BA sinks deeper into the red

After losing £1 billion over the past two years, British Airways has sunk further into the red with a £164 million loss for the last quarter. The flag carrier cited the cabin crew strikes and volcanic ash cloud for costing it an estimated £250 million.

However BA painted a more optimistic outlook, saying that “while some economic experts are flagging the risk of a ‘double-dip’ recession, the steady recovery continues.”

Chief executive Willie Walsh said the airline had seen an improved operating performance despite the disruptions and that BA expects to break even this year after two years of losses. Operating losses narrowed to £72m from £94m in 2009.

Walsh said he saw “positive underlying trends in both cargo and passenger traffic”.

Cabin crew have taken 22 days of industrial action since March and further walkouts could take place from September as the unrest lingers on.

With the threat of cabin crew strikes still lingering, Walsh signalled there will be no let up in his effort to change BA.

“Introducing permanent structural change across the airline remains our priority,” he told reporters.

The results came as it emerged that BA cabin crew was planning a 12 days of Christmas strike action.

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Staff are said to want a repeat of the action threatened last year, which was only prevented when a High Court ruled against it.

Walsh said he believed the ‘final’ offer rejected by Unite members earlier this month still formed the basis of a resolution to the dispute. But he also added that he was confident of running 100 per cent of long-haul flights if there was more industrial action.

“We continue to train volunteer cabin crew and that programme is going very well. I am looking forward to hearing what the trade union has to say in light of the poor turnout in the last ballot.

“I want to reach a resolution but we are preparing for further industrial action. I am confident we will operate 100 per cent of our long- haul services and we are looking at the short-haul programme.”

Stelios escalates row with easyJet

Just hours after releasing financial results suggesting the airline had weathered the economic storm, easyJet has hit turbulence with founder Sir Stelios Haji-Ioannou.

The Luton-based airline confirmed yesterday revenue rose by more than five per cent in the three months to June, despite the volcanic ash cloud costing it £65 million.

Despite this performance, the airline has been plagued with punctuality issues during the summer season, resulting in a withering attack from the flamboyant owner.

In a letter addressed to easyJet chairman Sir Michael Rake, Stelios has threatened to withdraw the ‘easy’ brand from the airline as concerns over increases in cancellations and poor punctuality at Gatwick persist.

Branding the company an “operational mess”, the founder – still the largest single shareholder in the organisation – issued a cure notice, threatening to withdraw the brand in 90 days if services did not improve.

Stelios Letter

In his letter, Sir Stelios said: “The result of the operational mess that the company is in is that it has too few staff to meet the number of flights it has sold.

“This leads not just to delays but a serious increase in cancellations, seemingly many at the last minute.

“This is extremely detrimental to the goodwill and reputation of the airline and the brand in particular.

“Many years of carefully building goodwill is being eroded in a matter of months.

“As the owner of this brand I cannot stand by and let this happen.

“This is why I have served a cure notice demanding easyJet improve its punctuality and cancellation performance.”

Reaction

However, easyJet has reacted to the claims by stating Stelios does not have the right to renegotiate the brand licence agreement over punctuality.

“EasyJet is advised that the brand licence does not impose or create any contractual obligation regarding on time performance and consequently easyGroup has no right to terminate the brand licence,” the airline said in a statement.

However, the airline has admitted to staff shortages, with incoming chief executive Carolyn McCall, who has been in the job for three weeks, focusing her attention on alleviating the concerns.

A shortage of pilots has been cited as a key reason for delays, with easyJet laying off a number of pilots during the depths of the economic crisis and failing to react to the unexpectedly busy summer.

Easyjet said cabin crew headcount has increased to 3,580 for the week ending July 12th compared with 3,321 in the same week in 2009 after a recruitment drive over the spring, while pilot numbers have jumped to 1,793 compared to 1,677 a year earlier.

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Soaring demand sends Singapore Airlines back to black

Singapore Airlines, the world’s second largest airline by market value, has posted stronger than expected quarterly profits on the back of resurgent passenger and freight demand.

SIA registered a first-quarter profit of SG$253m (US$184.7m) for the three months between April and June, comfortably ahead of analyst expectations and compared with a loss of SG$307m for the same period a year ago.

The recovery came despite the volcanic ash cloud that forced the widespread closure of European airspace in April. SIA put the losses due to the crisis at SG$50m.

Passenger numbers rose by 5.5 percent in the quarter, while the amount of cargo space filled rose from 60.6 percent a year ago to 65 percent. Revenue rose to SG$3.47 billion for the quarter from SG$2.87 billion a year earlier, whilst expenditure nudged up from SG$3.22 billion from SG$3.19 billion.

Singapore Airlines flew 4 million passengers last quarter, up from 3.8 million a year earlier.

SIA said the rebound would continue till at least the end of the year.

SIA said in a statement: “Advance bookings indicate that the year-on-year recovery in passenger carriage and yields evident in the quarter to June will hold up for the rest of 2010.”

Singapore Airlines was voted “World’s Leading Airline” at the 2008 World Travel Awards.

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BAA staff threatens strike chaos

Millions of airline passengers could face severe disruption at the UK’s largest airports during the August bank holiday weekend after the Unite trade union announced a strike ballot at BAA.

More than 6,000 workers, including firemen, security guards and engineers, are to vote on whether to strike over a pay dispute. The ballot closes on 12 August, which could lead to a walk-out on the August Bank Holiday weekend, one of the busiest periods in the travel calendar.

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The owner of Heathrow, Stansted, Glasgow and Edinburgh airports is embroiled in a pay dispute with Britain’s largest trade union

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Unite, which represents nearly two-thirds of BAA’s workforce, is confident of industrial action after a 1 percent pay increase was rejected in a consultative ballot by nine out of 10 members, paving the way for a formal ballot.

BAA is the UK’s largest airport owner and its terminals handle more than 300,000 passengers per day.

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It has admitted that it would be unable to operate if the staff do go on strike, and would be forced to shut Heathrow, Stansted, Southampton, Edinburgh, Aberdeen and Glasgow.

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The row centres on what Unite, which is also the union behind the BA cabin crew strike, described as a paltry one per cent offer from BAA following a pay freeze last year.

Brian Boyd, Unite’s aviation officer, described BAA’s offer as “measly” and “nothing short of confrontational”.

A spokesman for BAA said its offer was “reasonable” at a time when aviation was seeing a decline in the number of passengers.

“Last year, staff accepted a pay freeze, their generosity helped the company, BAA has returned the favour with no bonus and a one per cent pay offer when inflation is currently five per cent. Over 6000 BAA staff will now begin receiving ballot papers asking them if they are prepared to take strike action.”

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The transport secretary, Philip Hammond, said: “We have recently seen the disruption industrial action can cause at our airports, and another strike now is the last thing passengers need. I strongly urge both sides to find a resolution to this dispute so that passengers can enjoy their summer holidays free from the stress and concern that a major strike would bring.”

Japan Airlines Shifts to New Terminal 3 at Indira Gandhi Airport in New Delhi

Japan Airlines (JAL) will relocate its flight operations from Terminal 2 of Indira Gandhi International Airport in New Delhi, to the airport’s newest Terminal 3.

In Terminal 3, JAL customers can check in for their flights at a dedicated JAL check-in island located conveniently near the security screeners and from mid-August*, eligible JAL passengers may also access the lounge of India’s leading domestic carrier - Kingfisher. Kingfisher is slated to join in 2011, the world’s leading quality airline alliance oneworld, of which JAL is also a member. The lounge, designed in hues of red, offers wireless LAN connections, shower facilities and a business center among other amenities. JAL’s top tier frequent flyers who are entitled to use the lounge, may also bring one accompanying passenger each.
*Information of an interim lounge that will be used before the completion of the relocation will be provided to passengers.

The construction of the ultra-modern Terminal 3, a befitting symbol of India’s swift and vast economic growth and expansion, was completed within 37 months and boasts the use of state-of-the-art technologies. An outstanding facility among airports in Asia, its function as a strategic hub in South Asia is highly anticipated. The 120-acre terminal, in which several Indian carriers are also scheduled to commence domestic operations from August 27*2, will enable passengers to smoothly transfer between international and domestic flights. In addition, it is an excellent gateway for passengers traveling from the east of Asia to the Middle East.

Japan Airlines operates 3 weekly flights direct from Tokyo, Narita to New Delhi using a Boeing 777-200 configured with the award-winning JAL Shell Flat Seat in Executive class and JAL Sky Shell Seat in Premium Economy.

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Revitalised aviation soars at Farnborough

Aviation commentators are predicting an end to the global economic slump as aircraft orders continue to accumulate at the Farnborough International Air Show.

The show – which is scheduled to continue into the weekend – has already seen Boeing walk away with 103 orders for new aircraft, with a total value of over $10 billion.

A resurgent Airbus has also performed well, with the European manufacturer recording 130 contracts with total list prices of $13 billion.

In addition, the European company announced $15 billion of pledges, compared to $4 billion at American rival Boeing.

Airbus

John Leahy, Airbus chief operating officer said: “Before the Farnborough Air Show we already had 131 orders [for 2010], and we predicted by the end of the week we would double that.

“Indeed, the commitments which we have already received here bring our total firm orders this year already to over 260 aircraft.”

Mr Leahy went to add Airbus now expected to meet its target of 400 aircraft sales this year.

Firm Airbus orders at the show came from General Electric’s GECAS for 60 A320s worth around $4.9 billion; from Air Lease Corporation for 51 A320 Family aircraft worth $4.4 billion; from Aeroflot for 11 A330-300s worth $2.3 billion; from Garuda Indonesia for six A330-200s worth $1.2 billion; and from Germania for five A319s worth $372 million.

Airbus aircraft at the Farnborough International Air Show

Boeing

RBS Aviation Capital was among the largest customers for Boeing, with the group placing an order for 43 Boeing next-generation 737-800 aircraft, valued at approximately $3.3 billion.

American Airlines also exercised an option on a further 35 of the aircraft as part of an ongoing fleet renewal programme.

Boeing’s new 787 Dreamliner also made its public debut at the show, following over two years of delays.

The aircraft is now expected to be delivered to airlines – with Japan’s All Nippon first in the line – at the start of 2011.

Boeing’s 787 Dreamliner made its first public appearance at the show

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Empresa Brasileira de Aeronautica SA also scooped 37 contracts worth $1.4 billion for its regional jets.

The bulk of the orders were placed by British carrier Flybe, together with pre-orders for an additional 34 planes valued at $1.3 billion.

The Brazilian air force also stepped in, placing making a future purchase of 28 KC-390 aircraft at the air show.

“The Brazilian Air Force has been Embraer’s most important strategic partner since the company was founded in 1969,” said Embraer executive vice president for the defence market Orlando José Ferreira Neto.

“This announcement reinforces Embraer´s motivation and commitment to conceive a state of-the-art product that should exceed FAB requirements and overall market expectations.”

Bombardier also presented 23 firm orders for its business jets and turboprops during the event - valued at $1 billion

However, the Canadian company announced no regional jet contracts and failed to secure Qatar Airways as a buyer for the CSeries.

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Farnborough orders top $25 billion

The tally of plane orders by the close of third day of the Farnborough Airshow has passed the $25 billion mark, as a resurgent commercial aviation sector offset severe cut backs to government defence expenditure.

Though the show remains a long way off the record-breaking $88.7 billion of bookings announced at Farnborough in 2008, sales are well above the $7 billion placed at last summer’s sister airshow in Paris.

Airbus enjoyed the bulk of today’s bookings, including Thai Airways making a commitment to buy seven A330-300s worth around $1.5 billion, as well as sales to Berlin-based Germania, which signed a contract for five Airbus A319s.

Indonesian flag carrier Garuda has purchased of six long-range A330-200s, worth $1.1 billion at catalogue prices, to expand its new premium service “to more international destinations in a profitable and efficient way.”

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Boeing’s sales included Air Austral ordering two long-range 777-200s, worth $501 million at catalog prices. Qatar Airways had ordered two 777-200LRs for the same price.

Qatar also revealed that it was taking earlier delivery of Boeing’s 787 jetliner to meet increased demand.

“Air travel demand is continuing to rise in the Middle East and it is becoming clear that international demand is returning as the global economy shows signs of recovery,” said Qatar Airways CEO Akbar Al Baker.

Bombardier picked up an order for seven Q400 turboprop airliners from Qantas Airways, worth $218 million at list prices.

New leasing company Air Lease Corp. has so far signed the biggest deals, dividing orders for 115 planes worth $8.6 billion between Boeing, Airbus and French-Italian regional turboprop manufacturer ATR.

More than 1,000 exhibitors from 38 countries have signed up for Farnborough, with delegations from Egypt, Taiwan and Morocco attending for the first time. Organizers also cited stronger interest from major players China and Russia.