Boeing has reportedly offered an interim compensation of USD45 million in cash to Air India for delays in delivery of the B787 (Financial Express, 12-Jul-2011). This reportedly represents 5% of the USD900 million the carrier had demanded from Boeing. Air India has reportedly communicated the Boeing proposal to the Indian government. Air India is reportedly receiving B787 equipment on the contracted price of USD90 million. The list price for the B787-8 is USD185.2 million, according to Boeing. Air India has reportedly decided to deploy B787 equipment on short and medium-haul routes and is deciding on international sectors it could deploy them. The airline is expected to take delivery of four B787s by the end of the current year.
Boeing offers Air India compensation for B787s delays
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Air Canada believes that changes it is making to business strategy – aircraft densification and the expansion of its low cost subsidiary, rouge – are positioning the airline to weather uncertain economic conditions in Canada and in other geographical regions.
A decline in industry domestic capacity later in 2016 should benefit Air Canada and rival WestJet, but Air Canada’s yields will continue to decline because certain components of its strategy blueprint – longer stage length and a higher proportion of leisure travellers – dictate a decrease in yields.
Although Air Canada has ceased offering capacity guidance, most of its planned expansion of supply in 2016 is pegged for international markets as it works to craft a global network that rivals that of its large North American peers. Perhaps to reassure investors that it is prepared to act rationally if conditions suddenly worsen, Air Canada is stressing the flexibility it retains to adjust its fleet and redeploy capacity from underperforming markets to other regions of its network.
Hawaiian Airlines: cost creep casts a slight shadow over a favourable PRASM performance
Hawaiian Airlines’ geography has been a boon for the airline throughout 2016 as the company’s unit revenue performance has outpaced that of its peers. Hawaiian has benefitted from immunity to the lack of pricing traction in many domestic markets on the US mainland, and rational capacity deployment on is largest North American routes.
The company expects to continue posting a unit revenue outperformance for the remainder of 2016, driven by still favourable capacity trends in its markets. Hawaiian’s own capacity growth is expected to fall between 3% and 4% for 2016, and remain in the low- to mid- single-digit range for the foreseeable future.
Although Hawaiian continues to outperform the industry in unit revenue, the company is facing inflated unit costs in 2016 driven by several factors, including increased compensation and technology investments. The airline is also in the middle of pilot negotiations, and has acknowledged additional cost headwinds once a new collective bargaining agreement is reached.