Archive for 2007
November 27, 2007
Virgin America on Monday named former American Airlines global sales vice president David Cush to succeed Fred Reid as chief executive of the low-cost start-up carrier.
Cush will take over from Reid on December 10, completing a requirement by US transportation regulators that Reid relinquish his post after the company launched service. It did so in August.
Reid said in an interview that Virgin America was not required to clear Cush’s name with regulators but did give the Transportation Department a courtesy “heads up” about his selection.
Reid said a search committee of investors and executives, not including him, did most of the work and settled on Cush, who spent two decades at American where he worked with Reid and Virgin America’s chairman, Donald Carty. Carty is a former chief executive of American.
“This was a professional search,” Reid said.
British entrepreneur Richard Branson’s Virgin Group has branded Virgin America and helped finance its initial operations, prompting unusually close government scrutiny and complaints from industry rivals that Branson’s interests were really in control of the company in violation of US law.
In addition to requiring that Reid step down because of his ties to Branson and the international business community, regulators also required changes in Virgin America’s investment and ownership structure.
Reid and Cush, in a separate interview, said Virgin America has complied with Transportation Department requirements since applying to operate nearly two years ago.
Cush said he took the job with no reservations and he believes the ownership controversy, especially the resistance from his former employer and other carriers, was to be expected. He considers the matter “water under the bridge.”
At American, Cush was responsible for global sales and distribution. He also had senior level experience in operations and alliances.
Robert Mann, an industry consultant, said Cush has vast operational experience and has close ties to Carty. But Mann also noted that Cush comes from the complex world of network carriers.
“This would be new ground for him,” Mann said.
Cush declined to discuss company specifics but said his goals were to grow the customer service focus of Virgin America.
“Doing that will make travel fun again for the passenger,” Cush said.
Reid said Virgin America’s business so far “was quite encouraging” but would not discuss operating specifics. He did say passenger load factor, a measure of paying customers, was in the “normal to high range.”
He also said oil prices nearing USD$100 per barrel is a cost issue that “we can manage” and has so far not affected Virgin America’s business model or its growth plans.
Virgin America, which is not publicly traded, flies 10 Airbus A320s and serves a handful of cities, including its San Francisco base, New York, Washington, Las Vegas and Los Angeles. It plans to add San Diego in February.
Virgin America’s chief competition is JetBlue Airways , which said last month it had felt the effect of new competition on transcontinental business from Virgin America.
(Reuters)
November 23, 2007
The workers’ council at European aircraft manufacturer Airbus disputed remarks made by management on Thursday that the weak US dollar threatened the company’s survival, according to the Berliner Zeitung newspaper.
The strength of the euro creates a problem for the company but does not threaten the planemaker’s existence, Ruediger Luetjen, chief of Airbus’s workers’ council said, according to Friday’s editions of the newspaper.
Airbus Chief Executive Tom Enders had said on Thursday the weakness of the dollar is threatening the survival of Airbus.
The dollar hit a new low against the euro, the Swiss franc and a basket of currencies on Thursday.
(Reuters)
November 23, 2007
The weakness of the US dollar is threatening the survival of European planemaker Airbus, its chief executive, Tom Enders, told employees in a speech in Hamburg on Thursday.
Workers at Airbus had to prepare for further major cost cuts to help counter the impact of the currency, he said, according to a spokesman for the company.
“The dollar’s rapid decline is life-threatening for Airbus,” Enders said in the speech. “The dollar exchange rate has gone beyond the pain barrier.”
Airbus’s entire business model had to be reviewed as “reasonable processes of adjustment” were hardly possible any more, he said, adding that management was looking at radical measures that would be introduced in coming weeks.
“There will be no more taboos,” Enders said.
All major costs would be examined, though this did not mean talk of additional job cuts and plant closures, the spokesman said.
Airbus is already shedding about 10,000 jobs and selling plants as part of its Power8 restructuring plan after delays to its A380 superjumbo drove the planemaker into a loss. Airbus says the weak dollar favors US rival Boeing.
The dollar hit new record lows against the euro on Thursday as the euro reached USD$1.4873, bringing the euro’s year-to-date gains to around 12.5 percent.
EADS acknowledged earlier this month that its controversial restructuring plans were inadequate to cope with the dollar’s slide. It said then that the aerospace group would have to find EUR1 billion (USD$1.48 billion) in new savings between now and 2010-11.
(Reuters)
Nov 20 2007
LIAT’s newly introduced special web fare is garnering significant interest from the public. Launched on November 15th 2007, the special offers discounted fares to customers who book online.
The procedure to obtain the discount fare is an uncomplicated one that requires customers to log on to the website www. liat.com, select their travel options and submit other pertinent financial information. The fares are subject to availability and it is therefore advised that persons wishing to travel should book in advance.
The initiative is just one of the areas LIAT is looking at to make travel more attractive to the everyday consumer.
Recently, the airline conducted a promotion with the Barbados Tourism Authority the “Companion Fare” which essentially offered a buy one ticket, get another free (exclusive of taxes) to persons flying into Barbados.
November 22, 2007
The US Thanksgiving air travel rush began in earnest on Wednesday with flights running smoothly for much of the day, but hitting turbulence later with storms and delays hitting some key airports.
Favorable weather throughout much of the country was the biggest plus for travelers as industry on-time performance ran at normal or near normal levels. But worsening winter conditions pushing across the Midwest and accelerated traffic volume gradually led to slow downs.
By evening, flights heading from the Northeast to Chicago O’Hare Airport, where United Airlines is based, were grounded for an hour due to weather problems.
Delays at Newark Airport in New Jersey, where Continental Airlines has a hub, approached two hours and more than an hour at New York’s LaGuardia, where US Airways has major operations.
FAA spokeswoman Diane Spitaliere said the aging air traffic control system, a point of criticism for airlines, worked efficiently, but noted the late-day delays.
“It’s all weather related,” Spitaliere said.
The 12 day November holiday travel period is the busiest of the year and a crucial revenue generator for airlines struggling to blunt the affect of sky-high fuel prices. Oil prices per barrel continue to flirt with the USD$100 mark, but fell on Wednesday, pushing industry shares slightly higher.
Carriers expect to carry some 27 million people over the period — 4 percent more than last year. Wednesday, the day before Thanksgiving, usually brings a travel rush. The real one-day crush is expected on Sunday, when travelers return home.
Delays have worsened this year due to exploding demand and airline over-scheduling at peak times. At times, the air traffic control system could not keep pace with the volume.
Airlines were nervous heading into November that worsening delays experienced during the summer rush would carry into this week. Worries were especially acute for the New York area, which handles one-third of all airline traffic.
To ease pressure on the air traffic control network, the US military cleared its coastal air space in the East for airlines from Wednesday to Sunday. Spitaliere said the FAA acquired access to it a few hours earlier than planned.
In addition, air controllers gave traffic priority to bigger airports around New York, creating some back-ups at secondary locations. The FAA also was prepared to slow flights around Boston and other New England states to ensure a smooth traffic flow in New York, if delays mounted in the East.
Service meltdowns at JetBlue and American Airlines last winter, as well as deteriorating performance over the summer, tarnished the industry’s reputation and prompted government and congressional scrutiny.
“We recognize the concern of our customers around these times and obviously there has been a lot of attention to this holiday in particular,” said Megan McCarthy, a spokeswoman for UAL, parent of United Airlines.
In anticipation of higher traffic, airlines beefed up services, staff and flight schedules. Both United and American said they have made every effort to keep delays to a minimum.
“Today, we really expect things to go smoothly. We’ve got everything in place, weather is generally good around the system,” AMR spokesman Tim Wagner said.
Airline expert Terry Trippler said carriers were determined to clean up their sullied reputations.
“This is the most pro-active I have ever seen airlines going into a holiday season,” he said. “They are hiring extra baggage handlers, extra ticket counter staffers, extra gate agents. Some even have extra planes and crews, just in case.”
(Reuters)
November 22, 2007
Canada’s Bombardier, the world’s third-largest maker of civil aircraft, said no additional carriers have said they would stop using its Dash 8 Q400 aircraft after SAS’s decision to do so.
More than half of the 160 Q400 aircraft in service around the world were grounded in September after landing gear on Q400s flown by Scandinavian Airlines Systems collapsed on touchdown in a couple of separate incidents.
Japan’s All Nippon Airways also suspended all flights using Q400 aircraft temporarily.
“We are very disappointed with SAS’s decision, particularly on the fact that the investigation is still ongoing,” Todd Young, vice president at Bombardier, told a news conference in Tokyo on Thursday.
“To this point, we have received tremendous support from other Q400 operators… We don’t expect any kind of knock-on effect to other operators.”
SAS said last week it planned to cut 230 jobs in its Swedish business, partly due to the grounding of its 27-strong Q400 fleet after three of the aircraft had crash-landed in the last two months. No one was hurt in the crashes.
Bert Cruickshank, a director of industry and airline communications at Bombardier, said the sales prospects for the Q400 remain strong, with 276 Q400 aircraft on order and 164 aircraft in operation.
Australia’s Qantas Airways recently ordered 12 Q400s and had options on 24 more, while Yemenia Airways has indicated in the past few days that it was strongly considering the Q400 for its operations, he said.
(Reuters)
November 22, 2007
Air France KLM, the world’s biggest airline by revenues, posted a stronger-than-expected 28 percent jump in quarterly profit on Thursday and said full-year operating income would rise.
Profits were powered by strong demand, especially on longer routes, and by fuel surcharges and hedging which buffered the airline from surging oil prices.
Air France KLM said operating profit rose to EUR725 million euros (USD$1.08 billion) for the three months to the end of September, while revenues of EUR6.489 billion were up 5.8 percent.
Its fuel costs rose just 1.8 percent, as overall operating costs rose by 3.6 percent to EUR5.7 billion.
The airline said while passenger revenues grew by 6.1 percent, cargo revenues fell 0.3 percent.
“The passenger activity was dynamic during the second quarter, still driven by long-haul. In cargo, the recovery in traffic levels from the end of the first quarter was confirmed, but unit revenues remain under pressure,” it said.
KLM, the Dutch arm of the company, said separately that it had ordered two Airbus A330-200 airliners and five from Boeing, including 2 777-300ER long-range planes and three single-aisle 737-700s.
A capital gain of EUR202 million on the sale of a stake in the Amadeus reservations system helped boost its pre-tax performance.
“These are excellent results, essentially due to the strength of passenger demand, but also due to a plan of cost savings,” Finance Director Philippe Calavia told journalists.
“We are not seeing any weakness in passenger demand, even with the level of fuel prices where they are today, and even with the fuel surcharges we are applying.”
The airline also said its financial charges fell sharply.
Air France KLM confirmed its objectives of a further rise in operating income in 2007/08 from last year’s EUR936 million and a return on capital employed of 7 percent after tax for the full year, up from 6.5 percent.
“The first quarter was excellent; the second quarter was very good,” Deputy Chief Executive Pierre-Henri Gourgeon said.
The Franco-Dutch airline group, formed from a 2004 merger of Air France and KLM, aims to lift its return on capital to 8.5 percent by 2009-10.
It has promised its investors it will only pursue possible mergers with other European airlines if the deals protect its medium-term financial goals.
Vice Chairman Leo Van Wijk said this week that Air France KLM had not yet decided whether to bid for either struggling Italian carrier Alitalia or Spain’s Iberia, both of which are looking for buyers.
(Reuters)
November 19, 2007 in Airline Industry
(Forimmediaterelease.net) United Becomes the First Major U.S. Airline to Offer Lie-Flat Beds in Business Class with Today’s Flight 952 Washington to Frankfurt
United Airlines’ first international aircraft to complete the company’s multi-million dollar product enhancement will take flight today from Washington Dulles to Frankfurt. With the inaugural flight, United becomes the first U.S. airline to offer 180-degree, lie-flat beds in business class on overseas flights.
“I look forward to spending time with our guests and hearing first-hand how much they are enjoying our fine dining, top-notch entertainment and most importantly, getting a good night’s rest in our new flat-bed seats,” says Graham Atkinson, United executive vice president and Chief Customer Officer, who will be on United Flight 952.
“I am excited to be on this inaugural flight and experience United’s new international business class service,” says Gene Fowler, a frequent United customer who has 1K Mileage Plus status and booked this trip to Frankfurt merely to be on the inaugural flight. “A truly lie-flat business class seat is clearly what a road warrior like me wants most when traveling overseas.”
Business class customers on United Flight 952 will dine on an appetizer of orange and ginger duck leg confit and soba noodle salad. Morel mushroom risotto and herb-rubbed chicken breast will be one of the many dinner choices created by Chef Charlie Trotter, a world-famous and legendary Chicago Restaurateur.
First class customers will begin with an appetizer of Chef Trotter’s crispy short rib wontons with organic Thai barbecue sauce and sweet and sour cucumber relish. Apricot curry braised lamb medallion is one of the main entrée courses featured on the menu.
To complement the meals in first and business class, Doug Frost, one of only three people in the world to hold both the title of Master Sommelier and Master of Wine, has selected almost a dozen wines that will be available on United Flight 952.
Following the meal, customers will enjoy a choice of more than 150 hours of on-demand entertainment from a personal 15.4” screen, including movies such as Spiderman 3, Fracture, Waitress, Shooter, Next, Wild Hogs and Catch and Release. First and business class customers will have a selection of 30 movies in all.
As part of United’s international widebody aircraft investment, United Flight 952 will also have a new First Suite, refreshed premium cabin restrooms, and new seat cushions, carpeting, digital inflight entertainment servers and LCD screens in economy.
The new international premium cabins are part of United’s strategy of providing customers with distinct products and services that they expect and value, with a particular focus on serving more frequent business travelers. United is the first and only U.S. airline to offer customers 180-degree, lie-flat seats in its first and business class cabins on its international widebody aircraft and a choice of four different seating sections – United First, United Business, Economy Plus and Economy.
About United
United Airlines (NASDAQ: UAUA) operates more than 3,600* flights a day on United, United Express and Ted to more than 200 U.S. domestic and international destinations from its hubs in Los Angeles, San Francisco, Denver, Chicago and Washington, D.C. With key global air rights in the Asia-Pacific region, Europe and Latin America, United is one of the largest international carriers based in the United States. United also is a founding member of Star Alliance, which provides connections for our customers to 855 destinations in 155 countries worldwide. United’s 55,000 employees reside in every U.S. state and in many countries around the world. News releases and other information about United can be found at the company’s Web site at united.com.
*Based on the flight schedule between Jan. 1, 2007 and Dec. 31, 2007.For media inquiries only, please send a detailed e-mail1313131313131313131313131313131313131313 to media.relations@united.com
November 19, 2007
Air France KLM wants to be a consolidator of the airline industry but will do so only if this does not hurt its medium-term financial performance, the Franco-Dutch carrier’s deputy head said.
Asked whether Air France KLM was still interested in an alliance with troubled Italian carrier Alitalia, Air France-KLM Deputy Chief Executive Pierre-Henri Gourgeon said: “Of course we are still ready to talk with Alitalia… But however interesting the matter is, we will go ahead with the project only if we have a clear vision that they will not hurt our medium-term performance.”
“If we can’t see the possibility of continuing on the path of profitability at a three-year horizon, then too bad, we will not be able to pursue this (project),” he added, in a speech at shareholders trade fair Actionaria in Paris.
Alitalia seeks a buyer for the Italian Treasury’s 49.9 percent stake in the loss-making Italian flag carrier after an auction for it collapsed in July.
Air France KLM did not take part in the original auction, citing unattractive conditions set by the Italian government, but was later named by Alitalia management as a potential buyer.
Gourgeon also repeated that Air France KLM was looking at Iberia but he declined to say whether it would join a bid battle for the Spanish carrier.
“Iberia is looking for something that could guarantee its future. They have the feeling that they need to merge with one of the big players,” he said.
“We are ready to move along with the consolidation process… After that, it is like a dance and it takes some time for the couples to form.”
Sources close to Air France have not ruled out a bid for Iberia but say any such bid would be a financial deal rather than an industrial partnership because the two airlines compete heavily on routes to Latin America.
British Airways has already expressed interest in Iberia, while Lufthansa has for months said the Spanish airline was too expensive.
On Thursday, a group of Spanish billionaires along with Spanish bank BBK made a takeover approach that values Iberia at up to EUR3.7 billion euros (USD$5.4 billion).
Gourgeon downplayed risks that surging oil prices and a weakening of the dollar could affect Air France KLM’s profitability.
He said its fuel hedging policy had been “efficient” to reduce the impact of rising oil prices and added that fuel taxes on tickets had allowed the airline to match the gradual rise in oil prices with the gradual rise in ticket prices.
The weakening of the dollar was not negative for the airline, Gourgeon said.
“When the dollar goes down, we are benefiting from it since we have more dollar costs than dollar revenues,” he said.
“But if the euro goes up against all other currencies, then this is a different matter because then it is our yen revenues and our yuan revenues that are falling.”
(Reuters)
November 16, 2007
The US government will temporarily clear military airspace for commercial use to help reduce airline congestion during holiday travel, President George W Bush said on Thursday.
The modest change is among the measures the Bush administration is taking to try and ease flight delays, especially in the eastern United States where congestion ripples through the system and grounds planes elsewhere.
Delays have worsened this year due to exploding demand and more flights stressing an aging air traffic control system.
In many cases, runways, gate services and other airport facilities have been unable to efficiently handle passenger loads during busy periods.
“Airports are very crowded, travelers are being stranded and flights are being delayed, sometimes with a full load of passengers sitting on the runway for hours. These failures carry some real costs for the country,” Bush said at the White House.
The Federal Aviation Administration and the Defense Department will open coastal air space from Florida to Maine over the busiest five days of Thanksgiving holiday travel, between Wednesday and Sunday.
The step gives air traffic controllers an automatic option for routing flights, most likely in case of bad weather. Usually, the Federal Aviation Administration must negotiate clearance with the military to use its air space on a case-by-case basis.
Thanksgiving is the busiest US travel period of the year. Airlines expect to fly some 27 million people over a 12 day period beginning on Friday — 4 percent more than last year.
Carriers are scheduling more flights at higher fares due to record fuel prices. But they also are freeing up seats and adding extra staff and planes to ensure they are not caught short if aircraft are delayed and passengers inconvenienced by weather, mechanical or other problems.
Responding to criticism of airline service, Bush proposed doubling the amount of compensation passengers receive when involuntarily bumped off flights due to overbooking. He also wants to require that airlines create legally binding contingency plans for instances when flights face long ground delays.
These changes must go through the federal rule-making process and would not take effect for several months at least, if at all.
Richard Anderson, chief executive of Delta Air Lines, told House lawmakers that airlines will do everything they can to ensure efficient travel — especially over the crowded holiday period — but are only partly responsible for the industry’s chronic congestion problem.
“The most significant contributors to customer frustration and inconvenience — systematic delays and congestion, especially in the New York area — are very much outside our control,” Anderson said.
Among other steps, he urged the Federal Aviation Administration, the Transportation Department and Congress to modernize the air traffic system to improve efficiency.
Bush urged Congress to approve legislation that would fund modernization changes but a decision on the bill is not expected until next year.
(Reuters)