Tag Archives: Los Angeles

Delta and China Eastern solidify their strategic partnership, Delta to acquire a 3.55% share

Delta Air Lines (Atlanta) and China Eastern Airlines (Shanghai) today signed an agreement to expand their partnership and better connect Delta’s global network with China Eastern, one of the leading airlines in China. The agreement will include a $450 million investment by Delta to acquire a 3.55 percent stake in China Eastern.

Delta continued:

This move marks a significant step in the airlines’ collaboration and partnership that will allow Delta and China Eastern to compete more effectively on routes between the U.S. and China, provide more travel options for customers in both countries and make joint investments in the customer experience.

“The execution of the Subscription Agreement and the launching of commercial cooperation plan by China Eastern and Delta indicate significant strategic moves of China Eastern to comprehensively reform further, actively explore and develop mixed ownership economy, and actively promote globalized development,” said Shaoyong Liu, China Eastern CEO. “The cooperation of the parties is based on a global vision and joint strategic blueprint. The parties will take advantage of their respective route networks, flight services, relevant businesses and advantageous resources to fully connect the world’s two top economies as well as two top air transportation markets. The parties wish, through excellent operation and international cooperation, to optimize customer experience, enhance the parties’ global competitiveness and promotes the development and revenue growth of both parties.”

“Delta’s relationship with China Eastern is long-standing. We share a vision that will create the most profitable, enduring franchise between the U.S. and China, with world-class customer service,” said Richard Anderson, Delta CEO. “For the past three years, Delta has welcomed members of the China Eastern team at our headquarters for sharing best practices and work study opportunities. We have learned much from one another already and look forward to deepening our already effective partnership.”

China Eastern, with its wholly owned subsidiary Shanghai Airlines, and Delta currently operate codeshare flights on 30 domestic routes in the U.S., 43 domestic routes in China and seven trans-Pacific routes between China and the U.S. China Eastern serves the three largest U.S. markets, with four nonstop flights from Shanghai and Delta serves the three largest cities in China with six daily non-stop flights from the U.S.

China Eastern and Delta continue to strengthen cooperation and support each other in the China-U.S. market through greater access to each other’s networks and an improved customer experience. Among recent improvements:
China Eastern and Delta have expanded their joint China-U.S. offering – further cementing their position in the largest market to/from Shanghai – with Delta’s recent addition of new Los Angeles to Shanghai service.
Delta’s recent move to Terminal 1 at Shanghai’s Pudong Airport to co-locate with China Eastern and Shanghai Airlines has resulted in more convenient connections and a seamless airport and baggage experience for customers.

Newly developed joint corporate sales provide more competitive products to customers in China and the U.S.

Equity investment

As part of the enhanced strategic partnership, China Eastern and Delta entered into a conditional subscription agreement where Delta will invest $450 million in China Eastern’s H-shares, which trade on the Hong Kong Stock Exchange. The investment equals approximately 10 percent of China Eastern H shares and [3.55] percent of the total shares of China Eastern. Delta also will be entitled to an observer seat on the China Eastern board of directors. The agreement is conditioned upon achievement of a final marketing agreement and approval by each carrier’s board of directors.

China Eastern in the U.S.

China Eastern will operate 35 weekly departures to 4 destinations in US from Shanghai, 2 flights a day to Los Angeles, daily to New York, San Francisco and Hawaii, also 3 flights a week from NanJing to Los Angeles. China Eastern operates Luxurious new 777-300ERs on routes between China and North America, which will be a major market for China Eastern over the future years. China Eastern plans to open new routes to North America and also boost frequencies on existing routes.

Delta in China

Delta will operate 28 weekly departures to Shanghai this summer. Delta also offers daily service to China’s capital, Beijing, from Seattle and Detroit and to Hong Kong from Seattle. Delta has grown its China network by nearly three times in the past five years.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. China Eastern’s new Boeing 777-39P ER B-2002 (msn 43288) climbs away from Los Angeles International Airport (LAX).

Delta aircraft slide show (current livery only):

China Eastern aircraft slide show:

Southwest Airlines reports a record second quarter net profit

Southwest Airlines (Dallas) today reported a record second quarter GAAP net profit of $608 million.

The airline issued this statement:

Southwest Airlines today reported its second quarter 2015 results:

Record quarterly net income, excluding special items1, of $691 million, or $1.03 per diluted share. This represented a $206 million increase from second quarter 2014 and exceeded the First Call consensus estimate of $1.02 per diluted share.
Record quarterly GAAP2 net income of $608 million, or $.90 per diluted share.
Record quarterly GAAP operating income of $1.1 billion. Excluding special items, record quarterly operating income of $1.1 billion, resulting in an operating margin3 of 22.5 percent.
Returned $430 million to Shareholders through dividends and share repurchases during second quarter 2015, and $811 million during first half 2015.
Return on invested capital, before taxes and excluding special items (ROIC)1, for the 12 months ended June 30, 2015, of 28.2 percent, compared with 17.1 percent for the 12 months ended June 30, 2014.
Subsequent to June 30, 2015, the Company amended and extended its co-branded credit card agreement with Chase Bank USA, N.A. (Chase), which is expected to provide generous rewards to the Company’s co-branded credit cardholders and significant future value to the Company’s Shareholders. The Company currently estimates its second half 2015 GAAP operating revenues will increase approximately $400 million from the combined impact of the amended agreement and the effect of a change in accounting methodology4.

Gary C. Kelly, Chairman of the Board, President, and Chief Executive Officer, stated, “We are delighted to report another strong quarter of earnings. Our net income, excluding special items, of $691 million, or $1.03 per diluted share, is an all-time quarterly high and represents our ninth consecutive quarter of record profits. Operating income, excluding special items, increased 40.2 percent year-over-year, producing a strong 22.5 percent operating margin. We significantly expanded our margins and generated very strong cash flows during first half 2015, allowing us to return $811 million to Shareholders through dividends and share repurchases so far this year. In addition, we intend to launch a $500 million accelerated share repurchase program soon. We have a solid investment grade balance sheet, and we are pleased with the recent upgrade to Baa1 by Moody’s. For first half 2015, our record profits have earned our outstanding Employees a record $308 million profitsharing accrual, nearly doubling first half 2014’s contribution. For the 12 months ended June 30, 2015, our ROIC was an outstanding 28.2 percent, far surpassing our cost of capital. Our 2015 results, thus far, are exceptional, and our current outlook for the second half of 2015 is also strong, laying a solid foundation to surpass 2014’s ROIC.

“Fuel savings5 in second quarter 2015 were nearly $500 million, which led to a reduction in our second quarter 2015 unit costs, excluding special items, of almost 12 percent year-over-year. Second quarter 2015 economic fuel costs were $2.02 per gallon, compared with $3.02 per gallon in second quarter 2014. Based on our existing fuel derivative contracts and market prices as of July 20, 2015, we expect significant year-over-year fuel savings again in third quarter 2015, with economic fuel costs currently estimated to be approximately $2.20 per gallon, as compared with third quarter 2014’s $2.94 per gallon.

“We also were very pleased with our overall cost performance. Our cost control efforts, ongoing fleet modernization, and improved aircraft utilization resulted in a 1.8 percent year-over-year decline in our second quarter 2015 unit costs, excluding fuel and oil expense, special items, and second quarter 2015’s record profitsharing expense of $182 million. Based on current cost trends, and excluding fuel and oil expense, special items, and profitsharing, we expect third quarter 2015 unit costs to decline approximately one percent and full year 2015 unit costs to decline approximately two percent, both compared with the same year-ago periods.

“Our second quarter 2015 operating unit revenue performance was impacted by challenging year-over-year comparisons, longer average stage length, higher average seats per trip (gauge), and a softer yield environment. Still, we grew second quarter 2015 operating revenues 2.0 percent to a record $5.1 billion on a year-over-year increase in available seat miles (ASMs) of 7.0 percent. Demand for our popular low fares remained strong throughout the quarter resulting in a record 84.6 percent load factor. Our second quarter 2015 unit revenues declined 4.7 percent, as expected, driven largely by the 5.4 percent decline in passenger revenue yields, both as compared with second quarter last year. The year-ago results included $47 million in additional passenger revenue due to a change to previously recorded estimates of tickets expected to spoil in the future, which impacted second quarter 2015 year-over-year unit revenue comparisons by approximately one percent. Another two to three percent of the second quarter 2015 year-over-year unit revenue decline was driven by a 4.6 percent increase in average stage length and a 2.4 percent increase in gauge, both as compared with second quarter 2014.

“We continue to be extremely pleased with our development markets in Dallas. They are remarkably strong, surpassing system average margins and returns. In April, we launched nine additional daily nonstop flights, bringing our total daily flights out of Love Field to 166. By August 2015, we are scheduled to operate 180 weekday departures to 50 nonstop destinations.

“Our international expansion is also progressing, as planned, and producing expected results. We began service to Puerto Vallarta (PVR) in June and announced daily service between PVR and Denver beginning in November 2015, pending foreign government approval. We are excited to begin service by the end of this year between eight international cities and Houston (Hobby), including inaugural service to Belize City, Belize in October 2015, and Liberia, Costa Rica in November 2015, both pending foreign government approvals.

“Earlier this month, we were delighted to amend and extend our long-standing partnership with Chase for our co-branded credit card agreement. Beginning in third quarter 2015 and continuing thereafter, we expect to realize significant revenue enhancements. Since we re-launched our award-winning frequent flyer program in 2011, we have nearly doubled the size of our program, in terms of membership, and grown our credit card program, proportionately.

“While some yield softness has continued into July, demand thus far remains strong. Based on current bookings and revenue trends, and including the estimated benefit to operating revenues from our amended co-branded credit card agreement, we are currently estimating third quarter 2015 unit revenues to decline a modest one percent from third quarter 2014. Taking into consideration the ongoing impact of increased stage and gauge, as well as 18 percent of our network under development in third quarter 2015, we are very pleased with our third quarter revenue outlook.

“Overall, our network performance is exceptional. For this year, we are growing our ASMs approximately seven percent, year-over-year. The annualized impact of our 2015 expansion is expected to contribute the majority of 2016’s year-over-year capacity growth. As we continue to optimize our network, we are currently planning to grow our total 2016 ASMs in the five to six percent range, year-over-year, with the goal to sustain strong margins and ROIC levels in line with 2015.”

Fleet

During second quarter 2015, the Company’s fleet increased by ten to 689 aircraft at period end. This reflects the second quarter delivery of six new Boeing 737-800s and five pre-owned Boeing 737-700s, as well as the retirement of one Boeing 737 Classic aircraft. The Company continues to manage to roughly 700 aircraft in 2015 and continues to expect to grow its net fleet approximately two percent, year-over-year, in 2016. As an extension of its fleet modernization initiatives, during second quarter 2015, the Company designated its 31 Boeing firm orders in 2016 as 737-800s rather than 737-700s and added 31 pre-owned 737-700 aircraft scheduled for delivery through 2018. In addition, subsequent to June 30, 2015, the Company canceled the 12 737NG options scheduled for delivery in 2016.

Additional information regarding these revisions to the Company’s aircraft delivery schedule is included in the accompanying table:

Notes:

(1) A revenue passenger mile is one paying passenger flown one mile. Also referred to as “traffic,” which is a measure of demand for a given period.

(2) An available seat mile is one seat (empty or full) flown one mile. Also referred to as “capacity,” which is a measure of the space available to carry passengers in a given period.

(3) Revenue passenger miles divided by available seat miles.

(4) Seats flown is calculated using total number of seats available by aircraft type multiplied by the total trips flown by the same aircraft type during a particular period.

(5) Seats per trip is calculated using seats flown divided by trips flown. Also referred to as “gauge.”

(6) Calculated as passenger revenue divided by revenue passenger miles. Also referred to as “yield,” this is the average cost paid by a paying passenger to fly one mile, which is a measure of revenue production and fares.

(7) RASM (unit revenue) – Operating revenue yield per ASM, calculated as operating revenue divided by available seat miles. Also referred to as “operating unit revenues,” this is a measure of operating revenue production based on the total available seat miles flown during a particular period.

(8) PRASM (Passenger unit revenue) – Passenger revenue yield per ASM, calculated as passenger revenue divided by available seat miles. Also referred to as “passenger unit revenues,” this is a measure of passenger revenue production based on the total available seat miles flown during a particular period.

(9) CASM (unit costs) – Operating expenses per ASM, calculated as operating expenses divided by available seat miles. Also referred to as “unit costs” or “cost per available seat mile,” this is the average cost to fly an aircraft seat (empty or full) one mile, which is a measure of cost efficiencies.

(10) Aircraft in the Company’s fleet at period end, less Boeing 717-200s removed from service in preparation for transition out of the fleet.

Read the full report: CLICK HERE

Copyright Photo: Jay Selman/AirlinersGallery.com. Boeing 737-7H4 WL N909WN (msn 32458) with the special “Beats Music – Don’t miss a beat” markings arrives in Los Angeles.

Southwest Airlines aircraft slide show (current livery only):

Thai is dropping Los Angeles and Rome

Thai Airways International (Bangkok) is ending two long-haul routes per Airline Route. The flag carrier will drop the Bangkok (BKK) – Seoul (ICN) – Los Angeles route on October 25. The route is currently operated four days a week with Boeing 777-300 ERs. This means Thai will no longer serve the United States.

Thai is also ending the Bangkok – Rome (FCO) route on the same day.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Boeing 777-3AL HS-TKP (msn 41525) approaches the runway at Los Angeles International Airport (LAX).

Thai aircraft slide show:

United Airlines to end two routes from Guam

United Airlines (Chicago) will drop two routes from Guam in late September. The carrier will end the Guam – Cairns route on September 26 and the Guam – Seoul (Incheon) route on September 30 per Airline Route.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Boeing 737-824 N37274 (msn 31592) departs from Los Angeles International Airport.

United Airlines aircraft slide show:

Air France to introduce the Airbus A380 on the Paris (CDG) – Mexico City route

Air France (Paris) will introduce the Airbus A380 on the Paris (CDG) – Mexico City route on January 12, 2016 with three initial weekly frequencies. The A380 will replace existing Boeing 777-300 ER service. The route will be served daily with the A380 starting on March 26, 2016 per Airline Route.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Airbus A380-861 F-HPJG (msn 067) departs from Los Angeles International Airport.

Air France aircraft slide show:

American Airlines to add 8 new routes

American Airlines (Dallas/Fort Worth) is adding winter seasonal flights from its hubs.

From Charlotte, the company will add weekly Airbus A319 service to both Curacao, Netherlands Antilles and Puerto Plata, Dominican Republic starting on December 19 per Airline Route.

From Chicago (O’Hare), the airline will add weekly Boeing 737-800 service also to Punta Cana also starting on December 19.

From Dallas/Fort Worth, AA will add weekly Airbus A319 flights to Punta Cana.

Finally from Los Angeles, American will add twice-weekly Boeing 737-800 service to Montego Bay, Jamaica on December 18.

Adding to this, American on July 13 issued this statement:

American Airlines plans to add eight new routes throughout Mexico, the Caribbean and Latin America later this year, further strengthening its position in these key regions and providing customers with increased options when traveling to these destinations.

Expanded service includes new flights to Mexico City International Airport (MEX); General Rafael Buelna International Airport (MZT) in Mazatlan, Mexico; Curacao International Airport (CUR); Sangster International Airport (MBJ) in Montego Bay, Jamaica; Punta Cana International Airport (PUJ); Gregorio Luperon International Airport (POP) in Puerto Plata, Dominican Republic; and Mariscal Sucre International Airport (UIO) in Quito, Ecuador, pending regulatory approvals.

American also plans to reinstate its service between New York’s John F. Kennedy Airport (JFK) and Simon Bolívar International Airport (CCS) in Caracas, Venezuela, on December 17. Flights will operate five times per week with Boeing 757-200 aircraft.

Copyright Photo: Jay Selman/AirlinersGallery.com. Airbus A319-112 N744P (msn 1287) in the legacy Piedmont Airlines livery taxies to the gate at the Charlotte hub.

American Airlines aircraft slide show (current livery):

Spirit Airlines launches two new routes from Los Angeles

Spirit Airlines (Fort Lauderdale/Hollywood) today (July 9) introduced two new nonstop routes between Los Angeles and Kansas City and Baltimore-Washington, DC.

The new daily, nonstop service will connect Los Angeles International Airport (LAX) with Kansas City International Airport (MCI) and Baltimore-Washington International Thurgood Marshall Airport (BWI). Spirit now offers 15 daily departures out of LAX to 11 cities, and will be adding more routes in the future. On August 20, Spirit will offer another nonstop route to and from Los Angeles to Atlanta’s Hartsfield–Jackson Atlanta International Airport (ATL). Additionally, the carrier will provide twice daily service to/from Oakland starting on November 12.

According to the airline, Spirit is the fastest growing airline in the United States. With a scheduled growth of approximately 30% this year, Spirit expects to keep expanding service by adding new destinations at the lowest available fares in the industry.

Copyright Photo: Tony Storck/AirlinersGallery.com. The first Airbus A320 with Sharklets, A320-232 N642NK (msn 6586) approaches the runway at Baltimore-Washington International Thurgood Marshall Airport (BWI).

Spirit Airlines aircraft slide show:

LAN Peru to operate the Boeing 787 between Lima and Miami

LAN Peru (Lima) will begin operating the Boeing 787-8 Dreamliner on the Lima – Miami route starting on February 24, 2016 per Airline Route.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Boeing 787-8 Dreamliner CC-BBF (msn 38476) completes the final approach to the runway at Los Angeles International Airport.

LAN Chile aircraft slide show:

American to operate the Boeing 787 internationally from Los Angeles

American Airlines (Dallas/Fort Worth) will soon begin operating the new Boeing 787-8 Dreamliner internationally from Los Angeles International Airport. The carrier will launch daily Los Angeles – Shanghai (Pudong) Boeing 787 service on October 5 followed by daily Los Angeles – Sao Paulo (Guarulhos) flights on November 5 per Airline Route.

Copyright Photo: SPA/AirlinersGallery.com. Boeing 787-8 Dreamliner N800AN (msn 40618) approaches the runway at London (Heathrow).

American Airlines aircraft slide show (new livery only):

Southwest Airlines reaches a tentative agreement with its flight attendants

Southwest Airlines (Dallas) has announced it has reached a tentative agreement with its Flight Attendants. Terms of the deal were not released, but the airline said they include wage increases, bonus opportunities, and work-rule adjustments.

According to the airline, Southwest Airlines Flight Attendants, represented by Transport Workers Union (TWU) 556, will be presented with the details of the agreement in the coming weeks, and members will have the opportunity to vote on ratification. The current contract became amendable May 31, 2013. If approved, the new agreement will run through May 2019.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Boeing 737-8H4 N8662F (msn 36936) completes its final approach to the runway at Los Angeles International Airport.

Southwest Airlines: