Southwest Airlines Senior VP Finance and CFO Laura Wright, at the Annual Dahlman Rose & Co Global Transportation Conference on 07-Sep-2011, stated Southwest Airlines has increased the number of B737-800s scheduled to enter the fleet next year to 33, all scheduled to replace the B737 classic, as part of an effort to continue reducing costs. Originally at 20 deliveries for 2012, the company has arranged for the lease of an additional five B737-800s which will be used out of its Dallas Love Field hub. The company expects to take delivery of 100 new -800s aircraft over the next few years, a large part of its cost-reduction strategy. Ms Wright also stated that due to fuel cost increases, which have resulted in declining profits for the carrier, it has become more aggressive in capacity cuts. Ms Wright also stated the carrier is anxious to enter the Atlanta market. It is planning to use Southwest metal to serve the 15 markets it originally announced in addition to the new points announced last week that AirTran did not serve – Phoenix and Las Vegas. Ms Wright elaborated on CEO Gary Kelly’s comments that Southwest would not retain AirTran’s B717s, stating it would be some time before they exited the fleet. AirTran brought 88 717s and 52 737s to the combined fleet. Ms Wright also explained the success of the company’s 2007 strategic plan, designed to increase revenues by USD1.5 billion, was driven by market-share increases rather than capacity growth. The additional revenues were offset, however, by rising energy costs. It is now in the midst of four follow-on initiatives including the acquisition of AirTran, its new FFP programme launched in Mar-2011, fleet replacement with the B737-800 and its new reservations system. Other initiatives in progress include additional revenue management techniques, in-flight connectivity, taking advantage of required navigation performance (RNP) and implementing an operations recovery/re-accommodation programme. Ms Wright added that merger synergies would yield USD400 million net by 2013, but it has forced the delay of its new reservations system, another initiative that will increase revenues exponentially.
Southwest Airlines accelerates fleet replacement
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WOW air: the fast-growing Icelandic LCC starts new widebody services to US West Coast
The rapidly growing Icelandic LCC WOW air began a new chapter in its short history on 9-Jun-2016. Just over four years after its inaugural flight – from Reykjavik to Paris on 31-May-2012 – the airline has launched its first widebody service from Reykjavik to San Francisco. This route will be joined on 15-Jun-2016 by a Los Angeles service, also deploying A330-300 aircraft and taking its North American network to six destinations.
With 20 European destinations it is developing a role as a provider of low cost trans-Atlantic connecting services to sit alongside its point-to-point offering. In this respect it is providing growing competition to its larger compatriot Icelandair, which is also growing fast (and profitably).
However for now, at least, there appears to be room for both: Icelandair is not present on 12 of WOW air's European city pairs, or on three of its North American routes. Certainly the North Atlantic needs new competition, and both Icelandic airlines are helping to provide it.
Air France-KLM: long haul low cost airline could be part of new CEO's vision as French Blue enters
Air France-KLM chairman and CEO, Jean-Marc Janaillac, who took charge in Jul-2016, has talked about the possibility of launching long haul low cost operations (Bloomberg/luchtvaartnieuws.nl, 20-Sep-2016).
If Air France-KLM were to enter this segment it would be the second of Europe's big three legacy airline groups to do so, after the Lufthansa Group. Ironically, there is no long haul low cost competition to Lufthansa in Germany. By contrast, IAG faces more such competitors in the UK than either of its two major rival groups in their largest home market, but currently has no plan for such an operator.
Air France-KLM management told analysts on a conference call in May-2016 that it was sceptical about the sustainability of year-round profits for long haul low cost. However, new competition has prompted Mr Janaillac to look more closely at this market segment. Since Jul-2016 Norwegian has commenced trans-Atlantic long haul operations from Paris CDG. In addition, since Sep-2016, the new-start long haul LCC French Blue now flies on routes to the Caribbean. Mr Janaillac is expected to report on his strategic vision for Air France-KLM in early Nov-2016. Labour relations will be crucial to the group's development – not least in the area of long haul low cost.