Hello and welcome to our weekly aviation business briefing for the week beginning Monday 6 November 2017.
International Airlines Group Capital Markets Day
Let’s start with IAG’s annual
festival of Powerpoint Capital Markets Day which was held last Friday. We’ve summarised the main BA announcements from Friday and you can download the full deck from the IAG website.
Taking the opportunity to review again the presentations and compare notes to previous year what emerges is often these events are more interesting for what wasn’t said.
For BA, there was an underlying degree of contrition. Last year, there were plenty of suggestions that BA would trial an unbundled World Traveller fare as Aer Lingus has implemented and Alez Cruz has intimated BA would consider introducing a fare without free meals. However, there is now a promise of improved long-haul economy catering from next year and BA being “premium for everyone”. By IAG’s own admission, pitching a brand with four different classes of travel on long-haul isn’t easy, and introducing effectively a fifth class of travel is perhaps a step too far.
IAG clearly has ambitious expansion plans for its new low cost long-haul brand Level. It will announce its next European base in late November/early December. This is likely to be either Rome or Paris Orly. The “known unknown” is whether LEVEL will launch in the UK. IAG has also made it clear that all IAG group airlines will be bidding for Monarch’s Gatwick slots, so it remains a possibility.
Another clear trend from IAG’s presentations on Friday is the rise of the automated digital airport.
Self-boarding gates and self-baggage drops have long had a presence at airports around the world. Automation is moving a step further with remote controlled aircraft pushback vehicles and now robot baggage handling arms and automated jetties are under consideration. There was a time when BA’s ground operation at London Heathrow was far from an industry leading model of efficiency. With a new Chief Operating Officer at BA, Klaus Goersch (formerly or Air Canada) there seems to be a real drive to improve operational performance, which is a big driver of customer satisfaction, particularly on short-haul. Given the many tens of thousands employed in ground operations at airports around the world, the rise of automation could have a very significant impact.
Qatar Airways acquires 9.6% stake in Cathay Pacific
One late update that broke over night: Qatar Airways has acquired a 9.6% stake in Cathay Pacific. This is a continuation of its strategy of acquiring stakes in members of the Oneworld alliance. Qatar already owns 20% of International Airlines Group and 10% of LATAM. A bid to acquire a stake in American Airlines was rebuffed.
Cathay is not known for particularly deep levels of co-operation with its Oneworld alliance partners. Indeed, a joint-venture between Cathay and Qatar proved to be very short-lived before Cathay suspended Hong Kong – Doha.
The announcement has clearly caught Cathay by surprise as indicated by this statement.
Ryanair may continue to be the subject of brickbats (see Eurowing’s Halloween image above), but it posted solid half-year results with an 11% increase in both H1 profit to €1.29bn and traffic to 72m passengers.
Air France KLM reported a 38% increase in Q3 operating profit to €1,022m.
WestJet reported a 19% increase in Q3 net earnings to CAD$138.4m.
As has been widely publicised, Singapore Airlines has unveiled new Airbus A380 cabins with its new hotel style first class suites gaining the most attention.
The four new cabins will be retrofitted to 14 of its 18 existing Airbus A380s (the remaining four are to be returned to lessors) and five new A380s, yet to be delivered. The first refurbished aircraft is due to enter service by the end of this year and the refurbishment will be complete in 2020.
Whilst these products will not be fitted to other Singapore Airlines widebody aircraft such as the Airbus A350 and Boeing 777, it does show the huge PR an airline can generate (like Etihad’s A380 apartment) and the brand halo effect of a truly flagship product, even if its relatively scarce.
Emirates welcomes its 100th Airbus A380
On the subject of the Airbus A380, Emirates welcomed its 100th Airbus A380 last week. Meanwhile, Bloomberg reports that Emirates is in discussions with Airbus on a further order, which may be announced at the Dubai Air Show next week.
United says adieu to the Boeing 747
Turning to a much older, but still move loved aircraft, United Airlines will say “adieu” to the Boeing 747 on Tuesday 7 November with a special flight UA747 from San Francisco to Honolulu.
Also of note this week:
Eurowings’ new route from London Heathrow to Salzburg takes to the skies.
Etihad suspends Dallas Fort Worth from March 2018 pointing the finger of blame at American Airlines for suspending its codeshare relationship.
This is a great blog by Virgin Atlantic on how it handles VIP passengers, something airlines rarely discuss in public.
Canadian journalist Tyler Brûlé raves about the Bombardier C Series in the Financial Times.
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