Tuesday, May 22, 2018

Mexico grounds charter airline involved in Havana accident

Mexican civil aviation authorities are conducting a special inspection of the charter operator at the center of the May 18 accident in Havana, and have suspended the company's operation until further notice—the third such action in eight years against the carrier.

The Directorate General of Civil Aeronautics (DGAC) said it would conduct an "extraordinary verification" of Mexico City-based Global Aerolineas Damojh, or Global Air, and ground the carrier during the check. One of Global Air's Boeing 737-200s was flying for Cubana de Aviacion when it went down shortly after departing Jose Marti International Airport (HAV) last week.

The suspension is at least the third for Global Air, which went into business in 1990. In November 2010, a nose landing-gear failure prompted DGAC to shut the airline down for five weeks. In October 2013, a complaint from a pilot triggered another special inspection and resulted in one aircraft being grounded for nine weeks.

"The DGAC seeks to ensure maximum safety of air operations, not only by periodic checks, but also by making the necessary extraordinary visits, accompanied by the measures required to ensure that the findings of the verification are remedied," an agency statement explained.

DGAC said Global Air passed its last routine annual inspection, in November 2017.

The Global Air aircraft, operating as Cubana flight 972, was en route to Holguín, Cuba, with 107 passengers and six crewmembers when it went down moments after departing Havana. One passenger taken to a hospital died May 21, Cuba's Ministry of Public Health confirmed, increasing the number of fatalities to 111.

The leased aircraft had been flying for Cubana for about a month, Cuba Minister of Transport Adel Yzquierdo Rodríguez said.

The aircraft's cockpit voice recorder was recovered May 19, Yzquierdo said. Investigators were still searching for the flight data recorder.

(Sean Broderick - ATWOnline News)

More American Airlines frontline staff criticize Boeing 737 MAX

American Airlines’ rollout of the Boeing 737 MAX is generating a lot of discontent among AA employees as more and more pilots and flight attendants get their first experience flying the aircraft.

American began operating the MAX earlier this year. There are now eight MAXs in AA’s fleet with 20 to be in service by the end of 2018. The MAX is the same size as the Boeing 737-800, of which AA has several hundred, but the MAX has a more fuel-efficient engine.

The MAXs now coming online seat 172 people, as opposed to 160 people in the 737-800s now in AA’s fleet. A large number of those 737-800s are about to be reconfigured to match the cabin configuration of the MAX, however.

And that increasingly has AA employees on the frontline concerned about what’s coming as part of Project Oasis, which the reconfiguration of the 737-800s has been dubbed.

To get more seats on the MAX, American Airlines installed new lavatories that — according to one AA captain who spoke at a recent crew meeting presided over by AA President Robert Isom — are only 75 percent of the size of the lavs on AA’s fleet of 737-800s.

That AA captain who spoke up called using one of the new aft lavs on the MAX the “most miserable experience in the world.” The captain further explained that he couldn’t even turn around in the new lav. The Chicago Business Journal obtained an audio tape of the crew meeting in which the AA captain spoke.

Isom responded to the concerned pilot and tried to explain why AA installed the kind of lav it did on the MAX, though he didn’t dispute the AA captain’s experience using the lavs. Nor did Isom signal that AA was about to rip out the smaller lavs and replace them.

Isom said the real estate on the MAX is very valuable, hence the need to maximize the revenue that real estate can generate by maximizing seating on the MAX. One way that was accomplished was by downsizing the lavs and by decreasing the seat pitch throughout the MAX, and soon throughout hundreds of 737-800s.

At the crew meeting, Isom didn’t shy away from the fact that AA is intent on maximizing revenue and profitability. Isom cited Spirit Airlines as one of the nation’s most profitable airlines and suggested AA was looking at how Spirit got to be such a cash cow.

Isom also intimated that the new MAXs are configured to help AA be more like Spirit when it comes to generating revenue and profits.

But other AA employees have come forward to the Chicago Business Journal in recent days and suggested it’s not going to be fun working on the MAXs or 737-800s when they are reconfigured to mirror the MAX.

One flight attendant told me in an email: “I’ve worked the MAX three times and have gotten hurt three times,” though the flight attendant didn’t immediately specify what the nature of the injuries were.

Still, the flight attendant said many within the ranks of American FAs are “embarrassed” about the MAX product that the carrier is rolling out — “no TV, manual (safety) demos, tight aisles; slim, cheap seats.”

But the source, who worked for American CEO Doug Parker at America West, U.S. Airways and now American, said he understands where Parker is coming from in doing what he’s doing with the MAX.

“He was one of my favorite CEOs, as he knows how to fill planes and make money, but at the same time, I’m sorry, but he’s cheap," the source said.

(Lewis Lazare - Chicago Business Journal

Gulstream G200 crashes in Honduran capital, all aboard survive

(Fernando Antonio - Associated Press)

Gulfstream G200 (c/n 054) N813WM has crashed off the end of the runway at Toncontín International Airport (TGU/MHTG) or Teniente Coronel Hernán Acosta Mejía Airport the civil and military airport located 6 km (4 mi) from the center of Tegucigalpa, Honduras. The crew and passengers were rescued and reportedly out of danger, the government's emergency management agency said.

Photographs posted by the agency showed a white jet broken in half near the center. Firefighters sprayed foam onto the wreck and part of the plane appeared to lie across a street.

Video showed what appeared to be area residents pulling people out of the damaged fuselage while others sprayed the plane with hand-held fire extinguishers.

The FlightAware website said the flight had originated in Austin, Texas, on Tuesday morning.

(Photo: Honduras Policía Nacional)

Federal Aviation Administration records show the plane registered to TVPX Aircraft Solutions Inc. in North Salt Lake, Utah. A person who identified himself as Mike at TVPX said he had no information to share and hung up.

The emergency agency said on Twitter that first responders rescued passengers and crew. It did not provide the number of those aboard, but said all were alive.

Honduran firefighters posted photos of the crash and said there were nine people injured, but military police spokesman Mario Rivera said there were six aboard. The discrepancy was not immediately clarified.

President Juan Orlando Hernandez confirmed via Twitter that the injured were stable.

In 2008, a plane of the former airline TACA crashed in nearly the same spot. Five people died in that crash.

Tegucigalpa's airport has long been notorious as one of the more difficult approaches in the hemisphere, surrounded by mountaintops and residential neighborhoods. The airport's runway is about 6,600 feet (2,012 meters) long, according to the airport's website.

Authorities asked drivers to avoid the area and said about 50,000 people in the surrounding neighborhood lost power because the plane took down power lines.

(Christopher Sherman - Associated Press)

Friday, May 18, 2018

Boeing's Sci-Fi Foldable Wing Design for New 777s Gets Go-Ahead


U.S. regulators have approved a Buck Rogers makeover of Boeing’s revamped 777 jetliner that will allow the tips of its massive wings to fold upward after landing so the plane can park at existing airport gates.

The new wings, the largest ever created by the Chicago-based planemaker, are taking shape as Boeing builds the first of its 777X jetliners in a factory north of Seattle. They will be the most distinctive-feature for the hulking jets, the first twin-engine models built to haul more than 400 travelers.

Once the new planes touch down, the tips of the wings will rotate until they’re pointed skyward, which will make it the only commercial jet in widespread use with such a hinged design. A set of locking mechanisms will make it impossible for them to retract while airborne, according to the company.

Because commercial aircraft design standards didn’t envision a foldable wingspan, U.S. regulators had to craft them from scratch. Those “special conditions” were approved Friday by the Federal Aviation Administration, according to federal documents.

The Boeing plane’s chief project engineer, Terry Beezhold, called it “this beautiful wing” in a recent video made by the company. “This airplane actually will be the most efficient twin-jet ever developed in commercial history,” Beezhold said.

Instead of aluminum, Boeing will make the new wings out of carbon-fiber composites, which are stronger and lighter than the metal they replace. That technology helps enable the company to extend the width of the wings by 23 feet (7 meters), or 11 percent beyond the existing 212 feet.

But the wing also created a new problem: The current 777s barely fit into the standard airport gate for long-range, wide-body aircraft. The wider wing on the new 777-8 and 777-9 planes would require airports to build new gates to accommodate the plane’s increased size.

“For that reason, we developed the folding wingtip, so that in flight we can enjoy this very long, efficient span, but it will be able to operate at any airport, any gate, that today’s 777 can service,” Beezhold said.

Boeing didn’t immediately respond to a request for comment on the FAA’s action.

The 777’s new wing will make it the company’s widest, passing the 747-8, according to Boeing documents.

Airbus's double-decker A380, the largest passenger jetliner, has a wing that’s 262 feet wide. Its size required some airports to build special gates where it could load passengers.

The FAA approval for the 777-8 and 777-9 came as Boeing is already assembling the first wings for the new models. The process is delayed because building structural ribs for the wings “has taken longer than expected up front,” program chief Kevin Bartelson told Aviation Week. Bartelson said the company expects to get the process back on schedule by this summer.

The hinge on the wing created a host of potential safety issues, the FAA said. In particular, several planes have crashed in recent decades when pilots accidentally tried to take off without properly configuring movable panels on wings called flaps. The same thing could happen with the new wingtips, according to the FAA.

One of the conditions the FAA imposed is that Boeing must have multiple automatic warning systems to ensure pilots won’t ever try lifting off without the wingtips fully extended.

The agency also said Boeing must demonstrate that the wingtips could never be accidentally unlocked during flight and that “no force or torque can unlatch or unlock the mechanisms.”

Among the 10 conditions set by FAA, the wings must also be able to withstand wind gusts as high as 75 miles (120 kilometers) an hour on the ground. The agency even set requirements for how to replace the normal lights at the tips of the wings.

(Alan Levin and Julie Johnsson - Bloomberg Technology News)

Temporary Closure of Runway 12-30 for Rehabilitation Project at Long Beach Airport

American Eagle (Mesa Airlines) Bombardiar CRJ-900ER (c/n 15024) N924FJ holds short of Rwy 25R at "Kilo 1" as it waits to be the first departure from the 6,192ft Rwy on Tuesday May 15, 2018.
(Photo by Michael Carter)

Runway 12-30, Long Beach Airport's main commercial runway, will be closed intermittently over an eight-day period for rehabilitation of critical areas. As a result of this closure, neighborhoods near the airport may notice a change in aircraft flight activity.

The need for this rehabilitation project was identified during a recent Federal Aviation Administration annual inspection and has since been monitored. Airport Engineering staff have determined it is vital to initiate these repairs now, as runway fitness is one of the LGB's obligations as a FAR Part 139 airport and as required by FAA Grant Assurances to maintain safe and serviceable movement areas.

The runway closures will occur Monday, May 14, 2018, through Friday, May 25, 2018. The closure schedule will be as follows:

Monday, May 14 at 10 p.m. - Tuesday, May 15 at 2 p.m.
Tuesday, May 15 at 10 p.m. - Wednesday, May 16 at 2 p.m.
Wednesday, May 16 at 10 p.m. - Thursday, May 17 at 2 p.m.
Thursday, May 17 at 10 p.m. - Friday, May 18 at 2 p.m.

Runway open from Friday, May 18 at 2 p.m. - Monday, May 21 at 10 p.m.

Monday, May 21 at 10 p.m. - Tuesday, May 22 at 2 p.m.

Tuesday, May 22 at 10 p.m. - Wednesday, May 23 at 2 p.m.
Wednesday, May 23 at 10 p.m. - Thursday, May 24 at 2 p.m.
Thursday, May 24 at 10 p.m. - Friday, May 25 at 2 p.m.

(Long Beach Airport - Media / Noise Office)

Airbus loses ground in bid to sell jets to United

Airbus's hopes of winning an immediate respite from slow sales of its A330neo jetliner with an order from United Airlines are dwindling, leaving a gap in future production weeks before it is due to enter service, industry sources said on Friday.

Airbus has been competing with Boeing to replace all or part of a fleet of some 50 Boeing 767s at United Airlines , people familiar with the discussions say.

Others said Airbus had made an unsolicited offer to try to head off plans by United to use rights to buy more Boeing 787s.

It's the latest twist in one of the fiercest recent jet market battles, pitting Boeing's 787 against the latest type of A330, with Boeing so far holding the upper hand.

"Airbus doesn't have United," one person familiar with the matter told Reuters, though others did not exclude a chance to compete for a second tranche of business later.

Sources say Boeing has an advantage in any competition because United already flies its 787 and has options for more.

Airbus , Boeing and United declined comment.

Airbus is keen to clinch a deal after losing to the 787 at two other U.S. carriers.

It also hopes to defend planned production rates, which have only just been lowered due to weak demand.

Sources said more than 15 A330 output slots remain unfilled in next year's schedule, heightening pressure to win deals.

Airbus has sold 214 A330neos to around 13 customers led by AirAsia , which has been giving mixed signals over whether it plans to take the jets or switch to Boeing.

AirAsia Group boss Tony Fernandes said this week the A330neo was still the "favorite choice" but he was delaying a final decision until he saw how the jet performed.

America's withdrawal from the Iran nuclear accord threatens the sale of 28 A330neos to IranAir.

Another reason Airbus wants to add a new marquee customer is that it would make it easier for airlines to finance A330neo purchases, and potentially hold back the tide of 787 sales under a hard-charging new Boeing leadership, financial sources said.

Banks add risk factors and toughen the terms when backing thinly sold jets and the risk is that the more popular 787 could become cheaper to finance, even though the price of an A330neo is lower after allowing for market discounts.

Airbus has said it is confident about long-term demand and is talking to several airlines about the 310-seat plane.

"It's a big segment and we think we have the right airplane at the right time," Airbus Americas Chairman Jeff Knittel said.

(Tim Hepher and Alana Wise - Reuters)

Billionaire Paul Allen's Stratolaunch preps for first flight this summer

Billionaire Paul Allen's massive Stratolaunch aircraft is gearing up to take flight for the first time.

Stratolaunch CEO Jean Floyd revealed the plans on Twitter, saying the giant satellite-launching aircraft would conduct three more taxi tests on the runways at its California home base in the Mojave Desert before taking to the skies.

"The Stratolaunch aircraft remains on-track for first flight later this summer. Three more taxi tests and we will be ready to 'slip the surly bonds,'" said Floyd, who did not reveal any specific date for the flight.

In a separate tweet this week, Floyd added: "Operations are coming on-line as we approach aircraft first flight this summer. Launch vehicles will be integrated in our 88,000 square foot low-bay and rolled directly under the aircraft for mating ops in the 103,256 square foot T-hanger."

The Stratolaunch aircraft is wider than the length of a football field and 14 feet longer than a Boeing 787 Dreamliner.

Floyd also offered aviation enthusiasts a few more details about the wheels on the jet. For instance, the Stratolaunch aircraft has a total of 28 wheels, he wrote. Of the 28 wheels, 24 are Boeing 747 main body gear assemblies, or 12 wheels on each Stratolaunch fuselage.

There are also two nose gear wheels on each fuselage, also from a 747, he added.

The company has been somewhat secretive about what's inside the airplane, but Floyd shared details recently.

"The majority of the Stratolaunch aircraft controls are legacy 747 components (engines, gear, cockpit, hydraulics and avionics)," he said on Twitter. "Proud to be hosting such a reliable and successful heritage on our aircraft. We salute the history of the incredible 747."

(Andrew McIntosh - Puget Sound Business Journal)

Wednesday, May 16, 2018

Silk Way West launches B747F to Liege

(Silk Way Cargo)

Baku-headquartered freighter operator Silk Way West Airlines has launched a new regular Boeing 747F link between Belgium’s Liege Airport and its cargo hub in the capital of Azerbaijan.

Twice-weekly flights into Liege were launched at the end of April.

Silk Way West Airlines president and chief executive Wolfgang Meier commented: “The aim is to further knit our European network by adding more destinations and maintaining a denser schedule in order to offer our customers the highest flexibility.”

In March, Silk Way West re-introduced scheduled B747-8 freighter services into Budapest, returning to the Hungarian capital after an absence of nearly two years.

The first flight landed at Liszt Ferenc International Airport on March 18, and the carrier now connects Budapest twice a week with Baku.

Alongside these network additions, Silk Way West Airlines is also growing its fleet.

It is in the process of introducing two more B747-400Fs to its operating fleet. The first of the two freighters joined Silk Way West Airlines last week, and the second one is to join the carrier in June.

The carrier operates a global network encompassing more than 45 destinations, connecting Baku with China, Central Asia, the Middle East, Europe, Africa and North America.

An interview with Wolfgang Meier will appear in the Freighters World supplement to June's Air Cargo News.


Aeromexico Scales Back ‘Unsustainable’ Flights, Following United

Aeromexico, Mexico’s largest airline, is trimming its expansion plans as a seating glut drags down fares.

Capacity will expand 7 percent the rest of this year, said Chief Executive Officer Andres Conesa. That’s down from a previous forecast of about 9 percent, he said, citing the need for increased discipline as rising fuel prices add to earnings pressure.

The carrier is tapping the brakes as a weaker industry outlook has prompted investors to dump Mexican airline shares. Years of go-go growth have left the domestic market awash in capacity, while an open skies deal with the U.S. prompted airlines from both countries to add cross-border flights. United Continental Holdings Inc. said last week it would chop flights to Mexico, saying service to some markets was unsustainable.

“We’re starting to see the impact on profit, but it has more to do with excess capacity than weak demand,” Conesa said in an interview at Bloomberg’s offices in Mexico City.

Aeromexico fell less than 1 percent to 24.10 pesos at 1:58 p.m. in Mexico City. The shares slid 15 percent this year through Tuesday. Its biggest domestic rival, Volaris, tumbled 28 percent this year while the benchmark IPC index fell 6.3 percent.

Delta Partnership

Aeromexico has been able to fend off some of the capacity-related pressure thanks to its joint venture with Delta Air Lines, which owns 49 percent of the Mexico City-based company, Conesa said. Passenger traffic between Mexico and the U.S. rose 6 percent in March from a year earlier, according to the Transportation Ministry.

While Aeromexico eked out a slim profit in the first quarter, Volaris reported a loss of 1.1 billion pesos ($56 million) and posted the largest one-day share decline since 2016. The Mexican airline industry is entering a period of uncertainty amid a potentially unsustainable drop in fares, Barclays Plc said last week.

The highest jet-fuel prices since 2014 -- currently at $2.26 a gallon for purchase in New York harbor -- are adding to the pressure. Aeromexico hedged for about half of its fuel requirements using call spreads with a strike price starting at $1.78 per gallon, the airline said in a call with analysts last month.

Peso Weakness

Aeromexico is naturally hedged against peso weakness, with about 60 percent of its sales in other currencies and about two thirds of costs denominated in dollars, Conesa said. But persistent currency weakness represents a risk to Mexico’s boom in air travel.

“If the peso continues to depreciate, it will have an impact on demand, on real activity and that will have an impact on our business and on the Mexican economy,” he said.

The Mexican currency has tumbled 8.5 percent in the last month alone, dragged down in part by uncertainty about the future of the North American Free Trade Agreement. Investors are also growing increasingly concerned about a deeper rout amid tensions between business leaders and firebrand presidential candidate Andres Manuel Lopez Obrador, the frontrunner in the July 1 election.

Lopez Obrador’s pledge to cancel the construction of a $13 billion airport in Mexico City represents another risk for Aeromexico, which is banking on the hub to boost air traffic. Conesa said he looked forward to working with whoever wins the race.

“We’ll work with the new president and their party to make the case that the airport is needed and is going to be good for the industry, for the country, the economy and job creation,” he said.

Fleet Plans

Aeromexico is still weighing an order of Bombardier C Series planes, Conesa said. The carrier had initially considered the plane when the U.S. slapped tariffs on the Canadian aircraft after a trade complaint brought by Boeing Co.

A trade panel’s ruling in Bombardier’s favor paved the way for Delta to get the planes, giving Aeromexico more time to study its fleet plans. The company flies Boeing 737 and 787 Dreamliner planes, while its regional unit operates Embraer jets. Aeromexico is also considering an order for Embraer’s upgraded E2 planes -- if it takes new planes at all.

“It opened a window of additional time, so we’re analyzing whether to bring the C Series, the new E2 or staying as we are,” he said. “We’re hoping to make a decision in the second half of the year.”

(Andrea Navarro - Bloomberg Business)

Southwest sets its sights on international routes, including to South America

Southwest sets its sights on international routes, including to South America 28

Southwest Airlines carries more passengers within the United States than any other airline. Now it's looking to fly outside the U.S., including to destinations in South America.

Southwest's CEO Gary Kelly told shareholders on Wednesday that 96 percent of the carrier's flying is domestic and that it only serves 14 international destinations currently. But there are as many as 50 other destinations in North America and parts of South America that it could serve, he said.

"Not all next year," Kelly said. "It may take us 25 years."

While such an expansion could be many years a way, a move to northern South America could include destinations in Colombia, Ecuador, and Peru, where tourism has grown in recent years. Southwest's core market is leisure travelers. An expansion to South America could follow similar network growth to the region by competitors like Spirit and JetBlue, and possibly put it in competition with large U.S. airlines like Delta, United and American.

Southwest is focused this year on growing its domestic network. Last year it announced its plans to offer service to Hawaii. Kelly said the goal is to sell flights to the islands by the year's end. The airline is in the process of revamping its fleet with new Boeing 737 MAX, a more fuel-efficient model of Boeing's best-selling plane.

Southwest last month announced it would not only fly to Hawaii from California but that it would fly between the islands, sending shares of Hawaiian Airlines tumbling.
(Leslie Josephs - CNBC)

Southwest Airlines finds no fan blade failures, but sends 'several dozen' for further examination

After inspecting all the fan blades in its fleet of engines, Southwest Airlines found no structural problems like the one that caused the left engine aboard Flight 1380 to fail last month and kill a passenger.

"The engine inspections are complete, the findings have been zero, which is obviously expected but good news," said Gary Kelly, Southwest's CEO, during the airline's annual meeting Wednesday in Maryland.

However, Kelly also told reporters after the meeting that several dozen fan blades were sent to General Electric for further inspection, according to Bloomberg.

Those fan blades had some coating anomalies, said Southwest chief operating officer Mike Van de Ven, adding that they were sent to GE "out of an abundance of caution." Kelly added that he didn't think the examinations would turn up any problems.

The place where the fan blade was attached to the engine that failed during the April 17 flight showed signs of metal fatigue, according to a preliminary investigation by the National Transportation Safety Board after the accident. New Mexico businesswoman Jennifer Riordan died from injuries suffered when she was sucked partially out of the window that blew out after being struck by engine shrapnel.

As a result, the CFM56-7B engine model — made by CFM International, a joint venture between GE and Safran — faced increased regulation scrutiny from the Federal Aviation Administration.

The FAA issued an airworthiness directive, or AD, that called for expedited inspection times of fan blades within the engine model. Southwest inspected the fan blades on its engines quicker than the AD called for.

Increased dividends

The Dallas-based airline also announced an increase to its quarterly dividend Wednesday. The new dividend will increase to 16 cents from 12.5 cents a share, a 28 percent jump.

The new dividend will be paid out June 27. Annualized, the increase amounts to more than $370 million for the airline's shareholders, Kelly said.

The company's board of directors also announced it intends to repurchase $2 billion in shares. This latest share repurchase program will commence after its previous $2 billion share repurchase program, which started in May 2017, finishes its last $350 million of share purchases.

So far, the company has repurchased approximately 19.8 million shares under the May 2017 plan.

"We remain committed to maintaining an investment grade balance sheet and strong financial position," Kelly said in a prepared statement.

Low-fare summer

The carrier also announced a mega sale for the summer months with one-way fares starting at $49 for select routes.

The sale is good through May 18 at 11:59 p.m. in whatever time zone the originating city is in. In addition to the $49 price point, Southwest is also offering one-way flights at $79, $99 and $149.

The sale could be meant to spur ticket sales after the company booked fewer passengers than normal after Flight 1380's accident. In the company's first quarter earnings call, it estimated the accident had between a $50 million and $100 million impact on bookings.

"The full revenue impact isn't totally clear," said Tom Nealon, Southwest president, on the earnings call. "But we do expect there to be a continued impact for a period of time."

That reduced number in bookings was in part because of a self-inflicted drop in website traffic. After the accident, Southwest halted its marketing channels. Things like its Twitter feed, television ads, and emails promoting flight deals were stopped in wake of the accident.

Those marketing channels draw a lot of eyeballs to Southwest's website, Nealon said. Website traffic to Southwest's homepage is more important than the other big airlines, considering Southwest doesn't use third parties like Google Flights or Kayak to help sell flights.

(Evan Hoopfer - Dallas Business Journal)

Fare fight: Alaska Airlines ready to battle Southwest Airlines in Hawaii, CEO Brad Tilden says

Alaska Airlines is ready to battle Southwest Airlines when the discount carrier launches service to Hawaii from four California cities in December or early 2019, Alaska CEO Brad Tilden says.

"We've competed against Southwest Airlines for a long, long time," Tilden said. "They are a very good airline but we've got to go on the field and compete."

Challenges like this, he said, make Alaska stronger.

"If I were to guess, five, 10, 15 years from now," Tilden said, "I would guess we'll have an extraordinarily strong franchise in Hawaii."

Southwest announced it will fly to Hawaii from Oakland, San Jose, Sacramento and San Diego, promising "aggressive pricing" and two free bags, but no meals and no reserved seats.

Southwest will provide inter-island service and serve Hawaii’s four primary airports: Honolulu, Maui, Kauai and the Big Island.

"We are going to lead on pricing and we are going to generate a lot of traffic very quickly,” Southwest CEO Gary Kelly told a Hawaiian newspaper.

That could quickly lead to a fare war. But Tilden doesn't seem worried, saying Alaska Airlines will "embrace" competition.

"I think the mindset has to be competition is a good thing," Tilden said.

Tilden said the airline industry in general is very competitive, noting Alaska has benefited from its own competitive expansions due to the lack of restrictions on U.S. destinations.

Both airlines rely on Boeing 737 jets as their workhorses, but Alaska will tout several things as differentiators, Tilden said, including its on-time performance, fares that are "very, very close to the low cost airlines," superior onboard service, a great mileage plan and premium cabins.

"At the end of the day, there are a lot of things to differentiate Alaska," Tilden said.

Veteran airlines analyst Helane Becker with investment firm Cowen told her clients Alaska and Hawaiian Airlines "are the biggest losers" in Southwest's Hawaii expansion.

"We expect Hawaiian to protect their turf against Southwest, while competition between Alaska and Southwest remains a major theme for both companies," Becker said.

Steve Danishek, a Seattle travel industry analyst, disagreed somewhat, saying he doesn't see much initial pressure from Southwest on Hawaiian routes because the budget airline will attract mostly "pocketbook flyers."

However, Southwest's lower pricing, combined with inter-island flights, could eventually threaten Alaska's routes over time, Danishek said.

"Alaska may have to adjust fares, or a better and cheaper response would be to offer bonus miles (double or triple mileage) to compensate customers," Danishek said.

How much could fares drop? University researchers have found when Southwest enters a market, average fares decreased by up to 24 percent.

(Andrew McIntosh - Puget Sound Business Journal)

Tuesday, May 15, 2018

EU paid Airbus billions in illegal subsidies, WTO rules

The World Trade Organization (WTO) has ruled that the European Union (EU) failed to comply with requests to end subsidies for Airbus.

The US Trade Representative (USTR) said the ruling in the dispute opens the way for placing tariffs on EU goods.

The USTR argued that European countries had given $22bn in state aid to Airbus to help launch its A380 and A350 jets, causing losses to US rival Boeing.

The European Commission said most of the disputed support ended in 2011.

It said it had "only a few" remaining things to do to be compliant and pledged "swift action" on those fronts.

What is the history of the dispute?

Tuesday's ruling in favor of the US, which brought the case on behalf of plane-maker Boeing, brings an end to a dispute which began in 2004 over $22bn (£16.3bn) in subsidized European financing for Airbus.

The WTO initially found in favor of the US in 2011. The US subsequently complained that the EU and certain member countries were not in compliance with the decision, prompting further wrangling between the two sides.

On Tuesday, the WTO dismissed an appeal by Airbus, saying the European plane maker had failed to fix the harm done to US rival Boeing.

Boeing chairman and chief executive Dennis Muilenburg said : "Today's final ruling sends a clear message: disregard for the rules and illegal subsidies are not tolerated."

A logo at the Airbus A380 assembly site in Blagnac, southern France, on March 21, 2018. 
Image copyright AFP/Getty
The EU and Airbus argued that the WTO had rejected many of Boeing's initial claims in the suit, limiting the damage.

Airbus is also waiting for the outcome of a similar WTO case challenging US government support for Boeing.

Airbus chief executive Tom Enders said : "Of course, today's report is really only half the story - the other half coming out later this year will rule strongly on Boeing's subsidies and we'll see then where the balance lies." 

What does the ruling mean?

The decision authorizes the US to retaliate against Europe with sanctions, the amount of which would be determined in another WTO decision.

Boeing said it is expecting the "largest-ever WTO authorization of retaliatory tariffs" - which would mean billions of dollars.

The retaliation can apply to a range of goods and could come as early as 2019, analysts said.

What will this do for US-EU relations?

It is rare for a dispute to reach this point. And in the past, the counter-claims over US subsidies for Boeing have kept tensions in check, averting tariffs.

But on Tuesday, US Trade Representative Robert Lighthizer threatened further action.

"Unless the EU finally takes action to stop breaking the rules and harming US interests, the United States will have to move forward with countermeasures on EU products," he said.

The Trump administration may decide to use the decision as leverage to advance other goals, said Chad P. Bown, a senior fellow at the Peterson Institute for International Economics in Washington.

The White House is currently negotiating with the EU over steel and aluminum tariffs. The US has also expressed frustration over tariffs placed on US goods such as automobiles.

"This has the ability to get complicated," Mr Bown said.

The leverage would be short-term, depending on the outcome of the case against the US, he added.

Analysis by Theo Leggett

The WTO panel has issued a ruling, and both sides have claimed victory. To anyone who has followed the ins and outs of this A380-sized trade dispute over the past 14 years, that will not come as any surprise.

Boeing and the US are trumpeting their view that it shows "disregard for the rules and illegal subsidies is not tolerated". Meanwhile Airbus is portraying the decision as a "significant legal success" because many of Boeing's original complaints have been dismissed along the way.

And still grinding through the WTO machinery is a separate complaint the EU has filed against Boeing over allegedly illegal subsidies from Washington State, the US Department of Defense and NASA.

The reality is that developing large aircraft requires huge amounts of money - and the best source of that, one way or another, is governments. It isn't only happening in Europe either. Russia and China, for example, are both funding major civil aircraft programs.

In fact, this dispute looks increasingly like a relic of the days when Boeing and Airbus enjoyed a cozy duopoly, and could afford the distraction of years of complex litigation.

(BBC Business News / Yahoo News)

Southwest Airlines Suffers Multiple Headwinds, Down 20% YTD

Shares of Southwest Airlines LUV have declined 20.2% so far this year, underperforming the industry’s decrease of 12.5%.
The back-to-back in-flight glitches put Southwest Airlines (LUV) in a tight spot. Further adding to its woes are the rising fuel costs.

Reasons Behind the Plunge

Southwest Airlines has been grappling with numerous challenges right from the onset of 2018. It all started with the winter storm Grayson in January, causing multiple flight cancellations and hurting the company’s top line. The destruction continued unabated with successive nor’easters striking in March, further dampening the situation.

The storms resulted in huge revenue loss for the company.The adverse effects were partly witnessed in first-quarter results wherein the low-cost carrier reported lower-than-expected revenues. Also, passenger revenue per available seat mile (PRASM: a key measure of unit revenues) slid in the period. Also, a tragic incident of April resulted in large-scale dissatisfaction among the customers as the carrier made an emergency landing at the Philadelphia International Airport due to an engine failure. Consequently, one of the passengers died while seven others were injured.

Southwest Airlines has been struggling with low bookings ever since this fatal incident. In fact, the carrier provided a bearish view on unit revenues for the second quarter due to the same reason. It expects revenue per available seat mile (RASM: a key measure of unit revenue) to decline between 1% and 3%. Also, last month’s traffic results were affected by the incident. Traffic slipped 0.3% while capacity expanded 1.5%. As traffic contracted and capacity increased, load factor deteriorated 150 basis points. What's worse is that the impact from the incident is likely to linger for quite some time and recovery of the lost revenues might be a slow process.

Similar incidents have happened this May too. Earlier in the month, the carrier made an abrupt landing when one of its window panes broke. Adding to its woes, another Southwest Airlines flight had to make an emergency landing a few days ago due to pressurization issue, causing massive panic among its passengers. The successive flight horrors will possibly add to the airline’s already low demand, thereby denting profitability and revenues.

Another issue having engulfed the entire airline industry of late is the rising fuel costs. The high fuel costs are anticipated to hurt Southwest Airlines' bottom line in the second quarter. Notably, economic fuel costs are projected at $2.20 per gallon, much higher than the year-ago figure.Undoubtedly, the above negatives substantiate the company’s Zacks Rank #5 (Strong Sell).

(Zacks Equity Research - Zacks) 

Gulfstream G650 (c/n 6313) N613GD tbr N667HS

Arrives back at Long Beach Airport (LGB/KLGB) following a pre-delivery test flight on May 14, 2018.
(Photos by Michael Carter)

JAL to launch long-haul LCC in 2020

Japan Airlines will establish a new Tokyo Narita-based low-cost unit focused on long-haul routes that will start operations in 2020.

The Oneworld carrier says the as-yet unnamed carrier will operate two Boeing 787-8s and fly to destinations in Asia, Europe and the Americas.

It adds that the unit’s long-haul focus will complement the domestic and regional international services of Jetstar Japan, in which it holds a 47.1% economic interest and 33.3% voting stake.

“When JAL establishes the new LCC business, the company aims to create new demand, working along with the successful services provided by Jetstar Japan, which features domestic and short-haul international flights,” it says.

Qantas holds an equal interest in Jetstar Japan, with Century Tokyo Corporation and Mitsubishi making up the remainder.

The company that will operate the new low-cost carrier will be established in June, with details on its capitalisation to be announced at a later date. It will be a consolidated subsidiary of JAL group, and fits with its strategy of developing new business streams.

JAL’s announcement of the new carrier follows a report in Bloomberg last week quoting a senior executive who said that the premium carrier was analyzing launching a new low-cost unit.

At that time, JAL told FlightGlobal that no decision had been made, and that the analysis was part of its usual course of business.

The launch comes as rival ANA Holdings prepares to merge two of its budget brands – Vanilla Air and Peach – ahead of a planned launch on medium-haul routes in 2020.

(Ellis Taylor - FlightGlobal News)

Airbus CFO Wilhelm to Leave in 2019 Along With CEO Enders

Airbus Chief Financial Officer Harald Wilhelm will follow Chief Executive Officer Tom Enders out the door in April, deepening a shakeup of senior management as the European planemaker grapples with the future of the A380 superjumbo and a long-running bribery investigation.

Wilhelm, 52, decided “in agreement with the board of directors” that he will leave in April after 27 years at Airbus and its precursors, the Toulouse, France-based company said in a statement Monday.

While Enders said the departure signifies “no change of company strategy or equity story,” the move adds to the sense of upheaval at the highest levels of the manufacturing giant.

Harald Wilhelm, left, and Tom Enders.
(Photo: Balint Porneczi / Bloomberg)

Airbus is already searching for a replacement for Enders, who decided in December that he would leave in April. His No. 2, Chief Operating Officer Fabrice Bregier, left after being passed over for the CEO job, while Marwan Lahoud, head of strategy, departed in 2016 and sales supremo John Leahy, a fixture at the company for decades, recently retired.

Shares of Airbus fell 1.4 percent to 98.06 euros as of 9:31 a.m. in Paris.

Though not someone who was expected to ascend to the top job after 18 years spent within Airbus’s finance division, Wilhelm is regarded as a safe pair of hands and someone prepared to assert the need for discipline in reining in problem projects.

A380 Clash

The German national, who previously worked with Airbus precursor DaimlerChrysler Aerospace, played a big role in controlling spending on the A350 wide-body and was the first top executive to publicly question the future of the slow-selling A380. The A380 comments led to a clash with Leahy, who was still seeking to promote the model as the plane of the future. Bregier intervened as peace-maker. The aircraft has survived so far after a recent order from Dubai-based Emirates, but its future remains a challenge for the company without further orders.

Wilhelm’s plan to leave comes as Britain and France are investigating whether sales intermediaries, who helped the company sell planes, paid bribes to secure the deals. U.S. authorities have asked the company for information about the European probe to assess whether any of the alleged misconduct could fall within U.S. jurisdiction. Airbus has warned of “significant penalties” and newspapers have speculated that the fines could surpass $1 billion.

Smooth Transition

Wilhelm said in the release Monday that next year will be the “right time” to move on, adding that he remains “committed to the performance of the company” and will work with management to ensure a smooth transition to the next CFO.

Airbus’s board in March sought to assert control over the CEO succession as speculation mounted over whether the company would continue previous practice and appoint a French candidate to replace Enders, who is German, saying it would make the choice known by the year’s end but not comment before then.

The manufacturer, whose two biggest shareholders are the French and German governments, has hired a consultant to help with the process, and plans to submit the choice to investors at its 2019 annual meeting when Enders, who turns 60 in December, will step down.

The succession became clouded when Airbus appointed helicopters chief Guillaume Faury to head the commercial aircraft business, raising the possibility of the group’s two top jobs being held by French nationals. Faury remains a possible internal appointee for CEO.

Airbus picked an external candidate, Eric Schulz from Rolls-Royce Holdings Plc, to succeed Leahy, highlighting how the company is keen to inject new blood.

(Phil Serafino and Christopher Jasper - Bloomberg Business)

Sichuan Airlines co-pilot 'sucked halfway' out of cockpit, captain says

The co-pilot of a Sichuan Airlines flight that was forced to make an emergency landing on Monday was "sucked halfway" out of the plane after a cockpit windshield blew out, media reported, citing the aircraft's captain.

Workers inspect a Sichuan Airlines aircraft that made an emergency landing after a windshield on the cockpit broke off, at an airport in Chengdu, Sichuan province, China May 14, 2018.
(Picture: Reuters / Stringer / TPX Images of the Day)

Liu Chuanjian, hailed a hero on social media after having to land the Airbus A319 manually, told the Chengdu Economic Daily his aircraft had just reached a cruising altitude of 32,000 feet when a deafening sound tore through the cockpit.

The cockpit experienced a sudden loss of pressure and drop in temperature and when he looked over, the cockpit's right windshield was gone.

"There was no warning sign. Suddenly, the windshield just cracked and made a loud bang. The next thing I know, my co-pilot had been sucked halfway out of the window," he was quoted as saying.

"Everything in the cockpit was floating in the air. Most of the equipment malfunctioned ... and I couldn't hear the radio. The plane was shaking so hard I could not read the gauges."

The co-pilot, who was wearing a seatbelt, was pulled back in. He suffered scratches and a sprained wrist, the Civil Aviation Administration of China said, adding that one other cabin crew member was also injured in the descent. None of the plane's 119 passengers were injured.

The Civil Aviation Administration of China (CAAC) said France's BEA accident investigation agency and Airbus would send staff to China to investigate, according to CAAC News which is affiliated to the aviation regulator.

Sichuan Airlines Flight 3U8633 left the central Chinese municipality of Chongqing on Monday bound for the Tibetan capital of Lhasa. It made its emergency landing in the southwest city of Chengdu.

"The crew were serving us breakfast when the aircraft began to shake. We didn't know what was going on and we panicked. Then the oxygen masks dropped... We experienced a few seconds of free fall before it stabilized again," an unnamed passenger told the government-run China News Service.

"I'm still nervous. I don't dare to take an airplane anymore. But I'm also happy I had a narrow escape."

The windshield shattered about half an hour after the plane had taken off, the Chengdu Economic Daily said. A separate report said the aircraft had accumulated 19,912 flight hours since entering service at Sichuan Airlines in July 2011.

CAAC also said that the windshield was part of the original aircraft and had no previously recorded faults.

Incidents involving cracked windshields do happen on a regular basis due to bird or lightning strikes but ones involving entire windshields coming off are rare.

In 1990, one of the pilots on British Airways Flight 5390 was blown partially out of the cabin window after its windshield blew out at 23,000 feet. He survived the incident, which occurred on a BAC-111 jet. 

(Brenda Goh - Reuters)

Saturday, May 12, 2018

US jets intercept Russian bombers off Alaskan coast

US fighter jets intercepted two long-range Russian "Bear" bombers in international airspace off western Alaska, the North American Aerospace Defense Command said Saturday.

The long-range Tupelev Tu-95 bombers were "intercepted and visually identified" Friday morning by a pair of F-22 Raptors as the Russian aircraft flew just north of Alaska's Aleutian islands, said Canadian Army Major Andrew Hennessy, of NORAD public affairs.

"At no time did the Russian bombers enter North American sovereign airspace," Hennessy said in a statement to AFP.

He added that the Alaska-based US jets monitored the Russians until the bombers left an area known as the Air Defense Identification Zone along the Aleutians, heading west.

That zone extends about 200 miles (322 kilometers) from the coastline, mostly in international airspace.

Saturday marks the 60th anniversary of the founding of NORAD, a joint US-Canadian command charged with aerospace warning and control for North America.

In April 2017, NORAD and the Pentagon said Tu-95 "Bear" bombers -- four-engine Cold War-era turboprop giants that can carry nuclear weapons -- were spotted in international airspace on three occasions -- twice near the Aleutians and once near mainland Alaska and Canada.

That was the first sighting of such Russian long-range bombers around Alaska in about two and a half years, a Pentagon spokesman said at the time.

- 'Unsafe' interception -

Tensions between Russia and the United States and its NATO allies are running at levels not seen since the Cold War.

The Alaska incident comes after a Russian Sukhoi Su-27 fighter jet buzzed a US Navy P-8 Poseidon surveillance plane in international airspace over the Baltic Sea, US media reported, citing the US Navy.

Earlier, on January 29, the US Navy released video of a Russian Su-27 intercepting a US EP-3 Aries surveillance plane in international airspace over the Black Sea.

The interception, which lasted two hours and 40 minutes, was "unsafe" because the Russian jet was "closing to within five feet and crossing directly" through the surveillance plane's flight path, "causing the EP-3 to fly through the Su-27's jet wash," the US Navy said in a statement.

NATO naval officials in late 2017 also reported Russian submarines probing underseas data cables in the North Atlantic.

US Defense Secretary Jim Mattis said in January, as he unveiled the Pentagon's national defense strategy, that the United States is facing "growing threats" from Russia and China, and he warned that the US military's advantages have eroded in recent years.

(AFP News / Yahoo News)

US, Emirates strike deal resolving airline spat

The United States and the United Arab Emirates signed a deal Friday to resolve a years-old spat over alleged Emirati government subsidies to its airlines and accusations of unfair competition in the U.S.

After months of negotiations, a deal was reached that was carefully constructed to allow both sides to claim victory. Yet in a sign of how testy the issue has become, the Emiratis and the U.S. airlines immediately disagreed about what the deal said about the most controversial issue: flights to the U.S. that don't stop in the UAE.

The deal was signed in private at the State Department by Assistant Secretary of State Manisha Singh and Emirati Ambassador to the U.S. Yousef al-Otaiba. The State Department declined to comment. The Associated Press obtained the text of the agreement, known as a "record of discussion."

Under the deal, Dubai-based Emirates and Abu Dhabi-based Etihad Airways agreed to voluntarily open up their accounting books by publishing annual financial statements "consistent with internationally recognized accounting standards." The major U.S. carriers — Delta Air Lines, American Airlines and United Airlines — have long alleged those financials obscure billions in hidden subsidies by the Emirati government.

The more sensitive issue related to so-called "Fifth Freedom flights" in which passengers can fly to or from the United States to third countries without ever setting foot in the UAE.

The U.S. airlines had sought a "freeze" — a binding commitment that they wouldn't offer any more Fifth Freedom flights — from the Gulf airlines. Instead, they got a side letter in which the Emiratis state they currently have no plans to add more of the flights. Currently, Emirates offers flights directly from New York-area airports to Milan, Italy, and Athens.

Otaiba, the Emirati ambassador, called that a victory, because Emirati airlines would remain "free to continue to add and adjust routes and services."

"The UAE is very pleased that our understanding with the U.S. preserves all of the benefits of Open Skies for travelers, airlines, communities and aerospace companies in both countries and around the world," Otaiba said, referring to the so-called open skies agreements that govern international civilian air travel.

Not so, said Scott Reed of the coalition representing the big three U.S. airlines.

"This agreement will freeze Emirates and Etihad Airways from adding additional direct flights from the United States to Europe and Asia," Reed said in a statement.

The reality is somewhere in between. In the side letter, the Emiratis do not explicitly promise never to add more such routes, but simply indicate none are planned. Still, the agreement rests on a tacit understanding between the U.S. and Emirati governments that more routes won't be added, several individuals familiar with the negotiations said.

The deal is expected to be announced Monday when the Emirati foreign minister visits Washington, according to a State Department official, who wasn't authorized to speak to reporters about the agreement and requested anonymity.

The U.S. airlines can also point to language included in the agreement that affirms their longstanding claim that Emirati government subsidies are hurting their business. The agreement says that both sides agree "that such government support in whatever form may adversely impact competition in providing international air transportation."

That led Reed, the U.S. airlines representative, to call it a "win."

"We are extremely pleased that the UAE has finally admitted what we have said all along: that their government subsidies harm competition," Reed said.

Yet in another example of how the deal gives both sides room to say that the other side caved, it also includes language that effectively states the opposite.

"The delegations stated that government support in whatever form — including policies, practices, and rules — is neither uncommon nor necessarily problematic in the global aviation sector," the agreement says, paradoxically.

Both of the Emirati airlines have long denied receiving unfair government subsidies. The three U.S. carriers have spent huge sums over the last three years pressing the Obama administration and Trump administration for tough action, and have been eager to show a win on the issue. The airlines have hoped that if they have more visibility into the finances of the state-owned Emirati airlines, the Emiratis will no longer be able to get away with unfair subsidies.

The deal closely mirrors one reached in January between the U.S. and Qatar. For the UAE, the agreement averts the more serious step U.S. airlines wanted: re-opening the open skies treaties, which could ultimately lead to less favorable conditions for Persian Gulf airlines.

(Josh Lederman - Associated Press / San Francisco Chronicle)