Monday Briefing – 6 May 2019

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Eurowings Halloween Barb (Image Credit: Eurowings)
Eurowings Halloween Barb (Image Credit: Eurowings)

Welcome to our Monday Briefing for the week beginning 6 May 2019.

18 months or so when Ryanair was on the receiving end of another periodic bout of public opprobrium, Eurowings posted the image above on social media as its Hallowee’n fancy dress outfit.

Ryanair is having the last laugh. In publishing its quarterly results last week, Lufthansa Group revealed an overall loss of €342m. Of its airlines, only SWISS was profitable and there were widening losses of €256m and €99m respectively at Eurowings and Austrian Airlines.

Eurowings has a complex history and operation with multiple air operating certificates. It has grown to become one of Europe’s biggest low cost airlines largely from the transfer to it of Lufthansa short-haul routes outside of Frankfurt and Munich (including routes to many cities in Germany at Heathrow), low cost long-haul flights initially from Cologne in 2015, and the acquisition of aircraft from Air Berlin in 2018.

Austrian Airlines is also feeling significant competitive pressure from the rapid expansion of Laudamotion, LEVEL and Wizz Air in Vienna.

To address this Lufthansa is focusing on improving productivity at Eurowings. It will also launch long-haul flights at Frankfurt later this year. Austrian Airlines is also to reshape its network and simplify its fleet, with a greater focus on Vienna.

There was a similarly downbeat outlook from Air France-KLM which reported a widening loss of €320m for the first quarter. International Airlines Group will report its quarterly results this coming Friday.

Heathrow Third Runway Judicial Review

As has been widely reported, the Mayor Of London, a number of London Borough Councils and Heathrow Hub Ltd have lost judicial review proceedings in the High Court against the Secretary of State For Transport concerning the decision to allow a third runway at Heathrow.

A judicial review concerns not so much the merits of the third runway at Heathrow but rather whether the Government acted lawfully in reaching its decision. It is a difficult test to meet and these cases are not easily won.

There are two judgments handed down by the High Court. One judgment is in the case brought by the Mayor Of London and London Borough Councils. A second judgment in the case brought by Heathrow Hub Ltd.

Few will probably be inclined to even begin reading either of the judgments, but a cursory scan of the cast of thousands involved, and their sheer length, illustrates just how complex airport policy and planning issues are.

Rolls-Royce Trent 1000 Engines Update

Airlines are continuing to suffer from the impact of the grounding of Boeing 787s and additional maintenance to Rolls-Royce Trent 1000 engines. At present, around 35 aircraft are grounded worldwide.

Rolls-Royce provided an update to investors last week, confirming that it has now settled compensation claims with airlines. Rolls-Royce has previously advised that the cash cost of disruption, which includes compensation, is £1.5bn. Rolls-Royce also expects the number of grounded aircraft to be in the single digit range by the end of 2019. Should this not be the case, IAG has made it clear this will have a significant impact on its long-term relationship with Rolls-Royce.

We continue to implement the fixes to improve the health of the Trent 1000 fleet. Retrofits of the new design of the Intermediate Pressure Compressor (IPC) blade for the Package C variant are underway. Additionally, inspections of Trent 1000 TEN High Pressure Turbine Blades (HPTBs) are progressing and work continues on testing a redesigned HPTB for the Trent 1000 TEN ready for introduction into the fleet in early 2020. Based on our current understanding of the situation and fleet management plan, our guidance for in-service cash costs on the Trent 1000 in 2019 and 2020, as published with our 2018 Full Year Results on 28 February, remains unchanged.

In case you missed it:

BA has unveiled its new Club lounge at New York JFK. BA’s press photographer is flying to New York today to photograph the lounge so more photos should be available shortly. (London Air Travel)

BA introduces new M&S Buy On Board short-haul menus. (London Air Travel)

BA adds third party lounge access at more airports on its short-haul network. (London Air Travel)

BA launches worldwide flights and holidays sale. (London Air Travel)

Aer Lingus, four years later than planned, is to introduce its new “AerSpace” premium seating on select short-haul routes. (London Air Travel)

Also of note this week:

A snippet on the BA vs Financial Times battle: This article by The Guardian’s media editor Jim Waterson suggests that the decision to remove the FT from BA aircraft and lounges actually came from Willie Walsh at IAG. BA’s parent company does not usually get involved in the minutiae of BA’s service offerings. (The Guardian)

A “blueprint” for direct high speed rail services from London to Bordeaux is presented to the Mayor of Bordeaux. (Railway Gazette)

The Connect Airways consortium is seeking to recover funds in the tens of millions withheld from Flybe by credit card processing companies. (Financial Times)

Monocle 24 continues its review of the “golden era” of civil aviation with a look at Braniff’s uniforms designed by Emilio Pucci and its advertising campaign “The End of the Plain Plane”. This edition also features interviews with former cabin crew from the 1960s from airlines such as Continental. (Monocle)

Qantas has appointed Tino La Spina, currently Qantas Group CFO, as CEO of Qantas International following the sudden departure of Alison Webster. The prospect of a management reshuffle has prompted speculation whether Qantas Chairman Richard Goyder is preparing to replace Alan Joyce as CEO. According to commentary in the Australian press, Alan Joyce is likely to stay on for another three years, most likely to see out Qantas’ centenary next year and the launch of non-stop flights from London to Melbourne and Sydney. (Sydney Morning Herald)

Virgin Atlantic marks the thirtieth anniversary of its in-house engineering team. (Virgin Atlantic)

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