Delta Air Lines and Southwest Airlines announced (21-May-2012) an agreement has been signed for Delta to acquire Southwest’s Boeing 717s. Southwest Airlines and Boeing will lease 88 717s originally delivered to AirTran to Delta from 2013. Delta’s recent tentative agreement with its pilots union contributed to the new deal, which allowed the addition of new aircraft. Delta CEO Richard Anderson said, “These actions pave the way for us to restructure and upgauge our domestic fleet, which will lower our costs, provide more pilot jobs and improve the onboard experience for our customers. The addition of the Boeing 717s, additional large regional jets and the planned replacement of 50-seat aircraft continue Delta's commitment to operating an efficient, flexible domestic fleet that offers customers even more opportunities to upgrade to our First Class and Economy Comfort cabins." [more - original PR]
Delta to acquire Southwest’s 717s
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Air Canada Part 2: Financial progress makes investment grade metrics more tangible
A decade ago it would have been unheard of for Air Canada to contemplate reaching an investment grade credit rating. The airline had emerged from bankruptcy protection, but was still struggling financially. It would teeter on the verge of another formal restructuring before setting out on a course to restructure its financial foundation – a process that has allowed the airline to improve its balance sheet and leverage.
Air Canada’s leverage targets for YE2018 will not meet the general proxy for an investment grade rating; however, its lower capital commitments and debt refinancing could create an opportunity for achieving that status beyond 2018.
Attaining an investment grade credit rating likely remains a longer term goal for Air Canada as its major financial goals in the short term remain paying down debt that is creeping up due to a fleet renewal, as well as funding growth to drive long-term shareholder value. More meaningful shareholder returns will likely occur once the company reaches what it deems as acceptable progress in debt management, and reaches a certain maturity level in growing its international network.
This is Part 2 in a two part series on Air Canada. Part 1 dealt with long haul LCC subsidiary, rouge.
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.