The Atlantic Update – Wednesday 4 September 2019

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Norwegian Boeing 787 Aircraft, Boston Logan International Airport
Norwegian Boeing 787 Aircraft, Boston Logan International Airport (Image Credit: London Air Travel)

Hello and welcome to our Atlantic Update on its return from a summer break. The Atlantic Update is a weekly bulletin on transatlantic travel between Europe and North America.

Attention is of course still focused on Hurricane Dorian. The latest updates on the progress of the hurricane are available from the National Weather Service. On the West Coast, heat warnings are in place for parts of Los Angeles County.

Norwegian seeks to refinance its debt

Norwegian issued a significant update on Monday morning.

It has asked its bondholders to delay the redemption of two bonds, worth a combined $350m, from 11 December 2019 and 7 August 2020 to November 2021 and February 2022 respectively. The delay would be secured by a package of Norwegian’s slots at London Gatwick. A decision is expected by bondholders in the next two weeks.

There have long been signs that Norwegian is scaling back its growth ambitions. In the summer, Norwegian announced it has permanently suspended all transatlantic routes from Ireland from 15 September 2019. Its credit card companies are holding back more funds as security. Fears of airline liquidity can become a self-fulfilling prophecy, but it’s clear that Norwegian has now entered a very different phase.

BA Transatlantic Route Performance

Airlines, for obvious reasons, do not say much about the performance of individual routes other than vague comments about performance against expectations.

However, Civil Aviation Authority traffic data can provide a useful indicator of how routes are performing. BA has not yet announced a new transatlantic route from Heathrow for next year, as it usually does at this time of year. Here are indications of how some recent Heathrow routes are performing, based on passenger numbers for July 2019. Prior year numbers, where available, are in brackets.

Charleston 3,239 – 94% load factor

Nashville 11,220 (8,076) – 84% load factor

New Orleans 6,635 (7,564) – 78% load factor

Pittsburgh 6,642 – 86% load factor

Nashville is clearly performing very strongly, as is Pittsburgh in its first year. Charleston, with just two flights a week, is also generating high load factors.

Also of note this week:

BA has also made a small adjustment to its seasonal service from London Heathrow to Calgary for next summer. It will initially operate four times weekly on its return from late March until mid April. The route will also end earlier on 2 October 2020.

Etihad is to lease one of its daily Heathrow slot pairs to American Airlines for the winter. There is no indication yet as to how this will be used by America.

Late post-publication updates:

The Competition & Markets Authority has issued a brief update on the progress of its investigation into the transatlantic joint-business between American Airlines & BA.

The investigation opened in 2018 due to the expiry of ten year commitments given to the European Commission when the joint-business launched in 2010.

The CMA was due to conclude its investigation this summer but has now advised that it needs more time to review submissions from interested parties.  It will decide whether to issue a “statement of objections” this winter.

Given there will have been intense lobbying by JetBlue for slots at Heathrow and the CMA has adopted a tough line in other cases, no assumptions can be made as to the CMA’s likely findings.  The CMA may well demand further competition remedies to allow the joint business to continue.

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