LOT Polish Airlines announced (25-Apr-2013) plans to resume Boeing 787-8 operations on 05-Jun-2013 with 11 times weekly Warsaw-Chicago O’Hare service. The airline will resume three times weekly Warsaw-Toronto 787 service from 07-Jun-2013 and twice weekly Warsaw-New York John F Kennedy 787 service from 30-Jun-2013. As previously reported by CAPA, LOT’s 787 aircraft were temporarily grounded due to a fault with the 787 batteries. [more - original PR]
LOT Polish Airlines to resume 787 operations on 05-Jun-2013
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LOT Polish Airlines: new LA service highlights value of long haul; short haul heat from LCCs remains
On 3-Apr-2017 LOT launched its longest direct service, between Warsaw and Los Angeles, deploying Boeing 787-8 aircraft. Los Angeles is LOT’s fourth North American destination and its first regular service to any US west coast destination. It is also the only direct flight anywhere between Central Europe and the US west coast. Warsaw-Newark and Krakow-Chicago route launches will follow later in summer 2017.
As it is with its other long haul routes, which also include three Asian destinations, LOT is aiming the new LA service not only at O&D traffic from Warsaw, but also squarely at passengers travelling to Southern California from across the Central European region. LOT is the only significant long haul operator in the region and the only one serving Los Angeles. Its Warsaw Chopin hub is the only airport between Vienna and Moscow with more than 1,000 long haul flights per year.
On short/medium haul, competition from LCCs Ryanair and Wizz Air is intense. Both have more seat capacity in Poland than LOT, whose new unbundled fare structure reflects the need to adopt some of their tactics. Long haul, where there is far less competition for LOT, is set to remain its strategic growth priority.
Air Canada’s 1Q2017 margin pressure and lower ROIC targets trigger market trepidation
Canada’s largest airline, Air Canada, is working through a multi year effort to grow its international footprint and cut costs. The company’s strategy has entailed higher than average capacity growth compared with its North American global network airline peers. Its long haul push has resulted in growing stage lengths and yield pressure; but Air Canada’s EBITDAR margin, the preferred metric in which the company measures its performance, has remained well within its established targets.
The company’s capacity should continue to expand in the double digit range during 2017 as it adds more Boeing 787 widebody jets and plans additional new route introductions. Its stage length should continue to grow in 2017, which means yields will remain under pressure. Air Canada’s capacity growth should moderate in 2018 as several initiatives it has undertaken during the last few years reach maturity.
Air Canada has been reasonably successful in growing its valuation during its large scale capacity growth, but a downward revision in ROIC targets and warnings of lower EBITDAR margins for 1Q2017 are triggering some pressure on its stock price. For now, markets are not quite reassured by Air Canada’s pledges that it will still meet its stated annual EBITDAR margins in 2017.