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Aviation Industry Updates: October 11, 2022

By October 11, 2022October 18th, 2022Industry News

Mesa Sells 18 CRJ’s To United

  • United Airlines has reached an agreement with regional carrier Mesa Airlines over the acquisition of 18 Bombardier CRJ-700s.

  • United Airlines will bolster its regional fleet with the addition of 18 Bombardier CRJ-700s from Mesa Airlines. The 18 regional jets, which are in service under the United Express brand, will officially transfer to United Airlines in an agreement worth around $50 million.
  • According to the purchase agreement, each aircraft will be delivered “as is, where is”, while United has “agreed to deposit a specified sum per aircraft with FAA counsel, to be applied toward the purchase of each aircraft.”
  • In early 2021, Mesa Airlines announced it would end all CRJ-700 operations on behalf of United Express and lease the aircraft to GoJet Airlines, which now operates the jets under United Express. Even before the pandemic hit, Mesa had plans to phase out its CRJ-700s with the ERJ-175 before accelerating the process in the past couple of years.

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Delta & United Could Emerge As Big 4th Quarter Winners

KEY POINTS:

  • Full flights and busy airports are likely to continue in the U.S. through the end of the year, Wall Street analysts warn. Demand is forecast to remain robust as corporate travel continues to recover, and consumers shift spending back to services — like air travel — after a pandemic switch to goods.
  • Delta Air Lines and United Airlines could benefit the most from these trends in the fourth quarter, according to a recent report from Raymond James. This is not to say that revenues will weaken at other U.S. airlines, including American Airlines and Southwest Airlines, but more because Delta and United are more exposed to markets where the recovery has been slow but accelerated in recent months as more people return to offices and international markets reopen.
  • “It appears there is greater demand recovery among large corporates and in the northeast in particular, which along with gradual reopening of long-haul international markets likely places [United] and [Delta] in a relatively stronger position in terms of revenue recovery,” Raymond James analyst Savanthi Syth wrote.
  • New booking data from J.P. Morgan appears to confirm this view. In September, booked revenue for the fourth quarter was “comfortably ahead of 2019” at American and United, analyst Jamie Baker wrote Thursday. He added that Delta is expected to see similar trends.
  • A third point, and one beneficial to airlines, is consumers’ continued shift back to spending more on services. Melius Research analyst Conor Cunningham wrote Thursday that roughly 66 percent of consumer spending was on services in August compared to roughly 69 percent before Covid. He expects the percentage to revert to the pre-crisis norm in the months ahead.
  • “This is an important theme as it speaks on steadily improving demand for travel given a shift in spending habits,” wrote Cunningham.
  • These points are all good news for U.S. airlines as they near a full recovery from the pandemic. Most are expected to report strong results in the third quarter when travel demand was strong but capacity constraints — from staffing issues to air traffic control limits and aircraft delivery delays — kept airfares high. In September, United raised its third quarter revenue forecast a point to up roughly 12 percent compared to 2019, and Southwest honed its guidance to up 9-11 percent. And JetBlue Airways raised its unit revenue forecast by as much as three points to up 22-24 percent year-over-three-years.

Airline Weekly

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Ambrosi And Insler Compete To Become ALPA President

KEY POINTS:

  • Not surprisingly, the contest for president of the Air Line Pilots Association primarily involves leaders of ALPA’s two largest members, Delta and United.
  • On October 19, about 200 members of the union’s board of directors, representing pilots from each of the 40 member airlines, will vote for a new president to take office in January and serve a four-year term. ALPA represents about 65,000 pilots.
  • Top candidates are Jason Ambrosi, chairman of the Delta pilots since January 2021, and Todd Insler, former chairman of the United pilots, who left office in March due to term limits after three terms. Ambrosi is an Atlanta-based Boeing 757-767 captain while Insler is a Newark-based Boeing 787 international captain. Both are backed by the master executive councils of their airlines.
  • As of Friday, Delta ALPA and United ALPA each counted 14,500 member pilots at their airlines. Pilot counts at most airlines are growing. DePete is expected to resign at the end of his term.
  • The election comes at a crucial time in the pilot profession, due to a vast demand for pilots that is occurring just as more than half of the ALPA member airlines are in contract talks. Most talks have been delayed by the pandemic.
  • Most pilots expect substantial pay increases: The number 20% over three years has been floated as the amount of a possible increase for pilots at American Airlines, which is not an ALPA carrier, and pilots at regional carriers have secured even larger increases.

Forbes

FAA Credits Additional Military Experience Towards ATP Qualification

KEY POINTS:

  • A final rule published September 21 (effective October 21) allows additional options for military and Part 135 pilots to credit flight time toward the 1,000 hours of air carrier experience required to qualify to serve as pilot in command of a flight conducted under Part 121.
  • The final rule “broadens the existing 500-hour credit for military pilots of fixed-wing airplanes and can count towards the1,000-hour air carrier experience requirement by permitting certain powered-lift experiences to be credited,” the final rule states. “Additionally, in response to comments received, the FAA is also permitting a pilot to credit PIC time in certain part 135 eligible on-demand multiengine aircraft operations to count towards the 1,000-hour air carrier experience requirement.”
  • The final rule allows military pilots to credit up to 250 hours flown in powered-lift aircraft toward the time required for an initial ATP certificate. Of the 1,500-hour total time required for an ATP certificate, 250 of those hours must be flown as pilot in command or as second in command performing the duties of PIC. Powered-lift time must be acquired in horizontal flight to be credited.
  • In the past, military pilots of powered-lift aircraft seeking to earn an ATP certificate were required to obtain the 250 hours of PIC time in the airplane category. Because the FAA designated powered-lift aircraft in a separate category, military pilots were precluded from crediting any powered-lift flight time toward the ATP certificate.

AOPA

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Flexjet Going Public With $3.1B Value After Merger With SPAC

“Subscription-based private aviation company Flexjet Inc. said Tuesday it will go public through a merger with special purpose acquisition company (SPAC) Horizon Acquisition Corp. II HZON, -0.05% in a deal that values Flexjet at $3.1 billion. After the deal closes, which is expected to occur in the second quarter of 2023, Flexjet expects to be listed on the New York Stock Exchange (NYSE) under the ticker symbol “FXJ.” The companies said the deal is backstopped with a common equity capital commitment of up to $300 million from Eldridge Industries and Horizon’s sponsor. “Having capital and currency will position us to expand market share at an accelerated pace in an opportunistic environment,” said Flexjet Chairman Kenneth Ricci. “We will parlay our existing profitability and use that as a launch pad to accelerate our growth into the next chapter.” Horizon’s stock, which went public in December 2020, has gained 1.9% year to date while the S&P 500 SPX, -0.24% has lost 24.2%.”

United Looks At Potentially Opening New Crew Bases

As shared with us in a recent MEC memo:

  • The SSC is pleased to announce that the company has issued Notice of Proposed Decision Making (NPDM) 22-02, Additional Crew Bases. This NPDM seeks to explore the viability of opening additional pilot bases at United. While the NPDM is still in the initial phase, we would like to share a review of the NPDM process and how we proceed from here.
  • The first step in this UPA protected collaborative process is initiated by the company in the form of a letter to the SSC Chairman outlining the goals of the proposed action. The SSC will then review the letter and provide a written response to the company, which includes requests for additional supporting data and information for our review.
  • The SSC Manpower team will review the supporting information and formulate a recommendation. This recommendation, sent from the SSC Chairman, must be provided in a timely manner to the Managing Director of Crew Resources. In the case of NPDM 22-02, the company has requested an expedited timeline to complete the review by October 14.
  • Ultimately, if a final recommendation leads to the opening of a new base, further communications will outline related UPA provisions, such as the ability to participate in related Vacancy bids and existing freeze application. Opening a new base would, by default, include opening new categories.