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Thursday July 2, 2009

Virgin Atlantic Airways CEO Steve Ridgway said yesterday that the carrier will cut its winter capacity by 7% year-over-year, putting up to 600 jobs in jeopardy. "The outlook for the industry is as bleak as ever and all airlines are having to shrink their businesses," he said, according to press reports. "We will look to minimize the number of compulsory redundancies and ensure we treat our staff as fairly as possible." VS's London Heathrow-Chicago O'Hare service will be suspended, while flights to Hong Kong will be halved.

Shanghai Airlines hopes to maintain its membership in Star Alliance even after its merger with China Eastern Airlines, which most likely will join SkyTeam, Chairman Zhou Chi said. He noted that Shanghai needs to discuss the matter with Star airlines. "Also, whether we can maintain it or not will be up to which global airline alliance CEA joins," he said. CEA Chairman Liu Shaoyong has said internally that the carrier prefers SkyTeam, which already includes China Southern Airlines. CEA was scheduled to sign an agreement with SkyTeam last month, but it was postponed because it is "busy with merger issues with SAL."

After the merger (ATWOnline, June 16), SAL is expected to become a wholly owned subsidiary of CEA but maintain its brand. "It is important for us to operate independently. Our relationship with CEA will be just like Cathay Pacific and Dragonair," Zhou revealed. "We never expected to expand our business by relying on the merger with CEA, but the merger will produce synergies and will help build Shanghai as an international aviation hub." The carriers remain in negotiations and the specific merger plan is expected to come out this month. Zhou emphasized that the merger is being pushed by Beijing and led by CEA. "The whole merger process will have to take about 4-5 months to complete," he said.

British Airways CEO Willie Walsh said he remains committed to the A380 and "could make a case to take this capacity earlier than scheduled." BA placed an order for 12 A380s in September 2007 as part of its long-term fleet modernization, with deliveries beginning in 2012. "There is a big cost reduction compared to the 747s [we currently operate]," he said yesterday. "With fuel prices over $70 and maybe heading to $100 a barrel the difference in unit cost becomes even more distinct," he told ATWOnline during a press conference at the SITA Air Transport IT Summit in Cannes. "Also in terms of capacity, there is a case. One A380 could replace two 747s," he noted, while acknowledging that other costs associated with the introduction of a new aircraft type as well as pre-delivery financing costs would "almost certainly rule out changing the delivery schedule." All new aircraft deliveries up through 2013 are financed, he confirmed. "We are fortunate to be in this position," he said.

Walsh also conceded that BA considered postponing its new all-business-class A318 service from London City to New York JFK, which is due to commence in September. "We reviewed it in May-June last year when the first signs of the credit crunch were apparent and we expected a downturn and again in September, but research convinced us to move forward with it," he said. "We see a demand for the service, and we believe it will be a very successful venture." He admitted to this website that the new route will "of course" cannibalize premium traffic on existing Heathrow-JFK service, "but equally it will give us the opportunity to cut capacity at LHR." And, he said, if the LCY-JFK operation is not a success, "we can use the aircraft on other routes" like to Dubai or certain oil-producing destinations.

by Cathy Buyck

GECAS and flydubai reached a sale-and-leaseback agreement covering four 737-800s scheduled for delivery in the second half of this year (two this month, one in October and one in December). Aircraft are worth $320 million. Flydubai CEO Ghaith Al Ghaith said the financing is the first secured by the startup from outside the UAE. The airline expects to operate six aircraft to "around" 14 destinations by year end. Flydubai ordered 50 -800s at last year's Farnborough Airshow (ATWOnline, July 15, 2008).

Air Canada said technical, maintenance and operational support employees represented by the International Assn. of Machinists and Aerospace Workers rejected the tentative pension funding moratorium and contract extension agreement reached last month by a 50.8% margin (ATWOnline, June 17). Clerical and finance workers ratified by 93.2% and 87.7% margins respectively. AC and IAMAW "will meet promptly to discuss next steps," the airline said.

AirBridgeCargo Airlines added Milan Malpensa to its network, launching twice-weekly 747F flights to/from Moscow Sheremetyevo. ABC already operated 31 weekly flights to/from Sheremetyevo and Domodedovo linking Frankfurt, Amsterdam, Budapest and Zaragoza with Beijing, Shanghai, Tokyo Narita and Hong Kong (ATW, May 2009). The Volga-Dnepr scheduled services subsidiary also operates flights to Krasnoyarsk. ABC appointed Kales GSA as its general sales agent in Italy.

GE Aviation said it "successfully completed a customer trial of its ClearCore engine wash effluent collection system" on a Virgin Atlantic Airways CF6-80C2-powered 747-400 at London Heathrow. According to GE, ClearCore will be offered as either an effluent collection system working with "existing front-end wash equipment" or as a complete wash and collection system.

Spectralux Corp. announced that EASA certified its Dlink+ all-in-one ACARS system on the 757. FAA STC approval was granted in March.

Lufthansa CEO-Group Airlines and Corporate Human Resources Stefan Lauer was appointed chairman of the six-member board of directors at bmi effective yesterday. He succeeds founder Michael Bishop, who is leaving the board. LH Manager-Hub Development and Capacity Management-Frankfurt also was named to the board, joining Lauer, CEO Nigel Turner and Deputy CEO Tim Bye as executive directors. Lufthansa's takeover of bmi was approved last week (ATWOnline, June 23).