TOMORROWS TRANSPORTATION NEWS TODAY!
Barron’s says it’s going to be another good day for airlines, as a number of analysts had good things to say about stocks across the sector.
Where we were: Airlines have struggled this year, but Spirit Airlines (SAVE) upbeat fourth-quarter forecast sent shares soaring Tuesday.
Move to expand A330-900neo order book to 35 from 25 addresses Delta’s near-to-medium-term widebody needs and reinforces commitment to fuel, economic and sustainable efficiency.
Delta Air Lines is adding 10 Airbus 330-900neo aircraft to its fleet under an agreement with Airbus and Rolls-Royce, expanding its order of the next-generation widebody jet from 25 to 35. The first delivery of the state-of-the-art aircraft, which is powered by next-generation and fuel-efficient engine technology, is expected next year.
Delta will be the first U.S. airline to operate the next-generation A330-900neo, which will offer the latest in innovative design and technology for customers. It will be the first Delta aircraft to feature all cabins – Delta One suites, Delta Premium Select, Delta Comfort+ and Main Cabin. The jet also will be the first Delta aircraft to feature memory foam cushions throughout the aircraft for hours of comfort, and the first Delta widebody aircraft featuring its new wireless in-flight entertainment system in every seat.
Simultaneously, Delta has agreed to terms with Airbus to reduce its near-term A350-900 purchase commitment to a total of 15 aircraft from 25. The 10 previously on order A350 aircraft have been deferred to 2025-26 with certain flexibility rights including the right to convert these orders to A330-900s.
“The A350 has been a great success for our customers and our business,” West said. “A fleet of 15 of these world-class aircraft is the right current fit for Delta’s industry-leading global network, operational reliability and award-winning products and services.”
Delta currently operates 11 A350-900 aircraft and expects to take delivery of two A350s in 2019 and two in 2020.
In addition, Delta plans to retire older Boeing 767-300ERs in the years ahead as the aircraft reach the end of their serviceable life cycle.
Story from delta.com image from www.airbus.com
(Reuters) – The chief executive of JetBlue Airways Corp, which has made no secret of its desire to expand into transatlantic service, said on Thursday that U.S. and European regulators should review joint ventures that have allowed big airlines to dominate the market.
JetBlue CEO Robin Hayes, speaking at an airline industry event in New York, said consumers were at risk of decades of high fares because of legacy transatlantic partnerships.
JetBlue (JBLU.O), the sixth largest U.S. airline, wants to service Europe from its main hubs in New York, Boston and Fort Lauderdale, Florida, but is concerned about challenges posed by the big three U.S. legacy airlines’ control of important foreign markets through their global alliances.
American Airlines Group Inc (AAL.O), Delta Air Lines Inc (DAL.N) and United Airlines (UAL.O) are each part of a global airline alliance that together control nearly 80 percent of the transatlantic market. The three carriers also have joint ventures with member airlines in Europe that allow them to coordinate prices and schedules and share revenues.
“We believe that regulators should be doing everything they can to make it possible for new players and new models to have a fair shot at competing,” Hayes said.
Hayes believes competition authorities in the United States, the UK and the European Union should force slot divestitures to create a level playing field for new entrants, particularly in the wake of major consolidation among U.S. carriers over the past decade.
For example, since American Airlines forged a commercial tie-up with fellow oneworld alliance member British Airways (ICAG.L) in 2010, it has merged with US Airways to become the world’s largest airline.
Such mergers have made it more difficult for younger, low-fare carriers like JetBlue to access gates and slots – as airport take-off and landing rights are known – at congested airports where the larger airlines dominate.
A handful of Europe-based budget carriers, including Norwegian Air (NWC.OL) and WOW Air, have broken into the transatlantic market, but two – Primera Air and Monarch Airlines – were forced into bankruptcy over the past year.
JetBlue argues that Mint, the carrier’s version of business class, has driven a 50 percent decline in premium fares on some competing U.S. routes. It believes it can drive a similar reduction for premium travel between the United States and Europe.
Separately on Thursday, JetBlue announced a biometric self-boarding gate for international flights at New York’s John F. Kennedy International Airport (JFK), becoming the first domestic airline to launch the use of facial recognition technology to verify passengers with a quick photo capture for international travel.
JetBlue has 14 million annual JFK customers.
(Reporting by Tracy Rucinski; Editing by Leslie Adler)
Image from www.jetblue.com
PARIS (Reuters) – U.S. carrier Delta Air Lines (DAL.N) has emerged as the probable buyer for 10 Airbus A330neo jets worth $3 billion, industry sources said, in a boost for the becalmed European model.
Airbus (AIR.PA) announced an order for 10 of the 300-seat aircraft in its latest monthly order update on Friday, but withheld the name of the buyer for the Oct. 30 deal.
Two industry sources, asking not to be named, said Delta (DAL.N) was the buyer. A third said Delta had been looking to expand an existing order for 25 A330neo aircraft.
Airbus declined comment. Delta was not immediately available for comment.
If confirmed, the deal would mark the second order for the slow-selling A330neo in as many weeks after Kuwait Airways ordered eight of the long-haul planes in mid-October.
Airbus is aggressively seeking more orders for the latest version of its profitable A330 franchise after sales of the engine-upgraded A330neo model fell short of expectations in the face of heavy competition from the newer Boeing 787.
However, industry sources have questioned how far recent orders represent net new sales for the European giant, saying they could replace at least some earlier orders for the A350.
The new-generation A350 is a longer-term bet for Airbus and competes with the 787 and Boeing 777. But one market source said Airbus was willing to give up some orders for the newer plane in order to keep the A330neo afloat and prevent production cuts.
Airbus has given cautious signals that it is prepared to be flexible in both directions when offering combinations of the A330 and A350, sources said, though it cannot afford to lose too many orders or customers for the more strategic A350 plane.
The wide-body A330neo is part of a pair of upgraded aircraft – the other being the strong-selling A321neo narrowbody – that strategists say Airbus is trying to push into the market to reduce the space for a new 220-260 seat, mid-sized jet being studied by Boeing. A decision on that project is due next year.
Airbus is especially keen to continue A330-series production because it has been a major source of profits and cash.
Airbus also needs an aircraft like the 250-300 seat A330 to offer airlines a step-up into the wide-body market from its largest narrowbody, the A321neo, which holds up to 240 people.
Without it, Airbus’s smallest wide-body would be the 315-seat A350-900, which leaves a large gap in Airbus’s portfolio above the A321neo for rival Boeing (BA.N) to exploit.
(Reporting by Tim Hepher and Tracy Rucinski; Editing by Laurence Frost and Edmund Blair)
Image from www.airbus.com
Southwest ripped American’s proposed rule change that would alter how U.S. airlines handle their routes to Cuba, calling the idea “unprecedented” in an Oct. 10 regulatory filing.
The U.S. opened up the Cuban market a few years ago and allowed airlines to apply for routes. Only 20 daily routes to Havana were allocated to U.S. airlines.
Both American Airlines Group, Inc. (NASDAQ: AAL) and Southwest Airlines Co. (NYSE: LUV) were granted routes. When an airline is awarded a route, it’s tied to that specific city. So, an airline can’t shift its route allocations to different U.S. cities to match demand.
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Southwest balks at American Airlines
SHANGHAI (Reuters) – Foreign airlines that fly on 20 popular long-haul routes to China will face fresh competitive pressure as Beijing begins to ease decade-old restrictions on Oct. 1, allowing more Chinese carriers to offer service.
The change affects about 20 percent of Chinese long-haul daily capacity, according to data compiled for Reuters by Chinese aviation data firm Variflight.
It will turn up the heat on U.S. and European carriers like United Airlines (UAL.O) and Air France KLM (AIRF.PA), which have higher costs, lower outbound demand from their countries and less cultural appeal to Chinese travelers.
“The North American and European airlines are no match for the Chinese carriers,” said Corrine Png, chief executive of Singapore-based transport consultancy Crucial Perspective, citing the majority of traffic being driven by Chinese customers.
Some have already abandoned Chinese routes, with American Airlines (AAL.O) recently planning to drop Shanghai-Chicago service after also cancelling Beijing-Chicago and describing the routes as a “colossal loss-maker” that cost it $30 million a year.
The “one route, one airline” policy had been in place since 2009; altering it now is a response to the changing aviation market, China’s Civil Aviation Authority has said.
Two of the routes, Shanghai-Paris and Shanghai-Frankfurt, already have two Chinese airlines flying them but can add one more.
‘LITTLE INFLUENCE’
Variflight’s chief data analyst, Cong Wei, said Chinese airlines controlled about 50 percent of the seats on the 20 routes, which include Beijing-Los Angeles and Shanghai-London, and had the potential for a much higher share.
These routes are divided up between state-controlled carriers China Eastern Airlines Corp Ltd <600115.SS>, China Southern Airlines Co <600029.SS> and Air China Ltd <601111.SS>.
They compete against foreign airlines including Air France KLM, Lufthansa (LHAG.DE), Air Canada (AC.TO), British Airways (ICAG.L), Virgin Atlantic [VA.UL], Air New Zealand (AIR.NZ), United Airlines, Delta Air Lines (DAL.N) and American Airlines.
An Air France KLM spokeswoman said the company was monitoring the regulation change but had “very little influence on how this rule could evolve.”
“Competition between Europe and China is already present and increasing,” the spokeswoman said. “We continue to enhance our existing partnerships to offer the most attractive products and services at competitive fares to all our customers. This is undoubtedly the best response to this eventuality.”
Delta Air Lines said China continued to be an important market for its long-term network and that it was well positioned because of its partnership with China Eastern. Air New Zealand said it was aware of the change and was constantly assessing new route opportunities.
Lufthansa, Air Canada, British Airways, Virgin Atlantic, United Airlines and American Airlines did not respond to requests for comment.
TIE-UPS
The policy would also likely hurt incumbent Chinese airlines like Air China, which under the old rules had been able to dominate the Beijing-Los Angeles route. Many Chinese airlines are already facing falling returns on their international business.
Rivals like Hainan Airlines <600221.SS>, China’s fourth-largest carrier, have been expanding their international business in secondary routes and could take on new ones, analysts said. Out of the 20 routes opening for competition, Hainan only flies between Beijing and Toronto.
China Eastern and China Southern, headquartered respectively in Shanghai and Guangzhou, are also expected to launch new routes from Beijing once the Chinese capital’s new second airport opens in late 2019, giving the two state-owned airlines secondary bases.
The opening of Beijing Daxing International Airport was a catalyst for the government’s decision to change the route policy, the Chinese aviation regulator said in May.
China Southern said it supported the policy change, while China Eastern declined to comment. Air China and Hainan Airlines did not respond to requests for comment.
Li Xiaojin, a professor at the Civil Aviation University of China, said foreign carriers could focus on developing services for the luxury end of the Chinese market or deepen recently forged tie-ups with Chinese carriers to try to retain a competitive edge.
But Li said the ultimate winner would be Chinese travellers.
“By liberalizing international air rights, airlines will put more capacity on popular routes, at hot timings … and provide passengers with safe, more convenient, more comfortable and economical services,” he said.
(Reporting by Brenda Goh; Additional reporting by SHANGHAI Newsroom; Editing by Gerry Doyle)
Warren Buffett’s Berkshire Hathaway Inc. (BRK.B) could use its controversial cash hoard to purchase Southwest Airlines Co. (LUV), according to Morgan Stanley.
In a research note, reported on by CNBC and MarketWatch, analysts at the bank noted that Berkshire now has a thing for airline stocks, over a decade after Buffett dismissed them as “the worst sort” of businesses. Within the sector, Morgan Stanley identified Southwest Airlines as the best fit, adding that the Dallas, Texas-based low-cost carrier’s “consistent earnings power,” strong balance sheet, good management, “simple” business model, low cost structure, “significant competitive advantage” and attractive price are exactly the type of characteristics that Berkshire usually looks for.
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Should Berkshire Hathaway Buy LUV?
* Q2 adjusted profit tops estimates
* Q2 revenue up 7.7 pct
* Shares rise 4.2 pct after the bell (Compares with estimates, updates shares)
July 17 (Reuters) – United Airlines raised its profit forecast for 2018 on Tuesday, as average fares and traffic both rose and it trimmed capacity expansion in the face of soaring fuel costs.
Shares of United rose as much as 4.2 percent in trading after the bell as the airline’s second-quarter profit also topped analysts’ estimates.
The third-largest U.S. airline forecast adjusted profit for the full year at between $7.25 and $8.75 per share, up from its previous range of $7.00 to $8.50 per share.
Bigger rivals Delta Air Lines Inc and American Airlines Group Inc have both cut their full-year earnings forecasts in light of rising oil prices.
The Chicago-based carrier cut its plans for capacity growth for the year to a rate of between 4.5 percent and 5 percent, a company spokesman said. It had previously forecast a range of between 4.5 percent and 5.5 percent.
The company said net income fell to $684 million, or $2.48 per share, in the quarter ended June 30 from $821 million, or $2.67 per share, a year earlier, hit by an already-flagged $105 million write-down of the value of its Brazil routes.
On an adjusted basis, the airline earned $3.23 per share, beating analysts’ estimates of $3.07, according to Thomson Reuters I/B/E/S.
Total operating revenue rose 7.7 percent to $10.78 billion, while average fares rose 1.5 percent.
Fuel costs, which accounted for a quarter of United’s total costs, surged 43.2 percent, reflecting a steep rise in crude oil prices since early 2016.
United said it paid $2.26 per gallon for aircraft fuel on average, up from $1.63 a year earlier.
Shares of the airline have risen 7.7 percent this year, compared with a 13.9 percent fall in the S&P 500 Airlines index .
(Reporting by Sanjana Shivdas in Bengaluru; Editing by Anil D’Silva)
United Airlines wants to help its most affluent travelers get to Newark International Airport a whole lot quicker.
The Chicago-based airline (NYSE: UAL) launched a helicopter service in mid-May as a transfer of sorts, charging $2,099 for up to three travelers who are looking for speedy route from Manhattan to Newark, New Jersey and vice versa.
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United Offers Helicopter Transfers to Newark
United Airlines is facing increased competition from its arch-enemy Emirates at its Newark Liberty International Airport hub.
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United Airlines facing increased competition
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