Archive for June, 2009
June 23, 2009 — The H1N1 influenza virus could cost Delta Air Lines USD$250 million in revenue this year, which the world’s largest airline will offset by cutting capacity, its chief executive said on Monday.
“The steps we are taking have essentially involved capacity because the flu has decreased demand,” said Delta CEO Richard Anderson at the company’s annual shareholders meeting.
Airlines continue to grapple with fallout from the virus, commonly known as swine flu. The flu has compounded the industry’s other worries, namely the notable drop-off in business travel and the surge in oil prices.
During an investor conference earlier this month, Delta President Edward Bastian said the virus hurt second-quarter revenue by between USD$125 million and USD$150 million.
Delta has “significantly” cut capacity in Mexico and Latin America during the second quarter, Anderson said during the meeting, but expects to add some back later this year. Weakness in demand in Asia prompted the Atlanta-based airline to cut capacity there.
Another issue that emerged at the shareholders’ meeting was labour. A handful of retired pilots addressed Anderson and Bastian with concerns about their pension plans, which were affected by Delta’s bankruptcy which ended in April 2007.
(Reuters)
June 23, 2009–United Airlines on Monday said it would reduce the number of flight attendants by 600 because of economic weakness and lower attrition rates.
The cuts are in addition to the 1,550 flight attendant jobs eliminated last year as the third largest US airline downsized. Those reductions were achieved through voluntary layoffs, and the company said it would again offer workers voluntary exit packages.
United currently has 13,500 flight attendants. The workers are represented by the Association of Flight Attendants union.
High fuel costs and sagging demand has clobbered the airline industry as the recession erodes travel budgets. Carriers responded last year by trimming the number of seats for sale.
United said at the end of the first quarter it had reduced its mainline capacity by between 9 and 10 percent year over year. The downsizing involved cutting 7,000 jobs or 13 percent of its workforce.
Rivals Delta Air Lines and American Airlines announced further capacity reduction targets for 2009 earlier this month. Analysts expect more airlines to follow.
(Reuters)
June 23, 2009 –Signals from the flight data recorders of an Air France airliner that crashed into the Atlantic killing all 228 people on board have been located, Le Monde newspaper said on Tuesday.
But a spokeswoman from the BEA, the French air accident authority, noted that many sounds were picked up on the sea bed and investigators were not sure that what they had detected was from the flight recorders.
“It’s not the first time sounds have been heard and we will be verifying this with all the equipment we have at our disposal,” she said. “The search is continuing and we haven’t found the recorders.”
An Air France spokeswoman also said she could not confirm the newspaper report.
Le Monde said French naval vessels had picked up a weak signal from the flight recorders and that a mini submarine had been dispatched on Monday to try and find the “black boxes” on the bottom of the rugged ocean floor.
The search has been focused on the black boxes which may contain vital information that could help explain what happened when the Airbus A330 crashed into the sea en route from Rio de Janeiro to Paris on June 1.
Locator beacons, known as “pingers,” on the flight recorders send an electronic impulse every second for at least 30 days. The signal can be heard up to 2 km (1.2 miles) away.
French vessels involved in the search operation include a nuclear submarine with advanced sonar equipment and a research ship quipped with mini submarines.
The remote location in the Atlantic as well as the depth and surface of the ocean floor have made the search especially difficult and the wreckage could lie anywhere between 1 km (0.6 miles) and 4 km (2.5 miles) down.
(Reuters)
Jun 22, 2009 –The H1N1 influenza virus could cost Delta Air Lines $250 million in revenue this year, which the world’s largest airline will offset by cutting capacity, its chief executive said on Monday.
“The steps we are taking have essentially involved capacity because the flu has decreased demand,” said Delta CEO Richard Anderson at the company’s annual shareholders meeting. Delta shares were down 34 cents or 5.6 percent at $5.73 on Monday afternoon on the New York Stock Exchange. The Amex airline index .XAL was down 4.8 percent.
Airlines continue to grapple with fallout from the virus, formerly known as swine flu. The flu has compounded the industry’s other worries, namely the notable drop-off in business travel and the surge in oil prices.
During an investor conference earlier this month, Delta president Edward Bastian said the virus hurt second-quarter revenue by $125 million to $150 million. Delta has “significantly” cut capacity in Mexico and Latin America during the second quarter, Anderson said during the meeting, but expects to add some back later this year. Weakness in demand in Asia prompted the Atlanta-based airline to cut capacity there.
Another issue that emerged at the shareholders’ meeting was labor. A handful of retired pilots addressed Anderson and Bastian with concerns about their pension plans, which were affected by Delta’s bankruptcy which ended April 2007.
Source: reuters.com
Battle Over Britain Heats Up
Jun 22, 2009 — Sir Richard Branson, the billionaire owner of Virgin Atlantic Airways Ltd., said he’s ordering 10 Airbus SAS A330 aircraft worth $2.1 billion and urged the government not to bail out British Airways Plc as travel slumps.
Virgin, the biggest rival to British Airways on long-haul routes from the U.K., has agreed to buy six A330-300 planes and lease four others for use on routes to the U.S. and Caribbean.
Branson has no plans to bid for British Airways because it has too many liabilities and no paper value, he said in a Bloomberg Television interview today at London’s Heathrow airport. BA shares fell the most in more than six months.
“If they do go bust the government should let them go bust,” he said. “Just because they were once the flag carrier doesn’t mean the government should come in and bail them out.”
British Airways Chief Executive Officer Willie Walsh is cutting jobs and curbing pay after reporting a 375 million- pound ($617 million) loss for the 12 months ended March 31, the London-based carrier’s first full-year deficit since 2002.
“Willie Walsh is saying they are in a fight for survival and asking his staff to work for a month without pay,” Branson said. “These are obviously fairly desperate measures.” Asked if BA would survive the slump, he said: “I really don’t know.”
British Airways said it has no intention of seeking aid from the U.K. government.
Opposed to Aid
“There are no talks with the government and there will be no talks,” the carrier said in an e-mail1313131313131313131313131313131313131313ed statement. “We have opposed state aid and our position has not changed.”
British Airways fell 11.8 pence, or 8.7 percent, to 124.6 pence, the biggest slide since Dec. 1. The stock has declined 31 percent this year, reducing the company’s market value to 1.44 billion pounds. Virgin Atlantic is closely held.
Howard Wheeldon, a senior strategist at BGC Partners LP in London, said Branson’s comments were “aimed at creating unnecessary fear amongst BA’s investors, staff and customer base” and that Virgin itself faces similar problems.
Remarks from Walsh regarding the likely duration of the slump in air traffic and its impact on business travel risk damaging British Airways, Branson said in the interview.
‘Early Grave’
“I think Willie Walsh is talking his airline into an early grave,” he said. “It’s up to Virgin Atlantic and other carriers to go out there, to keep improving, buying young planes and competing to get passengers. We have to offer them good value for money.”
Douglas McNeill, an analyst at Astaire Securities in London, said British Airways is likely to survive the recession.
“Business travel will come back and British Airways will cope courtesy of the cash reserves it has built up when times were good,” said McNeill, who recommends buying the stock.
The airline, Europe’s third-biggest, said separately today that it will go ahead with a business-class only service from London City airport to New York beginning Sept. 29. Airbus A318s fitted with 32 flat-bed seats will operate on the route.
“In the harshest trading environment airlines have experienced, we believe it is more important than ever to embrace the future and innovate,” Walsh said in a statement. Passengers will be able to check in as little as 15 minutes before takeoff and the service will offer in-flight Web access.
Walsh said in the ‘BA News’ employee newspaper on June 18 that he sees “no evidence” of the decline in air travel bottoming out and that the outlook will be “very tough for a considerable time.” The CEO wrote that he also questions whether demand for business travel will ever recover to previous levels, particularly on shorthaul routes.
Heathrow Slots
Virgin Atlantic, based in Crawley, south of London, would take up available operating slots at Heathrow airport should British Airways collapse and is prepared to establish a short- haul airline to fill the gap, said Branson, who spoke prior to a flight to the U.S. to mark the carrier’s 25th anniversary.
The airline doubled pretax profit to 68.4 million pounds in the 12 months through February as it carried more premium passengers, it said May 26, bucking the trend among most other full-service carriers. CEO Steve Ridgway said then that 2009 will be tougher and “not about making a profit.”
Virgin will buy six A330 twin-engine planes direct from Toulouse, France-based Airbus and then sell them to Amsterdam- based AerCap Holdings NV before leasing them back, the Dutch company said in a statement. The other four jetliners will be leased direct from AerCap, the lessor said.
Virgin Fleet
Virgin Atlantic currently operates a fleet of 38 aircraft, made up of 25 Airbus A340s and 13 Boeing Co. 747 jumbo jets. The A330s will add capacity as the carrier begins services to Beijing, Vancouver and Cancun and may eventually come to replace six older A340-300s, spokeswoman Polly Durrant said by phone.
The A330-300 is a stretched version of the A330-200 model, one of which crashed into the mid-Atlantic on June 1, killing all 228 people on board. The Air France plane was en route from Rio de Janeiro to Paris.
Virgin also has orders for 15 Boeing 787 Dreamliners and six Airbus A380 superjumbos.
Source: bloomberg.com
Air Transport Association Report
Jun 23, 2009–The Air Transport Association of America (ATA), the industry trade organization for the leading US airlines, reported today that passenger revenue fell 26 percent in May 2009 versus the same month in 2008 – the seventh consecutive month in which passenger revenue has fallen from the prior year.
The number of passengers traveling on US airlines in May fell 9.5 percent while the average price to fly one mile fell 17.6 percent. Revenue declines extended beyond the mainland United States to the trans-Atlantic, trans-Pacific, and Latin markets. May results also reflect the impact of the H1N1 (swine) influenza outbreak.
Compounding the softening demand for passenger travel, US airlines saw cargo traffic – as measured by revenue ton miles – decline 22 percent year over year in April 2009, marking the ninth consecutive month of declining cargo traffic. Notably, cargo traffic in the Pacific region fell 26 percent. May 2009 cargo data is not yet available.
“In May, the H1N1 influenza outbreak compounded an already weak demand situation, negatively impacting industry cash flow and forcing a closer look at current levels of flying,” said ATA president and CEO James C. May.
Annually, commercial aviation helps drive US$1.1 trillion in US economic activity and more than 10 million US jobs. On a daily basis, US airlines operate nearly 30,000 flights in 77 countries, using more than 6,000 aircraft to carry an average of two million passengers and 50,000 tons of cargo.
ATA airline members and their affiliates transport more than 90 percent of all US airline passenger and cargo traffic. For additional industry information, visit www.airlines.org.
CASTRIES, St Lucia, June 22, 2009 – St Lucia’s Tourism and Civil Aviation Minister Senator Allen Chastanet is investigating whether regional airline LIAT has been illegally collecting taxes, and a report on the issue is expected to be ready in another three weeks.
He told a press conference over the weekend about his concern that LIAT’s current price structure is hurting travel between Caribbean countries and he questioned the Antigua-based airline’s claim that it was the level of taxation by regional governments that was contributing to its high fares.
Chastanet said he had met with the Air Licensing Committee for St Lucia and asked for a review of these taxes, noting that some of them could be illegal. As an example, he pointed to two fuel surcharges, instead of one, on a single flight.
He said the St Lucia Air and Sea Ports Authority had written to LIAT months ago, asking for one of the taxes to be removed, but there has been no change so far.
“We’re really calling on this region to take on a full examination and we will be coming up with a report in three weeks to determine whether, in fact, these taxes have been erroneously charged and to make a decision on how we deal with that matter at that point,” he said.
Chastanet also contended that LIAT should make some sacrifices, as other carriers have.
“Given the competition we have internationally and the adjustments we are seeing people make internationally in terms of airlines lowering their fare, hotels lowering their room rates, governments reducing taxes, making all kinds of efforts in concessions to try to encourage businesses to grow, we have not seen a similar pattern take place here in the Caribbean,” he said.
“LIAT has benefited from a major cash injection from three countries,” Chastanet added, making reference to the shareholder governments Barbados, Antigua and Barbuda and St Vincent and the Grenadines. “The leases on several of the planes have been written off by the Canadian government. They have no debt to carry and they are getting planes cheaper than what they could be getting at any time.”
Just last week, LIAT’s acting Chief Executive Officer Brian Challenger said the carrier was barely above water and was counting on a good summer to boost declining passenger numbers.
But Chastanet said that if the carrier was indeed barely making money, given the airfares it is now charging, it doesn’t augur well for the airline.
“I am not against LIAT. What I am against is the policy of holding onto something that has proven that it cannot be sustainable. When LIAT was under competition it lost money, it refused to change. All the competition has now been eliminated and here it is many years later and no one is able to identify one plan as to how LIAT is going to bring down its operating cost,” he said.
LIAT has had the monopoly on intra-regional travel since it purchased the assets of its competitor, Caribbean Star Airlines in October 2007.
Air Jamaica will begin a twice-weekly service from New York to Barbados on July 1, and will continue operating there until August 30.
The direct flight will be mainly transporting Crop-Over revellers taking advantage of attractive travel packages being offered in the United States and which are expected to attract many Barbadians living there.
Billed The Bajan Invasion, the travel packages start at US$500 and include three nights’ hotel accommodation, roundtrip airport transfers and government taxes.
Air Jamaica ceased flights between Barbados and New York in April, and between Barbados and Jamaica in February, citing unprofitability due to low load factors on these routes.
However, chairman of the Barbados Tourism Authority, Ralph Taylor, said last month that the airline was expected to fly between Barbados and JFK airport in New York during Crop-Over to accommodate the hundreds of Barbadians and others who come here for the annual festival.
It is expected that Barbadians will take advantage of the opportunity to travel roundtrip between Barbados and New York on Air Jamaica during the period. (GC)
June 22, 2009 –Privately-owned airline Virgin Atlantic has placed an order for 10 Airbus A330-300 aircraft, the company said on Monday ahead of an official announcement at London’s Heathrow Airport.
The 25-year old airline, controlled by Richard Branson’s Virgin Group, said the deal was worth USD$2.1 billion.
Five of the wide-body aircraft would be delivered in 2011, the other five in 2012, Virgin Atlantic said.
(Reuters)
Monday, 22/06/2009 –The worldwide travel and tourism industry was gratified to learn that the UN Secretary-General and the World Health Organization (WHO) both recommended against restrictions on travel and border closures despite the move to phase 6 pandemic status of the A(H1N1) influenza virus.
Specifically, Dr. Margaret Chan, Director-General of WHO, stressed in a statement to the press on 11 June 2009 that “WHO continues to recommend no restrictions on travel and no border closures”. On the same day UN Secretary-General Ban Ki-moon stated that “we must guard against rash and discriminatory action, such as travel bans or trade restrictions”.
The move to phase 6 is based on the geographic spread of the influenza A(H1N1) virus and is not related to its severity. The current overall assessment of the severity of the virus remains moderate.
WHO points out that limiting travel and imposing travel restrictions would have very little effect on stopping the disease, but would be highly disruptive to the global community.
In order to protect themselves and others under the current situation, individual travelers are cautioned to act in a responsible manner towards themselves, towards those around them and in the host communities of their destinations.
They should familiarize themselves with the simple prevention practices that apply in daily life and while traveling such as hand-washing and normal cough etiquette. People who are ill should delay travel plans. Returning travelers who show influenza symptoms should contact their health care provider.