Latest News
-
Ethiopia Airlines to make decision on regional jets in the next three weeks
Ethiopian Airways will likely decide in the next three months on an order of 25 smaller commercial 'jets' to expand its local network. This was announced by CEO Mesfin TasewBekele late Saturday night during a meeting of airline executives held in Brazil. Africa's largest airline, with 147 aircraft in its fleet, is considering the Airbus A220 and Embraer E-2, as well as the Boeing 737 -MAX 7 which will be certified this year by the U.S. faa. The planes will be used for both domestic routes as well as around neighbouring countries. Bekele stated that there are some issues but a decision would be made in a matter of a few months. Bekele didn't specify what the issues were. The A220 program is still in the red, and it faces stiff competition from Brazilian competitor Embraer. Ethiopian Airlines, like other carriers, has struggled with rising fuel prices because of the "war in Iran". It has also cut Middle East flights due to lower passenger demand. For example, it reduced frequency to Dubai, from three flights per day to two, he explained. The airline is spending 60% more per plane on jet fuel than it did in the past, despite resolving concerns about shortages. "We have resolved the supply problem." He added, "It is fine now" on the sidelines of?the International?Air Transport Association (IATA's) annual summit this weekend in Rio de Janeiro. "But the pricing issue is a very serious issue."
-
Boeing executive: China can get aftermarket support for its 200-jet aircraft order.
Boeing's top executive for services?said that Boeing can support China with aftermarket parts to back up a 200-planes order announced by the planemaker in response to a visit made by U.S. President Donald Trump to Beijing this year. Chris Raymond, Chief executive of Boeing Global Services said that China would have no problems obtaining parts for the deal, "if they are parts that we can sell globally." He also added that the planemaker had a warehouse in China. Kelly Ortberg, CEO of Boeing Global Services, said that China's 200-jet deal would be finalized later this year. It is only the "initial tranche" of what could become a much bigger deal. China's commerce ministry said the U.S. would have to give the country supply guarantees on?aircraft engines and components as part of the Boeing deal. Raymond stated that despite the war in Iran, there was still a demand for aircraft modifications in most regions. Raymond added that supply chain issues continue to be a problem for parts such as flight deck windows and engine components distributed by?Boeing. The executive said that his 'division' is looking to'slash costs by using analytics and not through layoffs. (Reporting by Allison Lampert in Rio de Janeiro)
-
Alaska Air: Demand and fares may support cash flow in the second half despite fuel price shock
Alaska Air Group hopes to reinstate its financial guidance during its second-quarter earnings conference call, if fuel prices stabilize, said Chief Financial Officer Shane Tackett on Saturday. Volatility in jet fuel costs had forced the carrier's?full year outlook. Alaska is unwilling to restore guidance until they have more confidence about the outlook. Tackett, speaking at the annual meeting of the International Air Transport Association in Rio de Janeiro, said: "We would like to see more stability." Tackett says that the carrier is expecting a more difficult second quarter than they had expected before the recent fuel shock. However, he said that higher fares and resilient customer demand should help to offset the majority of the impact in the second half. He predicted that operating cash burn would fall to zero or even turn positive in the second part of the year. Alaska recently borrowed $1 billion, divided between secured and unsecured debt. But?Tackett stated that the company did not plan to make another liquidity move, or reduce capital spending. He said that corporate bookings for the next 90-day period are up 20-30% from a similar time last year, across most industries and geographies. Tackett stated that Alaska also works with energy companies to obtain more jet fuel from Singapore for the West Coast, as refining margins are high in its core geographies. He stated that the airline has no plans to retire Hawaiian Airlines' Airbus A330s and A321s, and they expect to remain an Airbus operator for "a long time." (Reporting and editing by Manuela Andréoni in Rio de Janeiro)
-
Southwest Airlines sticks with Boeing after MAX 7 delays push service back to 2027
Southwest Airlines' Chief Operating Officer Andrew Watterson said on Saturday that the airline expects Boeing's long delayed 737 MAX 7 to enter revenue service by 2027. The company is also focused on adding more aircraft types in order to reduce risks, rather than focusing on another type of aircraft. Watterson responded that Southwest Airlines was not interested in Airbus's A220. Watterson stated in an interview at the International Air Transport Association annual meeting in Rio de Janeiro that diversification does not come from a second type of fleet. "A second fleet type can increase risk." It doesn't make any sense to ignore that," he said. The?MAX 7 still awaits certification by the U.S. Federal Aviation Administration. Watterson stated that Southwest will spend about six months on?internal projects after certification. This includes adding the aircraft to their operating specifications and manuals. He said that the clock begins when they certify it. Watterson stated that the MAX 7 delays had not forced Southwest Airlines to delay specific routes but limited its ability better match aircraft sizes with demand. He said the penalty is too many large aircraft and not enough small jets in markets or periods of lower demand. STARLINK ROLLOUT Southwest also?moves ahead with Starlink-powered Wi-Fi. However, Tony Roach said that the carrier hasn't ruled out Amazon’s Leo satellite -network. Southwest Airlines' chief customer and brand officer, Tony Roach, said the airline expects to be able to service an aircraft with Starlink by the end of this month. Executives said that the airline has set a goal of equipping 300 aircraft by the end of the year with Starlink. However, the speed depends on the ability of Starlink to supply the equipment. Watterson said, "Our 'tech ops' can retrofit as quickly as Starlink can supply," Watterson added. Watterson said that activist investor Elliott Investment Management was correct to say Southwest had been slow to change despite the fact that many changes were already underway. Elliott Investment Management was unambiguously?correct in that we were too late," he said. Watterson said that investors underestimated Southwest's customers' willingness and ability to pay for new services, and revenue per available seat-mile would be the "litmus" test for whether or not the changes were working. (Reporting by Rajesh Kumar Singh in Rio de Janeiro)
-
Breeze Airways, a US low-cost carrier, sets its sights on the 2027 IPO
?U.S. Breeze Airways, a low-cost domestic carrier, is planning an initial public offering in 2027. Its Chief Executive David Neeleman announced this on Saturday. He said that the carrier had considered an IPO earlier but decided to delay it due to the market 'conditions'. This was revealed during an interview on the eve of the annual summit of the International Air -Transport Association (IATA) in Rio de Janeiro. He said that "to have an IPO the market must cooperate and the industry must cooperate." Neeleman added that the low-cost carrier has steadily built up its financial stability since it launched in '2021. The company does not have to raise capital now and can wait for the right equity market environment before launching publicly. Breeze was founded by Neeleman who, as the founder of JetBlue and Azul before, aimed to connect underserved American cities via a?affordable point-to-point flight service.
-
Rio Summit: Airline executives grapple with fuel crisis, fare tests
The Iran War is driving up fuel prices and disrupting airspace, while airlines try to cushion the impact with higher fares. The International Air Transport Association's (IATA) annual meeting, which takes place from June 6-8, coincides with the fuel crisis and another issue that airlines are unable to quickly solve: a lack of new aircraft. Boeing and Airbus delays in delivering jets have forced some carriers to continue using older, less-fuel-efficient aircraft for longer. This has increased maintenance costs and fuel costs, just as oil prices are rising. IATA, the trade association for more than 370 airlines that account for 85% of the global air traffic, predicted a record-breaking $41 billion net profit for the industry this year before the war. Analysts and industry executives expect the outlook to be revised downward at the meeting. Deloitte's survey of 21 airline CEOs in the world published this week revealed that fuel price volatility, inflation and other risks are at the top of their risk agenda. This is driving carriers to place a greater emphasis on financial health and cost control. The survey stated that "together, they have turned what was meant to be a record-breaking year into a 'fight for margins. According to CEO John Rodgerson, the Brazilian airline Azul plans to reduce more flights in order to meet demand because of higher jet fuel prices. Air New Zealand CEO Nikhil Ravishankar said that airlines could only increase ticket prices to a certain extent in order to offset rising fuel costs. In an interview, he stated that the market would respond by reducing demand and lowering ticket prices. Fuel and labor are the two main costs for airlines. Fuel increases are difficult to absorb when tickets are purchased weeks or even months in advance. The longer routes are also more fuel-intensive and less efficient for aircraft and crew. It is a challenge to determine how much of this latest fuel cost can be passed onto travelers before the increased fares begin to dampen demand. FARE POWER Travel demand is holding up well in many large markets. This includes premium and corporate travelers. Carriers have more room to increase fares. According to Raymond James, the domestic fares published in the United States as of 25 May showed a robust demand, and a successful pass-through for higher fuel costs. The fares were up 35.8% on an annual basis, while fares four weeks out were up 39.4%. Alexandre Lefevre is Air Canada's vice-president of global sales and network planning. He said, "the willingness to pay from the premium side over the last few years has been very strong. We see that strength continuing." There are still limits. The higher fares may help the airlines recover some of their fuel costs, but they can also push out those with smaller budgets. This risk is higher in regions with weak currencies, where consumer spending is under stress or where airlines lack the pricing power of major network carriers. Some carriers are still planning growth. Singapore Airlines has been in discussions for at least fifty large wide-body planes. Qantas, meanwhile, is considering an order of about 20 Airbus and Boeing wide-body aircraft. Reporting by Rajesh Kumar Singh in Rio de Janeiro and Allison Lampert. Gabriel Araujo contributed additional reporting from Rio de Janeiro. David Gaffen, Louise Heavens and David Gaffen edited the story.
-
Bloomberg News reports that Airbus is closing in on a widebody order by a Scandinavian airline
Bloomberg reported that Airbus was 'closing in' on a large-scale order from Scandinavian Airlines, SAS AB. The order includes a mixture of Airbus A330neos and more advanced A350s, with 15 to 20 aircraft being considered, according to the report. The airline is expected to 'finalise' the deal within the next few weeks, and it will receive the aircraft in the first decade of the new century. According to the report, "people familiar with the matter" were quoted. Airbus and 'SAS AB' did not respond immediately to a comment request. The report could not be verified. Reports said that the carrier was also in talks?with Boeing regarding a large order for widebody jets, but chose to go with the European planemaker instead to maintain "fleet uniformity" and keep costs down. SAS AB, one of the first airlines to reduce flights in March due to the "sharp" and "sudden" increase in fuel prices triggered by U.S. - Israel's war against Iran.
-
Brazilian airline Azul is planning further frequency reductions as the fuel shock bites
Brazilian airline Azul will increase 'capacity reductions' amid increased jet fuel prices related to the Iran War. The carrier will also continue reducing flying in order to save money and protect cash flow, according to CEO John Rodgerson. Rodgerson said that the largest companies in the industry were cutting capacity to better match demand and higher costs, and Azul was following suit. The company would go beyond the earlier cuts, as the conflict continues. "When we first made our?cuts, I thought that the war would have been over by now," said he in an interview Friday in preparation for a global airline chiefs meeting in Rio de Janeiro. "But the problem is continuing. We'll continue to cut frequencies opportunistically, to make sure that we only fly things that are sensible." Rodgerson stated that the majority of Azul's reductions in the second quarter were on international routes. Further adjustments would focus on domestic frequencies, rather than pulling out entire cities. "Do you fly from Curitiba to Rio six times per day?" With these fuel prices it might be better to fly four times a day. He added that the airline prioritized its hubs at Campinas and Belo Horizonte. "We haven't yet pulled cities, but it's always an option." You must first reduce frequencies and?utilization. You don't want an aircraft operating 13 or 14 hours per day at a time when fuel costs double. Rodgerson stated that Azul's strong balance sheet following a major restructuring of debt put it in a better position to adapt than its peers. In February, it exited Chapter 11 proceedings with the backing of United Airlines and American Airlines. Azul expects that pricing will remain under pressure in the second quarter, which is traditionally weaker, but he believes there's room for higher fares as demand increases into the third and forth quarters. (Reporting and editing by Andrew Heavens; Additional reporting and editing by Luciana magalhaes).
Retailers scramble to save the US summer shopping season
After Washington and Beijing agreed on a temporary tariff cut, U.S. retailers such as Walmart and several clothing companies are racing to get China-made products for the busy summer season that begins in late May. According to Portless, the logistics company that helps U.S. brands import goods via air from China, orders for sundresses as well as bathing suits, clogs, and sunscreens have increased since Monday's agreement between Washington and Beijing to temporarily lower tariffs.
Izzy Rosenzweig is the CEO of Portless. Portless counts Hapari swimwear and bug repellent manufacturer NatPat as clients. "They said, 'let's resume production and shipping.'
John Harmon, managing Director of Technology Research at Coresight Research said that U.S. companies rely heavily on ocean shipping. However, it can take up to 60 days to get goods from China to the United States, depending on their destination and the size of the ship. Orders for summer can be placed in the late winter or the early spring, to allow time for new designs to be manufactured.
Typically, U.S. retailers begin importing merchandise from China two to three months prior to Memorial Day this year. After U.S. President Donald Trump slapped Beijing with retaliatory fentanyl and tariffs totaling 155% on April 9, many U.S. firms paused orders. According to Vizion, data from brokerage TD Cowen on container bookings to the U.S. from China in the final week of April fell by nearly 50%.
Harmon says that it could take a while to restart supply chains following the April pause.
"It's been super busy the last two days," said Liu. A toy maker from Dongguan, an export hub in Southern China who declined to reveal her full name out of respect for her privacy.
"We're booking containers, and some of our products are already on their way to Shenzhen Port." "In recent months, there were fewer trucks on the road, but today, there's a traffic jam heading to the port," Liu said. Liu serves Walmart, which is the largest importer of container goods in the United States.
CONTAINER COSTS WORRIES
Freight rates are not rising despite the rush to get goods to the U.S. Freightos data shows that the spot rate for a 40-foot (12-meter) container to be sent from China to U.S. West Coast increased 3% on a week-to-week basis to $2,395 Monday. This indicates that businesses are not flooding shippers with orders.
The price is now half what it was in February when large companies were stocking up to avoid the tariffs that Trump had promised.
Companies like Bogg Bag, however, are beginning to worry about container costs going through the roof. Kim Vaccarella said that the CEO of a tote bag maker sold by retailers such as Target has accelerated production for her China-made bags to ensure they arrive in New Jersey as soon as possible. She has chosen to focus on a few products that are popular instead of launching many new items at once. This allows them to move quickly. Walmart, who reported earnings on Thursday, as well as Costco and Target, rival retailers, front-loaded their orders at the beginning of the year. CFRA research analyst Arun Sunderam wrote on May 13 in a note.
Sundaram reported that Walmart's inventory rose by about 3% during the quarter ending January 31. This was the first increase in almost two years.
In the three-month period ending in February, Costco's inventories rose by nearly 10%. Zumiez, a retailer of surf and skateboard clothing, saw their inventories rise about 14%. Target's inventory rose by 7% in the same time period.
Sundaram, a freight expert who anticipates an increase in freight prices, says that while the tariff reprieve on Monday is likely to be a boon for U.S. companies eager to stockpile summer merchandise, it may also create supply-chain congestion, although this will probably be less severe than the pandemic year of 2021-2022. On Wednesday, some Halloween decor manufacturers said they'd have to rush to make and ship hanging skeletons as well as costume props into the United States before the 90-day deadline.
Gene Seroka said that businesses might not be able prepare fully for the summer as well as back-to school in July, which is another major retail season.
Right now, we are looking at the final orders that will be sent in for back to school and perhaps some orders for summer fashion. Seroka explained that the situation was very tight.
Stephen Lamar of the American Apparel & Footwear Association (of which Adidas America is a member) warned of congestion in ports if companies rushed to import goods.
The tariff war has caused a delay of a month in the shipping back to school. Lamar said that school districts cannot delay the start of school for a whole month. (Reporting from Siddharth Cavale in New York, and Casey Hall and Jessica DiNapoli at New York; Additional reporting from Lisa Baertlein and Matthew Lewis in Los Angeles. Editing by Lisa Jucca & Matthew Lewis.
(source: Reuters)