Global Airline Industry Expectations in 2010 : Aviation Firms Shares Rose Sharply
Airline stocks have been flying high in 2010 thanks to renewed hopes over an economic recovery, an uptick in business travel, and a stronger dollar. The Claymore/NYSE Arca Airline ETF (FAA) has shot higher on the news, gaining nearly 5% on the week and 15% so far on the year. A slight pullback in oil prices–one of the primary negative factors weighing on the airline industry–has also added momentum to FAA in recent sessions. Ongoing concerns over the financial health of Europe have boosted the greenback, which generally moves in the opposite direction of oil.
Alliance consolidation should also further help to boost revenues, as the world’s biggest airline, Delta Air Lines, looks for a new partner to assist in the expansion of international travel destinations. Not to be outdone, several of Delta’s chief rivals are also looking to strengthen international operations. “American Airlines, British Airways, and Iberia have taken significant steps toward allaying antitrust regulators’ concerns over their proposed alliance, offering a number of gates at New York’s John F. Kennedy Airport and London’s Heathrow and Gatwick airports to competitors,” writes Christopher Hinton. These developments could help many airlines open up more international routes, which could translate into increased profits. For many carriers, business and international are the most profitable operations.
Wall Street banks are beginning to take note of the improved outlook for the industry. UBS recently raised its target price on several carriers and Jesup & Lamont Securities forecast a smaller first-quarter loss for Delta. In further good news for Delta, the company raised its operating profit margin forecast for this quarter from 1% to 2% of sales, up from an estimate at the end of January of “break-even.” However, the best sign for investors in Delta was the large uptick in business travelers; ticket volume was up 34% in February compared to last year, producing a 32% rise in corporate travel revenue according to Barron’s.
Japan Joins Asia And South Pacific Initiative To Reduce Emissions Program
Japan aviation industry yesterday joined US FAA, Airservices Australia and Airways New Zealand as a partner in the ASPIRE (Asia and South Pacific Initiative to Reduce Emissions) program.
ASPIRE flights use a host of optimized operational procedures and ATC routings, including tailored arrivals, to save time and fuel. “This is an important milestone in our collective effort to lessen aviation’s environmental footprint,” said FAA Administrator Randy Babbitt, who signed the agreement along with Japanese Civil Aviation Bureau DG Ryuhei Maeda.
Last week, Japan Airlines became the fourth carrier to operate an ASPIRE flight behind Air New Zealand, Qantas and United Airlines. The Oct. 10-11 747-400 flight was operated by Japan Airlines subsidiary JALways on a scheduled trip from Honolulu to Osaka.
Although specific results of the flight have not been disclosed, JAL previously had announced that it aimed to reduce fuel burn by 9,421 lb. and carbon dioxide emissions by 28,969 lb. through a variety of means: A precise estimate of fuel required for the flight, lighter cargo containers, reducing the weight of items loaded onboard including cabin attendants’ carry-on baggage, maximizing the use of ground electricity instead of the APU, engine washing, two-engine taxi, changing the runways for takeoff and landing to shorten taxi distance, faster climb to optimum cruise altitude, utilizing user preferred route, DARPS (Dynamic Airborne Rerouting), delayed flap and gear approach and reduced reverse thrust.
ANZ conducted the first ASPIRE flight on Sept. 12, 2008, from Auckland to San Francisco aboard a 777, saving 7,700 lb. of fuel and 27,700 lb. of CO2. Last week, ANZ GM-Operations and Chief Pilot Dave Morgan told ATWOnline that almost all of the airline’s flights to San Francisco are now conducted as ASPIRE flights. ANZ will commence regular ASPIRE flights to Los Angeles shortly, he said.
Virgin America Start Direct Flight From Orlando International Airport to Los Angeles and San Francisco
Virgin America announced this morning that it will start direct flights from Orlando International Airport to both Los Angeles and San Francisco starting August 19.
The two-year old airline, affiliated with Virgin Atlantic that now brings thousands of British tourists into Orlando, also announced introductory one-way air fares start start at $149 to LA and $199 to Frisco.
The new Orlando to California routes were among several changes the company announced, including new service between Toronto and California.
Currently, only United Airlines provides direct service between Orlando and San Francisco, while several carriers — United, American Airlines and Delta Air Lines — provide direct flights between Orlando and Los Angeles.
Virgin America’s flights to the West Coast both will leave at night. The San Francisco flight is scheduled for a 6 p.m. departure, in contrast with United’s 6:55 a.m. flight. Virgin America’s 7:15 p.m. flight to LA would be the latest available. United and Delta offer two flights a day, morning and evening, while American leaves Orlando in the early afternoon.
“We are pleased that Virgin America, the airline recently ranked best domestic midsize airline in premium and economy class in the 2009 Zagat Global Survey has chosen Orlando as its newest destination. The nonstop service to and from Los Angeles and San Francisco will offer new options and low fares,” Steve Gardner, Executive Director of Orlando International Airport, stated in the Virgin America news release.
The changes are possible because earlier this year American airline regulators approved a new corporate structure for Virgin America that essentially declares it to be an American-owned airline, allowing it more freedom in providing domestic flights in the United States.
“With strong financial performance, a new ownership structure and growth in fleet size, we’re pleased to be able to expand to world-class destinations like Orlando and Toronto this year,” Virgin America President and CEO David Cush stated in the company’s news release. “Both cities are major travel destinations from the West Coast, and we’re looking forward to introducing our service to travelers in these and other new markets in 2010 and beyond.”
Airlines Company : Alitalia Stop 100 Flight Service 100 End Of November
Alitalia has said that it will cut 100 flights a day through the end of November, due the ongoing labour action by flight attendants and pilots, according to the bankruptcy administrator for the troubled airline.
Some employees at the airline have caused havoc for over a week, staging unannounced work slowdowns in protest of some aspects of a bailout plan for the carrier proposed by a group of Italian investors.
The airline has said that the protestors have been following job rules strictly and calling in sick, slowing down operations, causing flights delays and resulting in the cancellations of hundreds of services.
Augusto Fantozzi, Alitalia’s bankruptcy administrator appointed by the government, told La Repubblica that the workers’ protest was costing the carrier millions of euros daily. The bankrupt airline was already losing around two million euros daily.
Fantozzi added that Alitalia would scrap 100 of its 600 daily flights through the end of November, when it is expected that the sale of the airline will be completed.
Passengers will be reimbursed for cancelled flights, or accommodated on other flights. The administrator urged all Alitalia passengers to check on the status of their flight on the airline’s website.
A spokesman for the airline would not comment on the figures put forth by Fantozzi.
Unions involved in the protest maintain that the carrier is also to blame for the disruptions that have occurred, saying that flights are intentionally being cancelled to save money.
source : alitalia.com
Italia Airlines Company, Alitalia to Meet to OK Air France Deal
Alitalia’s board will meet on Monday to approve the sale of a minority stake to larger rival Air France-KLM after months of negotiations, a source close to the Italian airline said on Thursday.
The Franco-Dutch carrier has beaten out archrival Lufthansa for a stake of about 25 percent in the Italian carrier, two sources close to the matter have said previously.
Italian Prime Minister Silvio Berlusconi on Wednesday indirectly confirmed the French victory in the tussle by saying that his preferred candidate, Lufthansa, never made an offer.
The source confirmed newspaper reports that Air France-KLM would pay about 300 million euros for the stake, but said the figure was approximate. La Repubblica daily reported the French carrier would pay 310 million euros for a 25 percent stake.
Both Air France-KLM and Lufthansa had been eyeing Alitalia as a way to gain a foothold in Europe’s fourth-largest aviation market that combines busy business routes in Italy’s north with heavy tourist traffic to destinations like Rome.
Alitalia went bankrupt last year after muddling through years of losses, strikes and inefficiencies but is being revived by the CAI Italian investor group, which bought the carrier’s best parts and has since adopted the carrier’s name.
The restructured airline will begin operating under a reshaped network and slimmed down employee base on January 13.
