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Etihad Airways purchases widebody aircraft, returns to pre-war capacity by June
In an interview, CEO Antonoaldo Neves stated that Etihad Airways will be ordering more widebody aircraft to meet its 8% increase in flights over the previous year by June 15. On Saturday, he said that Abu Dhabi's airline is purchasing widebody planes in the "double digits" but declined to provide any further details. Neves stated that Etihad has restored flights following the cuts made in March, as the U.S. and Israeli war against?Iran shifted regionally, increasing fuel prices. Etihad, he said, "doesn't plan to reduce?costs? by cutting flights for the time being." He said, "The largest cost we have is an empty plane." "So I cut costs by not having empty planes."
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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."
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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)
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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)
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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)
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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.
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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.
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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.
Boeing's CEO brought the company out of a nosedive but there are new challenges ahead
After taking over the company during Boeing's worst crisis in decades one year ago, Kelly Ortberg stopped its freefall. He faces new challenges, including ramping up jet manufacturing, revitalizing the struggling Defense and Space division, and returning profitability to the legendary planemaker. Ortberg had retired to Florida and was enjoying a comfortable retirement when Boeing's Board offered him the job of CEO at a company that was losing money and suffering from a damaged reputation.
After a midair panel blowout in January 2024 on a new MAX, the crisis deepened. This prompted his predecessor to leave and brought back memories of two deadly MAX crashes in 2018 and 2019. These crashes killed 346 people.
Ortberg promised to restore trust and stay close to the factories, as well as ensure Boeing met their commitments to quality, safety, and transparency. Boeing has had a series of successes since then: It has improved the efficiency and quality of the 737 line; it has navigated the trade policies of President Donald Trump; it has reached an agreement with the U.S. Department of Justice, to drop prosecutions over the crashes; and signed blockbuster deals for airplanes.
The stock of the company is up 39% compared to a year earlier, and has seen its biggest gains in recent months due to an increase in 737 production.
Boeing, however, is still losing money. It trails Airbus on the single-aisle aircraft market. It struggles to fix its space programs and its defense programs. Ortberg's first challenge is to increase production of the 737 MAX back to levels seen before the crisis, and then beyond. This will allow Boeing to replace this model with a future model.
The biggest risk that Boeing faces in the future is whether they become a great company or a mediocre one. Ron Epstein is an aerospace analyst at Bank of America.
Boeing refused to allow Ortberg to be interviewed.
CULTURE CHANGE
Ortberg is an Iowa native who spent years climbing the ranks of avionics company Rockwell Collins. He became CEO, and led it through a number of deals that resulted in aerospace firm RTX.
He retired in 2021.
Jans Timmers who worked directly for Ortberg at Rockwell Collins recalled Ortberg telling him, when dealing with an expensive program, "Put everything on the table and we'll deal with it."
"And that is what he does at Boeing right now," he said. Boeing, once hailed for its role in winning World War II and putting men on the Moon, had been associated with cutting corners, prioritizing profit over quality and misleading regulators.
Ortberg focused on fixing the basics, reducing defects, eliminating work that was out of sequence, and improving the overall build quality, rather than just pushing out more jets. "Give it a damn!" "Give a damn!" became one of Boeing’s core values under Ortberg. He introduced it to the employees in April. Alaska Airlines CEO Ben Minicucci said Ortberg was a great example of a leader who chose to be physically present in the factory, where he lived.
Minicucci stated, "They are walking on the floor and they feel what is going on." "That's a different experience than in the past."
TRUMP TURBULENCE
Ortberg had to deal with one of the most difficult challenges facing any CEO in the United States this year: managing Donald Trump. In February, the U.S. President publicly criticized Boeing for delays and cost overruns in the Air Force One Replacement Program. Trump and Ortberg celebrated a record-breaking widebody order with Qatar Airways in May, despite the tension. Ortberg, along with other aerospace leaders, worked behind the scenes to manage Trump's volatile policies on trade, which has largely spared new tariffs for the industry. Jeff Shockey is Ortberg's biggest hire. He was brought in to be Boeing's top advocate. Shockey has a long history as a political operative with experience in aerospace. Boeing requires Federal Aviation Administration (FAA) support to increase production and certify the new jets. It also needs continued federal funding to develop the F-47, named for Trump as the 47th President.
Richard Aboulafia, managing director of AeroDynamic Advisory, said: "It is impossible to imagine doing any of this without an experienced head at Boeing's Washington operation."
Ortberg's struggles have not been easy. Last year, he struggled to bring an end to a seven-week strike by 33,000 union workers who assemble Boeing jetliners along the West Coast. The strike deepened divisions within the company. Separately, 3,200 workers from a union that builds fighter jets began a strike on Monday. The company continues losing money - $643 millions through the first half year - and Ortberg pushed back certifications for the 777-9, and the 737 MAX smallest and biggest variants - the MAX 7 & 10 - to next year.
Ortberg now must prepare Boeing for a new plane launch this decade to reclaim market share lost by Airbus. Or risk being relegated as an after-runner for another decade.
Ortberg played down the importance of the upcoming year when asked during a recent earnings conference.
He said, "It is just one day at the time. Improve our performance, address issues we have, rebuild trust with our customers and end users of our product," he added. (Reporting from Seattle by Dan Catchpole; Editing by Joe Brock & Rod Nickel)
(source: Reuters)