Boeing announced (19-Jun-2013) it has acclerated the first delivery of the 737 MAX 8 to launch customer Southwest Airlines from 4Q2017 to 3Q2017. Final configuration for the 737 MAX programme is set for Jul-2013. Boeing Commercial Airplanes VP and general manager, airplane development, Scott Fancher said the company has "retired key technology risks" thorough Boeing's "disciplined development on the 737 MAX programme" and the work done by Boeing has enabled the programme to accelerate the 737 MAX schedule. Since launch in Aug-2011, the 737 MAX team has worked to define the final configuration of the airplane including new LEAP-1B engines from CFM International, a redesigned tail cone and the 'Advanced Technology' winglet. Testing in the wind tunnel and data analysis show that the 737 MAX configuration will provide a 13% fuel-burn improvement over existing narrowbody aircraft. After firm configuration is achieved, the 737 MAX team will begin detailed design of the aircraft, scheduled for completion in 2014. [more - original PR]
Boeing accelerates first delivery of 737 MAX by one quarter
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US airlines Part 2: LCCs and ULCCs face the same cost overhang as their larger rivals
US low cost carriers and ULCCs observed many of the same trends in the country’s marketplace at the end of 2016 as their large global network rivals – namely, that weak pricing trends in the domestic market were improving. Each airline has its own nuanced view of that general operating environment, but they feel encouraged by what they hope is an inflection point in pricing that will lay the groundwork for a return to positive unit revenue.
Those lower cost and ultra-low cost airlines also face similar challenges to their larger counterparts – cost pressure from new labour contracts and rising oil prices. And like their larger rivals, most of the lower cost US airlines are plotting lower capacity growth in 2017 as a means to improve their respective revenue performances.
For now, pricing improvement that began in late 3Q2016 and a bump in demand after the US presidential election are sustaining the cautious optimism expressed by US airlines as 2017 gets under way. But no US airline is ready to declare that pricing traction in the country’s domestic market is on a sustained upswing.
This is Part 2 of two reports examining the outlook for US airlines in 2017.
Delta Air Lines: cost pressure drives margin compression in 2017. Revenue generation is paramount
Although Delta Air Lines expects to sustain strong pre-tax profits in 2017, cost inflation and continued unit revenue pressure are creating margin compression for the airline. Delta anticipates its operating margin for the year will fall below the 17% to 19% targets it has set for itself over the long term.
Delta acknowledges that in the past its ability to predict a return to positive unit revenue accurately has been dismal; but the company believes it will post a flat unit revenue performance in 1Q2017. The airline also concedes that when it set long-term margin targets earlier in 2016 it believed unit revenues would rebound faster than has ultimately materialised.
The company is characterising 2017 as a transition year in which it is crucial to restore unit revenues in line with cost escalation, concluding that it could be the first year in many that could test the durability of its business model. But Delta is encouraged by positive momentum in many of its markets, and the slowing of yield degradation in the key corporate sector.