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Aviation Industry Updates: April 11, 2023

James Onieal : Apr 11, 2023 8:13:53 AM

Industry News Export

FedEx Announces Company Restructure As Pilots Picket

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FedEx Corporation will consolidate its operating companies into one unified organization, “Federal Express Corporation,” a restructuring it says will help streamline operations and enable a distinct focus on air and international volume.
FedEx called the consolidation an important step in its “DRIVE” transformation, which seeks to reduce costs to the tune of $4 billion by the end of fiscal 2025, including $1.3 billion in its air network and international operations. The company’s April 5 investor call announcing the changes came as FedEx Express pilots picketed on Wall Street over continued contract negotiations that began in May 2021.
“FedEx is at a pivotal moment in history,” FedEx Corp President and CEO Raj Subramaniam told investors on the call. “We’re transforming our operating model to be more flexible, efficient and an intelligent global network.”
The consolidation is planned in two phases, first with changes to its executive structure in mid-April before a second phase slated for June 2024 combines FedEx Express, FedEx Ground, and FedEx Services into one. Its business optimization costs, incorporating those for DRIVE and a network optimization strategy dubbed Network 2.0, are expected to be less than $2 billion, company executives said.

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FedEx, UPS Call Time On MD-11 Fleets

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Air cargo giants FedEx and UPS, the two largest remaining operators of the McDonnell Douglas-developed MD-11 freighter, have both announced plans to begin retiring their fleets of aging trijets.
Between them, FedEx and UPS currently operate 94 MD-11s, or almost half of the 200 aircraft delivered between 1990 and 2001. But FedEx, which was launch customer for the factory-built freighter version, has announced plans to phase out the trijet as part of a broad ranging cost-saving and modernization campaign, while UPS began retiring the first of its MD-11s in January.
Dubbed the DRIVE program, the FedEx streamlining effort aims to deliver $4 billion in cost reductions by the end of fiscal 2025. Raj Subramaniam, FedEx president and chief operating officer, says part of this effort is focused on reconfiguring the air network. “This requires many steps, including plans currently being developed to phase out our fleet of MD-11s. Our aircraft modernization program and use of [Boeing] 777s and 767s affords us the ability to flex our plans,” he adds.
Commenting at the company’s fiscal 2023 third quarter financial results call, Subramaniam says the decision also reflects a flatter market forecast. “Our fleet modernization strategy that we’ve been underway has allowed us to build a more agile and flexible fleet. And so, we come to a fork in the road here, are we going to see a high-demand environment or a low-demand environment? And the MD-11 was that flex fleet. And as we now look at the demand environment, we don’t see that high demand coming through.”

Aviation Week

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How Are The U.S. 'Big 4' Airlines Faring Compared To 2019?

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This week we look at how many flights (cycles) the U.S. “Big 4” airlines are operating compared to their respective equivalent month in 2019.
American Airlines: From January 2023, American has been operating more flights than the equivalent month from 2019, and flights have tracked very closely to 2019 numbers since.
Delta Air Lines: Delta has yet to operate the same number of flights compared to the same month in 2019, however they are operating in the upper 90% range and should surpass 2019 numbers in the coming quarter.
Southwest Airlines: Southwest have been operating at over 100% since August 2022, due to their strength in the U.S. domestic market. The only blemish is December 2022, with the well-publicized computer issues that Southwest faced during the month.
United Airlines: United surpassed 100% flight as of the start of the 4th quarter of 2022 and has remained above that number. Of all the “Big 4,” United leads in terms of number of flights when compared to its 2019 figure.

Aviation Week

Sun Country Creatively Grows Fleet | Acquires 5 737’s In The Process

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Sun Country Airlines, based out of Minneapolis, Minnesota, is about to expand its fleet to include five Boeing 737-900ERs currently in the care of Oman Air. The low-cost airline, with a mission to "connect guests to their favorite people and places, to create lifelong memories and transformative experiences,” now needs more efficient larger models of the 737 Next Generation.
According to ch-aviation.com, Oman Air was leasing all five of its Boeing 737-900ERs from the German financial firm KGAL. The agreement with Sun Country Airlines is that Oman Air will retain the 737-900ERs until the KGAL leases begin to expire in late 2024 and 2025.
As the leases to Oman Air expire, the 737-900ERs, aged between 8.5 years and 7.5 years, will transfer to Sun Country Airlines to provide the low-cost airline with more capacity. Sun Country
Airlines notes that leasing will allow the airline to grow “in a tight market at favorable economic terms while providing fleet growth certainty through 2025.”
Worth noting that the lease will be a dry lease. Therefore, Sun Country Airlines will be fully responsible for the maintenance and operation of the 737-900ERs.

Sun Country

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