UPS Begins Replacing MD-11’s With 767’s
KEY POINTS:
- UPS has begun a planned retirement of aging MD-11 freighters as part of a plan to renew the fleet with more fuel-efficient aircraft that also coincides with new measures to reduce costs as shipping volumes decline.
- The parcel freight giant’s operating profit fell 3.3% in the fourth quarter on lower revenues as high inflation, the Ukraine war and COVID restrictions in China combined to slow global economic growth.
- The earnings report included the news that UPS (NYSE: UPS) will retire six of its 42 MD-11s this year. The first aircraft was pulled from the fleet on Jan. 2, said UPS Airlines spokesman Jim Mayer. The 26-year-old plane arrived at Southern California Logistics Airport in Victorville, a major desert storage site for aircraft, the same day, according to flight tracking site FlightAware.
- The MD-11s will be replaced by 28 factory-built 767-300 cargo jets previously ordered from Boeing, seven of which are scheduled for delivery this year.
- The twin-engine 767s offer lower operating costs, with better reliability and fewer carbon emissions than the tri-engine MD-11s.
- “Our MD-11s have served us well since we took delivery of the first aircraft in 2001. They were a mainstay on international routes, and more recently have operated primarily in the U.S. We will begin replacing them with new, more efficient 767s, with deliveries set to begin later this year,” Jim Joseph, president of UPS Airlines, said in a statement provided to FreightWaves.
Freight Waves
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JetBlue’s Two-Faced Approach to American
KEY POINTS:
- It’s been widely speculated this week that for JetBlue’s other Justice Department showdown to be successful (yes, it has two potential lawsuits in progress against the government at the moment) JetBlue could only merge with Spirit if it were willing to sacrifice the Northeast Alliance. It’s important to note that the DOJ has not formally sued for the second matter yet, but even the most enthusiastic pundits don’t see a JetBlue future where it can operate both.
- Assuming it is one or the other, is this a preview of how JetBlue will plan to operate South Florida after absorbing all of Spirit Airlines and its massive footprint? There’s no question that the acquisition of Spirit Airlines is the better long-term (and short-term) move for JetBlue’s Expansion and when given the choice, the Northeast Alliance would go away first.
- Rather, could this be political gamesmanship? Using a single short-haul flight from Fort Lauderdale to Tallahassee to talk about future European network advances, and expanding to 250 flights from FLL seems odd. As mentioned this isn’t even a route set to start for more than 10 months, it feels like it was just the next opportunity to get some attention.
- The question is whether that signals to the DOJ which has not yet sued that they can resolve both the NEA and Spirit question in one breath But it could also send a message to DOJ that it still sees American Airlines as a competitor and will call it out as such. Labeling it a “high-fare legacy airline” takes an open dig at American and shows that despite a partnership, the two remain competitors.
Live and Let's Fly
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Alaska Suffers 2 Tail Strikes In 6 Minutes | All Flights Grounded Briefly As A Result
KEY POINTS:
- On the morning of Jan. 26, as two Alaska Airlines flights from Seattle to Hawaii lifted off six minutes apart, the pilots each felt a slight bump and the flight attendants at the back of the cabin heard a scraping noise.
- As the noses of both Boeing 737s lifted skyward on takeoff, their tails had scraped the runway.
- Both planes circled back immediately and landed again at Seattle-Tacoma International Airport. Tail strikes happen occasionally in aviation, but two in quick succession was not normal.
- Bret Peyton, Alaska’s on-duty director of operations, immediately ordered no more planes were to take off across the airline’s network. All Alaska flights not already airborne were stopped nationwide.
- “At that point, two in a row like that, that’s when I said, ‘No, we’re done,'” said Peyton. “That’s when I stopped things.”
- Alaska’s flight operations staff quickly realized that a software bug was sending bad takeoff weight data to its crews. They immediately figured out a workaround and normal flying resumed.
- On Tuesday, following a series of recent safety incidents and dangerous close calls around the U.S. aviation system, acting Federal Aviation Administration Administrator Billy Nolen wrote a “call to action” letter warning that the U.S. system’s stellar safety record mustn’t be taken for granted.
Seattle Times
Delta | Positive Indicators For Continued Recovery
KEY POINTS:
- In 2019, the year before COVID hit the U.S. economy, Delta Air Lines (NYSE:DAL) stock closed above $60 multiple times. While the shares recovered fairly quickly after dropping below $20 in early 2020, briefly closing above $50 in March of 2021, they currently trade at $38.36. This is well above the 12-month low closing price of about $28 from late September of 2022, however. DAL returned -11.4% over the past 12 months, as compared to -19.3% for Airline stocks as a group (as tracked by Morningstar) and -4.7% for the S&P 500 (SPY).
- DAL reported results for Q4 of 2022 on January 13, 2023, beating expectations on earnings and revenue. Management also reiterated guidance for 2023, with expected EPS of $5 to $6 and YoY revenue growth of 15% to 20%.
- On February 6, 2023, the company published a presentation with additional guidance that indicated that operating margin, which was 7.8% in 2022, was expected to rise to 10% to 12% in 2023 and 13% to 15% in 2024. These numbers look plausible, given historical pre-COVID margins.
Seeking Alpha
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2023 HIRING EVENTS
Women In Aviation | FEB 23-25 | LGB MEET-N-GREET REGISTRATION
Delta Pilot Career Expo | MAR 6 | ATL
Frontier Meet-the-Chief's | MAR 16 | Dallas (registration link TBD)
American Airlines | MAR 21-22 | Houston (registration link TBD)
Delta Special Military Only Event | MAR 24 | JAX
TPNx | APRIL 21-22 | MCO
PAPA | MAY 18-19 | LAS
OBAP | AUG 9-11 | MSY
