SkyWest Swings Back To Profitability Amid New American And United Deals

Regional carrier in the United States, SkyWest, has turned a profit for the third quarter of 2020. While the airline is not out of the woods yet, it has reached new agreements with American and United on regional flying.

SkyWest turns a third-quarter profit

For the third quarter of 2020, SkyWest turned a net profit of $33.7 million. While this was down from the $91.3 million profit the carrier made in the third quarter of 2019, it is fat better than the airline’s nearly $26 million loss from the second quarter of 2020. But, in the first quarter of 2020, the airline did turn a profit.

Chip Childs, Chief Executive Officer at SkyWest, stated the following concerning the results:

“Over the past several months, we have worked with our partners and our people to respond quickly and aggressively to the worst crisis our industry has experienced. The SkyWest team continues to demonstrate exceptional dedication and flexibility, and I want to thank them for their hard work and focus through this challenge. We are committed and remain laser-focused on ensuring we are positioned for the long-term, maintaining strong liquidity, and delivering on our partners’ objectives in the recovery.”

SkyWest Airlines bolstered its liquidity in the third quarter. The airline entered into a $573 million agreement with the U.S. Department of Treasury for a five-year secured loan facility. This increased to $725 million in October amid other airlines pulling out of loan agreements with the Treasury Department.

A new agreement with American Airlines

SkyWest entered into an agreement with American Airlines on October 29th to place 20 used CRJ700s under a multi-year flying contract. The airline will be using 20 of its own aircraft that are not currently under contract with a partner.

These planes will not enter into service until 2021. Once these 20 go into service, in addition to four CRJ700s entering service in the fourth quarter of 2020 and five in 2021 under a previously announced deal, then SkyWest will be flying 90 CRJ700s under contract with American Airlines.

This also comes on top of a previous agreement for 20 new Embraer E175 aircraft flying for American Airlines. Five of those are anticipated in the fourth quarter of 2021, while 15 deliveries are scheduled for 2022.

American Airlines is working on upgauging its regional fleet, so the CRJ700s will be a great opportunity for plenty of regional destinations that traditionally see CRJ service. American’s regional arm is called American Eagle.

CRJ550s coming to SkyWest…sort of

SkyWest has entered into an agreement to acquire 21 used CRJ550s. These premium 50-seater aircraft will not fly under SkyWest. While the airline will own the aircraft, it is leasing them out under a multi-year agreement for another regional airline that operates United’s regional brand called United Express.

The aircraft purchases and leases are expected to complete in the fourth quarter of 2020. So, while SkyWest will not be operating the aircraft, it will own them.

An update with the Delta contract

Four new E175 aircraft, which will be financed and operated by SkyWest, will be delivered in the fourth quarter that will fly for Delta under their regional arm, Delta Connection. One new CRJ900, financed by Delta but operated by SkyWest, will come to the airline in 2021.

Delta and SkyWest also have a capacity purchase agreement for the CRJ200s that are expiring in 2020. Recently, Delta announced it was moving away from the CRJ200s, with retirements of those aircraft expected by December 2023.

Why SkyWest turned a profit

SkyWest Airlines does not fly its own routes or aircraft. Instead, it flies regional jets on behalf of major US airlines. While, from October 1st, US airlines were set to fly fewer regional services, SkyWest has done quite well for itself thus far.

While the carrier’s total block hours in the third quarter were down 41% from the third quarter of 2019, it still has agreements with the major carriers and has taken over a few routes from the major US airlines. With a fleet of over 400 aircraft, SkyWest has agreements with Delta Air Lines, United Airlines, American Airlines, and Alaska Airlines.

Heading into the fourth quarter, SkyWest should also be in a good position to turn a profit, or at least narrow losses. With the Thanksgiving and December holiday periods coming up, SkyWest will be doing plenty of more flying than the second or third quarter, which will help the airline’s bottom line.

Source https://simpleflying.com/skywest-profitable-american-delta/

What Happened To United Airlines’ Boeing 747 Aircraft?

As airlines around the world take to retiring their Boeing 747s, United Airlines was one of the carriers ahead of the game. Its last flight with the Queen of the Skies happened nearly three years ago. However, what happened to the aircraft that made up its fleet?

A prominent yet small fleet

Compared to United Airlines’ distinguished Boeing 737 fleet and extensive Airbus A320 fleet, the airline’s 747 fleet was comparatively small. According to Planespotters.net, in total, the airline once held 88 units of the type at various points in its history in four variants. Most popular was the Boeing 747-400, but United also had the -100, -200, and SP.

However, the airline no longer operates any of these models and hasn’t done so since 2017. The majority of the aircraft are stored but over 30 went onto new airlines.

First aircraft in the ’70s

United Airlines began its relationship with the 747 nearly 50 years ago. It acquired the first aircraft in 1970 and ended the year with a total of nine 747-100 in its fleet. Most of these aircraft were moved to other airlines. Between 1985 and 1986 United sent five aircraft to Pan American World Airways. Along with this, Pan Am had another deal with United in which it leased an aircraft registered N724PA. Pan Am kept this aircraft for just over a year before returning it to the airline in 1991.

But the tale of Pan Am was not a happy one. The iconic carrier collapsed in 1991. The rest of the 747 aircraft from 1970 were stored with United Airlines and have since been scrapped.

Many of the other 747 aircraft that United Airlines acquired in the 1970s were stored with the airline. The operator took delivery of a further nine units between 1971 and 1973. All of the aircraft have since been scrapped.

A momentary pause

However, before United advanced its Boeing 747 fleet, it took a pause. It wasn’t until 1986 that new orders of the aircraft returned again. In 1986, United Airlines received 11 Boeing 747 aircraft and continued to expand its fleet in the ensuing years.

Before 1990 hit, it had another 11 747s join. However, in these years, the model of the type that United acquired began to change. Whilst it still had an affinity towards the Boeing 747-100 variant, it also took delivery of three -400 variants, 11 SPs, and two -200s.

Nine of these aircraft went on to other airlines between 1992 and 2006, including Northwest Airlines, Tajik Air, and Qatar Amari Flight. Of those which were stored with the airline, only one continues to bear this status. It is registered N147UA and initially came from Pan Am but is marked to be stored and used by the FAA for testing.

Special missions

In September 1996, a former 747SP that United previously flew underwent a transformation into NASA’s Stratospheric Observatory for Infrared Astronomy (SOFIA).

Rgistration N145UA joined from Pan Am in February 1986. With NASA, it went on to carry a 17-ton, eight-foot-wide infrared telescope mounted behind a massive sliding door. The plane is still serving the space agency as N747NA and bears the nickname of Clipper Lindbergh, which it was initially called when with Pan Am.

The aircraft flies into the stratosphere at 38,000-45,000 feet, putting it above 99% of the Earth’s infrared-blocking atmosphere. This system helps scientists to study the solar system.

The 747-400

The 1990s was a big decade in terms of receiving deliveries of 747 aircraft for United. In total, it took nearly 50 of them over this period between 1990 and 1999. Most of these aircraft were 747-400 variants although United was still dabbling with the 747-200. It took five -200 models leaving 43 -400 variants.

19 of these aircraft were then passed onto other airlines including Atlas Air, and Blue Sky.

The last bunch

According to Planespotters.net, there were 20 747 aircraft in United’s fleet at the beginning of the year that the carrier stopped flying the aircraft. Thirteen of these planes have remained in storage since 2017. Meanwhile, five of them were scrapped that year.

Registration N119UA, which arrived at the carrier in March 1999, was taken on by Atlas Air in June 2019. The cargo outfit currently operates the jet as registration N480MC.

Additionally, registration N128UA, which joined United in May 2000, was handed over to TVPX Trust Services in April 2018. MAX Air then took it on and has been flying it as registration 5N-ADM since July 2018. The Nigerian airline has since named the aircraft Alhaji Dahiru Barau Mangal.

End of an era

According to a statement seen by Simple Flying, at the time of the farewell in 2017, former United CEO and current executive chairman Oscar Munoz spoke about the legacy of the 747. The businessman emphasized how the firm and the jet helped each other to serve its joint purpose of connecting people and uniting across the globe.

“With its unmistakable sloping silhouette, it came to embody the spirit of the age — allowing more affordable international travel and opening the skies to more people than ever before,” Munoz said, as per the statement.

“In that way, its legacy lives on in the next generation of aircraft that will follow in its path. Even so, it will always be ‘Queen of the Skies,’ and while it will be succeeded, it can never be replaced.”

Altogether, United is just one of several airlines that have let go of the Queen in recent years. Carriers have been looking at more modern and efficient solutions to assist on long-haul operations. Moreover, the current industry climate is catalyzing the jet’s retirement across the globe.

What do you remember of United Airlines’ Boeing 747 fleet? Did you ever fly on any of these planes over the years? Let us know what you think of the jets in the comment section.

Source https://simpleflying.com/united-airlines-boeing-747/

Hawaiian Airlines To Resume US’ Longest Domestic Flight

Hawaiian Airlines will restart the world’s longest regularly scheduled domestic flight to Boston from Honolulu. This comes as, from December, the airline anticipates operating its full 13-city US mainland network.

While Boston to Honolulu is the longest regularly scheduled domestic flight, it is not the longest domestic flight on record. French bee, followed by Air Tahiti Nui, beat out Hawaiian with their nonstop Tahiti to Paris flights.

Rebuilding the mainland network

In December, Hawaiian Airlines will be resuming its full 13-city US mainland network. Starting in December, Hawaiian will fly two times a week nonstop between Boston Logan International Airport (BOS) and Honolulu’s Daniel K. Inouye International Airport (HNL). Hawaiian will also be reinstating flights from HNL to New York John F. Kennedy International Airport (JFK).

Daily nonstop service between Honolulu and Long Beach will round out Hawaiian’s rebuilding of its mainline network with flights to all 13-city US cities, though not necessarily at the same frequencies as pre-crisis.

Separately, flights between Kaua’i’s Lihu’e Airport (LIH) to Los Angeles and Oakland and flights from Maui’s Kahului Airport (OGG) to San Diego and San Francisco will also resume.

Brent Overbeek, Senior Vice President of Revenue Management and Network Planning at Hawaiian Airlines, stated the following:

“We’re pleased with increased demand for travel to Hawai‘i, and we’re excited to once again offer our East Coast guests the convenience of our nonstop flights as we welcome them to the islands with new health and safety measures.”

Resuming services to and from Hawaii

Hawaii only recently reopened with quarantine exemptions for passengers with a negative, approved test within 72 hours the final leg of departure. Hawaiian Airlines has partnered with Vault Health to offer passengers a PCR saliva test before departing.

Available for all travelers, the test kit will be mailed overnight to customers who will self-collect the sample with assistance from a testing supervisor via video call. The kit is then express shipped overnight to a lab that analyzes the sample and provides results electronically within 24 hours of receipt, streamlining the pre-arrival testing process.

The aircraft

For flights to Boston and New York, Hawaiian Airlines will utilize one of their Airbus A330-200s. These aircraft have room for 278 passengers onboard with 18 in lie-flat first class, 68 in extra-legroom coach, and 192 in standard economy.

Flights from LIH and OGG to the mainland are on Airbus A321neo jets. These planes seat 189 passengers with 16 recliner-style first class seats, 44 extra-legroom economy seats, and 129 standard economy seats.

Hawaiian Airlines

Hawaiian Airlines has had a tough time thus far. While other airlines could capitalize on a rebounding domestic market in June, July, and August, Hawaiian had to contend with travel restrictions limiting passengers going to and from Hawaii.

In recent weeks, Hawaiian Airlines also announced it would suspend its ‘Ohana ATR service, triggered as a result of mainline furloughs.

Now, with Hawaii reopened for tourism, international borders shut around the world for Americans, and the carrier’s status as a premium leisure airline, it hopes that it can head back towards profitability. The airline also has a partnership with JetBlue, so it can access some connecting feed out of both Boston and New York, which should help fill a few more seats while also picking up the origin and destination travelers.

Source https://simpleflying.com/hawaiian-boston-resumption/

AirAsia X Cutting Indonesia Arm

Embattled Asian low-cost airline AirAsia X is verging on the brink of collapse and is shutting down its Indonesian arm in an attempt to cut costs and save the wider business.  AirAsia X needs more than US$100 million to avoid liquidation. But the question is, from whom or where is that money going to come from?

“We have run out of money,” AirAsia X deputy chairman Lim Kian Onn told Malaysian media outlets on the weekend.

“Obviously, banks will not finance the company without shareholders, both old and new, putting in fresh equity. So, a prerequisite is fresh equity.”

The end of the road for Indonesia AirAsia

People familiar with AirAsia will know there’s AirAsia and various iterations of AirAsia. The original AirAsia, formally known as AirAsia Berhad and helmed by Tony Fernandes, is based in Malaysia. Over the years, various affiliate airlines have spun off the Malaysian mothership. They share the AirAsia name and branding but are based elsewhere and separate corporate entities. The original AirAsia typically has a significant stake in the affiliate AirAsia airlines.

Operating out of Indonesia is Indonesia AirAsia. Indonesia AirAsia is a low-cost airline based in Tangerang, Indonesia. It operates scheduled domestic, international service.  In happier times, Indonesia AirAsia X also flew scheduled long-haul international flights from Bali’s Ngurah Rai International Airport. Indonesia AirAsia X closed its final cabin door in early 2019.

AirAsia Berhad has a 49% stake in its Indonesian affiliate. Indonesian law prevents foreign businesses from majority owning a local airline. That saw a prominent Indonesian business, Fersindo Nusaperkasa, take a 51% stake in Indonesia AirAsia.

Low-hanging fruit for the Malaysian mothership

AirAsia’s Indonesian operations never really scaled up and presented as low hanging fruit in the scramble to cut costs and save broader interests. Before the travel downturn, Indonesia AirAsia flew to about 15 domestic and six international destinations, with a fleet of around 30 Airbus A320-200 planes.

The airline achieved a degree of notoriety in 2014 when an Airbus A320 flying from Surabaya to Singapore crashed into the Java Sea, killing the 162 passengers and crew onboard the flight. That crash was later attributed to pilot error following a non-critical malfunction in the rudder control system. The incident did nothing for Indonesia AirAsia’s reputation and civil aviation safety in Indonesia generally.

Serious ongoing liquidity issues at AirAsia

AirAsia’s problems won’t just be solved by shutting down their Indonesia arm. They face a serious cash crunch. They have immediate liabilities approaching $500 million. As Lim Kian Onn indicates, there’s no money to pay the bills. Over the next decade, there’s something like $14 billion in liabilities due – aircraft leases, contracted maintenance, new orders, and the like.

“There are many lessors, some very big ones too,” said Lim Kian Onn. “We have been talking to them for two months. All of them are understandably upset.

“There are analysts and news reports that suggest creditors, particularly lessors, have no choice but to agree to our scheme. That’s not true. They have choices.”

Meanwhile, in addition to closing down Indonesia AirAsia and dealing with angry aircraft lessors, AirAsia Berhad has written off its 49% stake in Thai AirAsia. That airline is no longer part of AirAsia Berhad’s “restructuring plans.” Just a week ago, AirAsia’s Japan-based affiliate airline closed with immediate effect.

What do you think? What’s the future for AirAsia? Has 2020 finally clipped the wings of the ever-ambitious Tony Fernandes? Post a comment and let us know.

Source https://simpleflying.com/air-asia-x-indonesia-cut/

The US-EU Tariff Dispute Could End – If Airbus Pays Back Its Aid

The long-running trade dispute between the European Union and the United States continues to bubble away. Both sides are complaining about Government subsidies aircraft manufacturers Boeing and Airbus have received, saying those subsidies represented an unfair advantage. Last year, the United States slapped a 10% tariff on Airbus aircraft and parts. Just days ago, the World Trade Organization okayed the imposition of counter-tariffs by the European Union.  Now reports indicate the United States has offered to withdraw their tariffs if Airbus pays back monies and subsidies received from various European nations.

The United States offers to end the trade war, on certain conditions

Reuters report on Thursday flags comments made by Robert Lighthizer, a US trade representative. According to that report, Mr Lighthizer made the offer to remove US imposed tariffs leading up to the World Trade Organization’s decision earlier this week.

There are billions of dollars at stake here for both Airbus and Boeing. Boeing, via the United States Government, has long complained about unfair subsidies Airbus has received via low-interest loans from European Union nations. It’s not all one-way traffic, though. Airbus and the European Union have also complained about Boeing’s tax breaks and all lucrative the military and space work funneled to it from the United States Government.

It’s worth noting both Airbus and Boeing say they now fully comply with World Trade Organization rules. But the respective Governments are quite sure about that, and in part, the ongoing dispute is about remedying past wrongs, real or perceived.

A recent WTO win spurs the European Union & Airbus on

Airbus and the European Union had a win in the trade war recently. The World Trade Organization gave the green light earlier this week to the European Union imposing tariffs on US goods in response to the $7.5 billion of tariffs imposed by the United States. The value of the European Union imposed tariffs is estimated to be north of $US4 billion. The World Trade Organization says both sides are at fault. However, the imposition of tariffs last year by the United States appears to have inflamed the situation.

Agreeing to the United States offer would cost Airbus an estimated $10 billion

Various European Union nations made low-interest loans to Airbus assuming projects those funds were propping up were all going to be successful. On that basis, the loans were low risk and priced accordingly. Further, Airbus only had to pay back government loans when aircraft sales reach a certain threshold. The United States argues this gave Airbus an unfair advantage. Not all projects work out well they say, not even at Airbus. The A380 is an example of that.

Mr Lighthizer says if half the loans made were repriced to account for a higher risk level, the United States would pull back, axe the 2019 tariffs, and wrap up the dispute (which covers more than just aircraft). But if half the Airbus loans were repriced at a fair value, it would see Airbus repay an estimated $10 billion.

Naturally, Airbus isn’t wildly enthused about the offer. At the European Union’s Brussel’s HQ, the proposal has also been met with watery smiles. The European Union says it could further inflame the dispute.

Negotiations will continue. Airbus appears to be future-orientated. They may make concessions but aren’t that interested in addressing water under the bridge. The United States prefers to dive deep under that bridge and seek redress for poor past behavior. But Airbus says Boeing would also be up for billions if they went down that path.Advertisement:

Until both sides can find the halfway point they are comfortable with, there is no end in sight for this arcane but fascinating trade war.

Source https://simpleflying.com/us-eu-tariff-dispute-settlement-offer/