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British Airways owner IAG beats second-quarter profit estimates
IAG, the owner of British Airways, reported earnings for the second quarter that were better than expected on Friday. This was due to strong demand from transatlantic travelers despite concerns about possible knock-on effects caused by President Donald Trump’s tariff war. Air France-KLM, Lufthansa and other European airlines have largely avoided the turmoil caused by tariffs. Both companies reported strong second quarters this week and confirmed their annual forecasts. IAG posted an operating profit for the third quarter of 1,68 billion euro ($1.92 billion), compared to the average analyst forecast of 1.4 million euros, according to an LSEG survey. This is up 35% compared to a profit last year of 1.2 billion euro. "We continue benefiting from the trend of structural shifts in consumer spending to travel." We continue to focus on our core geographies and market-leading brands, where we see strong performance," said Chief Executive Luis Gallego in a press release. The group confirmed that it had made its full-year forecasts, and noted that there was strong demand for its products in North America as well as Latin America. U.S. Airlines haven't fared well. Delta pulled its full-year forecast this spring because of concerns over falling demand. IAG was one of the best performers in terms of share performance compared to other European carriers over the past few years. However, this year it has fallen behind rivals Lufthansa & Air France-KLM who have recovered from their cost pressures.
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Flight attendants sue Boeing over MAX 9 mid air panel blowout
Four flight attendants from Alaska Airlines 737 MAX 9 who were injured by a cabin panel that blew out in mid-air last January are suing Boeing. They claim they suffered physical and mental injuries. They are suing for compensation in separate lawsuits. They claim that they have suffered physical and mental injury, emotional distress, and other financial costs. Tracy Brammeier said that each of the four plaintiffs had acted bravely by following their training, putting the safety of their passengers first, and doing so while they feared for their own lives. They deserve compensation for the life-changing trauma they have experienced. Alaska Airlines and Boeing both declined to comment. The lawsuits, filed in Seattle's King County Superior Court on Tuesday, accuse Boeing and its subsidiaries of negligence in production, sale and repairs of 737 MAX aircraft and parts. The filings stated that "Boeing was aware or should have been aware of the quality control problems present in the 737 MAX aircraft line." The incident caused a crisis at Boeing and led the U.S. Justice Department, which opened a criminal probe into the company, to declare that Boeing did not comply with the 2021 deferred prosecutor agreement. The National Transportation Safety Board (NTSB), which was established by the United States government to ensure the safety of air travel, said that Boeing failed to provide sufficient training, guidance, and oversight in order to prevent this incident. The board criticised Boeing's safety culture, its failure to install key bolts into the panel during production and the Federal Aviation Administration for ineffective oversight. Reporting by Shivani Tana, Chandni Shah and Gursimran Kour in Bengaluru. Additional reporting by Dheeraj Kumra and Editing Clarence Fernandez.
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The paper reports that flight attendants are suing Boeing for the MAX 9 panel explosion.
The Seattle Times reported on Thursday that four flight attendants who were on board the Alaska Airlines 737 MAX 9 aircraft when it was hit by a cabin panel blowout mid-air in January of last year have filed a lawsuit against Boeing for both physical and mental injuries. The newspaper reported that in separate lawsuits, filed by the plaintiffs, they sought compensation for economic damages past and future. They cited mental and physical injuries, emotional distress, and other costs associated with the incident. The article quoted Tracy Brammeier as saying that "each of the four flight crews acted bravely by following their training, putting their passenger's safety first, while they feared for their lives." They deserve compensation for the life-altering trauma they have experienced. The paper reported that the lawsuits were filed in Seattle's King County Superior Court on Tuesday. They accused Boeing of negligence and product liability, for delivering an unsafe plane to fly. Boeing, Alaska Airlines, and Brammeier declined to comment. The National Transportation Safety Board (NTSB), which was established by the United States government, said that Boeing had failed to provide sufficient training, guidance, and oversight in order to prevent this incident. The board criticised Boeing's safety culture, its failure to install key bolts during production of a new Alaska Airlines MAX 9, as well as the ineffective oversight provided by the Federal Aviation Administration. (Reporting and editing by Clarence Fernandez in Bengaluru, Dheeraj Tanna and Shivani Tana)
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Travel along the U.S. Eastern Seaboard is disrupted by heavy downpours and flash flooding
On Thursday, New York Governor Kathy Hochul declared a state of emergency in areas that were threatened by flash floods due to heavy rains. This was a result of the disruption of rail and air travel on the Eastern Seaboard. The National Weather Service issued flash flood warnings in parts of the Northeast urban area stretching from Washington-Baltimore to Philadelphia, Wilmington and Newark (New Jersey) and New York City. The Interstate-95 corridor was also under severe thunderstorm warnings. Stormy weather was a major factor in disrupting commercial flights across the Northeast Thursday. The eight major airports serving the region - Washington Dulles, Baltimore-Washington, Ronald Reagan Washington National, Philadelphia, Newark Liberty, LaGuardia, John F. Kennedy International and Boston Logan - accounted for the cancellation of at least 1,170 airline flights into, out of or within the U.S., according to online flight tracking service FlightAware. Amtrak reported that passenger rail travel between Philadelphia and Wilmington was also affected by severe storms, which caused high water levels to flood the track. The Weather Prediction Center's daily rainfall forecast map shows that the risk of "excessive showers" capable of triggering a flash flood is 40% or more for an area of the mid-Atlantic region and Northeast, which has 37 million residents. Hochul said that the most intense bands of showers could bring up to 5 inches (12 cm) of rainfall across New York City and Long Island, as well as the Hudson River Valley. The rainfall rate may exceed 2 inches an hour. Hochul said, "I urge all New Yorkers stay vigilant, be informed and exercise caution, as we are expecting excessive rain with the possibility of flash flooding." In a statement, Tahesha Wad, the acting Governor of New Jersey, said that New Jersey should expect rainfall totals between 1 and 3 inches in general, but localized downpours could reach 5 to 7 inches. She warned that extreme rainfall in New Jersey could cause landslides and rock slides, as well as flash flooding on roadways. The damaging winds of thunderstorms would also pose additional dangers. Way, lieutenant-governor, issued a statement saying that residents should stay off the roads, and inside, unless it is absolutely necessary. She temporarily serves as the chief executive of the state while Governor Phil Murphy is on vacation. The Weather Service said that the storm threat was due to a frontal cold system bringing an unstable air mass, as well as a large amount of atmospheric moisture. Reporting by Joseph Ax, Los Angeles; Additional reporting by Steve Gorman; Editing by Sandra Maler & David Gregorio
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Southwest Airlines names Doug Brooks board chairman
Southwest Airlines announced on Thursday that Doug Brooks, an insider, will be the new independent chairman of its board. This appointment takes effect August 1. Rakesh Giangwal, who was previously the chairman, resigned due to other commitments, unrelated to Southwest Airlines, but remained on board. He became board chair last November. Southwest announced the formation of a "Fleet Oversight Committee", which will assist the board with its oversight of the airline's fleet acquisition strategy. Gangwal will serve as the chair of this committee. The company announced that Gangwal would continue to serve as a member of the Finance and Nomination & Corporate Governance committees. Brooks was previously the chief executive of Brinker international. He has been a director with the airline since 2010. Southwest is still struggling to get its bearings after the COVID-19 Pandemic. The company's poor earnings have increased pressure on it to change its business model. Southwest Airlines has made a number of changes. It ended the open-seating policy that had been central to the brand image of Southwest for over 50 years. They also introduced a new basic economy fares and in the last quarter began charging for checked baggage, ending an exclusive free policy. The trade war of Donald Trump has only exacerbated the challenges. Southwest Airlines, the biggest U.S. domestic airline, reduced its profit forecast for the year last week by up to $1.1 billion. Reporting by Rajesh Kumar Singh and AnshumanTripathy in Chicago; editing by Alan Barona
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FAA audit finds that SkyWest maintenance issues are not resolved by FAA
A government report on Thursday said that the Federal Aviation Administration failed to address persistent problems with SkyWest Airlines maintenance practices, which its inspectors feared could lead to an accident. SkyWest, the largest regional airline in the United States, operates flights for United Airlines as well as Delta Air Lines and American Airlines. A report by the Transportation Department Office of Inspector General found that FAA safety inspectors had been unable to resolve issues related to SkyWest's remote maintenance practices over a period of more than four year. The report stated that under this practice, which was introduced in 2018, SkyWest or contracted mechanics who perform maintenance at an aircraft's location are overseen by centrally located maintenance control at SkyWest headquarters in Utah. According to the audit, FAA inspectors discovered that SkyWest "inappropriately delayed maintenance for items on SkyWest's minimum equipment list, dispatched aircraft for flights without requiring inspections, used pilots for maintenance tasks not authorized in SkyWest’s maintenance manuals." SkyWest stated that it is committed to maintaining high standards of safety and conformity in all areas of its operation. It also said that it had taken a number of actions to assist the FAA in "identifying and resolving any issues with either our processes or SkyWest's Safety efforts." The FAA has worked to resolve 32 issues with SkyWest since 2021. According to the report, at the time the inspector general conducted its analysis in 2010, the FAA had already resolved 26 issues. However, non-compliance with SkyWest's practices for remote return-to service maintenance remained. Despite the fact that several FAA inspectors had identified similar systemic hazards, it was not until two years later that an agency-wide review of systemic risks began. The report stated that FAA inspectors are frustrated by the delay in their work and "concerned about how remote maintenance practices of the airline could lead to an accident." The FAA stated that it agrees with six out of seven recommendations, and plans to implement them before July 2026. The FAA also acknowledged that delays in submitting submissions can affect safety assessments. A report stated that an accident occurred in New York on March 20, 2020. The accident revealed pilots performing unauthorized maintenance procedures. The report said that in 2023, the remote return-to service maintenance actions could have led to flights not meeting FAA safety standards. The report mentioned an aircraft that was released for flight with no required operational altimeter, and another flight which included a fuel fault warning message improperly delayed. (Reporting and editing by Alexandra Hudson, Jamie Freed and David Shepardson)
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Uber claims some sexual assault accusers presented fake receipts
Uber found that in more than 100 cases, passengers who accused its drivers of sexual assault or harassment provided phony or doctored receipts as proof or failed to explain why they could not provide receipts. Uber filed a court document on Wednesday urging U.S. district judge Charles Breyer to order that 21 plaintiffs who have receipts they are not sure of should justify their claims, and 90 plaintiffs without receipts provide them, or give "non boilerplate" reasons as to why they were absent. Court documents show that at least 11 law firms are representing the plaintiffs. The plaintiffs were not charged with any wrongdoing. Uber is trying its best to limit its liability in the nationwide federal litigation, which includes more than 2,450 lawsuits alleging misconduct by drivers. San Francisco's company is facing several hundred more lawsuits at San Francisco Superior Court. In a joint press release, lawyers Rachel Abrams (lead federal litigation for plaintiffs), Sarah London, and Roopal Luhana said that they take Uber's claims seriously. Uber has said that it knows that some victims of sexual assault may not have receipts, because they ordered their ride from someone else. The increased risk that guests face when assaulted makes Uber's emphasis on documentation "more disturbing." Uber maintains that it is not liable for the criminal acts of drivers who connect with its passengers and that background checks and disclosures are sufficient. Breyer dismissed on July 8 some claims of fraud and liability based upon ads that promoted Uber's ridesharing service as an alternative to drunken driving. Uber's Wednesday filing revealed that some fake receipts appeared to have been generated by third-party websites. Uber claimed that some receipts had math errors, bogus surcharges or were timestamped before the ride occurred. They also said they contained stray marks or did not match their own formatting. The company stated that one plaintiff had submitted two receipts, and two plaintiffs had submitted different versions of a receipt. Uber stated that honesty is the most important factor in maintaining the integrity of our court system. It is hard to imagine a more grave act of misconduct than the fabrication of evidence by plaintiffs in this case. In re Uber Technologies Inc. Passenger Sexual Assault Case, U.S. District Court Northern District of California No. 23-03084. Reporting by Jonathan Stempel, New York Editing Rod Nickel
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Embraer escaped Trump's tariff blitz with flying colors
E mbraer avoided a major revenue hit on Wednesday, when U.S. president Donald Trump exempted aircraft from the higher tariffs he imposed against many Brazilian products. Embraer, along with its U.S. partner companies, argued that Trump's 50% tariffs would disrupt local businesses and deliveries. They also argued that Embraer's Brazilian jets were essential for regional flights within the United States. Four airline officials said that U.S. carriers privately asked the Trump administration to exempt Brazilian aircraft exports from higher tariffs. Envoy Air Piedmont Airlines Republic Airways and regional carriers Envoy Air and Piedmont Airlines wrote to the Commerce Department expressing concerns. Francisco Gomes Neto, CEO of Embraer, rushed to meet several high-ranking officials in the Trump administration. He told Valor Economico that among those officials were Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick. The main argument was simple: Embraer is a major employer in the U.S. and the largest aviation market in the world has no substitute for the E175 jetliner. This is the only jet produced today that meets the clause in labor agreements which prohibits planes with a weight of more than 86,000 pounds or 76 seats to be flown on regional routes. Embraer is awaiting the delivery of 200 E175 aircraft to U.S. carriers including American Airlines Group SkyWest Alaska Air Group Republic. U.S. customers also purchase 70% of its executive aircraft. SkyWest warned analysts in a conference call last week that they were not willing to pay for a tariff of 50% on new aircraft deliveries. They planned to work together with Embraer, and other partners, to delay the deliveries until the situation is resolved. Alaska said that it may also consider delaying deliveries. Analysts labelled Embraer as the main beneficiary of Trump’s exemptions after relief was received on Wednesday. This decision pushed Embraer's Sao Paulo traded shares up by more than 20% since their Wednesday lows. JPMorgan wrote in a client note that "given this news, JPMorgan expects Embraer to reach new highs." US TIES Gomes Neto stated earlier in the month that the impact of tariffs on Embraer could be similar to the COVID-19 Crisis, where Embraer saw its revenues fall by 30% and reduced its workforce around 20%. As Trump threatened levies, the Brazilian government was most concerned about the planemaker. Sources familiar with the situation said that Brazilian officials asked Washington to exempt Embraer aircraft from the tariffs. Embraer tried to convince Trump that the United States would also benefit from a reprieve. The company emphasized that it had approximately 3,000 employees in Brazil and its final assembly lines of executive jets are located there. 1 market. Embraer's aircraft are equipped with a large number of parts from the United States, including General Electric engines. The company estimated in a report earlier this month that it could purchase up to $21 billion of U.S.-made products between now and 2030. In a Wednesday statement, Embraer praised Trump's decision. It said that the decision confirmed the positive impact of the Brazilian economy and the strategic importance to the U.S. The 10% tariff will remain in place for Brazilian products. The firm stated that the tariffs were harmful but manageable and pledged to continue advocating for zero-tariff policies. SkyWest stated that due to the E175's U.S.-made components, the actual levies would be between one third and half of 10%. Last week, American Airlines, one of its major clients, expressed optimism about the resolution of the situation. In an interview conducted last week, CFO Devon May said that a tariff rate of 50% did not make any sense. He said: "I believe the administration understands Embraer's importance to North American carriers, and to our economy. So hopefully we can get to a more favorable position there." Robert Isom, CEO of Embraer, told analysts in a conference call that he had made sure the company and its administration were aware of their interests. Reporting by Gabriel Araujo, in Sao Paulo; David Shepardson, in Washington; Lisandra Paraguassu, in Brasilia; Tim Hepher, in Paris and Rajesh Kumar Singh, in Chicago. Editing by Manuela andreoni, Rosalba o'Brien.
Air France-KLM and Lufthansa defy worries about a trade war with Q2 growth
European airlines Lufthansa, Air France-KLM and United Airlines reported higher profits in the second quarter on Thursday. This was despite concerns that U.S. tariffs and economic uncertainty could affect transatlantic travel.
The transatlantic routes are the most profitable for airlines. In recent years, British Airways owner IAG has benefited from this as European competitors have struggled.
Delta was among the U.S. carriers that abandoned their full-year forecasts in spring due to a weakening of travel demand. This followed President Donald Trump’s tariffs, which shook consumer and business confidence.
However, European airlines are bucking this trend.
Lufthansa reported on Thursday that demand for its premium products in the United States was strong, despite the weakening dollar. Air France-KLM also highlighted the strength of their premium offerings.
Lufthansa announced a 27% increase year-on-year in its second quarter operating profit, which reached 871 million euro ($995 millions), exceeding the analysts' average estimate of 805million euros.
In a press release, Carsten Spohr, Chief Executive Officer of the company said: "Despite the fact that the second quarter saw a return to geopolitical crisis and economic uncertainty, we confirm today our positive outlook for this year."
CONTRAST WITH THE UNITED STATES
Bookings for U.S. Airlines have improved since late June, after a sharp decline in March and April following Trump's trade war.
Although demand has stabilised, airline executives claim that it is still below the estimates made at the beginning of the year. The spending of price-sensitive travelers is also down, despite the uncertainty surrounding the U.S. economic situation and rising costs.
Europeans are often known to be more price sensitive than Americans and have less spending power. The wealthy Americans who are visiting Europe this summer are not poor.
Delta and United Airlines have performed better despite the fact that domestic U.S. travel is struggling, affecting budget airlines.
FIXING WEAKNESSES, NEW STRENGTHS
In a client note, Bernstein analyst Alex Irving stated that the investment in Italy's ITA Airways contributed a "surprisingly large" profit to group's bottom-line.
Since the pandemic, Lufthansa struggled to cope with increasing labour costs and a slowdown in traffic from Asia. The airline issued two profit warnings.
The company stated that the decision to focus on Italy as a cost-savings measure was paying off. Rome is much cheaper to maintain than German base.
Air France-KLM’s operating profit for the second quarter rose to 736 millions euros, up from 513million euros a year ago. This is in line with analysts' expectations.
Air France has been able to capitalize on the strong demand for flights to Paris, and its appeal as a luxury French airline. KLM has had ongoing problems at Schiphol Airport near Amsterdam.
(source: Reuters)