Boeing, in its Order and Deliveries list through 11-Sep-2012, confirmed (13-Sep-2012) a tentative order by Air China for five 747-s has become a firm order. This marks the first addition to the order book for the aircraft type in more than 12 months. The tentative order was first announced in Mar-2012 but required Chinese Government approval (AINOnline/Seattle Times, 13-Sep-2012). The order is worth USD1.8 billion at list prices. [more - original PR]
Boeing confirms Air China order for five 747s
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Air Canada Part 1: low cost rouge is a pillar of growth; but further expansion might be constrained
During the past year Air Canada has found itself defending its double-digit capacity growth, stressing that 90% of its capacity in 2015, 2016 and 2017 is being deployed to its international network – an entity the company believes is far from reaching maturity. Recently the airline has outlined plans to introduce a raft of new long haul flights to Europe and Asia operated by Air Canada mainline and its low cost arm – Air Canada rouge.
Air Canada stresses the pillars of its international expansion – Boeing 787 widebodies and the establishment of its low cost subsidiary rouge – enable the company to enter international markets it once considered unviable due to higher costs. During the summer of 2018 rouge will nearly reach its 50 aircraft cap, and Air Canada needs to start determining if there are further opportunities to grow its low cost unit. Those evaluations will partially dictate Air Canada’s overall growth levels beyond 2018.
In the short term Air Canada is not seeing any broad changes in consumer behaviour, reflected in its solid booking curves. Weaker markets in Western Canada, hit by the downturn in the oil sector, are stabilising as capacity cuts have resulted in a rational supply-demand scenario.
This is Part 1 in a two part series on Air Canada. The second instalment will focus on the airline’s costs and balance sheet management.
LATAM Airlines Group: encouraging signs emerge in Latin America - but caution prevails
LATAM Airlines Group is forecasting higher system capacity growth in 2017, but also slightly higher margins as a slow economic recovery in Latin America sets in. The company has significantly cut its domestic capacity in Brazil during the past couple of years, but decreases for 2017 are less intense as LATAM balances rightsizing capacity with maintaining a certain level of market share.
Despite the tough conditions in Latin America that persisted throughout much of 2016 LATAM continued building its network utility for the long term, launching several new flights from its hub in Lima and new long haul service to Johannesburg. The company’s international expansion continues into 2017 with new long haul flights to Melbourne, as well as additional intra Latin America service.
One big strategy shift LATAM is beginning to undertake in 2017 is the launch of a new pricing structure to compete more effectively with low cost airlines operating in the region. Key to successfully executing that strategy is keeping its cost in line, in order to adapt its pricing models to new competitive realities within the Latin American market.