Avolon confirmed (10-Jan-2013) an order for 20 A320neo aircraft in Dec-2012. This firm order is an increase on Avolon’s initial commitment for 15 A320neo aircraft announced in Ju-2012 at the Farnborough International Airshow. Avolon will make its engine selection at a later date. Avolon president and CCO John Higgins commented, “Our increased commitment to the NEO reflects the strong customer feedback we have received since our original announcement for 15 NEO aircraft in July 2012. Maintaining a forward order book of highly fuel-efficient, new generation aircraft is a natural complement to our extensive sale and leaseback and other financing capabilities and maintains our position as a premier, full-service aircraft lessor.” Airbus COO customers John Leahy said, “When a dynamic lessor such as Avolon decides to order more of our aircraft than originally planned, it’s a clear recognition of the excellent value our products deliver. We are confident that the A320neo Family, which offers the best economics of any single aisle aircraft, will be the backbone of leasing companies’ portfolios for the years to come.” [more - original PR - Airbus] [more - original PR - Avolon]
Avolon increases initial A320neo commitment by signing firm order for 20 A320neos
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United Airlines Part 2: Sustaining balance sheet strength while declaring ambitious margin targets
One area where United Airlines has made important strides during the last few years is in overhauling its balance sheet. Its efforts have gained some recognition from credit agencies for its progress in paring down debt and improving leverage ratios; but similarly to its rival American Airlines – attaining an investment-grade credit rating is not a huge priority for United. The airline believes it can achieve some benefits that investment-grade companies enjoy with the current state of its balance sheet.
In order to sustain the progress it has made in balance sheet repair United plans to amend its aircraft order book to slash capex commitments during the next couple of years, including the deferral of 61 Boeing narrowbodies. United is hinting that other fleet changes could be under consideration, including deals similar to the agreement it forged during 2015 to lease used Airbus A319s.
This is Part 2 in a two-part series reviewing United’s financial and revenue-generating opportunities.
Allegiant Air: unit revenues could still turn positive in mid-2017 as cost pressures rise
Although Allegiant Air’s niche model differs from those of the majority of US airlines, the company has not been immune from the weaker pricing environment that has engulfed the US industry during the past year. Similarly to many US airlines Allegiant is beginning to see improving trends in the US market, and believes it can attain positive total unit revenues by mid-2017 as its own capacity growth slows and certain routes within its network mature.
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A new pilot agreement and other items are creating pressure for Allegiant in its unit cost performance in 4Q2016 that could continue into 2017. One cost area where Allegiant should see relief is in its maintenance expense, as the phase-out of its older MD-80 aircraft begins in full force.