Aviation Industry Updates: Nov 14, 2023

Why Is United’s Airbus A350 Order So Important? | The Order Is Far More Significant Than One Might Think

KEY POINTS:

• United Airlines' order for 45 A350-900 jets is crucial for Airbus, as it demonstrates the airline's intention to replace older 777 jets, giving Airbus a victory over Boeing.
• The partnership with United is vital for Airbus to strengthen its foothold in the US market and be recognized as a legitimate threat to Boeing in the high-capacity market segment.
• The success of widebody programs is often what defines aerospace manufacturers. For Airbus, the success of the carrier's widebody operations hinges almost entirely upon a single aircraft type. While the Airbus A330neo is certainly a modern widebody, it is not a cutting-edge clean-sheet design and is essentially just an upgraded version of what is almost a 30-year-old airframe. Furthermore, the A330neo's success in the sales department has been lackluster, lagging behind the Boeing 787 Dreamliner by almost a factor of six.
• Of course, it is the Airbus A350 that defines the European consortium's widebody offerings and the aircraft that will define the success or failure of its widebody program in the decade to come. With 45 A350-900 jets on order, United Airlines could prove the critical customer for defining the Airbus widebody's long-term success.

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Southwest Doesn’t Do Red-Eye Flights — But That May Be Changing

KEY POINTS:

• Hearing someone say they love a red-eye flight is like hearing someone say they love the middle seat — it just doesn’t happen. Sleeping upright, with little legroom, within inches from a stranger’s face is hardly ideal. But while fliers may loathe these overnight sleepovers in the sky, red-eyes are an opportunity for travelers to maximize precious time on the ground.
• It may come as a surprise then, that throughout its 56-year history, Southwest has never operated them. That’s right — the slightly offbeat, all-economy Dallas-based airline doesn’t fly passengers overnight. It’s one of the few major U.S. carriers without a single red-eye option.
• But a recent comment from Southwest chief executive Bob Jordan on the “evolution” of their business hints that’s set to change.
• Historically, Southwest didn’t offer red-eyes because of technology constraints in its reservation system. In 2017, the airline moved to Amadeus, an aviation IT provider behind many of the world’s most popular carriers. The option for red-eyes suddenly opened up.
• “Before that shift, Sabre [the previous software] didn’t have the capacity to allow Southwest to book red-eye flights,” said Benét J. Wilson, a former aviation journalist and frequent Southwest Airlines flier.
• Seven years later, Southwest finally made some moves. In July 2023, Southwest began to sell itineraries that involved an overnight layover — connections during the hours of midnight to 5 a.m. local time — at six airports nationwide. Those airports included Baltimore, Denver, Las Vegas, Phoenix, Chicago Midway and Oakland.

Washington Post

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Cargo Airlines Throttle Back On Aircraft Leases

KEY POINTS:

• A number of freighter operators are starting to back out of, or postpone, commitments for upcoming aircraft leases, underscoring how the prolonged contraction in demand for air cargo shipping is squeezing cash flow across a wider cross-section of the industry.
• Executives at Air Transport Services Group (NASDAQ: ATSG), a leading lessor of cargo jets that also provides cargo flying and other services, said Tuesday that weak interest from international airlines is a key reason why it lowered second-half profit guidance by $45 million and is taking a more conservative approach towards freighter investments. 
• The company presented a window into how pain from the freight downturn is spreading during an analysts briefing on its disappointing third-quarter earnings one day after the board of directors fired Rich Corrado and named its chairman, Joe Hete, as CEO.
• Air Transport Services Group late Monday reported adjusted earnings before interest, taxes, depreciation and amortization of $137 million, 16% below the third quarter of 2022. Other drags on performance included inflation, the conflict in Israel and unexpected maintenance.  The company’s stock price dropped 23% on Tuesday and another eight points Wednesday to close at $14.32. The stock is down more than 40% year to date. 
• Susquehanna Financial Group downgraded ATSG’s stock to “neutral” because of the magnitude of the earnings miss against Wall Street expectations and the revised guidance, which likely will carry over into 2024.
• “Our new reality is that growth will be more difficult to achieve than before,” said Hete, who once ran the company for 17 years and is tasked with shoring up results and investor confidence.

FreightWaves

Frontier CEO Targets European-Style 'Out & Back' Model By Spring '24

KEY POINTS:

• Frontier Airlines is considering adopting elements of the European low-cost carrier model to improve operational reliability and achieve pre-COVID utilization levels.
• European budget airlines like easyJet and Ryanair offer significantly lower fares compared to their full-service counterparts, a model that Frontier hopes to replicate.
• However, structural differences and high taxes on aviation fuel in the US may limit Frontier's ability to fully adopt the cost-saving strategies of European low-cost carriers.

Simple Flying

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