Aviation Industry Updates: August 24, 2021

Southwest Crews Exhausted | Pilots Ready to Picket

• Southwest Airlines pilots are preparing to picket as front-line employees at the airline complain of mismanagement, low staffing, scheduling chaos and a lack of food and hotels for pilots and flight attendants.

• Unions representing Southwest's front-line employees say the airline is severely understaffed, but continues to pack its flight schedule as air travel rebounds, forcing pilots and flight attendants to regularly work the maximum number of hours permitted by federal law. Staffing and weather issues have forced Southwest to cancel thousands of flights this summer.

• On Thursday, by late afternoon, Southwest had canceled 170 flights and delayed 852 others, the most of any U.S. airline. At the same time, United had 31 cancellations, while Delta had four.

• Crews say they routinely arrive in destination cities only to learn they have no hotel or food availability and cannot reach the company for help.

• Casey Murray, a Southwest captain and pilot's union president, said issues raised with the company have largely been ignored.

• "Management's refusal to even attempt any of our solutions, or have any real discussion has led us to this point, we must accept that our efforts to improve efficiency and make Southwest Airlines more competitive have fallen on deaf ears, time and time again, because the company has made it clear that they are comfortable with the operation as managed," Murray said in a video to Southwest pilots Thursday morning.

• Southwest Vice President Bob Waltz acknowledged some of the airlines' challenges, telling ABC News in a statement: "The airline and travel industry have seen a multitude of operational challenges as we navigate the effects of the pandemic. We have teams across the airline working diligently to adapt to the current environment and support our employees during this peak travel season, including efforts focused on providing support to our pilots."

Yahoo News

Spirit Projecting Third Quarter Loss | Will This Impact Hiring?

KEY POINTS:

• Spirit Airlines is the latest U.S. carrier to warn that the resurgent Covid-19 pandemic will tip it into the red in the third quarter, reversing previous optimistic guidance that the worst of the pandemic was behind the industry.

• Of course, aside from the pandemic, it was a rough couple of weeks for the Florida-based budget carrier, which cancelled almost 3,000 flights in August, due to a confluence of weather-related delays and a shortage of airport staff that led to crews being out of position to operate flights.

• Re-booking costs and hotel accommodations are also eating into Spirit’s guidance. In its second-quarter earnings call last month, Spirit said it expected third-quarter earnings before income and taxes (EBIT) margins of between 10-15 percent, now revised down to between negative 8 and negative 1 percent.

• Spirit is facing softening bookings as travelers put off trips for fear of the Delta variant of the coronavirus, the carrier said in a filing to the U.S. Securities and Exchange Commission (SEC) Monday. The carrier expects this trend to cost it between $80-100 million in revenue in the quarter.

• Frontier CEO Barry Biffle said the carrier saw bookings soften in early August and expected the slump to last through about October. He cited data from Delta-variant outbreaks in the UK and Israel to posit the U.S. surge would last between six to eight weeks, although he noted the vaccination rates in those countries were higher than in the U.S. and argued for stronger mandates.

Airline Weekly

NetJets And Wheels Up | Divergent Growth Plans

KEY POINTS:

• NetJets and Wheels Up, two of the largest providers of private jet travel in the U.S., are charting markedly different paths for growth as they navigate what’s becoming a turbulent operating environment.

• For those who sell private jet travel – operators of the aircraft and charter brokers – demand has continued its upward trend to record levels in recent months. There are no signs it’s letting up.

• NetJets has taken delivery of 25 new private jets so far this year. It expects to spend around $2.5 billion to add another hundred by the end of 2022. In a long-tail industry, where less than a handful of charter and fractional fleet operators have that many aircraft in total, it’s clear the unit of Berkshire Hathaway is accelerating growth as it reports month after month of record flying.

• Still, the industry leader put the brakes on sales during the past 90 days. First, it pulled its Classic jet cards. It also pulled the super midsize Cessna Citation Latitude from its Elite jet cards, which allow you to book up to 24 hours before departure.

• In early July came the big news. NetJets suspended sales of its entry level Embraer Phenom 300 and Citation XLS offerings across all products – fractional ownership, leases and jet cards. It also hiked prices on the Elite cards between two and eight percent. For new customers, a 25% surcharge on 45 peak days was replaced by a total blackout.

• A spokesperson for NetJets says it doesn’t have a date to restart sales of the paused programs, however, it is building a long waitlist.

• On the flip side, Wheels Up, which recently started trading on the New York Stock Exchange after a SPAC merger, is ramping up sales. Using a membership model, it books customers on a fleet of owned and managed aircraft as well as jets it charters from third-party operators.

• During its second-quarter earnings call with analysts last week, Wheels Up said one-third of its off-fleet flights are now part of guaranteed rate programs. The GRPs entail buying out aircrafts from other operators from one day to a year, essentially blocking their entire capacity.

Forbes

Breeze Focuses on Operations After Less-Than-Perfect Launch

KEY POINTS:

• Operational issues in June and July forced it to cull some frequencies from its schedule. The number of daily flights peaked at 66 a day on July 25 before falling to 60 a day the next Sunday, August 1, and remain there through at least the end of August, according to Cirium schedule data. And other flights were rescheduled to ensure that Breeze had two spare Embraer E-Jets from its fleet of 13 E190s and E195s for future disruptions.

• “We probably bit off a bit more than we could chew at the beginning,” Neeleman told Airline Weekly. “We got it done, [but] it wasn’t perfect.”

• Asked why the airline lacked spares at its start and he said it was simply a desire to maximize revenues.

• “No one really cares about revenue right now, we just need to run an airline,” said Neeleman, adding that he “cares more” for operational integrity now. It was an operational meltdown over Valentines Day weekend in 2007 at his best known venture, JetBlue Airways, that forced his exit as CEO of the carrier.

• And as for the Covid-19 Delta variant that several competitors have warned has dampened demand, Breeze sees some softness but has been able to stimulate bookings with fare sales, said Neeleman.

• Most of Breeze’s 16 startup markets are still developing and slowing growth during this period will allow them to mature, said Neeleman. Asked if any destinations were outperforming others, he declined to comment except to say that some were maturing faster than others. The airline has no plans to drop any markets, he added.

Airline Weekly

Weekly TSA Numbers

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