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Tuesday, March 12th, 2019
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The aftermath of the tragic crash of an Ethiopian Airlines 737 MAX 8 on Sunday, which saw all 157 passengers and crew killed, has seen several countries and airlines ground their 737 MAX 8s until further notice. This is the second fatal crash involving the MAX 8 after an Indonesian Lion Air
jet crashed in 2017 killing all 187 passengers and crew on board. The consequence for Boeing saw its share price tumble 12% on opening this Monday, according the Financial Times, the largest drop since the 9/11 attack on the World Trade Center. The share price had rallied to a 6% drop by mid-afternoon.
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The Civil Aviation Administration of China was the first to react, ordering all domestic airlines under its remit to ground their MAX 8 jets, noting similarities between the Ethiopian Airlines and Lion Air crashes. “Both occurred during take-off and have certain similarities,” the Chinese regulator said on its website, adding that the suspension was “in accordance with management principles of zero
tolerance for security risks and to ensure flight safety for civil aviation in China”. This is also an unusual step as governments usually wait for an airliner’s official certifying authority to make recommendations first, in this case the U.S. Federal Aviation Authority.
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The crash has come at a critical time for Boeing, which is in the middle of negotiating a deal with China to buy more Boeing jets. Both China and Indonesia are two of its most important Asian markets with China currently having 100 737 MAX aircraft on order.
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Indonesia has grounded all its MAX 8s prior to inspection to ensure the “aircraft is airworthy”. Ethiopian Airlines has grounded its four other MAX 8s as a precaution. Cayman Airways has grounded both its MAX 8 jets and South Africa’s Comair its single MAX 8.
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Héroux-Devtek has reported that consolidated sales increased 49.0% to CA$144.5 million, compared with CA$97.0 million last year, driven by CESA and Beaver which together have contributed CA$39.6 million, as well as 8% organic growth. The company achieved higher sales in both defence and commercial aerospace markets and had a net positive impact on third-quarter sales of CA$1.6 million, resulting from year-over year fluctuations in the value of the Canadian currency versus foreign currencies.
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Commercial sales increased 25.7% to CA$65.5 million, compared with CA$52.1 million last year. This was mainly driven by Beaver and CESA’s sales, increased deliveries to Boeing for the 777 and 777X programs, as well as higher business jet sales, mostly related to the ramp-up of deliveries for the Embraer 450/500 program and higher sales of spares.
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Defence sales increased 76.0% to CA$79.0 million, from CA$44.9 million. This was essentially due to Beaver and CESA’s sales, higher spares requirements from the U.S. Government and higher manufacturing sales to certain civil customers. These factors were partially offset by the ramp-down of repair and overhaul (“R&O”) activities for the United States Air Force following completion of the contract.
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Gross profit increased to CA$24.9 million, or 17.2% of sales, versus CA$15.8 million, or 16.3% of sales, last year. The increase was mainly driven by the impact of the Beaver and CESA acquisitions and higher throughput which led to better absorption of manufacturing costs, partially offset by exchange rate fluctuations which had a negative impact of 0.6% of sales during the quarter.
Operating income increased to CA$11.9 million, or 8.2% of sales, compared with CA$6.6 million, or 6.8% of sales, last year, reflecting mainly the Beaver and CESA contributions. This year and last year’s operating income included acquisition-related costs of $2.1 million and $0.6 million, respectively, in connection with the acquisitions of CESA and Beaver. Adjusted EBITDA, which excludes non-recurring items, also grew, reaching $22.9 million, or 15.8% of sales, compared with CA$13.6 million, or 14.0% of sales, a year ago. Financial expenses increased to CA$2.8 million, compared with CA$0.4 million last year. This variation mainly reflects the interest charge on new debt incurred to finance the CESA acquisition and higher interest rates. Last year’s financial expenses also included a CA$0.6 millon net gain on certain derivative financial instruments.
Net income for the third quarter of fiscal 2019 was CA$7.4 million compared with CA$0.6 million a year ago. Excluding non-recurring items net of taxes, adjusted net income reached CA$9.4 million versus CA$5.7 million last year.
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WestJet posted February 2019 traffic results with a load factor of 87.0%, an increase of 0.6 points year over year. Traffic increased 5.6% year over year, while capacity grew 4.9% over the same period. WestJet welcomed an additional 62,000 guests in February, a year over year increase of 3.2%.
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The International Air Transport Association (IATA) released data for global air freight markets showing that demand, measured in freight tonne kilometers (FTKs), decreased 1.8% in January 2019, compared to the same period in 2018. This was the worst performance in the last three years.
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Freight capacity, measured in available freight tonne kilometers (AFTKs), rose by 4.0%
year-on-year in January 2019. This was the eleventh month in a row that capacity growth outstripped demand growth.
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Demand for air cargo continues to face significant headwinds. Global economic activity and
consumer confidence have weakened. And the Purchasing Managers Index (PMI) for manufacturing and export orders has indicated falling global export orders since September 2018.
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"Air cargo markets contracted in January. This is a worsening of a weakening trend that started in
mid-2018. Unless protectionist measures and trade tensions diminish there is little prospect of a quick re-bound," said Alexandre de Juniac, IATA's Director General and CEO.
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During a meeting between the co-chairs of the Bilateral Oversight Board (BOB) at the Federal Aviation Administration's (FAA) Headquarters in Washington, D.C., the officials with FAA and the European Union (EU) signed two decisions associated with the Airworthiness Annex of the U.S./EU Safety Agreement.
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The first decision enables reductions of the EU‘s European Aviation Safety Agency (EASA) fees for validation of U.S. aerospace products. This achievement is the culmination of a multi-year effort to reduce duplication of efforts by the FAA and EASA, and to lower EASA fees on U.S. industry to be more commensurate with that reduced level of effort. The decision covers simple design modifications such as Basic Supplemental Type Certificates. Fee reductions will take effect 30 days from the contract signing (March 8, 2019).
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The second decision amends the U.S./EU Safety Agreement to remove country specific limitations associated with aeronautical products and parts eligible for import into the United States. This amendment treats all EU Member States equally under the agreement and recognizes EASA’s oversight and standardization processes throughout their jurisdiction.
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“The FAA is fully committed to mutually working together with our international partners to improve aviation oversight and management,” said FAA Associate Administrator for Aviation Safety and BOB Co-chair Ali Bahrami. “These agreements are a win, win for both the United States and Europe by providing greater access to aerospace markets, products and services.”
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Air Lease Corporation has delivered one new Airbus A320-200neo aircraft on long-term lease to Air New Zealand.
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Featuring Pratt & Whitney PW1127G engines, this aircraft is the first of two A320-200neos confirmed to deliver the airline in 2019 from ALC’s order book with Airbus.
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AVIAA is growing its Customer Success team and enhancing its data infrastructure to support a widened membership of nearly 500 aircraft. The move follows hard on the heels of AVIAA’s acquisition of Convolus and establishment of an office in Munich, Germany, headed by Managing Director Irena Deville.
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AVIAA’s Customer Success Team works closely with members to help them understand the process and analytics of the cost savings they are accruing. “We advise members as they move into new sectors, whether they are transferring from Part 91 to 135 operations; adding a new aircraft type or introducing new capability that may justify adding a new pillar of spend,” explains AVIAA COO Rick Tilghman. The Customer Success team also advises members on when there are available slots in training and when best to plan maintenance visits, working on a day to day basis with its supply chain.
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Boeing will begin offering airlines and operators the option of powering their new commercial jet with biofuel for the flight home. The program is designed to further spur the use of sustainable aviation fuels – which cut emissions up to 80 percent – and support the industry’s drive to protect the environment.
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The biofuel option will be available for customers accepting new airplanes at Boeing’s delivery centers in Seattle and Everett, Wash. The company also plans to use biofuel for certain flight tests at its Boeing Field facility, while working to offer the same option at its South Carolina Delivery Center.
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“This is another step in our decade-long journey to encourage the adoption of sustainable fuels and help commercial aviation earn its license to keep growing,” said Sheila Remes, vice president of strategy at Boeing Commercial Airplanes. “We have great customers such as Alaska Airlines that have made good progress in adopting the use of biofuels. We hope this new option will make it easier for them and others to demonstrate our industry’s commitment to reduce carbon emissions.”
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Alaska Airlines, the first participant in the program, will use a blend of biofuel made by World Energy and traditional fuel when it takes delivery of three Boeing 737 MAX airplanes this year.
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The ten fastest-growing major passenger routes in the Asia-Pacific region have been revealed in an exclusive study published by Routesonline, with a flight between South Korea’s capital city Seoul and a coastal city in central Vietnam taking the top spot. The research has been released as delegates gather for Routes Asia 2019, which is taking place in Cebu, Philippines.
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A 71% rise in the number of passengers flying between Seoul’s Incheon International Airport and Da Nang International Airport has placed the route as the fastest-growing in the Asia-Pacific region, research by Routesonline has found.
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More than 2.2 million passengers took a flight between the two destinations, which links South Korea’s capital and the largest city in central Vietnam, compared with 1.29 million just 12 months earlier. The growth is enough to place the route at number one in the rankings, comfortably ahead of Manila (MNL) - Iloilo (ILO) in second.
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Routesonline’s research found the top 100 passenger routes to/from and within the Asia-Pacific
region during 2018 using the latest data provided by Sabre Market Intelligence. The list was then ranked by percentage annual growth when compared with the same period in 2017.
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According to OAG Schedules Analyser, two-way capacity on the Seoul (ICN) - Da Nang (DAD) route jumped by 73% in 2018 to 2.8 million available seats. A total of ten carriers served the market, up from nine in 2017.
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Jin Air had a 20.0% capacity share of the total number of seats on offer last year, with Korean Air on 15.1% and Jeju Airlines on 13.2%. In total there were almost 12,100 flight departures on the route, compared with fewer than 7,500 in 2017.
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In second place is Manila (MNL) - Iloilo (ILO), which connects the capital of the Philippines with Iloilo City on Panay Island. Total passenger traffic increased by nearly 48% in 2018 to more than 2.1 million passengers.
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Overall two-way capacity rose by 49% in 2018 compared with the previous year, OAG figures show, increasing to 2.53 million seats. Cebu Pacific commanded a 50.5% capacity share, followed by Philippine Airlines with 31.3% and Philippines AirAsia with 18.2%.
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In joint third in the list are two domestic routes. The first links Indonesia’s bustling capital Jakarta with the port city of Palembang, while the second connects Hyderabad in south India with Bengaluru, the centre of the country’s high-tech industry. Both routes increased passenger numbers by 20 percent in 2018.
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The research has been released as aviation professionals gather for Routes Asia 2019, taking place from 10 -12 March in Cebu, Philippines. The event is the only route development forum that unites the Asia-Pacific region, providing a meeting place for airlines, airports and tourism organisations to discuss new market opportunities and the evolution of existing services.
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Tokyo-headquartered Financial Products Group and the Dublin-based FPG Amentum have announced the acquisition of one Airbus A321-200NX.
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The aircraft was acquired in a Sale & Lease Back transaction and is on lease to a subsidiary of Wizz Air group.
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At a press conference on Friday, March 8, Japan Airlines has announced the name of Japan's first medium to long-haul low cost carrier as ZIPAIR.
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With the registration now official, the company will be established as ZIPAIR Tokyo, as of March 8, 2019. As previously announced, the new carrier will prepare for launch during the summer schedule of 2020.
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