Aviation Industry Updates: October 25, 2022

Southwest Airlines May Take A Back Seat To The Legacy Carriers

• Four U.S. legacy airlines have reported strong results over the past two weeks.

• Southwest guidance indicates challenges that will set back its return to profitability.

• One of the world's most consistently profitable airlines, Southwest will be at an earnings disadvantage for the foreseeable future.

• Low cost carriers including Southwest have long been able to offset their generally lower average fares by being more efficient and growing at faster rates than legacy carriers to keep cost growth at lower rates. However, Southwest’s ability to grow has been significantly impacted because of delays with the Boeing 737 MAX which is the only aircraft type that Southwest has on order.

• However, for the third quarter, LUV’s hedges will deliver much less of a benefit, in part due to Administration releases from the Strategic Petroleum Reserve which has helped depress crude oil prices, the commodity which Southwest hedges. While lower fuel prices are good for everyone, the reduction in fuel prices for LUV’s competitors removes some of the advantage which Southwest has had.

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Frontier Airlines Eyes Flights to Europe, Hawaii, South America

KEY POINTS:

• Frontier Airlines’ CEO has confirmed that he would be interested in entering one of the most turbulent markets in the industry. Flights from the U.S. to Europe would be made possible with a delivery of 18 Airbus A321XLR aircraft that the airline has on order.

• When Frontier takes delivery of its first A321XLR in 2026, the aircraft’s 4,700-nautical-mile range means they will be able to carry out transatlantic flights.

• Even when full with passengers, luggage, and cargo, the aircraft would be able to complete nonstop flights from the East Coast to various popular destinations in Europe.

• Biffle only mentioned transatlantic departures from Philadelphia, but the aircraft’s range would bring nonstop transatlantic flights from other Frontier bases such as Cleveland (CLE) and even Trenton (TTN), should there be enough demand.

• If successful, Frontier’s possible entrance into the transatlantic market could really shake things up for the dozens of legacy carriers already operating the routes.

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Hawaiian Airlines Announces Agreement with Amazon

KEY POINTS:

• Hawaiian Holdings, Inc. (NASDAQ: HA) (the "Company"), the parent company of Hawaiian Airlines, Inc. ("Hawaiian"), today announced an agreement with Amazon.com, Inc. and its subsidiaries (NASDAQ: AMZN) ("Amazon") to operate and maintain an initial fleet of 10 Airbus A330-300 freighters starting in the fall of 2023. Hawaiian will maintain and fly Amazon's A330s under Hawaiian's FAA air carrier certificate to move cargo between airports near the online retailer's operations facilities. The initial 10 aircraft will enter into service in 2023 and 2024. The agreement also contemplates the ability to expand the fleet depending on Amazon's future business needs.

• "We are excited to help serve Amazon customers by providing additional air cargo capacity and logistics support. This recognizes our experience in providing safe and reliable operations, our incredible front-line team, and our shared focus on the customer," said Peter Ingram, president and CEO at Hawaiian Airlines. "This relationship provides a catalyst to grow our business and the unique opportunity to diversify our revenue sources while capitalizing on our established strengths."

• "We're thrilled to work with Hawaiian Airlines," said Sarah Rhoads, Vice President, Amazon Global Air. "They will maintain and operate the next generation of aircraft in our fleet, which is a reflection of the excellence they deliver as a renowned airline with their own A330 aircraft."

PNR Newswire

Another Pathway Program Announced…Spirit!

KEY POINTS:

• Spirit Airlines has announced that it will launch a pilot pathway program called Spirit Wings Pilot Pathway. The program is intended to help the airline build a pipeline of consistent talent, allowing it to ensure that it remains adequately staffed for decades to come.

• The program is in collaboration with CAE flight school in Phoenix, Arizona. The partnership comes amid a worldwide shortage of qualified airline pilots. Spirit hopes these efforts to secure some of the limited aviation talent that exists will help it stay ahead of its competition.

• The pathway program is designed to help aspiring pilots along their path to becoming airline First Officers. Once students at CAE complete their training and acquire a total of 500 hours, they will have an interview with Spirit.

• If selected, they will receive a conditional offer of employment along with a Spirit flight bag. From here, they will be mentored by Spirit pilots until they acquire the needed 1500 hours to obtain their Airline Transport Pilot Certificate (ATP).

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Hiring Events

United Recruiting Event | MCO | Nov 5

American Meet-the-Chiefs | JFK | Nov 8-9

Alaska Meet-the-Chiefs | LAS | Nov 10

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