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Wednesday November 18, 2009

Embraer yesterday announced Oman Air and Air Astana as new customers. Oman Air signed a contract for five E-175s plus five purchase rights, with four of the five firm aircraft slated to fly in WY colors and the fifth to be used by the Royal Omani Police. Deal is worth $177.5 million at list prices and could double if all five purchase rights are converted. First delivery is scheduled for the 2011 first quarter, Embraer said, adding that WY will be the Gulf region's first E-Jet operator. It will configure the aircraft with 12 business class and 60 economy seats. Air Astana will operate two E-190s ordered last quarter by Fort Lauderdale-based lessor Jetscape, which revealed the placement last month (ATWOnline, Oct. 19). Aircraft will seat nine in first class and 88 in economy and will deliver in the 2011 first quarter, according to the manufacturer. Air Astana President Peter Foster said, "We expect to expand our Embraer 190 fleet in the future."

Finnair was scheduled to resume "a little less than half" of its flight program today after pilots represented by the Finnish Airline Pilots' Assn. agreed to a settlement proposal submitted yesterday by a government mediator. AY was forced to cancel two full days of flying after pilots went on strike late Sunday/early Monday (ATWOnline, Nov. 17). "In addition to structural changes, we achieved through this agreement significant short-term cost savings. It has been agreed that, in addition to the 5% wage reductions, we will together pursue a 13% cut in unit costs," Finnair Senior VP-Human Resources Anssi Komulainen said, calling the settlement a "compromise solution" that included a new provision stipulating one year of redundancy protection. Deal expires on Oct. 31, 2011. AY expects to operate 75% of its schedule Thursday and the entirety Friday. It canceled more than 500 flights.

Indian government has "assured support" and promised a INR4 billion ($86.5 million) equity infusion to Air India by January, parent National Aviation Co. of India said yesterday. "Further installments would be tied up to the milestones of savings effected on account of cost-cutting exercise[s] adopted by the national carrier at various levels," NACIL said, adding that it plans to "aggressively rationalize its fleet size and network. . .in the coming months" (ATWOnline, Nov. 13). AI last week announced a INR55.48 billion loss in its fiscal year ended March 31 (ATWOnline, Nov. 13) and faces a Nov. 24 strike deadline set by pilots upset about (ATWOnline, Nov. 9) the withdrawal of allowance and incentive payments. NACIL said it is "trying to address" those issues "in view of the improved passenger carriage in recent months" and hopes to make its October incentive payments "shortly." An "improved booking position" for December also prompted the company to announce a plan to "clear the arrears to various vendors."

AI said it flew 770,000 domestic passengers in October, up nearly 17% year-over-year, and that its October load factor of 72.8% was 5.3 points higher than September's. It warned, however, that revenue is "still not of the order which can help generate surplus."

US Transportation Security Administration issued a Notice of Proposed Rule Making that would "establish security requirements for maintenance and repair work conducted on aircraft and aircraft components at domestic and foreign repair stations" and make the repair stations subject to US Dept. of Homeland Security inspections that could lead to decertification. The agency said "increased security protections" would be achieved by mandating that FAA-certificated repair stations "adopt and carry out a standard TSA security program to safeguard the security of a repair station, the repair work conducted and all aircraft and aircraft components at the station."

Under the proposed rule, TSA "must complete" security reviews and audits of foreign repair stations within six months of adoption. If deficiencies are found, a repair station would have 90 days to make corrections or face decertification. "This rulemaking guards against the potential threat of an aircraft being destroyed or used as a weapon," TSA Office of Security Operations Assistant Administrator Lee Kair said. Under the proposed rule, repair stations would be required to implement "strict access controls." The NPRM will go through a 60-day public comment period.

Lufthansa is looking at "using some elements from the LCC business model," Passenger Airlines CEO Christoph Franz was quoted as saying this week in several German newspapers. "We have to create additional markets through lower fares." Last week Air France simplified its European product in an effort to lower costs and drive efficiencies, and Franz said LH is considering adding more seats to aircraft serving domestic and continental routes and reducing the amount of onboard service. It currently offers up to six different catering options, from a snack to full dinners. "These make planning complicated. It is expensive," he said. He told Frankfurter Allgemeine Zeitung that LH has lost European market share and that "maybe we underestimated the brutality of competition from the LCC." He said he does not expect much market improvement in the next year and that "we cannot subsidize loss-making connections with profitable long-haul routes. . .We are able to sell a lot of tickets, but we are not able to increase prices."

Jazeera Airways reported a KWD762,745 ($2.7 million) third-quarter profit, down 53.2% from the KWD1.6 million earned in the year-ago period, according to a filing with the Kuwait Stock Exchange cited by several press reports. Revenue rose 4% year-over-year to KWD15.9 million on a 65% lift in passenger numbers to 582,490. "Our performance is picking up again following the expected impact from the restructuring of our network from a dual hub operation to a single hub operation earlier in the year," CEO Stefan Pichler told Arabian Business, referring to the closure of its Dubai hub. "The realignment of our network and some product enhancements, such as the launch of our new Jazeera business class, has yielded profitability in this quarter." Nine-month loss of KWD1.5 million was a reversal from the KWD1.5 million profit last year.

Gulfstream International Airlines reported a $3.5 million third-quarter loss, a 13.5% improvement from the $4.1 million deficit posted in the year-ago quarter. The Fort Lauderdale-based regional suffered a 7.3% year-over-year decline in revenue to $19.5 million but its operating loss narrowed to $2.9 million from $4.4 million last year. Nine-month loss of $567,000 compared to an $8.9 million deficit in the year-ago period. The airline said it plans to "aggressively pursue strategic expansion opportunities in strong regional markets that capitalize on current industry turmoil by filling regional market voids with right-sized aircraft as major airlines eliminate service or reduce capacity," and is starting with a focus on Pittsburgh. It intends to add 4-8 destinations from the airport starting in the 2010 first quarter.

United Airlines announced the issue of $810 million in enhanced equipment trust certificates comprising two classes due in 2016 and 2017 respectively that it said will generate $290 million in new liquidity. It will use remaining proceeds to repay at par $493 million in equipment notes related to its 2000-02 trust certificates. It said principal payment obligations will be reduced by some $225 million next year and by $175 million in 2011.

Horizon Air and the Assn. of Flight Attendants announced a tentative agreement on a proposed two-year labor accord covering 548 cabin staff. Union members will vote by Dec. 21.

LAN Airlines is "looking at all the possibilities around" for potential mergers or acquisitions, COO Ignacio Cueto told Bloomberg News. "We are window shopping," he said. "There is nothing concrete."

Gol joined the Sustainable Aviation Fuel Users Group, which now has 10 airline members.

SAS Group Airlines flew 2.32 billion RPKs in October, down 13.5% from the year-ago month. Capacity fell 18.6% to 3.11 billion ASKs, lifting load factor 4.3 points to 74.3%. SAS Scandinavian Airlines flew 2.13 billion RPKs, down 14.6%, while capacity was cut 20.1% to 2.83 billion ASKs. Load factor rose 4.8 points to 75.4%.

Turkish Airlines flew 33.08 billion RPKs through the first 10 months of 2009, up 15.1% year-over-year. Capacity rose 20.9% to 46.28 billion ASKs and load factor dropped 3.6 points to 71.5%.

Norwegian said October yield fell 11% year-over-year to NOK0.63 (11.28 cents) and unit revenue was down 12% to NOK0.49. It flew 969 million RPKs during the month, up 19%, against a 20% lift in capacity to 1.24 billion ASKs. Load factor slipped 1 point to 78%.

Bombardier's CSeries program took another step forward this week when construction began on a wing manufacturing facility in Belfast. The 600,000-sq.-ft. factory will be built in two phases, incorporating an existing structure. First test wing is expected in 2011. The first test fuselage barrel arrived at Bombardier's Saint-Laurent facility in August (ATWOnline, Aug. 25) and ground was broken the following month on the CSeries manufacturing center in Mirabel (ATWOnline, Sept. 16). Service entry is expected in 2013.

Goodrich Corp. signed an LOI with Emirates covering the provision of evacuation system MRO on EK's A380s.

GE announced that Kuwait Airways selected GE Sensing & Inspection Technologies' XL Go videoborescope for its remote visual inspection needs.