Tag Archives: SEA

Delta’s Vice President – Seattle, Mike Medeiros, talks about Delta’s fast-growing SEA hub

Delta Air Lines (Atlanta) has issued this interview with Mike Medeiros, Vice President – Seattle and the following charts about their fast growing SEA hub:

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A Delta News Hub conversation with Mike Medeiros, Vice President โ€“ Seattle, about the role the fastest-growing airport in the U.S. plays in the airline’s domestic and international strategy.

Mike Medeiros, Delta VP SEA

SEATTLE – A Delta News Hub conversation with Mike Medeiros, Deltaโ€™s Vice President โ€“ Seattle, who is charged with developing and executing Deltaโ€™s key strategic objectives for Seattle and the Pacific Northwest – from financial performance and marketing to community relations and government affairs.

Itโ€™s been two years since Delta began building its hub at Sea-Tac. What do you wish youโ€™d known then that you know now?

It is really hard to believe that we began this journey in Seattle two years ago. Having been in a similar situation in New York back when we began growing there in 2007, I guess Iโ€™m not surprised about how long it takes to get major facility improvements started, but itโ€™s probably one of the things that I had hoped would be different in Seattle from how it was in New York. The good news is that we are working closely with the Port of Seattle, and it is my hope that we will break ground on a new International Arrivals Facility by mid-2016.

Delta is building for the future in many ways โ€“ for example, it’s partnered with China Eastern and it’s launched an initiative to engage future business travelers while theyโ€™re still in college. What role does Seattle play in building for Deltaโ€™s future?

Seattle is an important element of the overall strategy at Delta, and thatโ€™s precisely why it is called out in our Flight Plan (internal goals statement) each year. We all know that Asia โ€“ China in particular โ€“ is growing at a far greater rate than any other region in the world, and even with the recent challenges their economy has faced, they are still expected to grow at an annual rate that exceeds 6 percent. Seattle has a unique opportunity to capitalize on that growth by virtue of the global diversity the city offers but also as a convenient connection hub for passengers traveling to Asia from all across the U.S. Being located in the very top corner of the United States, we are able to offer the shortest flights from the U.S. to Asia, and we are able to do it more efficiently than any other carrier is able to do it from their West Coast gateways. This is a strategic advantage that places Seattle in a great position and, importantly, helps ensure a strong future for Delta.

What challenges has Sea-Tacโ€™s rapid growth presented? How are you helping to make the experience easier for customers in the short-term and long-term?

As the fastest-growing airport in the country, SeaTac is bursting at the seams. That growth has largely come from Delta, but it has also come from other airlines adding flights in response to our growth. Over the summer, the airport had a 13 percent increase in passenger traffic over the previous year, which led to operational challenges, including longer taxi times, baggage system failures and an overall increase in congestion at the airport. Now that the summer is behind us, we are working with the Port of Seattle to create specific actions that can be taken between now and next summer that will help improve the passenger experience. From a Delta perspective, we are working to build a new 23,000-square-foot Sky Club and a Delta One premium check-in area, both of which will be up and running in time for at least some portion of summer 2016.

What impact has Delta had on Seattle? And, maybe the more intriguing question is, what impact has Seattle had on Delta?

The single biggest impact Delta has had on Seattle is that weโ€™ve brought competition to a market that has been largely underserved for a very long time โ€“ and that competition has driven innovation and required other airlines to step up their game in areas beyond just passenger travel, like community investment and volunteerism. As for how Seattle has impacted Delta โ€“ the city has been extremely gracious and accepting of the Delta brand coming to Seattle and competing for their business.

How has Deltaโ€™s entrance into state of Alaska from Seattle impacted that market?

Delta now serves three markets in the state of Alaska year-round and two seasonally, which places the brand in the stateโ€™s top five destinations by passenger traffic. Since Delta entered these markets, consumers have benefited by seeing fares drop dramatically, and when Delta ends its seasonal service, fares in those markets immediately return to those higher levels. Beyond fares, residents of Alaska now have choice, better products, a global network and the worldโ€™s best employees. All of this has been missing until Delta entered Alaska.

Weโ€™ve brought competition to a market that has been largely underserved for a very long time โ€“ and that competition has driven innovation and required other airlines to step up their game in areas beyond just passenger travel, like community investment and volunteerism.

Seattle is a major commercial focus for Delta in addition to New York and Los Angeles, but there are many distinctions between the three markets. How are they similar/different?

Thereโ€™s a lot thatโ€™s similar about these three markets, and it starts with the fact that theyโ€™re all emerging markets for Delta โ€“ at different stages, of course โ€“ where we are building new hubs and strengthening our network to help ensure we have a strong future for many years to come. In New York, we began that work back in 2007, and it has evolved from creating an international gateway at JFK to also creating a domestic hub at LGA โ€“ and that work continues. LAX and SEA are more similarly situated in that we began developing our West Coast strategy a few years ago and truly are in the early stages of creating something very special in both cities. That said, having lived in all three of these cities with Delta, Iโ€™ve experienced how different they can be from a cultural and customer perspective, and thatโ€™s where itโ€™s so important to have a team of Delta professionals on the ground that understand the nuances of what each of those region’s customers want and expect from their airline.

So whatโ€™s next? What are Deltaโ€™s top priorities over the next few years?

We have several imperatives in Seattle. First, we have to get the new International Arrivals Facility started so we have a competitive arrivals experience for our customers. Second, weโ€™ll continue building strong relationships and partnerships in Seattle to become a trusted and respected brand like we are around the globe. Weโ€™ve made great progress in this regard in a very short time, but we need to continue working hard at this every day. Finally, we will continue developing our network of flying that builds enough mass of flights that enables us to compete for every passenger, every day because we fly to where they want to go. Again, weโ€™re getting there but we still have some work to do.

Delta and Seattle: A story of growth, success

Copyright Photo Above: Joe G. Walker/AirlinersGallery.com.

SEATTLE – Fresh off the assembly line, Delta Ship 3809 โ€“ a Boeing 737-900 ER (above) known as the โ€˜Spirit of Seattleโ€™ โ€“ shone as it flaunted its new paint job on a December morning in 2013, nearly 80 years to the day after Deltaโ€™s first Seattle flight. A nod to the airlineโ€™s history with the Emerald City, the jet has since flown thousands of miles, proudly sharing Deltaโ€™s Seattle story in its travels.

That commitment began with a Hamilton H-47 metal plane that carried Deltaโ€™s first Seattle passengers in December 1933 on a Tacoma-Seattle-Wenatchee-Spokane route. Later, in a fitting twist, it was Delta predecessor Northwest Airways that helped give Sea-Tac the โ€œinternationalโ€ in its name when it started service to Tokyo in 1947 using the Great Circle Route.

Today, the story continues โ€“ but it retains the pioneering spirit for which the Pacific Northwest is known. Instead of prop planes, Delta serves Seattle with some of the largest jets in its fleet. Instead of a single flight to Tokyo, Seattle is a full-fledged international hub for Delta, with service to the top five destinations in Asia and three of the top four in Europe from Seattle-Tacoma International Airport.

But how โ€“ and why โ€“ did Seattle grow from a secondary air market to an international gateway?

โ€œIn the early years after our merger with Northwest, we had to take a hard look at our network,โ€ said Bob Cortelyou, Deltaโ€™s Senior Vice President โ€“ Network Planning. โ€œWe were well-positioned to compete on the trans-Atlantic because of our joint venture partnership with Air France and KLM, but the holes in our network across the Pacific were gaping, leaving us without a real chance to compete in some of the worldโ€™s most important emerging economies.

โ€œWe are a global company, and we want to be the airline of choice for customers around the world. And Seattle gave us that chance to compete in Asia.โ€

Deltaโ€™s story in Seattle parallels that of the city itself. Decades removed from its humble beginnings as a lumber town, Seattle is the seat of strong economic growth, widespread prosperity, a burgeoning tech scene and growing interest by investors from one of the worldโ€™s most powerful emerging economies: China.

At the center of the growth story is Sea-Tac, now the fastest-growing airport in the U.S., in large part due to Deltaโ€™s 35 percent overall growth since July 2014. The airline operates 128 daily departures to 36 destinations from Sea-Tac, including nine long-haul international routes.

Geologists estimate that it took more than 30 million years to form the Cascade Range that defines the region. But things are moving a little more quickly these days โ€“ itโ€™s taken less than three years for Sea-Tac to morph from a largely regional operation to an international gateway to key global commerce centers such as London, Shanghai and Tokyo.

โ€œSeattle had so much opportunity, and we moved quickly to fill that gap in our network,โ€ said Mike Medeiros, Deltaโ€™s Vice President โ€“ Seattle. โ€œEconomically, the city is a major commerce center and home to some of the worldโ€™s most important brands. Geographically, we are as close to Asia as you can get from the U.S. mainland. And itโ€™s a market that had been severely underserved for many years. It was a natural fit and has very much been a mutually beneficial relationship.โ€

Many a U.S. airport has fallen victim to the โ€œbuild it and they will comeโ€ fallacy. But in Seattle, โ€œtheyโ€ were there all along โ€“ and now those customers have choice. Despite unprecedented capacity growth, revenue performance and traffic remain strong, showing that Deltaโ€™s presence in Seattle has helped to stimulate pent-up demand.

The impact to the regionโ€™s economy is significant. Deltaโ€™s growth at Sea-Tac is bringing more revenue to the airport โ€“ and to the city โ€“ than ever. That growth is creating jobs and providing more resources to enhance the airportโ€™s role as a regional economic engine. Deltaโ€™s growth will contribute to 4,900 jobs paying $246 million in wages and $571 million in economic output in Seattle. The multiplier is astounding.

And Deltaโ€™s growth has placed Sea-Tac among the fastest-growing large hub airports in the U.S., moving more than 100,000 passengers per day. According to the Port of Seattle, nearly 37.5 million people traveled through Sea-Tac in 2014 โ€“ a 7.7 percent increase over 2013 โ€“ marking its fourth consecutive year of record growth.

Passenger growth at the airport is increasing this year at 13 percent over last yearโ€™s record levels. Cargo shipments are up 18.5 percent this year. Forecasts project the airportโ€™s annual passenger numbers will rise to 66 million by 2034. And the Portโ€™s plan to build a new International Arrivals Facility will further cement the Puget Sound region as a global commerce center.

In a sense, the story has come full circle. Itโ€™s fitting that Delta โ€“ an airline built with the help of Boeing, powered by Microsoft and fueled by Starbucks โ€“ all iconic Pacific Northwest brands – and Seattle โ€“ a city built on innovation and with deep roots in aviation โ€“ would collaborate to help drive the future of both the region and the airline industry. And that future looks bright.

Charts Below: Delta Air Lines.

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Alaska Airlines expands its relationship with American Airlines

Alaska Airlines (Seattle/Tacoma) is moving one step closer to American Airlines (Dallas/Fort Worth). Alaska is increasingly competing with Delta Air Lines (Atlanta) at its Seattle/Tacoma hub. Alaska issued this statement:

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Members of Alaska Airlines Mileage Plan now have access to book nearly 3,000 more daily flights on partner American Airlines following the most recent phase of the airlineโ€™s reservation system migration, which will bring all US Airways flights under the American code this fall. On October 17, Mileage Plan members will enjoy seamless access to the worldโ€™s largest airline and have even more options to earn and redeem miles for award travel.

Alaska Airlines also announced today an expanded lounge agreement with American Airlines, which gives Board Room members access to all 54 Admirals Club locations worldwide beginning August 15.

Elite members of Alaskaโ€™s Mileage Plan receive exclusive benefits on Americanโ€™s expanded network, including expedited security, priority check-in and boarding, complimentary or discounted access to Main Cabin Extra seats, as well as baggage waivers.

โ€œWe are excited to deepen the strong relationship we already have with Alaska Airlines by providing customers more access to more destinations,โ€ said Andrew Nocella, Americanโ€™s chief marketing officer. โ€œOur relationship with Alaska goes back more than 15 years and we continue to look for ways to work together to enhance the benefits for our customers, whether through access to clubs or new opportunities to earn and redeem miles.โ€

Alaska Airlines existing relationship with American began in 1999 and has included codeshare and frequent flyer reciprocity, which expanded in 2011 to include reciprocal elite benefits on each airline. The two carriers are working to expand their codeshare agreement even further later this year.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Boeing 737-890 N508AS (msn 35691) with APB Split Scimitar Winglets taxies to the runway at Seattle-Tacoma International Airport.

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Virgin America produces a second quarter GAAP net profit of $65.0 million

Virgin America (San Francisco) today reported its financial results for the second quarter of 2015. Key highlights from the second quarter include:

  • Second quarter 2015 net income was $64.4 million excluding special items1, an increase of $27.5 million from the second quarter of 2014. Operating income and operating margin excluding special items were $67.1 million and 16.7 percent, respectively.
  • On a GAAP basis, net income was $65.0 million. Operating income and operating margin on a GAAP basis were $67.7 million and 16.9 percent, respectively.
  • Fully diluted earnings per share excluding special items was $1.46. On a GAAP basis, fully diluted earnings per share was $1.47.

 

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“Our latest quarterly results are an affirmation of Virgin America’s business model – specifically, they demonstrate that we can deliver a better product and guest experience while also generating strong financial returns,” said David Cush, Virgin America’s President and Chief Executive Officer. “The progress we have made on financial performance over the past two years is remarkable, and we continue to outperform domestic industry unit revenue trends. Our guests love the outstanding product and service that our teammates provide and it shows in our financial results.”

The airline continued:

Second Quarter 2015 Financial Highlights

  • Operating Revenue: Total operating revenue was $400.9 million, an increase of 0.5 percent over second quarter of 2014.
  • Revenue per Available Seat Mile (RASM): Passenger revenue per available seat mile (PRASM) increased 0.5 percent compared to the second quarter 2014, to 11.24 cents. Year-over-year PRASM growth was driven by a 0.2 point increase in load factor and a 0.3 percent increase in yield. Total RASM increased 0.6 percent year-over-year. Virgin America’s PRASM was positively impacted by a $3.2 million adjustment related to Elevate loyalty revenue, which increased PRASM by 0.9 percent.
  • Cost per Available Seat Mile (CASM): Total CASM excluding special items decreased 5.1 percent compared to the second quarter of 2014, to 10.43 cents. Decreases in fuel costs and reduced heavy maintenance activity contributed to the decline in CASM, partially offset by increases in salaries, wages and benefits. Salaries, wages and benefits costs included a $6.7 million accrual for teammate profit sharing and related payroll taxes. CASM excluding special items, fuel costs and profit sharing for the quarter increased 7.1 percent year-over-year, to 7.27 cents.
  • Fuel Expense: Virgin America realized an average economic fuel cost per gallon including taxes and the impact of hedges of $2.20, which was 29.3 percent lower year-over-year. This amount includes certain fuel expense adjustments described as special items below.
  • Special Items: Special items in the second quarter of 2015 relate to a net $0.6 million adjustment for fuel hedges that settled during the second quarter of 2015 but for which unrealized gains or losses had been previously recorded under GAAP and mark-to-market adjustments for fuel hedges that mature subsequent to June 30, 2015 which did not qualify for hedge accounting treatment.
  • Operating Income: Second quarter 2015 operating income excluding special items was $67.1 million, an increase of $20.0 million as compared to 2014. The Company’s operating margin excluding special items of 16.7 percent improved by 4.9 points year-over-year.
  • Net Income: Net income excluding special items for the second quarter increased by $27.5 million year-over-year to $64.4 million.
  • Fully Diluted EPS: Fully diluted earnings per share excluding special items was $1.46 for the second quarter of 2015. Second quarter 2015 fully diluted earnings per share was $1.47 on a GAAP basis.
  • Capacity: Available seat miles (ASMs) for the second quarter of 2015 remained flat year-over-year compared with the second quarter of 2014. Virgin America ended the quarter with 53 Airbus A320-family aircraft, unchanged from the second quarter of 2014. Subsequent to quarter end, the Company took delivery of the first of five Airbus A320 aircraft scheduled to be delivered in 2015.
  • Liquidity: Unrestricted cash was $500.5 million as of June 30, 2015. Virgin America benefited from the release of cash collateral held by its credit card processors in addition to strong operating cash flow performance to generate a net increase of $82.2 million in unrestricted cash during the quarter. The new agreement with its credit card processors also allowed the Company to terminate a $100 million letter of credit facility, resulting in ongoing annual savings of approximately $5.5 million per year.

“Virgin America made great strides in improving its balance sheet and financial position during the second quarter of 2015,” said Peter Hunt, Virgin America’s Chief Financial Officer. “We increased our unrestricted cash balance by $82 million during the quarter thanks to strong operating cash flow and the release of collateral held by our credit card partners. We also terminated a financing facility that will save us over $5 million in financing costs annually. In addition, we arranged bank debt financing for five A320 aircraft deliveries occurring later in 2015 at interest rates that will average under five percent. These accomplishments will continue to reduce Virgin America’s cost of capital and position us for future earnings growth.”

Second Half 2015 Outlook

The Company’s expectations for the second half of 2015 and full year 2016 are based on currently available information. These expectations are forward-looking, and actual results could differ materially depending on market conditions and the factors set forth under “Forward-Looking Statements” below. You should not place undue reliance upon these expectations.

The Company expects capacity, as measured by available seat miles, to increase by approximately 2.0 percent to 3.0 percent for the third quarter of 2015 as compared to the third quarter of 2014. Based on current revenue trends, the Company expects PRASM to decrease between 2.0 percent and 4.0 percent versus the third quarter of 2014. The Company expects CASM excluding fuel and profit sharing to increase between 10.5 percent and 11.5 percent versus the third quarter of 2014. CASM excluding fuel and profit sharing is increasing in the third quarter due primarily to Virgin America’s previously announced pay and benefit initiatives that were implemented earlier in the year. Third quarter CASM excluding fuel and profit sharing will also be impacted by a decrease in average stage length year over year of approximately 8.0 percent resulting from previously implemented capacity at Dallas — Love Field. In addition, the company expects to incur additional maintenance costs during the quarter related to an engine maintenance overhaul.

Based on Virgin America’s hedge portfolio and current market prices for aviation fuel products, the Company expects Virgin America’s economic fuel cost per gallon inclusive of related taxes and hedge costs to average between $1.90 and $2.00 for the third quarter of 2015. This number may change depending on fluctuations in market prices for jet fuel during the quarter.

Virgin America is scheduled to take delivery of five A320 aircraft during the second half of 2015, and expects to place four aircraft into operational service prior to year-end. The Company currently expects fourth quarter 2015 capacity to increase between 9.0 percent and 10.0 percent as compared to the fourth quarter of 2014. In addition, the company expects CASM excluding fuel and profit sharing to increase between 2.0 percent and 3.0 percent for the fourth quarter of 2015.

2016 Initial Outlook

The Company has completed its preliminary fleet and capacity plans for 2016. Virgin America currently expects to take delivery of an additional five A320 aircraft between January and June 2016. In addition, Virgin America does not expect to retire any existing aircraft from its fleet, ending 2016 with 63 aircraft in its operating fleet.

Further, the Company currently expects capacity, as measured by available seat miles, to increase between 13% and 15% for the full year 2016. The Company is also targeting for its CASM excluding fuel costs and profit sharing to decrease between 1% and 2% for the full year 2016 based on these fleet and capacity projections.

1 Please see “GAAP to Non-GAAP Reconciliations” for reconciliations of non-GAAP financial measures used in this release and the reasons management uses these measures.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Virgin America will end 2016 with 63 Airbus A320 Family aircraft. Airbus A320-214 N844VA (msn 4851) taxies to the runway at Seattle-tacoma International Airport bound for the San Francisco hub.

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Virgin America 7.2015 Route Map

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Hawaiian reports second quarter adjusted net income of $37.5 million

Hawaiian Holdings, Inc, (Hawaiian Airlines) (Honolulu) has reported the financial results of its second quarter:

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  • GAAP net income of $48.8 million or $0.79 per diluted share.
  • Adjusted net income, reflecting economic fuel expense and excluding loss on extinguishment of debt, of $37.5 million or $0.61 per diluted share, an increase of $15.1 million or $0.26 cents per diluted share year-over-year.
  • Adjusted pre-tax margin of 10.7% compared to 6.4% in the prior year period.
  • Unrestricted cash, cash equivalents and short-term investments of $606 million.
  • Lowered leverage ratio to 3.4x.

“We are pleased with the results for the quarter,” said Mark Dunkerley, Hawaiian Airlines president and chief executive officer. “Strong demand across our network, coupled with low fuel prices, more than compensated for the adverse impacts of the strengthening US dollar, the significant reduction in most fuel surcharges and the high levels of industry capacity growth from North America. Our financial performance for the second half of the year seems set to be a continuation of what we’ve seen so far in 2015. In this environment, the company expects to generate free cash flow, strengthen its balance sheet and improve its profit margins. As ever, the whole team has done a great job of looking after our customers, enhancing our reputation, and burnishing our brand. They have my thanks.”

Statistical data, as well as a reconciliation of the reported non-GAAP financial measures, can be found in the accompanying tables.

Liquidity and Capital Resources

As of June 30, 2015 the Company had:

  • Unrestricted cash, cash equivalents and short-term investments of $606 million.
  • Outstanding debt and capital lease obligations of approximately $947 million consisting of the following:
  1. $689 million outstanding under secured loan agreements to finance a portion of the purchase price for 11 Airbus A330-200 aircraft.
  2. $127 million outstanding under secured loan agreements to finance a portion of the purchase price for 15 Boeing 717-200 aircraft.
  3. $100 million in capital lease obligations to finance the acquisition of an Airbus A330-200, two Boeing 717-200 aircraft and aircraft-related equipment.
  4. $27 million outstanding under floating rate notes to finance the acquisition of two Boeing 767-300 ER aircraft.
  5. $4 million of outstanding convertible senior notes.

In the second quarter, the Company repurchased $4 million (principal balance) of its convertible senior notes outstanding. Repurchases to date have totaled $82 million (principal balance) or 95%, of the originally issued principal amount, thereby eliminating the need for the Company to issue 10.4 million shares when the notes may have otherwise converted to common stock.

In addition, during the second quarter the Company repurchased 0.8 million shares of its common stock for approximately $18 million under its previously announced $100 million stock repurchase program.

Second Quarter 2015 Highlights

Operational

  • Ranked #1 nationally for on-time performance for the months of March, April and May 2015.
  • Ranked as one of the top domestic airlines by Travel + Leisure for 2015.

Product and loyalty

  • The comprehensive interior retrofit of the Company’s neighbor island fleet remains on schedule for completion in the fourth quarter of 2015 with 12 of 18 Boeing 717 aircraft completed to date.

Fleet and financing

  • Added an A330-200 aircraft under lease financing and retired a Boeing 767-300 at the end of its lease.
  • Updated the fleet plan and entered into a six-year lease agreement for one A330-200 with a delivery date of summer 2016 and accelerated the planned retirement date of certain of its Boeing 767-300 aircraft.
  • Announced the purchase of three ATR 72 turbo-prop aircraft in an all-cargo configuration for expansion of its cargo service.

Schedule

  • Los Angeles to Kona, three-times-weekly, and Los Angeles to Lihu’e, four-times-weekly, summer seasonal service reintroduced in May.
  • Oakland to Kona, three-times-weekly and Oakland to Lihu’e, four-times-weekly, summer seasonal service reintroduced in May.
  • Los Angeles to Maui second daily seasonal summer service reintroduced in May.
  • Announced year round service from Los Angeles to Lihu’e, three-times-weekly, beginning in January 2016.

Read the full report: CLICK HERE

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Airbus A330-243 N396HA (msn 1488) taxies to the runway at Seattle-Tacoma International Airport (SEA).

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Delta adds another Seattle/Tacoma feeder route, adds two Bahamas routes from Atlanta this winter

Delta Air Lines (Atlanta) continues its build-up at Seattle-Tacoma International Airport (SeaTac) (SEA) hub with new Delta Connection service. The carrier will add the SEA – Billings, Montana (CRJ700) route on December 19 per Airline Route.

The airline is also adding twice-weekly Delta Connection Bombardier CRJ700 service from the Atlanta hub to both Marsh Harbour and North Eleuthera on December 19.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Formerly operated by Horizon Air at the Seattle hub, now the CRJ700 regional jet is being operated byย SkyWest Airlines as a Delta Connection carrier at SEA. Bombardier CRJ700 (CL-600-2C10) N603QX (msn 10011) taxies to the runway at SeaTac.

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Delta to add another spoke route to the Seattle/Tacoma hub: Missoula, Montana

Delta Air Lines (Atlanta) is planning to add another feeder route to its growing Seattle-Tacoma International Airport (SeaTac) hub. The carrier will commence daily Delta Connection service between Missoula, Montana with Bombardier CRJ700 regional jets on December 19 per Airline Route.

In other news, Delta is ending its London (Heathrow) – Newark and London (Heathrow) service on October 5. Virgin Atlantic will restore a second daily Los Angeles service when Delta ends the route.

 

Copyright Photo: Michael B. Ing/AirlinersGallery.com.ย SkyWest Airlines’ Bombardier CRJ700 (CL-600-2C10) N631SK (msn 10329) taxies to the runway at the Seattle-Tacoma International Airport (SEA) hub.

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Virgin America’s pilots vote to join ALPA

Virgin America‘s (San Francisco) pilots have voted to join theย Air Line Pilots Association, International (ALPA).

ALPA issued this statement:

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The National Mediation Board (NMB) has announced that the pilots at Virgin America voted overwhelmingly in favor of representation by the Air Line Pilots Association, International (ALPA).

Of the 95.7 percent of eligible pilots who voted, 75.3 percent voted in favor of joining the worldโ€™s largest pilot union, showing their commitment to collective representation.

โ€œALPA is very pleased to welcome our colleagues at Virgin America,โ€ said Capt. Tim Canoll, ALPA president. โ€œToday, our union is stronger. ALPA is poised to ensure that Virgin America pilots will gain a stronger voice for their future and, together, we will continue to advance our profession.โ€

Virgin America pilots (ALPA)(LR)

Photo Above: ALPA.

The focus for Virgin America pilots now shifts to the membership drive and establishing pilot representatives in each base, and starting the work to negotiate their first collective bargaining agreement.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Airbus A319-112 N528VA (msn 3445) taxies to the runway at Seattle-Tacoma International Airport.

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Caesars enters into long-term agreements with Sun Country Airlines and ViaAir

Sun Country Airlines (Minneapolis/St. Paul) and Via Airlines (ViaAir) (Orlando) will see an increased amount of flying forย Caesars Entertainment Corporation’s Total Rewards Air.

Caesars issued this statement:

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Caesars Entertainment Corporation’s Total Rewards Air, the gaming industry’s largest domestic charter service, is enhancing its commercial operation by entering into long-term agreements with Sun Country Airlines (Minneapolis/St. Paul) and Via Airlines (ViaAir) (Orlando).

In addition, new technology by Total Rewards Air will allow for ease of booking flight and hotel packages beyond its traditional passenger base of Total Rewards members. The scheduled charter flights to Atlantic City, Laughlin, Nevada, Tunica and Biloxi, Mississippi, will include both invited members of the company’s award-winning loyalty program as well as retail guests seeking an escape to the leisure destinations.

The expanded service will include more than 1,800 flights annually to the Total Rewards Air primary destination hubs of Atlantic City, Laughlin, Nevada, Tunica and Biloxi, Mississippi. Total Rewards Air flies more than 100,000 passengers per year. Sun Country Airlines and Via Airlines will serve as the main operating partners for Total Rewards Air and will service more than 100 origin cities across the United States including major North American markets such as Dallas, Atlanta, Chicago, Detroit, Los Angeles, Denver, Edmonton and Toronto, as well as smaller regional markets such as Monterrey, California, Bismarck, North Dakota, Midland, Texas and Colorado Springs, Colorado.

Starting this summer, Sun Country Airlines will operate one Boeing 737-700 while Via Airlines will operate five Embraer 145 regional jets on behalf of Total Rewards Air. Via’s regional jets will operate from private aviation terminals (Fixed Based Operators) affording guests the opportunity to experience a true, VIP private jet experience eliminating the long lines and early check-in associated with commercial airline terminals.

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“Sun Country is honored to be partnered with an iconic organization like Caesars Entertainment,” said Eric Curry, Sun Country Vice President of Sales and Customer Experience. “We are looking forward to providing Caesars’ guests with the high standard of service that is the hallmark of both of our companies.”

“Via Airlines has been operating flights for Caesars since 1997 and we are honored to continue and expand our relationship with Caesars and Total Rewards Air,” said Mitch Pizik, Via Airlines Executive Vice President of Marketing. “Through our fleet of owned and leased Embraer jets we look forward to expanding our relationship with one of the most recognizable brands in the world that is synonymous with quality and customer service.”

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ViaAir LLC is an indirect Air Carrier operating under DOT Regulation 14 CFR 380 together with its subsidiary, Charter Air Transport d.b.a. Via Airlines (Via Airlines), as the Direct Air Carrier on 30 Pax Embraer EMB-120 Brasilias.

Top Copyright Photo: Michael B. Ing/AirlinersGallery.com. Sun Country Airlines will dedicate one Boeing 737-700 for the Caesars contract.ย Boeing 737-73V N710SY (msn 30241) taxies to the runway at Seattle-Tacoma International Airport (SEA).

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Alaska Airlines and WSU to team up on the use of wood residue biofuels

Alaska Airlines (Seattle/Tacoma) just made this announcement:

Alaska (2014) logo

Washington state’s hometown airline is teaming up with the Washington State University-led Northwest Advanced Renewables Alliance (NARA) to advance the production and use of alternative jet fuel made from forest residuals, the tree limbs and branches that remain after a forest harvest.

NARA logo

As the airline partner for NARA, Alaska Airlines intends next year to fly a demonstration flight using 1,000 gallons of alternative biofuel being produced by the NARA team and its many partners. The planned flight signals a growing interest in the aviation industry for a viable alternative to conventional fossil fuel.

NARA Supply Chain Regions

The project will use post-harvest forest residuals from the Pacific Northwest (above).

NARA’s focus is on developing alternative jet fuel derived from post-harvest forest residuals. Residual treetops and branches are often burned after timber harvest. By using these waste materials as the feedstock of a biojet fuel supply chain, NARA and its aviation industry partners, seek to reduce fossil fuel use and greenhouse gas emissions as well as bolster sustainable economic-development potential in timber-based rural communities located throughout the Pacific Northwest.

NARA is a five-year project supported by the U.S. Department of Agriculture, National Institute of Food and Agriculture, and is comprised of 22 member organizations from industry, academia and government laboratories. Its mission is to facilitate development of biojet and bioproduct industries in the Pacific Northwest using forest residuals that would otherwise become waste products. A key task of the project is to evaluate the economic, environmental and societal benefits and impacts associated with such developments.

In 2011 Alaska Airlines became the first U.S. airline to fly multiple commercial passenger flights using a biofuel refined from used cooking oil. The carrier flew 75 flights between Seattle and Washington, D.C. and Seattle and Portland. Alaska has set the ambitious goal of using a sustainable aviation biofuel blend on all flights departing one or more airports by 2020. Later this year, Alaska will fly the first ever commercial flight using an alcohol-to-jet fuel.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Horizon Air‘s Bombardier DHC-8-402 (Q400) N401QX (msn 4031) in the Washington State University (WSU) cougars livery taxies at the Seattle-Tacoma International Airport (SeaTac) hub.

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Air Canada establishes three financial targets for 2015, will replace 20 Embraer 190s

Air Canada (Montreal) issued this statement:

Air Canada logo-1

As part of a comprehensive strategic plan update to the investment community, Air Canada will establish three new financial targets at its 2015 Investor Day to be held today in Toronto from 09:00 to 12:00 EST.

Building on the success of its business plan, from 2015 until 2018, Air Canada is targeting an annual EBITDAR(1) margin (earnings before interest, taxes, depreciation, amortization and impairment, and aircraft rent, as a percentage of operating revenue) of 15 to 18 percent and a year-over-year return on invested capital (ROIC) (1) of 13 to 16 percent during that period and, by 2018, a leverage ratio(1) of 2.2 (measured by adjusted net debt over normalized EBITDAR).

“We have continued to make significant progress in the execution of our business plan since we first provided the investment community with our financial targets in June 2013,” said Calin Rovinescu, President and Chief Executive Officer of Air Canada. The implementation of our fleet initiatives, capital programs, liquidity targets and debt levels remain on target and we’re delivering on a permanently lower cost structure while profitably growing our business, especially our international routes.

“With our growth, we have successfully expanded margins, increased adjusted net income and improved our return on invested capital, thereby creating substantial value for shareholders. We’ve strengthened our balance sheet, reduced the cost of debt and most significantly achieved all of our objectives in restructuring our pension plans. Now that our pension plans are healthy and in a surplus position, by opting out of the special Air Canada 2014 pension regulations, we expect to free up approximately $1.1 billion in previously allocated deficit funding contributions over the next six years which may now be redeployed to further improve our competitive position and create incremental value.

“In 2013, we set out to achieve some very specific targets relating to our costs per available seat mile (CASM) and ROIC, amongst others. Building on our successful execution against these targets, we are raising the bar with more ambitious objectives and are confident that our new financial targets will be attained. We will continue our singular focus on the four priorities that have brought us this far – namely, reducing costs and enhancing revenues, profitably growing by leveraging our international network and partnerships, engaging our customers and culture change. Our new targets are significantly higher than those we set out in 2013 and reflect our confidence that we are pursuing the right strategic plan to deliver sustained profitability and value for our shareholders over the long term and that we are executing on it successfully,” said Mr. Rovinescu.

At its June 2013 Investor Day, Air Canada had projected that a number of key initiatives, including the roll-out of Air Canada rougeยฎ and the introduction of the new Boeing 787 Dreamliners, taken together, would drive an estimated 15 percent reduction in CASM by 2018 when compared to 2012.

Since its June 2013 Investor Day, the airline added and announced a number of new cost reduction initiatives, including:

the reconfiguration of Boeing 777 aircraft;

the replacement of 20 Embraer 190 aircraft with five larger Airbus narrow-body and five Boeing 767 aircraft;

an amended and extended capacity purchase agreement with Jazz;

the introduction of an additional two high-density Boeing 777 aircraft; and

the selection of Boeing 737 MAX aircraft (below) to replace the Airbus narrow-body aircraft in its fleet.

 

Air Canada 737-8 and 737-9 MAX

Air Canada 737-8 and 737-9 MAX

Air Canada is on track to exceed the 2013 Investor Day Targets and, taking the added initiatives into account, now estimates that it should realize CASM savings (excluding the impact of foreign exchange and fuel prices) of 21 percent by the end of 2018 when compared to 2012.

In addition, at the end of the first quarter of 2015, unrestricted liquidity was at $3.123 billion (compared to a minimum target of $1.7 billion), ROIC was at 15.2 percent (compared to a target of 10-13 percent) and the airline’s leverage ratio, as measured by adjusted net debt over normalized EBITDAR, was at 2.6 (compared to a target ceiling of 3.5).

The outlook provided in this news release constitutes forward-looking statements within the meaning of applicable securities laws, are based on a number of assumptions and are subject to a number of risks and uncertainties. Please see section below entitled “Caution Regarding Forward-Looking Information”.

Attendance at Air Canada’s 2015 Investor Day is by invitation only. A live, listen-only audio webcast of the event along with accompanying presentation slides will be available through a link on Air Canada’s website at http://www.aircanada.com (Investors section).

Major Assumptions

Assumptions were made by Air Canada in preparing and making forward-looking statements. As part of its assumptions, during the 2015 to 2018 period, Air Canada assumes annual Canadian GDP growth of 2.0 to 2.4 percent, annual Canadian Consumer Price Index (CPI) growth of 2.1 percent, and an average annual wage rate increase of 2.0 percent. Air Canada also assumes that the Canadian dollar will trade, on average, at C$1.22 to C$1.23 per U.S. dollar and that the price of jet fuel will average 70 cents to 81.5 cents, as set out in the table below for each year during the 2015 to 2018 period.

Top Copyright photo: Bruce Drum/AirlinersGallery.com. 20 Embraer 190 aircraft will replaced according to the plan. Embraer ERJ 190-100 IGW C-FMZW (msn 19000124) taxies away from the gate at Seattle-Tacoma International Airport.

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