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Boeing is a leading manufacturer of commercial and military aircraft, rotorcraft, electronic and defense systems, missiles, satellites, launch vehicles and advanced information and communication systems. Headquartered in Chicago, Boeing employs more than 170,000 people across the United States and in 70 countries.
Boeing is organised into two business units: Boeing Commercial Airplanes and Boeing Defense, Space & Security. Supporting these units is Boeing Capital Corporation, the Shared Services Group and Boeing Engineering, Operations & Technology.
Boeing’s main commercial products are the B737, B747, B767 and B777 families of aircraft and the Boeing Business Jet. New product development efforts are focused on the B787 Dreamliner, 737Max, 777X and the B747-8. The company has nearly 12,000 commercial jetliners in service worldwide, which is roughly 75% of the world fleet.
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Delta Air Lines has slightly adjusted its passenger unit revenue targets for 3Q2014 triggered by oversupply in some of its markets, unrest in the Middle East and the Ebola outbreak in Africa.
The airline has previously warned of tougher year-on-year comparisons in 3Q2014 after recording 7% unit revenue growth in 3Q2013. But despite the challenges that have cropped up during the last few months, Delta still predicts a strong performance in the quarter with double digit operating margin expansion and solid cost containment as demand in the US domestic market remains strong.
As it prepares to make trans-Atlantic capacity adjustments for the US winter time period in conjunction with its SkyTeam alliance partners, Delta is also making changes in it Pacific network by down-gauging Boeing 747s it operates to Tokyo and replacing them with smaller and more efficient aircraft.
LATAM Airlines Group is making adjustments to its international network in late 2014 and 2015 as the macroeconomic conditions in some of its home markets remain weak. The changes also reflect the group's ability to leverage the combined fleets of LAN and TAM post merger as LATAM continues its efforts to shed inefficient aircraft as it phases out 39 jets during a two year period.
LATAM is increasing frequency to North America and adding service to Europe even as it has cited some pressure in those markets during the last year.
But the company appears wisely to be selecting markets that are largely shielded from competition that could help deflect any lingering economic weakness within South America.
Mexican airlines Aeromexico and Volaris are sticking to their proclaimed strategies of deploying most of their capacity into international markets as the Mexican economy slowly rebounds from a sluggish 2013. Through the first eight months of 2014 each airline increased their international capacity and traffic significantly, betting that yields are stronger in international markets.
The competitive overlap between Aeromexico and Volaris on each airline’s top US transborder markets is not overwhelming, and Volaris has previously stated that it is targeting routes with a higher percentage of visiting, friends and relatives (VFR) travellers.
Aeromexico’s and Volaris’ rival VivaAerobus is also making a new transborder push during 2014, upping competition with Aeromexico and Interjet on some of its international services. It is tough to determine if the push is creating oversupply; but the international growth indicates Mexico’s airlines are attempting to counter weaker yields on the country’s domestic routes.
Large Brazilian airline Gol is gaining some attention for the restructuring it has undertaken during the past three years as market conditions in its home country deteriorated driven by a weakening economy.
Despite a still tenuous economic environment Gol has worked to improve its financial situation through capacity reduction, the restructuring of debt, network changes and a heightened focus on the corporate customer.
The results are improved leverage, a shrinking of losses and increases in its margins. Gol is refraining from declaring any definitive targets of when it will return to profitability, but believes it could be on a clear path to positive net income by YE2015 as it braces for continued higher fuel costs and currency devaluation.
With the Farnborough International Airshow over, the major aircraft manufacturers have reported their July orders and deliveries and 2014 is shaping up as another exceptionally strong year for the global airliner market.
Despite the talk of an aircraft ordering bubble, demand remains strong despite some regional weaknesses, order backlogs continue to hit record highs and the major problem for manufacturers is getting their aircraft into the hands of their customers at rates that satisfy them.
Air Canada’s record profitability in 2Q2014 is being undermined by a decline in the airline’s yield performance, resulting in the airline defending its strategy of improving its bottom line by an increased stage length and a higher proportion of economy seating.
The underlying philosophy is that Air Canada is creating a framework for unit cost to decline at a greater level than yields and unit revenues as it works to reduce its unit cost, excluding fuel, by 15% from CY2012 levels in the medium term.
It may take some time for the market to understand Air Canada’s tactics; but the airline’s 2Q2014 results seem to indicate there is merit to the airline’s efforts to meet its goals of long standing profitability.