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.
(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
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.
Click the link below for the full story!
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)
A funny thing happened to an older generation of Boeing Co. 747 jumbo jets on their way to dusty oblivion in desert parking lots.
Instead of being scrapped, the humpbacked planes are back in demand as workhorses of global shipping. Booming trade is stoking the need for big, long-range jets to haul time-sensitive goods, from Apple Inc. iPhones made in China to fresh flowers grown in Latin America.
Click the link below for the full story!
Boeing 747’s back from the dead
The first major construction project under the nearly $1 billion National Air and Space Museum overhaul got a big boost this week with contributions from eight major airlines — a rare moment of camaraderie in the industry.
Click the link below for the full story!
United Airlines is facing increased competition from its arch-enemy Emirates at its Newark Liberty International Airport hub.
Click the link below for the full story!
United Airlines facing increased competition
Aeromexico has held preliminary talks to take some Bombardier CSeries jets orders from Delta Air Lines, which owns a stake in the Mexican carrier, to avoid possible U.S. trade duties levied on the planes.
Click the link below for the full story!
Aeromexico eyes Delta’s CSeries jets
Southwest Airlines News, gate expansion at the St. Louis Lambert International Airport. The airport has undergone new renovations since it lost the Trans World Airlines hub following its acquisition by American Airlines back in 2001. The new look includes a paint scheme and chairs sporting the colors of Southwest Airlines, which now dominates the airports traffic these days. In fact, Southwest is operating so many flights out of St. Louis now that it will be opening 2 new gates this week. The new gates reflect Southwest Airlines new dominance over the airport. It occupies all of Terminal 2, and controls nearly half of the airports passenger traffic. The 2 new gates, numbered E31 and E33, are expected to handle 12 flights a day in the beginning, expanding to 16 in June when new flights are added to Cleveland, Oakland, and Portland, Oregon. This will give Southwest more than 100 daily departures to over 40 nonstop destinations from St. Louis.
Southwest Airlines plans to use some of the extra revenue it has generated the last few years to accelerate its fleet renewal plans. Southwest ended 2015 with 704 aircraft in its fleet, including the addition of 19 new Boeing 737-800 and 24 Boeing 737-700 aircraft. It also retired 4 of its older Boeing 737’s during the year. In December, the company updated its planned delivery schedule to include 33 more 737-800 planes, and converted its remaining order of another 25 737-700 aircraft to the 737-800 model. The updated delivery schedule is estimated to increase their aircraft capital expenditures by $400 million going forward. Southwest Airlines currently has an average aircraft age of 12.4 years. This leads its US competitors United Airlines, which has an average age of 13.6 years, and Delta Air Lines with an average age of 17.1 years. American Airlines now has the best average fleet age of the big four, coming in at 11.2 years. Southwest Airlines reported a net income of $2.4 billion in 2015, a massive increase over the $1.4 billion it reported in 2014.
Image from www.southwest.com
© 2024 WELCOME TO WWW.PLANESINTHEAIR.COM
Theme by Anders Noren — Up ↑