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United Beats Wall Street Expectations Despite 737 MAX Delays

January 21, 2020 /

CHICAGO (Reuters) – United Airlines Holdings Inc <UAL> on Tuesday beat Wall Street estimates for quarterly profit and held to its 2020 profit target, with a turnaround strategy overseen by its outgoing CEO underpinning growth even as the Boeing 737 MAX remains grounded.

Chicago-based United is one of three U.S. airlines cancelling more than 1,000 monthly flights in a hit to profits as the 737 MAX remains grounded following two deadly crashes in Indonesia and Ethiopia. Boeing Co <BA> said on Tuesday it does not expect approval for the 737 MAX’s return to service until mid-year, later than previously forecast.

While United has warned of a hit from the MAX grounding, it did not disclose any estimated financial impact from the fallout and stood by its full-year adjusted EPS range of $11 to $13.

Total operating revenue rose 3.8% to $10.89 billion, boosted by strong travel demand and Chief Executive Oscar Munoz’s three-year strategy to build up the airline’s flight connections through its main U.S. hubs. United President Scott Kirby will succeed Munoz as CEO later this year.

Revenue per mile flown, a closely watched industry measurement, rose 0.8% in the fourth quarter and United forecast similar growth in the first quarter given solid bookings.

However, unit costs excluding fuel and profit-sharing expenses, a concern for investors in a year of contract negotiations with pilots, rose 2.7%.

United had already announced a non-cash impairment charge of $90 million in the fourth quarter related to its Hong Kong routes, following anti-government protests in the city.

Shares of United closed 4.4% lower at $85.79 before the earnings release, tracking sharp declines for U.S. airline and travel stocks on concerns over the Wuhan coronavirus in China, which J.P.Morgan analyst Jamie Baker said poses a near-term overhang for airlines.

United did not comment on the outbreak in its results but separately said there is no impact on its operations and it remains in close contact with U.S., Chinese and other Asian authorities on safety.

United management will host a conference call to discuss results on Wednesday at 10:30 a.m. EST (1630 GMT).

Adjusted net income rose to $676 million, or $2.67 per share, in the fourth quarter to Dec. 31, from $657 million a year earlier, topping a Wall Street consensus forecast for $2.65 per share.

Fellow U.S. MAX operators Southwest Airlines Co <LUV> and American Airlines Group Inc <AAL> are due to report quarterly results on Thursday.

The three airlines are scheduling without the MAX until early June though that timeline will likely need to be pushed back following Tuesday’s guidance from Boeing.

United, which had 14 737 MAX jets in its fleet at the time of the grounding, said it plans to take delivery of 28 MAX variants in 2020 depending on U.S. regulatory approval and Boeing’s subsequent pace of production and deliveries.

Among other aircraft orders, it expects to take delivery of two Boeing 777-300’s and 15 Boeing 787’s in 2020 but has decided to assign its purchase obligations for 20 Embraer 175’s to one of its regional partners once each jet is delivered.

(Reporting by Tracy Rucinski in Chicago; Additional reporting by Dominic Roshan K L in Bengaluru; Editing by Matthew Lewis)

An American Airlines Boeing 737 MAX 8 flight approaches to land at Reagan National Airport in Washington

Trump Called Boeing CEO to Inquire About 737 MAX Production Halt

December 19, 2019 /

WASHINGTON (Reuters) – U.S. President Donald Trump called Boeing <BA> Chief Executive Dennis Muilenburg this week to ask about the status of 737 MAX production, two people briefed on the matter confirmed.

The call on Sunday was brief and Muilenburg assured Trump that the planned production halt was temporary and that the company would not be laying off any workers. The production halt, set to begin in January, was announced by Boeing Monday after a board meeting.

Boeing and the White House declined to comment on the call, reported earlier by the New York Times.

Separately, S&P Global Ratings on Thursday downgraded Boeing’s credit rating to “A-” from “A” and lowered the short-term rating to “A-2” from “A-1.”

The change “reflects the uncertainty over when the 737 MAX will return to service, the risk to the supply chain from the planned production halt, and possible long-term impact to Boeing’s competitive position.”

U.S. officials have repeatedly said they are waiting for additional answers from Boeing and have at time faulted the quality of submissions from the planemaker since the plane was grounded in March after two fatal crashes killed 346 people.

“We’ve had conversations about the importance of making sure that we are looking at complete documentation and not piecemeal documentation,” FAA Administrator Steve Dickson told Reuters in September. “It’s really better to be very methodical and very detailed rather than try to rush a partially completed product and then say, ‘We’ll get back to you with the rest of it.’”

Boeing has repeatedly said it is working with regulators to safely return the plane to service and acknowledged last week it would not occur until 2020.

Dickson said last week there are nearly a dozen milestones that must be completed before the MAX returns to service. Approval is not likely until at least February and could be delayed until March, U.S. officials told Reuters last week.

American Airlines Group Inc <AAL> and Southwest Airlines Co <LUV> have canceled flights into April because of the grounding.

(Reporting by David Shepardson; Editing by Nick Zieminski)

JetBlue Founder David Neeleman Selects Salt Lake City as Headquarters for New Airline

December 16, 2019 /
JetBlue Founder David Neeleman Selects Salt Lake City as Headquarters for New Airline

America’s newest and perhaps most innovative airline does not yet have a name, or any airplanes. But it now has a headquarters.

David Neeleman’s startup will be based in Salt Lake City, where it plans to spend a capital investment of $3.2 million and create nearly 400 jobs over the next five years, according to local authorities. In return, the state offered tax rebates worth as much as about $1.1 million over five years.

“There’s a super strong technology base, and lower cost of living than California and some of the coastal areas,” Lukas Johnson, the airline’s chief commericial said in an interview. “We want to focus more on the technology aspect of the transportation side, and it makes a lot of sense. The tech sector is booming out here.”

Click the link for the full story! https://finance.yahoo.com/news/jetblue-founder-david-neeleman-selects-195511487.html

Airline Stocks That Look Ready to Rise

November 29, 2018 /

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.

Click the link below for the full story!

Alaska and Virgin America Pilots Win Big Pay Increase

November 1, 2017 /

Alaska and Virgin America pilots have been awarded big pay increases through an arbitration ruling. The arbitration ruling awarded the pilots bigger increases than Alaska Airlines management had sought, but less than the increases sought by pilots. Senior Captains from both air carriers will see their pay increase to $251 an hour, effective today. Senior Captains at Alaska Airlines had been earning $216 per hour, while a senior Captain at Virgin America had been earning $189 per hour. That equates to an increase of 16% for Alaska pilots, and almost 33% for Virgin America pilots. While the new agreement also includes some additional improvements to retirement plan contributions, the union did lose its bid to prevent the company from flying larger regional jets.

The Alaska Air Group closed its acquisition of Virgin America in December of 2016. The merger combined two airlines that were at the top of the customer satisfaction rankings in the United States. However, Alaska’s $2.6 billion acquisition of Virgin America allowed the pilots union to re-negotiate compensation talks due to a clauses in their contract. This increase in pilot pay now comes on the heels of Alaska missing its earnings estimates last week as higher fuel price contributed to soaring costs. Revenue was also hurt by a price war in the California market, and Southwest Airlines has just announced it will soon begin service to Hawaii. The Southwest effect, the term that has been coined to reflect a drop in airfare prices anytime Southwest enters a new market, could also affect Hawaiian revenue in future quarters.

Virgin America was founded in 2004, and began operations out of San francisco International Airport in 2007. The new air carrier became the first airline in the United States to offer Wi-Fi internet on every flight in May of 2009. The airline began service to Toronto from both Los Angeles and San Francisco in June of 2010. Virgin America began flying to Dallas/Fort Worth International Airport in December 2010, and ended its service to Toronto in April of 2011. Following the repeal of the Wright Amendment in October 2014, the carrier moved their Dallas operations over to Love Field. Virgin America announced an order for 60 new Airbus A320’s, with the order split down the middle between the existing model and the NEO (New Engine Option model) in January of 2011. The Alaska Air Group has announced plans to retire the Virgin America brand sometime in 2019.

Southwest Airlines files for new service to Mexican beaches

June 2, 2016 /

Southwest Airlines has filed to offer new nonstop service from Los Angeles to 3 fabulous Mexican Beach destinations. The airline petitioned the Department of Transportation to grant it permission to operate new routes from the Los Angeles International Airport to the Mexican resort towns of Cancún, Puerto Vallarta, and San José del Cabo. Southwest Airlines is requesting to provide service twice a day to both Cancún and San José del Cabo, and once a day to Puerto Vallarta starting on November 6, 2016. The request needs extra bilateral authority from the DOT to allow the carrier to fly the routes during an interim period. The United States and México governments are still working together to finalize a new Aviation Agreement between the two countries that has already been agreed to in principle. According to some air fare trend analysis, the new competition in those three Los Angeles and México markets could drive fares down by more than 20%. Southwest Airlines already offers daily service from Los Angeles International Airport to Liberia, Costa Rica. The airline already serves four destinations in México from the United States.

southwest airlines

image from hardrock.com

To see a list of the 8 best Mexican Beaches, click this link: usnews.com

Southwest Airlines pilots suing Chicago

May 13, 2016 /

Southwest Airlines pilots are suing Chicago over a billboard they claim was banned by the city at Midway Airport. City Hall decided to bar the advertising that the Southwest Airlines Pilots Association wanted to post at the airport complaining about their lack of pay increases. In the suit, the pilots union is claiming that the City of Chicago’s refusal to allow the billboard at Midway Airport is a violation of their First Amendment rights of free speech under the constitution. The union wanted to get the billboard up prior to the Southwest Airlines shareholders meeting to be held in Chicago on May 18. The City has stated that it decided to ban the billboard due to new guidelines that were issued during the previous summer that disallow any and all political or public issue advertising at Chicago’s Midway and O’Hare airports.

Southwest Airlines pilots argue for wage increases

The advertisement that was denied showed Southwest Airlines pilots holding a sign stating “Shareholder returns: $3.1 billion; Pilot raises: $0” along side the phrase “The Pilots of SWAPA welcome Southwest shareholders to Chicago”. The city rejected the advertisement twice, including a “slightly” modified version of the phrase, according to the lawsuit. The pilots union is seeking a temporary restraining order that would allow the billboard to be posted prior to the shareholder meeting. The pilots are angry, claiming that they have not had a raise since 2011. The last contract that the pilots union had expired in 2012. The pilots union had negotiated a tentative agreement on a new contract last year. That contract collapsed when it was overwhelmingly rejected by the 8,300 members of the Southwest Airlines Pilots Association last November. The union elected a new president and selected a new negotiating committee following the rejection of the tentative deal last year.

Southwest Airlines pilots

Southwest Airlines News, St. Louis Lambert Airport

April 11, 2016 /

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 News, 737 Fleet Renewal plans

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.

Southwest airlines news

Image from www.southwest.com

Lyft partners with Southwest Airlines

April 4, 2016 /

Lyft partners with Southwest Airlines to offer bonus points. The ride services company, a competitor of Uber, is offering a new promotion for members of the Southwest Airlines Rapid Rewards program. Throughout the rest of the year, the airline will award Southwest Airlines Rapid Rewards customers with 1,100 bonus points after taking their first ride on Lyft from one of 11 different airports served by the two companies, including McCarran Airport in Las Vegas. The new program was announced last Thursday, March 31. This is the second collaboration between the two companies. Earlier this month, Lyft offered a $15 discount off of a first time ride for Southwest customers who were not enrolled in the airlines Rapid Rewards program. That offer is also good throughout the end of the year, but cannot be combined with the new offer.

Lyft Partners Airports

In addition to McCarran Airport in Las Vegas, the promotion is also valid at the following airports:

  • Austin, Texas
  • Chicago, Illinois (Midway Airport)
  • Dallas, Texas (Love Field)
  • Los Angeles, California (LAX)
  • Louisville, Kentucky
  • Nashville, Tennessee
  • Oakland, California
  • San Antonio, Texas
  • San Diego, California
  • Washington, DC (Reagan Airport)

Lyft is currently the second biggest ride service company in the US. This deal with Southwest follows one announced in February between Uber and American Airlines. That deal also offered incentives for rides to members of the airlines AAdvantage program.

Lyft partners

Check Lyft out at www.lyft.com

Virgin America puts itself up for sale

March 31, 2016 /

Virgin America has reportedly put the airline up for sale. News first broke that the airline was shopping for bidders last week. It is rumored that Virgin America investors are ready to cash in now that airline stocks are trading at elevated levels. The time may be right for those investors to get out, as the airline has struggled with intense compitition and low fares on the routes that it serves. Virgin America has been an easy target for its competitors to engage in these battles, as the air carriers small size means there are fewer routes for them to compete on. The recent additions of Honolulu and Kahului in Hawaii only brings the airlines total up to 24 airports in the US and Mexico. The decision by the airline to move its base of operations in Dallas from DFW to Love Field was also viewed as a very poor idea. The airline is being squeezed at Love Field by gate space capacity, with only two available for their use. Southwest Airlines’ Bags Fly Free and no cost ticket change or cancellation policies has made it even tougher to compete there. American Airlines was a competitor that Virgin was far better matched up against from a fare and service standpoint.

Virgin America bidders

Alaska Airline and JetBlue are said to have already made offers for Virgin America. A merger with JetBlue is believed by the street to be the best match. Its hubs in the East include Boston, Fort Lauderdale, New York (JFK), and San Juan Puerto Rico. The only JetBlue hub in the West is based in Long Beach, California. Virgin America has 2 hubs in the West, at San Francisco (SFO) and Los Angeles (LAX). JetBlue also operates the same types of Airbus aircraft as Virgin America, improving crew and maintenance synergies. The two carriers also offer a higher quality of passenger service, with both ranking high in consumer satisfaction polls. The fit with Alaska Airlines is viewed as having less benefit from a route overlap view. However, with both carrier networks primarily based on the west coast, a merger between the two could help Alaska Airlines reduce seat capacity and improve ticket prices. Alaska Airlines has been under pressure from Delta Air Lines, which has been aggressively expanding in Seattle where Alaska is based at. Other airlines may still decide to place a bid as well, so it looks like time will tell what happens with Virgin America.

Virgin America

Image from www.virginamerica.com/

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