Aviation Industry Updates: February 22, 2022

2022 Will Be A Defining Year In American Aviation

• Arguably the biggest story of 2022 is the anticipated merger between Frontier Airlines and Spirit Airlines. Creating the fourth-largest carrier in the US and largest ultra-low-cost carrier (ULCC) in the country, the merger was not exactly unexpected. Still, its timing and impacts will certainly be notable and put a real test on the industry.

• United Airlines announced last year that it would be moving its attention to a more premium travel experience. Estimated this year, the airline is planning a double-digit percentage increase of roughly 25% in its premium seats per departure in 2022, when including both first class and extra-legroom economy products. In the widebody market, United already beats its competitors in premium cabins per departure on long-haul international operations.

• American Airlines will be the center of attention in many of the big happenings in the industry in 2022. First and foremost, the airline made headlines late last year when it announced it would need to pull back its schedule as a result of ongoing delays to Boeing 787 deliveries. It may still need to pull back some of its capacity as the timing of the resumption of 787 deliveries remains unclear. It is, however, teasing some interesting plans with its Boeing 787-9s.

• Southwest Airlines is the largest domestic airline, but what it plans to do in 2022 is not continue to expand but continue to grow depth. It wants to bring back its pre-crisis schedule, which will be much of the airline's focus in 2022. Building back this schedule along with the airline's major expansion throughout the crisis and growth in Hawaii, Southwest will be a much stronger airline domestically, all while adding more MAX jets to its fleet.

• The US airline industry will be undergoing a major change in 2022. With the continued rise of ULCCs, a continued bet on various strategies, and a major year for the government's interest in competition in the marketplace have set the stage for a defining and very interesting year in American aviation

Simple Flying

Delta Air Lines Rebuilds Fleet Modernization Plans

KEY POINTS:

• Prior to the COVID-19 pandemic, Delta Air Lines ( DAL -1.08% ) planned to modernize its fleet at an aggressive pace in the early 2020s. However, the pandemic forced management to dial those plans back dramatically to reduce capital expenditures (capex) while matching the fleet size to demand.

• As of the end of 2019, Delta planned to take delivery of 66 new mainline jets annually in 2020, 2021, and 2022. It expected to spend over $10 billion on aircraft purchases over that three-year period. Including non-aircraft spending, that would have put annual capex well above $4 billion.

• The onset of the pandemic caused management to rethink those plans. Delta Air Lines ultimately deferred more than half of its planned 2020 aircraft deliveries, adding just 30 new mainline jets to its fleet that year.

• Additionally, Delta cut back on its planned aircraft purchases for the following years. As of a year ago, the company expected to take delivery of 33 new mainline aircraft in 2021, followed by 39 deliveries each in 2022 and 2023. This order book restructuring reduced planned capex between 2020 and 2022 by over $5 billion, helping to safeguard Delta's balance sheet.

• With air travel demand recovering rapidly, Delta Air Lines took all 33 mainline jets on its delivery schedule for 2021 -- and then some. During the year, the airline agreed to buy 29 used Boeing 737-900ERs and lease nine Airbus A350-900s. About half of those aircraft arrived by year-end, although they have to be refurbished before entering service for Delta.

• Most of Delta's aircraft deliveries over the next three years will be used to replace aircraft that were designated for retirement during the pandemic. However, that will still leave a lot of aircraft nearing retirement age in the active fleet.

• Aside from the fuel and maintenance benefits of modern jets, Delta's fleet renewal program will simplify its fleet even further. That should significantly reduce overhead costs and boost productivity. This will be a powerful lever to offset inflationary pressures over the next decade, helping Delta Air Lines expand its profit margin and grow its earnings to record levels.

Motley Fool

Small Communities Feel Impact of Pandemic

KEY POINTS:

• A small Oklahoma city and its local college are ponying up $4 million over two years to keep American Airlines flying daily to the city.

• Dallas/Forth Worth-based American Airlines first started flying to Stillwater Regional Airport in Oklahoma in 2016 but recently planned to back out due to unprofitability. However, on Monday, the Stillwater City Council approved a joint deal between the city and Oklahoma State University to keep the service afloat, according to Stillwater News Press.

• Currently, American is the only airport that flies to the city, offering service to Dallas/Fort Worth via its wholly owned subsidiary, Envoy Air.

• "We are proud to continue serving Stillwater and providing the local community access to our global network," American told Insider in an email statement confirming the deal.

• OSU and the city each plan to put up $500,000 for the first half of 2022 to keep the airline running, according to Stillwater News Press. Then, the entities will contribute $1 million each for the 2022-2023 fiscal year, which starts on July 1, 2022, and another $500,000 for the second half of 2023.

• Despite the threat of losing air service entirely, there are several airports that benefit from the government's Essential Air Service (EAS) program. The program ensures certain small communities do not lose airline connections to the rest of the country, though Stillwater is not one of them.

• One EAS city losing its only airline is Ogdensburg, New York, located on the border of Canada. SkyWest's United Express flight will end in 2022 after giving a 90-day departure notice in January, according to local news channel WWNY.

• SkyWest is required to stay until a new operator is in place, WWNY reported. However, because Ogdensburg is an EAS airport, two airlines have applied to take over operations, including Boutique Air and Air Charter Express, according to the Department of Transportation.

• However, not every airport is eligible for EAS, leaving some cities without any operator at all. Williamsport Regional Airport in Pennsylvania lost commercial air service in 2021 when American Airlines pulled out after the federal payroll support program ended, reported the Philadelphia Inquirer.

Business Insider

Piedmont Expands New Crew Base | Plans To Hire 400 Pilots In 2022

KEY POINTS:

• Following a year of record performance, American Airlines wholly owned subsidiary Piedmont Airlines will expand to a new crew base in May. The domicile, in state capital Harrisburg, Pennsylvania (MDT), drives network efficiency for Piedmont, increases line values and provides additional opportunities for commuting crew members.

• “We are excited to add another crew base location first for the quality of life it offers for our pilots and flight attendants who choose to live or commute there, and second for the value it adds to our operation,” said Piedmont Vice President of Flight Operations, Steve Keefer. “Piedmont took on many new challenges during the COVID-19 pandemic, including expanded routes out of Chicago, and our crews performed flawlessly. We are well positioned to now re-evaluate our network and optimize our value to American Airlines and its customers.”

• Piedmont currently operates a fleet of Embraer-145 aircraft out of American Airlines hubs in Charlotte and Philadelphia. At the height of COVID, Piedmont was one of only a handful of airlines to protect its pilots and flight attendants from layoffs. “Because we were able to keep our crews trained and flying, we could take on new opportunities for American,” added Keefer. “And that good work is paying off.”

• Piedmont plans to hire 400 pilots and 190 flight attendants in 2022. Piedmont team members enjoy the same flight benefits as American team members, and Piedmont pilots are guaranteed a job at American Airlines. Pilots hired in 2022 will receive up to $187,000 in bonuses over five years. Piedmont flight attendants reached a tentative agreement on a new contract in January which includes higher wages and industry leading benefits.

• “Establishing a new crew base is always exciting, but after two years of uncertainty across the industry this is a small but meaningful reason to celebrate,” said Piedmont President and CEO Eric Morgan. The new Harrisburg base will start with just 10 lines of flying and increase as the network warrants. “Piedmont will mark its 60th year in business in April,” added Morgan. “We look forward to another 60 years of growth and opportunity for our team members and the communities we serve.”

Piedmont Airlines

Weekly TSA Numbers

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