Two Reuters articles are recommended reading prior to our story here. First this one, which describes how OPEC is having a tough time curbing production. The previous swing producer, Saudi Arabia, says these cuts are only needed for six months. But there are dissenting voices; this is an important one “If OECD stocks were to continue to draw in 2017 at the same pace as that seen over July-December, then it would take us around a year to return to the five-year average in stocks,” IEA oil analyst Olivier Lejeuene said.
Oil markets are in an over supply position. It appears long term oil demand is declining or growing more slowly. And producers that recently were not selling, such as Libya and Iran are back. Nigeria and Libya are exempt from OPEC production cuts. Then there are the US-based frackers who are now the new swing producers They are not going to follow any OPEC guidance. They will grasp any opportunity to produce and sell oil. Continue reading
Boeing has an $16.6bn deal with Iran for 80 aircraft. Many in the industry were wary of the deal’s next steps after the change of government in Washington, DC. President Trump imposed a temporary travel restriction that included Iran. Then news emerged that Iran had test fired a ballistic missile last Thursday, which was seen by Washington as a provocation. On Friday, following a missile test masquerading as an orbital test flight, the US imposed new economic sanctions against several Iranian officials and entities involved in Tehran’s missile testing program. On Sunday, Iran fired another missile. Continue reading
Airbus Final Assembly Co., Ltd. in Tianjin, China, starts assembly of its first A320neo in July and plans to deliver it to an Asian customer in September 2017. The Chinese plant, a joint venture between Airbus and Chinese partners based in the Tianjin Free Trade zone, has delivered more than 300 A320 aircraft since it went into operation in 2008.
Last year Airbus delivered 153 aircraft to Chinese operators, making this its seventh consecutive year of over 100 annual deliveries. The 2016 deliveries included 141 aircraft in the A320 family and 12 of the A330 family. In 2017, Airbus’ Tianjin plant plans to assemble four A320neo aircraft per month.
Lufthansa celebrated the “roll-in” of its new Airbus A350-900 aircraft, and was kind enough to invite AirInsight to its celebration. Videos of the speeches and christening ceremony, in German, will be available in separate posts on our site.
The celebration was held in Munich because the first 10 of the 25 A350s Lufthansa has on order will be based in Munich, with initial flights starting this month to Boston and Delhi. After experiencing the event, with more than 2,000 people in a Lufthansa Technik hangar that was noisy enough that you needed to speak loudly to your neighbor, the flight out of a quiet Munich airport, and how the A350 will reduce noise nearby the airport, will be striking. Continue reading
SkyWest, Inc. announced its fourth quarter and full year results Thursday, showing a loss for both periods. The company is parent of SkyWest Airlines and ExpressJet. The company reported a $270.2m net loss for the fourth quarter ending December 2016, compared to a $40.4m profit previously. This loss was due to a one-off $465.6m aircraft “asset impairment charge” during the 4Q16. The stock market reacted well to the news.
SkyWest reached an agreement with Bombardier over residual value guarantees for CRJ200 as it starts to remove the aircraft from its fleet. SkyWest was among the original CRJ customers. The focus, going forward, is on two class aircraft. Bombardier agreed to end residual value guarantees (RVG) on 76 CRJ200s owned by SkyWest and ExpressJet. Bombardier is paying SkyWest $90m. “Streamlining our fleet and taking early settlement of Bombardier’s RVG obligations reduce both our overall risk profile and the future investment that… Continue reading
The airline business is competitive – more so than most other types of business. It is also a complex business because its reach is global. The airlines that have dominated the industry so far tended to be network, or legacy, carriers. In some markets, where traffic volumes allowed it, low cost carriers (LCCs) managed to plant roots and thrive.
An early pioneer of low cost long-haul travel was Sir Freddie Laker’s Skytrain. It was a brilliant idea. Then came People’s Express. Both failed. The complexity of connecting people to fly across the North Atlantic worked if you lived in or near the two points being served. Moreover, the ability to market tickets to travelers was difficult – you depended on travel agents. They wanted a commission to make the deals, and LCCs didn’t have the margin to afford this sales channel. Today we have the Internet and the typical travel agent has been dis-intermediated. Booking systems like the GDS’ are not critical. An airline can distribute its products effectively from its own website. Continue reading
This week saw two announcements that seem confusing. First came Bombardier’s news about the Cityjet CRJ900 order being firmed up. The came Falko’s announcement about its CRJ900 deal with SAS.
The first announcement was that Bombardier firmed its purchase agreement, based on a conditional agreement announced January 24, 2017, with CityJet. The firm agreement included six CRJ900 aircraft and options for four more. The aircraft will operate under wet lease in the Scandinavian Airlines network.
Then came the second, Falko Regional Aircraft Limited (Falko), a aircraft leasing and asset management company focused on the regional aircraft sector, announced that it will add 11 CRJ900 aircraft to its portfolio. The aircraft are being acquired from Scandinavian Airlines and are currently on lease to Cimber. Falko has been doing business with SAS since 2011.
Falko explained that 11 aircraft being acquired, 8 of which are now being re-marketed. All 11 aircraft are… Continue reading
Talks between Lufthansa and pilot union Vereinigung Cockpit (VC) ended without agreement. The latest talks, set to be completed by January 31, were led by mediator Gunter Pleuger. Herr Pleuger now will submit a conciliation recommendation to the parties by February 10. Earlier talks seemed to go nowhere. This is a long simmering disagreement.
The VC union said in a statement that both sides have “agreed on the content and course of conciliation”. The union wants a 3.7% average pay increase for each of the last five years. Lufthansa has offered a 4.4% increase in two stages and a one-off payment equivalent to 1.8 months salary. VC previously turned that offer down. Continue reading
We addressed a series of questions to Mitsubishi after the recent delay news. Here is the verbatim Q&A.
Responses from Mitsubishi Aircraft Corporation: Yugo Fukuhara, Vice President and General Manager of Sales and Marketing Continue reading