Japan Airlines Post $1 Billion Q1 Loss News
Japan Airlines Corp (JAL) said on Friday it suffered a US $1 billion loss in the April-June quarter which is larger than its loss for the entire last year. The carrier’s revenues took a heavy hit under the double whammy of the economic downturn and the outbreak of swine flue resulting in a net loss of ¥99.04 billion in the three months ended 30 June. The loss was much larger than the ¥3.41 billion net loss it posted in the previous year quarter last year.
“The net loss was Y10 billion more than expected,” Yoshimasa Kanayama, a JAL senior vice president, said at a press conference.
Like other airlines, JAL has been feeling the pinch of the economic downturn which has hit demand for business trips and cargo transport. The swine flu has also forced travelers to cancel their trips to several countries while rising oil prices have also come as another headache for the industry already reeling under the downturn.
JAL is focusing on turning around its falling earnings through paring workforce, inducting fuel-efficient aircraft and streamlining its non-airline businesses.
The carrier has also been granted ¥100 billion syndicate loan by two government-backed banks – Development Bank of Japan and Japan Bank for International Cooperation and three commercial banks to enhance its financial ability to effect a turnaround.
JAL’s smaller local rival All Nippon Airways Co also raised ¥130 billion in a public share offering which will partly help acquisition of new fuel-efficient aircraft.
Fewer Air Travelers May Mean Cheap Flights
The economic downturn is putting the skids on holiday travel. The American Society of Travel Agents says November sales fell about 1-billion dollars from last year. That’s the steepest monthly sales drop since the September 11th terrorist attacks. Fewer travelers could translate to better deals for those willing to spend. Industry experts expect a nearly 10% drop in air travel over the next month.
Theda Dyer, Knutson’s Travel Port: “We are seeing that travel is down. The prices are, they’re OK if you can find the flights, but the airlines have decreased the amount of flights.”
High fuel prices forced many airlines to cut flights earlier in the year. Now the poor economy is making it harder for airlines to fill fewer seats. Here in Michigan they say travelers are even more skittish because of the troubled auto industry.
Theda Dyer: “Just the uncertainty of what’s going to happen, we better not spend the money and we better wait. Even people I talk to who are not affiliated with GM, everyone’s sort of waiting and seeing.”
And while they wait those willing to part with their money can find some good travel deals if they travel on the slowest days- Christmas or New Year’s Day.
Theda Dyer: “You must be flexible to get that good deal, ’cause I saw on the computer leaving January 1st, Orlando from Detroit, coming back a week later, it was it was $150.”
Travel agents say the deals are likely to continue into the new year, which has many people waiting to book their flights, hoping to score a bargain. Travel agents say if you’ve already booked a flight and the fare has come down, you can change your ticket, but you’ll have to pay a $150 penalty. In some cases, experts say, it just might be worth it.
American Airlines to Challenge Proposed Penalty by FAA
Federal officials have hit American Airlines with a record penalty of $24.2 million over maintenance lapses that caused thousands of canceled flights in 2008.
The Federal Aviation Administration said Thursday that American failed to take steps to prevent chafing of electrical wires in the wheel wells of its McDonnell Douglas MD-80-series jets.
The FAA says the wiring could have led to fires and fuel-tank explosions.
American vowed to challenge the proposed penalty. Airlines routinely challenge FAA penalties or negotiate to reduce them.
“These events happened more than two years ago, and we believe this action is unwarranted,” said American spokesman Tim Smith. “We are confident we have a strong case and the facts will bear this out.”
American officials have said the dispute is over a minor matter of leaving too much space between clips that held bundles of wire together. Smith said passenger safety was never threatened.
A large safety penalty would add to American’s financial and image problems. Parent AMR Corp. was the only major U.S. airline company to lose money in the second quarter, and it has lost more than $4 billion since the start of 2008 as it struggled against high fuel costs and a slump in travel.
American is also beset by labor issues, with unions representing mechanics and flight attendants talking about going on strike, and pilots openly criticizing the company.
The new penalty stems from early 2008, when FAA inspectors said they spotted problems with the wiring on two MD-80 planes. The FAA says American failed to correctly fix the problem, and inspectors found improper work on most of the planes they checked during follow-up visits to American maintenance facilities.
The airline ended up grounding its entire fleet of about 300 MD-80s and canceling thousands of flights in April 2008 while mechanics worked on the planes.
The FAA said Thursday that American operated 14,278 passenger flights on 286 planes that didn’t meet the wiring standards.
“We expect operators to perform inspections and conduct regular and required maintenance in order to prevent safety issues,” said Transportation Secretary Ray LaHood, whose department includes the FAA. “There can be no compromises when it comes to safety.”
American has since been retiring some of the gas-guzzling MD-80 planes and replacing them with more fuel-efficient ones. The FAA said safety officials had made progress working with American to improve the airline’s “maintenance culture.”
If upheld, the penalty against American would top the previous record of $9.5 million that the FAA levied against Eastern Airlines in 1987 for delaying required maintenance work. Eastern went out of business after paying only about $1 million.
As the FAA was focusing on American in 2008, it also proposed a $10.2 million penalty against Southwest Airlines Co. for operating about 1,400 flights before inspecting the planes for cracks. Southwest negotiated that down to $7.5 million.
The actions against American and Southwest came after whistle-blowers in the FAA and members of Congress criticized the agency for being too cozy with the airlines.
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.”
WestJet Announces New Airline Flight Service to Kamloops
Canadian cheap flights carrier WestJet yesterday (December 15th) launched a new non-stop flight to Kamloops in British Columbia.
The airline will fly from Calgary to Kamloops, its seventh British Columbia destination, daily at 12:45, with the return flight departing at 13:30.
Commenting on the new flight, Bob Cummings, WestJet executive vice-president of guest experience and marketing, said: “This is an important day for both WestJet and Kamloops as we start our new service and bring our award-winning guest experience to the people of Kamloops and surrounding area.”
The new flight will offer passengers the opportunity of connecting with a number of other destinations in the airline’s network.
WestJet has also launched a seasonal non-stop flight to La Romana in the Dominican Republic, which forms part of the carrier’s improved winter schedule.
The airline will offer one flight a week to the Caribbean, which is scheduled for Mondays.
WestJet is Canada’s largest cheap flights carrier and offers flights to 51 destinations across North America and the Caribbean.
