Monthly Archive for September, 2008Page 2 of 3

Alitalia…almost gone?

Published
by
Dan Webb
on September 22, 2008
in Alitalia
. 1 Comment

I’m cynical whenever I read an article about Alitalia because it seems that every one says a collapse in imminent in a couple of days but they just keep flying. But, it does seem that the end is really starting to come now. From Reuters:

As concerns about Alitalia’s ability to pay for fuel grew, it suffered its first asset seizure with the Israel Airports Authority confiscating its bank accounts over a $500,000 debt.

And then…

Fantozzi meets civil aviation authorities on Monday to see if Alitalia can retain its operating licence, and he must then decide on announcing the public tender for Alitalia’s assets.

The authority says that if there is no feasible rescue plan, Alitalia’s planes will be grounded within a week to 10 days.

This is certainly a sad situation, and honestly I think the unions can be blamed here. Their constant refusal to accept any offers last week simply made the situation worse. I can certainly understand labor negotiations, but last week it seemed pretty clear: accept the offer or instead of some layoffs, the airline closes. Now it seems that they’re more open to negotiating, but it could be too late.

We’ll have to see how things develop I guess…

Saturday Links #11

Published
by
Dan Webb
on September 20, 2008
in Saturday Links
. 1 Comment

First time I’ve made this kind of post over on this blog…still has that new blog smell. :D

  1. DayJet is dead.
  2. JetBlue is starting twice-daily service between Fort Lauderdale and San Juan. The airline will compete with Spirit on the route.
  3. Speaking of Spirit, Brett has two good posts on them this work. First, he talks about how Spirit is introducing onboard advertising, and then he talks about Spirit’s financial results.
  4. Apparently O’Hare had some flooding issues a few days ago…PlaneBuzz has the pictures.
  5. Ben is officially a featured blogger here a BoardingArea – congrats!
  6. Linking to Brett again here…Air Canada is rolling back the second checked bag fee, and WestJet is eliminating its fuel surcharge! Yay! Will the Americans follow? One hopes.
  7. Lufthansa is buying a stake in Brussels Airlines and the carrier will join Star.
  8. Alitalia’s a mess.

JetBlue: Buy on Board (Maybe); Moving Some E190s

Published
by
Dan Webb
on September 19, 2008
in JetBlue
. 3 Comments

The Calyon Security Airlines Conference was on Thursday, and apparently some interesting things came from JetBlue.

From BusinessWeek:

JetBlue Airways Corp. said Thursday it is considering launching a premium snack service, although the company hastened to add that it will still offer free snacks.

Before this service is judged I think we all need to see a menu, but I’m guessing it will probably be basic things like sandwiches. I wonder if it will be limited to only the longer flights. Anyway, I like JetBlue’s thinking. There is a big difference betweeen what JetBlue and the legacies have done. When some of the legacies took away domestic food service (and when United considered removing meals in coach on Europe flights), they took away something that was free. But JetBlue is just adding another aspect to their service. The latter results in a much kinder reaction from consumers, I think.

On another topic, JetBlue has been limiting its capacity growth lately, which can be difficult when there are aircraft on order. Well, a solution has been found. Two E190s are being leased and four sold to Azul down in Brazil. Sound familiar? It should – Azul is the latest project of David Neelman, founder of JetBlue. You can see the SEC filing here and a story on it in Flight Global here.

Winglets for the A320…and a Saint?

Published
by
Dan Webb
on September 18, 2008
in Airbus and Random
. 2 Comments

It seems that all I’ve been talking about this week is oil and winglets. :D

A few days ago Flight Global reported that Airbus is planning to test winglets for the A320 again. For those that don’t remember, Airbus attempted two winglet designs a couple of years ago, but they never went past the testing stage. The interesting part is this time around a design by Aviation Partners, the same company that makes winglets for Boeing aircraft, will be tested. If the design is successful, I think the possibility of creating winglets for this aircraft type is a huge oppurtuninty for them. We’ll just have to see how it goes.

And also – a random fact for my fellow Catholics out there. Today is the feast day of St. Joseph Cupertino, patron saint of air travelers and flight crew.

The Risks of Hedging

Published
by
Dan Webb
on September 18, 2008
in Finance and United
. 0 Comments

First, it’s great to be here at BoardingArea. Thanks to everyone who helped me get set up and transfer my old posts over to the new site!

If you read my other blog yesterday, this graph should look very familiar. As I mentioned, new EIA data was coming out, so here’s a fresh graph with spot prices for WTI Crude that go up to September 15. Quite a dramatic drop!

Yesterday I mentioned how Continental, made some hedges with the expectation that oil would continue its rise. Apparently United is in the same situation. Based on a SEC Filing from yesterday, is forecasting a $544 million loss on the hedges, all made over $100/barrel. This number can change, though as this number is based on contracts United is still holding, so current prices are used. If the price of oil goes back up, the loss goes down, but if oil goes down even more, then the loss gets worse.

Business Week has a good article about the situation, and it makes a good point: “even if United loses money on fuel hedges, it will save money because the fuel itself is cheaper.”

Anyway, I’m excited to be here at BoardingArea, and I’m looking forward to many more posts in the future.

Some Thoughts on the Drop in Oil

Published
by
Dan Webb
on September 17, 2008
in Random
. 0 Comments

Oil prices have certainly taken a tumble since they reached their peak near $150 back in July, and they are finally below $100 again. Does this mean a rosy next few moths for the airlines? Well, maybe, maybe not.

First, here’s a graph of spot prices for WTI Crude:

And now, New York Harbor Jet Fuel:

Note: Updated EIA data will be posted today so I will update the graphs later to reflect the latest drops – these graphs only go to September 9.

The recent drop in prices will help for sure – they are just around where they started this year, so basically a year of gains has been erased. But, they are still higher than they were a year ago. So at these levels the airlines will still have to deal with high fuel costs, just not as obnoxiously high as they were for part of this year.

Will there be a rollback in a fees or a reduction in fares? Possibly, but I think this will take awhile. First, I think that the airlines will wait to see what demand looks like after their capacity cuts. Another important factor is where the oil price will eventually settle.

What I want to see is what the airlines will do in terms of hedging. They might be a bit hesitant to hedge as prices might fall a bit more and they could end up paying extra. For example, take a look at this posting about some of Continental’s recent hedging. If the airlines start hedging though, it most likely means they think these prices are a bit too low and will start going up again.

Overall, I think it is more likely there will be a halt to fare additions and fare increases before we see any reductions. Either way, I am cautiously optmistic about this news, especially if oil stays at these levels, or even drops further.

Hawaiian Joins the Winglet Club

Published
by
Dan Webb
on September 16, 2008
in Hawaiian
. 2 Comments

Hawaiian may be converting to an all-Airbus long-haul fleet in a few years, but apparently it is worthwhile for the modify at least some of their Boeing 767-300 aircraft with winglets. The airline announced yesterday that is was ordering eight pairs of them, with options for seven more. Installations will begin September next year and be completed some time in 2010. I really wish the press release would include a rendering of what the planes will look like, especially what Hawaiian will paint on them, but sadly this is not the case. Here’s a link to a picture of the first 767 with winglets, though. :D

The press release states that the winglets will save about 300,000 gallons of fuel per year per aircraft. The latest price (that website updates again tomorrow) I can find for New York Harbor Jet Fuel is $3.189/gallon. That’s $956,700 in savings for each aircraft annually, or $7,653,600 for all eight aircraft.

Hawaiian also says that the winglets can improve takeoff performance, reduce engine maintenance, and increase the range, and increase the payload.

Lots of the American airlines are using winglets now – AirTran, American, Contiental, Delta, Northwest, Southwest, United, US Airways, and others.

Anyway, seems like a good move for Hawaiian.

United Raises the Second Checked Bag Fee

Published
by
Dan Webb
on September 15, 2008
in United
. 1 Comment

Well, now there are two airlines that charge $50 for the second bag – Delta and United, which just made its announcement today. The fee applies to all tickets purchased tomorrow and later for travel starting on November 10. There is one major difference between the airlines, though. Delta doesn’t charge for the first bag, but United charges $15 for it.

I really don’t think this fee makes a whole lot of sense. First, as many have said before, United markets itself as a premium carrier but doesn’t act like it. Second, the timing is bad. Airlines are still paying more for jet fuel than they did last year for sure, but with oil going down it doesn’t look as good to when oil was climbing fast with no sign of stopping. Plus, as Brett Snyder reports on his BNET blog, Singapore Airlines is reducing its fuel surcharge. Obviously these are two very different airlines, but some could wonder why one airline is raising fees while another one is lowering its surcharge.

Oh well. All I can say is if you are planning to take a couple of bags with you on your next trip, check out all of the fees before you make that booking to determine your final cost. It could change the airline you end up flying.

Great New AirTran Ad

Published
by
Dan Webb
on September 15, 2008
in AirTran
. 0 Comments

My dad spotted this while watching TV yesterday….I love it! Today’s post wil come later.

Saturday Links #10

Published
by
Dan Webb
on September 13, 2008
in Saturday Links
. 0 Comments

Wow…a milestone! Actually my 100th post was this week too.

  1. Forbes has a good story on how things with Alitalia just keep going down the drain.
  2. Could Lufthansa invest in SAS? PlaneBuzz has all the details.
  3. Another one bites the dust…this time it’s XL.
  4. There was a House hearing this week about the DHL-UPS deal.
  5. Frontier is the latest airline to join the first bag fee club.
  6. AirTran made some changes to its frequent flier program, and some of them seem pretty nice.
  7. And in case anyone was wondering, United is not going bankrupt again. Whoops.