Continental Airlines and United Airlines shares are expected to stop trading on the New York Stock Exchange today (01-Oct-2010), with the carriers to instead trade under United Continental Holdings Inc (UAL), on their merger (AP, 30-Sep-2010). Following the combination, Delta Air Lines will no longer be the world's largest airline (Atlanta Business News, 30-Sep-2010). Delta, following its merger with Northwest Airlines, has been the largest carrier for the past two years. The carrier has launched a new advertising campaign in New York emphasising that Delta is “building a better airline, not just a bigger one.” A print ad in the campaign states: "It's easy to forget that size alone isn't enough to lead this industry."
Continental and United to trade as United Continental Holdings Inc
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Air Canada Part 1: low cost rouge is a pillar of growth; but further expansion might be constrained
During the past year Air Canada has found itself defending its double-digit capacity growth, stressing that 90% of its capacity in 2015, 2016 and 2017 is being deployed to its international network – an entity the company believes is far from reaching maturity. Recently the airline has outlined plans to introduce a raft of new long haul flights to Europe and Asia operated by Air Canada mainline and its low cost arm – Air Canada rouge.
Air Canada stresses the pillars of its international expansion – Boeing 787 widebodies and the establishment of its low cost subsidiary rouge – enable the company to enter international markets it once considered unviable due to higher costs. During the summer of 2018 rouge will nearly reach its 50 aircraft cap, and Air Canada needs to start determining if there are further opportunities to grow its low cost unit. Those evaluations will partially dictate Air Canada’s overall growth levels beyond 2018.
In the short term Air Canada is not seeing any broad changes in consumer behaviour, reflected in its solid booking curves. Weaker markets in Western Canada, hit by the downturn in the oil sector, are stabilising as capacity cuts have resulted in a rational supply-demand scenario.
This is Part 1 in a two part series on Air Canada. The second instalment will focus on the airline’s costs and balance sheet management.
Spirit Airlines touts its operational improvement, but its overall performance remains lacklustre
Spirit Airlines’ top priorities for 2016 are: improving its dismal operations after regularly underperforming the industry, and engendering a more positive relationship with its customers. The results so far are relative. Its on-time performance and customer complaint ratios have improved, yet Spirit's ranking remains near the bottom among airlines whose operational metrics are tracked by the US government. Nevertheless, Spirit is pleased with its progress so far.
Spirit acknowledges its operational performance will never rise to the level of some of the top performers in the US; but it believes that the progress it has made during the country’s busy summer high season will continue into autumn 2016, and the improvement will bolster its ULCC model over the long term.
Spirit’s unit revenue performance during the past year has shown that the ULCC model is not immune from the industry yield pressure that has stubbornly hovered over the US domestic revenue environment during that time. While the market place does remain competitive, Spirit is starting to see encouraging signs of capacity restraint among higher-cost airlines.