To bring you more aviation news, Airinsight introduces News in Brief. During October, we compile a rolling story by date with news that is sometimes too small for a deep analysis but still interesting enough not to be missed.
29 – Engine maker CFM has delivered 704 commercial aircraft engines in the first nine months of this year, compared to 745 last year, its shareholder Safran Group said in its Q3-results release. CFM delivered 625 LEAP engines compared to 622 last year, or 226 in the third quarter. As production of the CFM56 is winding down, deliveries dropped from 123 last year to 79 this year, of which 30 in Q3. Safran says that the recovery of air travel is reflected in the utilization rates or flight cycles, notably for the new-generation LEAP family. Weekly flight cycles in the week of October 17 for the LEAP were 105 percent of October 2019 levels, compared to 101 percent in July. The CFM was at 69 percent in October compared to 65 percent in July.
Safran’s Aerospace Propulsion business produced €5.0 billion in revenues between January and September, down from €5.6 billion last year which included a very strong start of 2020. Revenues of Aircraft Interiors dropped to €1.0 billion from €1.4 billion, those for Aircraft equipment, defense, and aerosystems to €4.5 from €5.0 billion. Safran is optimistic for the future as the recovery takes strength month after month.
28 – Airbus successfully completed an almost three-hour test flight with the A319neo prototype, flying one engine of the CFM LEAP-1A engines on 100-percent sustainable aviation fuels (SAF). The fuel consisted of hydro processed esters and fatty acids or HEFA produced by Total Energies, which Airbus will also use for its H160 helicopters. The test flight was the first of a project of Airbus, Safran, Dassault Aviation, research agency ONERA, and the French ministry of Transports to test pure SAFS. The study, which will be completed in early 2022, will analyze the impact of emissions of 100 percent SAF in ground operations and in flight. In an Airbus video after the flight, test pilot David O’Nions said that the engine running on the SAF worked identically to the one using conventional kerosene. The aviation industry is pushing for certification of 100 percent SAF over the current maximum allowance of a fifty percent blend. Airbus has earlier tested pure SAFs on an A350.
28 – Norwegian reported a NOK 168.7 million profit for Q3 compared to a NOK 980.5 million loss last year. The operating result was a negative NOK 295.5 million but still a huge improvement over last year’s NOK-2.812 billion. Total revenues were NOK 1.927 billion, up from NOK 1.288 billion. For the first nine months period, Norwegian produced a net profit of NOK 1.758 billion versus NOK -5.772 billion last year. The operating loss was reduced to NOK 2.523 billion or more than one-third of that in 2020.
The low-cost airline carried almost 2.5 million passengers and saw an uptick in demand, reflected by strong forward bookings even already for summer 2022. In response to the growing demand, Norwegian has opened bases in Trondheim, Bergen, and Stavanger. It is recruiting for its Copenhagen base but offers flexible contracts to be prepared for any changes in demand. The same goes for its fleet policy, with the current fleet of 51 Boeing 737-800s set to grow to 70 next year. They will be leased on power-by-the-hour contracts that allow for the leasing of the Boeing MAX and even the Airbus A320neo. Norwegian enters the winter with NOK 7.6 billion in liquidity.
27 – US low-cost Spirit Airlines reported a $14.8 million net profit for Q3 compared to a $99.1 million loss. The operating profit was $13.9 million versus $-99.5 million, with revenues up 129.6 percent to $922.6 million. The road to recovery was affected by new Covid-cases, rising fuel costs, adverse weather conditions, and serious staffing shortages resulting in the cancelation of over 1.700 flights in early August. Spirit has revised its capacity projections for this quarter and is further slowing down the pace “at which we are going to push the airline back to full fleet utilization and expect to produce 53 to 55 billion available seat miles in 2022”, said CFO Scott Haralson. It also revised its targets for the costs per seat mile to late 2022 or early 2023.
On October 25, Spirit said it has selected the Pratt & Whitney PW1100G-JM again to power its next order for 100 Airbus A320neo family aircraft, with another 50 on option.
26 – JetBlue produced a strong Q3 by reporting a $130 million net profit compared to a $393 million loss last year. The operating profit was $186 million versus $-516 million last year. Revenues improved by 300 percent to $1.972 billion. For January-September, the low-cost carriers reported a $53 million profit versus $-981 million last year.
While September ”took the brunt of the bookings softness’ with rising Covid cases, the quarter was strong. Since then, bookings have accelerated again even for the holiday season, but JetBlue takes a cautious view as new hick-ups might occur. It projects revenues for Q4 to be down by 8 to 13 percent compared to 2019 levels. EBITDA could be between $-50 and $50 million.
21 – Alaska Airlines also turned a Q3 loss into a profit, announcing a $194 million profit compared to $-431 million last year. The operating profit was $258 million versus $-571 million. Total revenues were $1.953 billion, up from $701 million. The carrier is very satisfied with its 12 percent adjusted pre-tax margin. For the nine-month period, Alaska reported a $460 million profit versus an $877 million loss.
The airline group that also includes Horizon Air has $3.6 billion in unrestricted cash and marketable securities. During the quarter, Alaska exercised options for twelve Boeing MAX 9s for delivery in 2023 and 2024 and added 25 options to its backlog, bringing firm orders to 93 plus 52 options.
18 – The parent company of Philippine Airlines (PAL) is set to receive nearly 12.8 billion pesos in “fresh and additional” capital injection through a private placement made by Buona Sorte Holdings (BSH), a company linked to the carrier’s owner and major shareholder, business tycoon Lucio Tan. This would be in the form of BSH subscribing to shares issued by PAL’s parent company, PAL Holdings. The move comes more than two weeks after the Southern District of New York bankruptcy court approved “on a final basis” the ability to access debtor-in-possession financing worth $505 million, comprising two tranches of multi-draw term loans. (by Firdaus Hashim).
15 – Eighteen months later than originally planned, All Nippon Airways (ANA)has taken delivery of its third and final Airbus A380. The carrier hopes to operate all of its A380s to Honolulu again when the US reopens after the popular holiday destination with Japanese travelers was off-limits since the start of the pandemic. Only this August, ANA occasionally operated the doubledeckers to Hawaii. The third A380, painted with sea turtles like the other two but in a vibrant orange livery, was contractually delivered to the airline on October 30, 2020. ANA preferred to keep her with Airbus in Toulouse for almost an entire year.
14 – Spirit Airlines has concluded another agreement for the lease of more Airbus A32neo’s. This time it concluded an agreement with SMBC Aviation Capital for twenty aircraft. Of these, fourteen are part of a sale and leaseback when they are delivered to Spirit between November this year and September 2022. The remaining six A320neo’s are direct placements from SMBC’s order book with Airbus for delivery from September 2022 to February 2023.
On October 7, Spirit announced an agreement with AerCap to lease twenty A320neo-family aircraft for delivery in 2022 until 2024. The aircraft will cater to the airline’s growth plans. By June 30, Spirit had firm orders for 124 Airbus aircraft, including the A319neo, A320neo, and A321neo for delivery through 2027. It planned to take delivery of four more aircraft this year to bring the neo-fleet to 43. For 2022, seventeen deliveries were scheduled but this will change following the latest announcements.
14 – United Airlines announced a significant expansion of its Transatlantic network from spring 2022, claiming it to be even “the largest Transatlantic expansion in our history.” The carrier says it will add Amman (Jordan), Bergen (Norway), The Azores (Portugal), Tenerife, and Palma de Mallorca (Spain) to the schedule, becoming the only North American airline to offer these destinations. Berlin, Munich, Dublin, Milan, and Rome will get extra frequencies. Frankfurt, Zurich, and Nice in Europe, plus Tokyo Haneda (Japan) and Bangalore (India) are set to return on United’s network, having been suspended during the pandemic. Dates are subject to confirmation as the routes first need government approval.
12 – UK airline easyjet expects to reduce its headline loss before tax from the originally forecasted £1.175 billion to between £1.135 and 1.175 billion, it said in a trading update. During the September quarter, which is its fourth and final in its financial year 2021, headline losses were halved compared to last year and generated positive cash flow. The carrier operated at 58 percent capacity. but is expected to increase to 70 percent for the current Q1 of FY22. Thanks to the successful £1.2 billion rights issue, easyjet has reduced its net debt from £2.0 billion to £0.9 billion in Q3. The airline has £4.4 billion in liquidity.
11 – Following the successful completion of a €2.162 billion capital increase on October 6, Lufthansa has immediately repaid €1.5 billion to Germany’s Economic Stabilization Fund under the Silent Participation I scheme. The repayment was originally planned for 2023, but the German carrier succeeded in raising the extra capital with its shareholders. Through a subscription right, Lufthansa placed almost 588 million new shares, corresponding to a subscription rate of 98.36 percent, at a price of €3.58. Some 9.8 million shares have not been sold and will be sold to institutional investors. The subscription period ended on October 5. Lufthansa announced the capital increase on September 19. It will use the proceeds to strengthen its balance sheet and reduce its debts. The airline wants to have repaid most of the aid from the June 2020 stabilization measures by 2023. Another €1.0 billion from the Silent Participation II scheme will be repaid before the end of this year and terminate the unused part of SP I.
08 – Air Belgium has taken delivery of the first of two Airbus A330-900s. The airline will operate the aircraft on its long-haul network, which from October 15 will include Mauritius. Air Belgium announced the purchase of the two leased A330neo’s in July. Over time, they will replace two older A340-300s. The aircraft has a three-class cabin with 286 seats, 30 Business Class, 21 Premium (Economy) Class, and 235 Economy Class.
05 – UK leisure airline Jet2 has firmed up its order with Airbus for A321neo’s. It has ordered another fifteen A321neo’s for delivery between 2026 and 2029. The carrier placed a firm order for 36 A321neo’s in August, selecting the Airbus over the Boeing MAX. For years, Jet2 has been a loyal Boeing customer. The carrier holds purchase rights for another 19 aircraft to eventually grow its neo-fleet to seventy aircraft.
05 – Rolls-Royce has announced it has appointed a new Chief Technology Officer (CTO). From November 2, Grazia Vittadini had been appointed to succeed Paul Stein, who will step down from the job in the first quarter of next year after almost twelve years. Until July, Vittadini has been CTO at Airbus. In this position, she has played a key role in determining Airbus’ sustainability strategy that was presented in September 2020. This strategy centers around the use of hydrogen as the main fuel for aviation. After stepping down as CTO, Vittadini has continued to work for Airbus and will leave at the end of October.
CEO Warren East said in a media statement that Vittadini “brings with her extensive expertise in the emerging and disruptive technologies that will help us on our journey to net-zero and further expand our digital innovation. She also has many years of experience working with our fundamental technologies and has a deep understanding of the safety-critical systems which are at the core of our product portfolio.”
Paul Stein has been involved in many of the technology programs within Rolls-Royce, including UltraFan and various electric projects. He will remain with the company as chairman of the venture that specializes in small modular reactors.
In the same statement, Rolls-Royce confirms that its Chief People Officer, Harry Holt, will become Chief Operating Officer at Vertical Aerospace. Vertical is developing the VX-4A eVTOL vehicle.
05 – Speaking of engines, GKN Aerospace has announced it will take on a leading role in the development of the Electric Fan Thruster project, EleFanT for short. Together with the Swedish Royal Institute of Technology. In its new facility in Trollhattan, GKN will develop fan technology for use in smaller regional aircraft. “The project will study aerodynamic design, performance, noise, and manufacturing technology for a nested fan powered by electricity, either from batteries, hydrogen fuel cells, or even more conventional hybrid propulsion solutions.” GKN says that a nested fan has benefits on safety, noise, and engine installation. The project already started in July and complements other studies at GKN, like H2GEAR and H2JET, which look at hydrogen propulsion.
03 – Qantas and Emirates will extend their close partnership by another five years until March 2028, both airlines announced on the sidelines of the IATA AGM in Boston. The partnership offers passengers the benefits of the combined network of both airlines, with each airline offering some fifty destinations that without the partnership would not be accessible this easily. Passengers can also benefit from each other’s loyalty programs. According to Qantas CEO Alan Joyce, some thirteen million passengers have benefitted from the partnership that was established in March 2013, when two Airbus A380s did a spectacular flypast over Sydney Harbor.
During the first five years, Qantas rerouted all its European flights via Dubai. At the first extension in 2018, the carrier opted to abandon Dubai and fly either directly or via Singapore again, re-establishing the Kangaroo Route. As both airlines coordinate pricing, schedules, sales, and marketing, the new extension needs approval from the Australian Competition and Consumer Commission. The partnership can be extended for another five years in 2028.
03 – Delta Airlines will strengthen its hub at Boston Logan International Airport and will offer five new destinations from Summer 2022. These include international services to Tel Aviv and Athens from May 26/27 and flights to Baltimore, Denver, and San Diego in the US from July 11. These routes will be served with the Airbus A330. The national network will see the doubling of services with the A220 to at least twenty routes.
Delta also said that it will base its first Airbus A321neo’s at Boston Logan next spring when the carrier takes delivery of the type. The A321neo will operate on transcontinental routes, offering passengers the option to book the new First Class seats on US routes. Following an incremental order in August, Delta has now 155 A321neo’s on order.
03 – Lufthansa CEO Carsten Spohr has confirmed that his airline will lease four ex-Philippine Airlines Airbus A350s. On the sidelines of the IATA AGM, he said that the aircraft will enter service in early 2022. They will be sourced from lessors Avolon, Goshawk, and SMBC. One of the aircraft is already in Frankfurt since August. Lufthansa has said before that it will expand its A350-fleet and take on more leased aircraft to lower its capital expenditures. The German carrier also has 25 Boeing 787-9s on order. If it will take delivery of the first before the end of this year depends on the situation at Boeing, which hopes to resume Dreamliner deliveries by the end of October. Deliveries were suspended in May over a new quality issue concerning tiny gaps between the forward pressure bulkhead and forward fuselage. On October 2, Lufthansa operated the first A350 service between Munich and Dubai.
03 – Delta Airlines nor Lufthansa has plans to participate financially in Italy’s new airline ITA, the CEO’s of both airlines said in Boston during two separate media briefings. However, both airlines are interested in a partnership or alliance with ITA and have had discussions with the carrier’s management about this. As reported by AirInsight in June, Delta and Lufthansa have offered ITA a partnership. In the case of Delta, this would mean that ITA would join the SkyTeam Alliance, whereas the option through Lufthansa would see it join the Star Alliance of which Alitalia has been a member. Lufthansa’s Carsten Spohr repeated that Italy is a key market for his Group. Regulations preclude that foreign investors can buy into ITA until 2024.
