Hello and welcome to our Monday Briefing for the week beginning 30 July 2018, summarising the main developments in air travel over the past week, and a look to the week ahead.
Is the aviation industry heading for its next crisis?
The notoriously cyclical aviation industry has had a relatively good run of late.
There have been some failures such as Air Berlin and Monarch, and there are others that are clearly struggling. However, the majority of major airlines have experienced consistent profitable expansion. Alitalia, of course, continues to manage to suspend economic reality and survive in a financial theme park of its own.
Buoyant demand and relatively low fuel prices combined with new aircraft have facilitated a significant number of new routes, notably on transatlantic. BA continues to add more Boeing 787 routes, with the launch of Pittsburgh in April 2019.
However, there was a string of bad news from airlines around the world last week.
American Airlines announced a 45% fall in its 2nd quarter pre-tax profit to $769m. The principal cause is its fuel bill which has increased by more than 40% (approximately $2 billion) this year.
Ryanair, whose pilots are due to strike again this coming Friday 3 August, reported a 20% fall in first quarter profit to €319 million. Ryanair cited a shopping list of fuel prices, weather, Air Traffic Control strikes and the World Cup. Ryanair has also issued protective notices to its pilots and cabin crew that it plans to cut the number of aircraft at its Dublin base this winter from 30 to 24.
Singapore Airlines, widely regarded for having a near impeccable financial track record, reported a 52% reduction in operating profit for its first financial quarter.
There were similarly subdued updates from Flybe and WizzAir. There are signs that at the very least capacity growth is moderating. Most airlines should be able to absorb higher fuel prices. However, should this be combined with a demand shock, there could be trouble ahead.
On a related note, International Airlines Group reports its 2nd quarter financial results this coming Friday.
Sunday Times: Thomas Cook mulls sale of airline
The Sunday Times has reported Thomas Cook is considering a partial sale of its airline to help pay down debt.
At Gatwick, Thomas Cook has a relatively small long-haul presence, serving Cancun, Cayo Coco, Holguin, and Orlando, It also has a number of short-haul routes. It has also built up a substantial long-haul presence at Manchester serving Boston, Cancun, Los Angeles, New York, Orlando, San Francisco and Seattle.
The Sunday Times’ track record of aviation business stories citing “industry sources” is patchy at best. However, very often these stories are deliberately leaked (with a non-denial denial on the record) to drum up interest from potential buyers.
What’s Going Wrong At Manchester Airport?
Asks the Manchester Evening News.
There is a litany of complaints about security queues, drop-off charges, car park security and treatment of disabled passengers. All credit to Manchester Evening News for producing an extensive article rather than the usual “Passengers took to social media to vent their frustration..” copy and paste tweets approach to journalism.
BA retires another Boeing 767
British Airways has retired another Boeing 767.
Aircraft registration G-BNWB flew its final flight to St Athan on Friday 27 July. The airline has not confirmed any official plans for the retirement of the aircraft, other than that the fleet will be retired by the end of the year. When the Boeing 757 was retired, BA did produce a special retro livery. The retirement of the Boeing 737 in 2015 was much more muted.
Star Alliance Advertising Campaign
The Star Alliance has released a film to highlight its proactive Connection Service.
Produced by London based agency Atomic London, it features a specially configured buggy cart driven by stunt car driver around Frankfurt airport.
Also of note this week:
The backers of an alternative “Heathrow Hub” expansion proposal have issued a pre-action letters in advance of legal action to challenge the Government’s decision to back a third runway at Heathrow. They are advised by the law firm DAC Beachcroft. This is separate to a call for a judicial review by some London councils. (Sky News)
Qantas remembers Hong Kong’s Kai Ten airport (Qantas Roo Tales)
No less than one year after its launch, IAG has announced that Vincent Hodder is to join LEVEL as its first Chief Executive. (IAG)
The Seven Deadly Sins Of Business Travel. (The Economist 1843 Magazine)
Late Post Publication Updates:
[Reserved for updates during the day.]
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