asset of approximately $216 million, compared to a net asset of approximately $220 million at December 31, 2012.ย  Additional information regarding the Company’s fuel derivative contracts is included in the accompanying tables.

Fourth quarter 2012 profitsharing expense was $19 million, which was comparable to fourth quarter 2011.ย  Excluding fuel, profitsharing, and special items in both periods, fourth quarter 2012 unit costs increased 5.8 percent from fourth quarter 2011.ย  Based on current cost trends, the Company expects a similar year-over-year increase in its first quarter 2013 unit costs, excluding fuel, profitsharing and special items in both periods.

Operatingย income for fourth quarter 2012 wasย $91 million, compared to $147 million in fourth quarter 2011.ย  Excluding special items in both periods, operating income was $136 million for fourth quarter 2012, compared to $167 million in fourth quarter 2011.ย  The Company incurred $14 million in special charges (before taxes) during fourth quarter 2012 associated with the acquisition and integration of AirTran.

Other income for fourth quarter 2012 was $34 million, compared to $108 million in fourth quarter 2011.ย  This $74 million decrease primarily resulted from $62 million in gains recognized in fourth quarter 2012, compared to $153 million in fourth quarter 2011.ย  In both periods, these gains primarily resulted from unrealized mark to market gains/losses associated with a portion of the Company’s fuel hedging portfolio, which are special items.ย  Excluding these special items, other losses were $3 million in fourth quarter 2012, compared to $15 million in fourth quarter 2011, primarily attributable to the premium costs associated with the Company’s fuel derivative contracts.ย  Net interest expense declined to $28 million in fourth quarter 2012, compared to $45 million in fourth quarter 2011, primarily as a result of the Company’s repayment of its $400 million notes in December 2011 and the redemption of its $385 million notes in March 2012.

Total operating revenues for full year 2012 increased 9.1 percent to $17.1 billion, while total operating expenses increased 10.0 percent to $16.5 billion, resulting in operating income of $623 million, compared to $693 million for full year 2011.ย  For full year 2012, special charges (before taxes) associated with the acquisition and integration of AirTran were $183 million, bringing cumulative costs incurred to $324 million (before profitsharing and taxes).ย  The Company expects total acquisition and integration costs will be no more than $550 million.ย  Excluding special items, operating income was $838 million for full year 2012, compared to $839 million for full year 2011.ย  Excluding special items and compared to combined results for the same period in 2011, total operating revenues for full year 2012 increased 3.0 percent, while total operating expenses increased 3.1 percent, resulting in a 0.5 percent increase in operating income for full year 2012.

The Company’s return on invested capital (before taxes and excluding special items) was approximately 7 percent for the year ended December 31, 2012.ย  Additional information regarding pretax return on invested capital is included in the accompanying reconciliation tables.

Net cash provided by operations for full year 2012 was $2.1 billion, and capital expenditures were $1.3 billion.ย  As a result, the Company generated $716 million in free cash flow* in 2012.ย  During 2012, the Company paid $22 million in dividends, which was a 57 percent increase over the year ago period.ย  The Company also repurchased approximately 46 million shares of common stock for approximately $400 million.ย  The Company repaid $578 million in debt and capital lease obligations during 2012, and intends to repay approximately $205 million in debt and capital lease obligations in 2013, including approximately $70 million in first quarter 2013.ย  As of January 23rd, the Company had approximately $3 billion in cash and short-term investments, and a fully available unsecured revolving credit line of $800 million.

Southwest Airlines Fourth Quarter 2012 Awards and Recognitions

  • Recognized as one of the 2012 Green Rankings Top 500 US Companies by Newsweek
  • Named to G.I. Job’s 2013 Top 100 Military Friendly Employers
  • Ranked first in America’s Happiest Airlines for Holiday Travel by Forbes for the third consecutive year
  • Recognized with the Employees Choice Awards Best Place to Work 2013 by Glassdoor.com
  • Named one of the Five Most Likeable Companies of 2012 by Likeable Media
  • Named one of the National Conference on Citizenship’s The Civic 50 for use of time, talent, and resources in civic engagement

Copyright Photo: Brian McDonough.ย Boeing 737-8H4 WL N8313F (msn 38810) prepares to touch down at Baltimore/Washington. The airline currently operatesย 34 737-800s with plans to grow to the 737-800 fleet to 54 this year and 78 next year.

Southwest Airlines:ย AG Slide Show

AirTran Airways:ย AG Slide Show

Alaska Air Group reports 4Q net income of $44 million, $316 net income for 2012

Alaska Air Group, Inc. (Alaska Airlines and Horizon Air) (Seattle/Tacoma) today reported fourth quarter 2012 GAAP net income of $44 million, or $0.61 per diluted share, compared to GAAP net income of $64 million, or $0.88 per diluted share in 2011. Excluding mark-to-market fuel hedge losses of $10 million ($6 million after tax, or $0.09 per diluted share), the company reported record fourth quarter 2012 net income of $50 million, or $0.70 per diluted share, compared to net income excluding mark-to-market fuel hedge gains of $37 million, or $0.51 per diluted share, in 2011.

The company reported full-year 2012 GAAP net income of $316 million, compared to $245 million in the prior year.ย Excluding the impact of the items noted in the table below, the company reported record net income of $339 million, or $4.73 per diluted share for 2012, compared to net income of $287 million, or $3.92 per diluted share in 2011.ย This marks the company’s ninth consecutive year of adjusted profits and the third year in a row the company has exceeded its goal of a 10 percent return on invested capital.

The following table reconciles the Company’s adjusted net income and earnings per diluted share (EPS) during the full year and fourth quarters of 2012 and 2011 to amounts as reported in accordance with GAAP:

Three Months Ended December 31,
2012 2011
(in millions, except per share amounts) Dollars Diluted EPS Dollars Diluted EPS
Reported GAAP net income $ 44 $ 0.61 $ 64 $ 0.88
Mark-to-market fuel hedge adjustments, net of tax 6 0.09 (27) (0.37)
Non-GAAP adjusted income and per share amounts $ 50 $ 0.70 $ 37 $ 0.51
Twelve Months Ended December 31,
2012 2011
(in millions, except per share amounts) Dollars Diluted EPS Dollars Diluted EPS
Reported GAAP net income $ 316 $ 4.40 $ 245 $ 3.33
Fleet transition costs, net of tax โ€” โ€” 24 0.33
Mark-to-market fuel hedge adjustments, net of tax 23 0.33 18 0.26
Non-GAAP adjusted income and per share amounts $ 339 $ 4.73 $ 287 $ 3.92

Copyright Photo: Michael B. Ing. Newly-painted Boeing 737-890 N559AS (msn 35178) displays the updated Wild Alaska Seafood “Salmon-Thirty-Salmon 2” as it climbs at Los Angeles International Airport.

Alaska Airlines:ย AG Slide Show

Alaska Horizon:ย AG Slide Show

Horizon Air:ย AG Slide Show

Air China to add Geneva on May 7

Air China (Beijing) has announced it will add Genevaย starting on May 7, 2013. The flag carrier will offer nonstop four-times weekly Beijing – Geneva service using the Airbus A330-200. That will make Air China the only carrier offering nonstop rotations between Beijing and Geneva. The Beijing – Geneva route will become East Asia’s first direct route to Geneva, offering an additional flight option to travelers to and from Tokyo, Seoul, Hong Kong, Bangkok and Manila.

The flight numbers of the Beijing – Geneva service will be CA 861/862. The four-times weekly flight leaves Beijing at 13:30 and arrives at 18:25 in Geneva on the same day. The return flight is expected to take off from Geneva at 20:25 and arrive at the Beijing Capital International Airport at 12:55 the next day.

The Chinese carrier is also retiring the Boeing 757-200 from international service on March 31, 2013 on the Chengdu-Karachi route per Airline Route.

Top Copyright Photo: Dave Glendinning. Airbus A330-243 B-6076 (msn 797) in the special Zichen Hao livery taxies to the gate at London (Heathrow).

Air China:ย AG Slide Show

Bottom Copyright Photo: Michael B. Ing. Air China’sย Boeing 757-2Z0 B-2820 (msn 25885) arrives back at the Beijing hub.

Delta Air Lines is looking at an order for 24-30 narrow body aircraft

Delta Air Lines (Atlanta) is in discussions with both Airbus and Boeing about an order for 24 to 30 narrow body airliners according to this report by Bloomberg.

Delta is in a select group of airlines that operates both the Airbus A319/A320 family (inherited from Northwest) and the Boeing 737-700/800 Next-Generation family. The order will be for current models which are now being reportedly discounted by the manufacturers pending the arrival of the next round of new more fuel-efficient engines.

Which manufacturer will win out?

Read the full story from Reuters: CLICK HERE

Top Copyright Photo: Michael B. Ing. Ex-Northwest Airbus A320-212 N365NW (msn 964) climbs away from Los Angeles International Airport.

Delta Air Lines:ย AG Slide Show

Bottom Copyright Photo: Brian McDonough. Boeing 737-732 N310DE (msn 29665) completes its final approach into Dulles International Airport near Washington.