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WestJet positive about its revenue performance as it works to shore up falling returns

21-Feb-2017 8:20 PM

Canada’s WestJet is maintaining a reasonable level of confidence that its unit revenue growth will outpace cost inflation in early 2017, as it attains positive unit revenue in 1Q2017 for the first time in eight quarters. Improving conditions in the province of Alberta and growing ancillary revenue are helping to lift WestJet’s unit revenues in early 2017.

WestJet’s return on invested capital has been falling during the last few months, dropping out of its targeted range of 13% to 16%. The airline is not offering a specific timeframe to post an improved ROIC performance, but believes a better operating environment in Alberta should create a favourable scenario to attain targeted return levels.

After WestJet’s pilots endorsed a new deal in late 2016 that allows for the expansion of the airline’s widebody operations, speculation grew about a potential aircraft order from the company in the not too distant future. But WestJet is taking a cautious approach to its widebody evaluations, as current capital expenditures could reach CAD920 million (USD703 million) in 2017 and investors are looking for definitive progress in restoring historical ROIC performance.

Alaska Air Group: capacity uptick in 2017 and fleet changes as Virgin America integration starts

18-Feb-2017 3:29 PM

Now that Alaska Air Group has completed its acquisition of Virgin America, the combined company is offering capacity guidance for 2017 that is higher than the industry average. But Alaska is stressing that the projected growth is 2ppt below the combined increase of the two airlines in 2016. Much of the growth is driven by Alaska’s delivery of 18 Embraer 175s used on routes to enhance network offerings from the hubs of both Alaska and Virgin America.

Adding Virgin America’s network to its operations appears to be creating a competitive shield for Alaska. The company has refined competitive capacity growth estimates downward for 1Q2017 as the broader scale created by absorbing Virgin America gives Alaska the strategic network diversification that it lacked prior to the merger.

The merger integration between Alaska and Virgin America remains in its infancy, and many questions about fleet composition and branding remain unanswered. But in the short term Alaska aims to slow delivery streams for the Airbus A321neos in Virgin America’s order book until it can properly determine fleet needs for the combined airline over the long term.

The CAPA airline fleet quiz: 15 challenging questions. CAPA Summit Singapore 2/3 March

16-Feb-2017 8:21 AM

Test your knowledge of the global aircraft fleet with this CAPA Quiz. If you have access to the comprehensive CAPA Fleet Database, it should be a breeeeze.

Rank your result:

15/15 = Outstanding! – you should set up your very own aircraft leasing company.
13-14/15 = Excellent – your colleagues should say the word ‘wiki…’ in front of your first name around the office.
10-12/15 = Very good – someone should shout you several drinks at the next air finance gathering.
9 or below/15 = Time to brush up – you need to sign up for CAPA's Fleet Database immediately.

Visit http://capaevents.com/AFFS17 for the answers

Southwest Airlines strikes a cautious tone for its 2017 unit revenue performance outlook

5-Feb-2017 11:19 PM

Southwest Airlines remains committed to capping its capacity growth at 3.5% in 2017, of which 2.5% is pegged for the US domestic market. At the end of 2016 the company said that US domestic seats were outpacing the country’s GDP growth, and Southwest has often cited capacity pressure in many of its markets.

The large US airlines, including Southwest, seem to be keeping their domestic growth in check during 2017 as they work to achieve and sustain a positive unit revenue performance. Southwest expects sequential improvement in 1Q2017, and believes two year declines have now bottomed out – a conclusion drawn by most of its US airline counterparts.

Similarly to most US airlines, Southwest is facing cost pressure in 2017 stemming from recent collective bargaining agreement it has reached with large labour groups. The challenge for Southwest and the rest of its competitors is achieving a unit revenue performance that offsets cost inflation.

Hawaiian Airlines: favourable revenue trends, but aircraft delivery delays add cost pressure

30-Jan-2017 9:12 PM

Hawaiian Airlines is maintaining a positive outlook for 2017, despite cost pressure and delays in delivery of the first Airbus A321neo aircraft to join the company’s fleet. The airline is a huge proponent of the new generation narrowbody, touting the jet as the only aircraft that serves its mission of serving secondary North American markets at the right cost point. Because of the delays Hawaiian faces the undesirable situation of incurring the costs of adding the A321s to its fleet without enjoying any revenue benefit from their operation.

The delays may intensify the cost pressure Hawaiian already faces in 2017, and its current guidance does not include any effects from a potential collective bargaining agreement it could reach with its pilots. Hawaiian is not alone in facing cost pressure in 2017; nearly every US airline is bracing for non fuel unit cost challenges alongside rising oil prices.

But the unit revenue momentum Hawaiian enjoyed throughout most of 2016 is continuing into early 2017 as industry capacity to Hawaii remains rational, and its own growth is largely driven by new long haul routes introduced in late 2016. But it will be tough for Hawaiian, and the industry in general, to sustain a revenue performance that offsets the cost pressure that most US airlines, Hawaiian included, face in 2017.

Juneyao Airlines: will launch long haul, join Star Alliance, but must balance Air China's interests

30-Jan-2017 6:42 PM

China's Juneyao Airlines has always operated in the shadow of Spring Airlines. They launched from Shanghai within a year of each other and have had similar growth trajectories. Yet Spring sought the limelight and garnered attention for its low cost model. Juneyao, in contrast, often seemed to want to keep a low profile.

There are now rapid changes for Juneyao, and not just in comparison to its quiet history. In 1H2017 Juneyao is due to be the first "Connecting Partner" for Star Alliance, which will regain a footprint in China's commercial centre. Juneyao will likely transition to being a full Star member.

This will help the airline to grow its footprint as it takes delivery of its first of five 787s in 2018. Traffic rights internally and externally will be a challenge, but Juneyao must keep even closer watch on its quasi strategic patron, Air China. It is in the interests of Beijing based Air China to have a friend in Shanghai, but Air China's ultimate objective with Juneyao could be consolidation.

This content is exclusively for CAPA Membership Subscribers

CAPA Membership gives you the latest aviation news and alerts, access to CAPA articles, reports, and our leading aviation data with optional premium add-ons.

This content is exclusively for CAPA Membership Subscribers

CAPA Membership gives you the latest aviation news and alerts, access to CAPA articles, reports, and our leading aviation data with optional premium add-ons.

This content is exclusively for CAPA Membership Subscribers

CAPA Membership gives you the latest aviation news and alerts, access to CAPA articles, reports, and our leading aviation data with optional premium add-ons.

This content is exclusively for CAPA Membership Subscribers

CAPA Membership gives you the latest aviation news and alerts, access to CAPA articles, reports, and our leading aviation data with optional premium add-ons.

This content is exclusively for CAPA Membership Subscribers

CAPA Membership gives you the latest aviation news and alerts, access to CAPA articles, reports, and our leading aviation data with optional premium add-ons.

This content is exclusively for CAPA Membership Subscribers

CAPA Membership gives you the latest aviation news and alerts, access to CAPA articles, reports, and our leading aviation data with optional premium add-ons.

This content is exclusively for CAPA Membership Subscribers

CAPA Membership gives you the latest aviation news and alerts, access to CAPA articles, reports, and our leading aviation data with optional premium add-ons.

This content is exclusively for CAPA Membership Subscribers

CAPA Membership gives you the latest aviation news and alerts, access to CAPA articles, reports, and our leading aviation data with optional premium add-ons.

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