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Thursday 24th July 2014

Read more at www.aviationnews-online.com

Air Algerie leased aircraft missing; and would you use Bitcoin?

Algerian aviation authorities have lost contact with Air Algerie flight AH5017 en route from Ouagadougou in Burkina Faso to Algiers. Around 50 minutes after departure all contact was lost.

Air Algerie leased the aircraft earlier this month from Spanish ACMI firm, Swiftair. The aircraft was an MD-83, reg EC-JUG (msn 49847), according to the Airline Economics 24/7 database. The Algerian national carrier has also wet-leased an A330-300 from AirAsia X and two A340-300s from Hi Fly.

Following on from yesterday’s editorial regarding Chinese airspace, we can confirm that a trusted contact of a reader (our thanks to him) notes that the 26 days of flight delays and cancellations is caused by air force and military exercises, in which it is said that china is conducting its largest ever live fire drills. This information at least gives us confirmation that this is a set timescale and the current problems will not drag on past the set 26 days, however one must surely ask if this is the start of a more regular occurrence of such exercises.

Meanwhile Latvia’s national airline, airBaltic, confirmed this week that it is now accepting bitcoin payments directly. So is airBaltic lighting the way for others or is it taking too much of a risk? The truth is a bit of both. airBaltic could force some of the large online booking agents to accept Bitcoin, which would certainly start an avalanche for the virtual currency use.

But as we are all aware, and as reported here previously, Bitcoin is terribly unstable and as admitted earlier this year by the owners of the currency, it can be hacked. airBaltic is leaving itself open to considerable currency loss. But airBaltic is hedging its bets by slapping a hefty €5.99 transaction fee on Bitcoin transactions, so in the event this move creates good global publicity while also being low risk as many will be deterred from using it.

But the point is this: airBaltic might be starting something that will grow rapidly and then cause significant loss. If the major online booking agents start using Bitcoin en-masse then they are open to losing their shirts. On the flip side of the argument though if passengers are willing to pay €5.99 extra to use Bitcoin then you will know that your usual fares by other payment means need to be increased. This is indeed an interesting experiment to keep an eye on.

Finally, in September 2012 we received information stating that the Hong Kong Airlines A380 order would without question be cancelled. We ran a feature on this and put the same on the cover of issue ten of Airline Economics, the cancellation came through this week and so this is a new lead time record on a story for us. We thank our sources for once again being right on the money.

Philip Tozer-Pennington

philipt@aviationnews-online.com

Orix Aviation

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Airline Economics Growth Frontiers Hong Kong 2014

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Airline News

easyJet announces Q2 results and raises profit expectations

LCC easyJet has published its Q2 financial results, indicating a rise in total revenue of 8.6%, to £1.24bn.

Total passenger numbers increased by 9.4% to 17.9 million, with load factors increasing by 2.2% to 90.4%.

Total costs per seat also increased by 1% on a constant currency basis; the airline attributing the rise to increased airport charges and planned year-on-year increases in maintenance and leasing costs.

easyJet’s net cash holdings amounted to £603 million.

easyJet CEO Carolyn McCall said: “easyJet has again delivered a solid performance in the quarter carrying 17.9 million passengers and growing revenue by 8.6% to £1,240 million.

“With 77% of second half seats now booked, easyJet expects to grow profit before tax from £478 million for the year to 30 September 2013 to a range of £545 million to £570 million for the year to 30 September 2014 assuming no further significant disruption. This range includes the impact from the situations in Israel, Egypt and Moscow.”

Flybe CEO hails return to profit with Q2 results

UK regional airline Flybe has reported an increase in passenger revenue by nearly 10% with load factors of 75%, citing its deep restructuring plans during which it dropped loss-making routes, cut capacity by 17.2%, shed 1,100 jobs and disposed of surplus fleet.

The airline has returned to profit for the first time in four years, by recording a pre-tax profit of £8.1 million.

Chief executive Saad Hammad said: “We have achieved a significant amount in the quarter, with substantially more to do in the months ahead.”

Ryanair to contest EU ruling on state aid

Ryanair has elected to appeal the European Commission’s decision to force the airline to repay nearly €10 million in illegal state aid extended to it by the French airports of Pau, Nîmes, and Angoulême.

The Commission investigated public aid measures to airports and airlines across Europe, including the three airports in France, three airports in Germany (Dortmund, Leipzig/Halle and Dusseldorf Weeze), and Klagenfurt in Austria. The Commission exonerated the latter four while condemning the marketing arrangements that the three French airports had concluded with Ryanair and its subsidiary Airport Marketing Services.

Ryanair disputed the verdict, claiming all its airport arrangements comply with EU state aid rules.

Ryanair stated that: “today’s decisions confirm that Ryanair’s airport agreements at Dortmund and Niederrhein airports comply with the EU State aid rules (Market Economy Investor Principle). Following the closure of this case and the earlier six positive decisions at Aarhus, Bratislava, Brussels Charleroi, Marseilles, Berlin Schönefeld and Tampere airports, we will immediately appeal the decisions in Pau, Angoulême and Nîmes cases where the EU Commission mistakenly suggested that the airports’ agreements with Ryanair did not fully comply with the EU state aid rules.”

Ryanair may buy stake in Cyprus Airways

Ryanair CEO Michael O’Leary has stated that the airline is likely to submit an Expression of Interest (EOI) for a stake in Cyprus Airways.

The Cypriot government currently owns a 93.67% stake in the carrier; and earlier this week the government stated that a rescue package for the airline may involve a sell-off.

O’Leary said: “We probably will make some expression of interest in Cyprus Airways. We want to see if we could help the government come up with some rescue package even though it might be too late.”

airBaltic to accept Bitcoin as payment option

Latvian flag carrier airBaltic has confirmed that it is now accepting Bitcoin as a method of payment. airBaltic becomes the first airline to accept Bitcoin directly, rather than through a third party.

However the airline still charges a €5.99 transaction fee for bookings using Bitcoin, while passengers using airBaltic’s loyalty card are exempt from the fee.

Austrian to launch Zurich-Lugano services

Austrian Airlines has taken delivery of the first of four Dash-8 Q400s, and will launch a four-times daily domestic Zurich-Lugano service on behalf of Swiss International Air Lines from November 1st.

The Lufthansa subsidiary recently signed a wet-lease agreement with Swiss. Austrian said Swiss can increase capacity on the route by 50% on the route by operating the larger Q400.

The second Q400 is expected later this year, and two more aircraft will join operations during 2015.

Finance News

Trade union blocks Aer Lingus pension reform plans

Irish trade union Siptu has blocked a proposed solution to the €750 million deficit in the pension fund operated jointly by Aer Lingus and the Dublin Airport Authority (DAA).

The Government-backed proposal was initially supported by Aer Lingus and the DAA. Siptu’s committee has not stated why it was rejecting the panel’s report.

The Government panel requires both Aer Lingus and the DAA to increase their contributions to a new pension fund that will replace the insolvent Irish Airlines Superannuation Scheme defined benefit plan.

Doric distributions to investors continue to rise

Distributions from Doric‘s real assets have risen, with the equivalent of €110 million will be paid to investors during 2014.

Distributions will be paid for all Doric investments whereby distributions for Doric aircraft funds will be the highest, averaging 8.2% per-annum.

Insurance News

Insurers expected to raise war risk premiums after MH17 and conflicts in Israel and Libya

Insurers are expected to increase war risk premiums for airlines, following recent losses due to conflicts in Israel and Libya, and the MH17 disaster.

The insurance settlement of the MH17 in particular, is expected to be complex and lengthy as the claims would be for both the hull loss and passenger liability.

Lloyd’s Syndicate 609, which is managed by Atrium Underwriters Ltd, has confirmed that it is the leader of the hull war policy for Malaysia Airlines.

War risk hull is used in shipping and aviation industries to cover damages and is calculated based on the value of the craft.

Barclays Bank has stated in a research note that if reports that MH17 was shot down are verified, the aircraft loss will be borne by the niche aviation war market.

Turkish 737 damaged by fire in Nigeria

A Turkish Airlines B737-900ER has been damaged by a fire at Kano Aminu International Airport in Nigeria during a refuelling operation.

Turkish Airlines stated that the aircraft’s fuel tanker caught fire under the aircraft’s wing.

The aircraft was scheduled to operate from Kano to N’djamena in Chad.

Technology News

A350 XWB commences route-proving in final certification trials

The fifth Airbus A350-900 prototype (MSN005) has embarked on route-proving trials as the final part of the A350’s certification process. The trials are designed to demonstrate readiness for airline operations, and will include high density altitude and high elevation airfield performance, auto-land trials, and will also assess compatibility with airport turnaround and handling services.

The A350’s itinerary includes 14 major airports worldwide, including one route via the North Pole. Some of the flights will carry passengers.

MSN005 is one of two flight test prototypes that are fitted with a fully-functional cabin (42 business class and 223 economy class seats).

The route-proving flights will be operated by Airbus flight crews with the participation of Airworthiness Authority pilots from the European Aviation Safety Agency (EASA).

The A350’s first delivery to Qatar Airways is expected later this year.

Regulatory News

Dutch Safety Board takes over MH17 investigation

The Dutch Safety Board has taken over formal responsibility for the investigation into the MH17 disaster.

The Dutch Safety Board stated that it took over the lead for the investigation from Ukraine on Tuesday evening. It also confirmed the arrival of the aircraft’s flight recorders in the UK, where analysis will be carried out.

The Dutch Safety Board said: “The on-site investigation in Ukraine is currently in full swing. Although investigators still do not have safe access to the crash site, work to gather and analyze data from various sources is underway in both Kiev and the Netherlands.”

The investigation is also assisted by authorities from Ukraine, Malaysia, Australia, Germany, the US, the UK and Russia, as well as ICAO.

The Board also said: “If the investigation shows evidence of any criminal or terrorist activities, the information will subsequently be submitted to the relevant authorities in accordance with applicable regulations. The Dutch Safety Board’s investigation will focus on ascertaining facts, rather than apportioning blame.”

BALPA criticizes regulators’ inconsistency over airspace risks after MH17

UK pilots’ union BALPA has criticized national regulators’ airspace policies, saying there must be “a uniform level of safety, not one decided in secret”.

BALPA has also called for “global leadership” from the ICAO in flight operations in proximity to areas of hostility.

BALPA General Secretary Jim McAuslan said: “Individual pilots looking at their flight plans need to have absolute confidence that the right calls are being made. The process behind the choice of airspace routing is based on a risk assessment, both by a country’s national aviation security services in the advice that they give to their airlines, and by the airline in how they assess this advice.”

McAuslan added: “This risk assessment approach can give an illusion of safety but it is in fact vulnerable to all sorts of influences including commercial pressure and so it is not surprising to us that there are differences in the way that this risk is assessed by different airlines.”

BALPA also stated that although ICAO is the UN body responsible for coordinating global aviation, it should have a greater leadership role and strengthened powers along with that responsibility.

McAuslan said: “ICAO’s purpose should be to lead where national authorities cannot and it should have the tools to do that. The problem of the absence of a clear international co-ordination to avoid operations above eastern Ukraine has now become tragically obvious and to avoid a repeat ICAO should be better resourced and enabled to declare airspace unsafe.”

Monarch Aircraft Engineering

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ISTAT

Airline News

Ethiopian granted traffic rights between Uganda and South Sudan

Ethiopian Airlines has been granted traffic rights to carry passengers and cargo between Entebbe, Uganda and South Sudan’s capital Juba, commencing on August 1st.

The approval comes after the universal grounding of all airlines based in Uganda after the Ugandan regulator withdrew their AOCs.

Leasing News

Camair-Co settles outstanding 737 leasing bill

Cameroonian airline Camair-Co has resumed regular operations following the return of one of its two B737-700s from Paris CDG where it had been impounded by lessor Aviation Capital Group (ACG), in June.

The airline stated that the dispute with ACG had been settled following a payment of $1.4million in outstanding fees.

ACG had claimed that Camair-Co’s outstanding leasing fees amounted to $2.9million.

The aircraft was seized on its arrival at Paris CDG on June 7th.

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Airline News

TAM holds highest Brazilian market share during June

Reports published indicate Brazilian airline TAM (part of LATAM Group) has achieved a market share during June 2014 of 37.47%.

Gol takes second place in the list published by the Agencia Nacional de Aviacao Civil-Brasil (ANAC) with 35.12%, and Azul Brazilian Airlines taking third place with 17.7%.

Insurance News

Insurers count cost of airframe losses in Tripoli conflict

Afriqiyah Airways and Libyan Airlines have incurred up to $200million in damages since armed conflict occurred at Tripoli Airport earlier this month.

In total, thirteen aircraft were either damaged or destroyed during the conflict.

Afriqiyah’s chairman Abdulhakim Al-Fares said: “The damage ranges from serious to superficial, and we need time to see how grave the damage is.”

The airport is expected to remain closed until the security situation improves and repairs to the terminal and associated infrastructure have been carried out.

Regulatory News

FAA Statement – FAA lifts flight restrictions for Ben Gurion International Airport

The FAA has lifted its restrictions on US airline flights to Israel’s Ben Gurion Airport by cancelling a Notice to Airmen (NOTAM) that it had initially renewed earlier today.

The statement reads:

“Before making this decision, the FAA worked with its U.S. government counterparts to assess the security situation in Israel and carefully reviewed both significant new information and measures the Government of Israel is taking to mitigate potential risks to civil aviation.

The FAA’s primary mission and interest are the protection of people traveling on U.S. airlines. The agency will continue to closely monitor the very fluid situation around Ben Gurion Airport and will take additional actions, as necessary.”

Technology News

Bombardier to shed 1,800 jobs

Bombardier has announced it will reorganize its business structure and cut 1,800 jobs, also stating that the head of its aerospace division will retire.

The Montreal-based company will separate its aerospace division into three segments focused on business aircraft, commercial aircraft, and aerostructures and engineering services.

The three units, along with Bombardier’s rail-industry focused transportation unit, will all have separate heads reporting directly to CEO Pierre Beaudoin.

As part of the restructuring, Bombardier Aerospace President and Chief Operating Officer Guy Hachey will retire.

The restructuring is attributed partly to the ongoing delays experienced by the CSeries project.

CEO Beaudoin said: “The new aerospace organizational structure will enable us to be more agile and flexible in addressing customer needs, while increasing our focus on growth areas.”

The company said the new structure will be in place January 1st.

People News

Campbell joins Alaska Airlines

David L. Campbell is to join Alaska Airlines’ regional subsidiary Horizon Air as president and COO on August 11th. Campbell leaves JetBlue Airways, where he began work in January.

Alaska Air Group CEO Brad Tilden said: “We are excited to welcome Dave to Horizon Air and the Alaska Air Group team. He is an accomplished airline executive with deep operational knowledge and leadership experience. Dave is the right person to lead Horizon into the future as the airline continues to evolve and create new ways to serve the thousands of loyal customers in its 43 markets who depend on us every day.”

UAM appoints new executive staff

Universal Asset Management (UAM) has announced the appointment of several key management roles.

Shawn Kling has been named President of UAM; Greg Brinkerhoff has been hired as CFO;

Tracy Andrews has joined as Senior VP; Craig Richardson has joined UAM as Vice President of Strategic Markets.

Keri Wright, Chairman & CEO at UAM stated, “I am very excited to announce these appointments within the UAM organization as we position for the future. Each of these appointments are both strategic and part of a measured plan that I had over a year ago when I acquired UAM. The organization needed executives with the kind of depth, experience, and pedigree to develop and grow UAM into a billion dollar global organization. This team represents the best of the best, and I have never been more confident in our ability to lead in this industry and deliver significantly higher returns to our investors and clientele.”

Pratt and Whitney

Bombardier

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Airline News

TransAsia ATR crashes in Penghu

A TransAsia Airways ATR-72 has crashed during landing in Taiwan’s outlying Penghu Islands.

The aircraft was reported to be making a second approach to Magong Airport when it crashed amid heavy rains from Tropical Storm Matmo at about 7:20 p.m. local time yesterday.

The aircraft carried 54 passengers, two pilots and two cabin crew on the flight from southern Taiwan’s Kaohsiung International Airport.

Lee Wan-Lee, deputy director general of Taiwan’s Civil Aeronautics Administration, said: “Weather conditions at the airport at that time were within standards.”

AirAsia drops Indonesian subsidiary IPO plans

AirAsia has decided against selling-off its subsidiary Indonesia AirAsia in an IPO, citing the airline’s recent poor financial performance.

AirAsia Group CEO Tony Fernandes said: “Indonesia AirAsia is not making money, so going for an IPO without a good financial record is not the norm. It is also not my style. AirAsia moving forward would also like to own more of these airlines [affiliates]. Just like banking and telecoms, I am sure ASEAN airlines will one day be allowed to be 100%-owned by another ASEAN company.”

Fernandes reiterated that AirAsia would take the subsidiary public only when it made financial sense to do so.

The original plans to raise $200million by offering 20% of Indonesia AirAsia’s shares in an IPO were dropped due to a declining Indonesian Rupiah. Later plans to hold the IPO this year were also postponed until after the recently-concluded presidential elections.

Indonesia AirAsia is a 49%/51% joint venture between the Malaysian LCC and its wholly-owned Indonesian investment vehicle, PT Fersindo Nusaperkasa.

ANA to be first commercial operator of 787-9

All Nippon Airways will become the first airline to operate the B787-9 in revenue-earning service.

ANA stated that after taking delivery at Boeing’s Everett factory on 27th July, the aircraft will be flown to Tokyo, arriving on 29th July.

The aircraft will initially be deployed on domestic routes, although the carrier did not provide details of specific destinations.

ANA’s 787-9s are equipped with 395 seats, of which 18 are in business class and 377 in economy. Its 787-8s have just 335 seats.

Leasing News

EVA Airways to lease six new B777-300ERs from GECAS

GE Capital Aviation Services Limited (GECAS) has signed an agreement to lease four B777-300ERs to Taiwan’s EVA Airways, following a lease of two B777-300ER aircraft in February 2014.

Delivery of the six aircraft is scheduled for 2016 and 2017.

Norman C.T. Liu, president and chief executive officer of GECAS, said: “We have a strong and positive long-term relationship with EVA that dates back more than 10 years ago. We are delighted to help them upgrade and expand their fleet with the latest long-haul aircraft available.”

GECAS currently leases 11 aircraft to EVA including three A330-200s, four A321-200s and four B747-400SF freighters. GECAS signed an agreement in 2011 to lease eight A321-200s to EVA and will deliver the remaining three A321-200s in 2014.

Monarch Engineering

 

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