Boeing is already estimating a US$1b increase in costs related to its troubled 737 Max and has pulled its forecast of 2019 earnings because of uncertainty surrounding the jetliner. The $1b figure is a conservative starting point. It covers increased production costs over the next few years but does not include the company's spending to fix software implicated in the crashes, additional pilot training, payments to airlines for grounded jets, or compensation for families of the dead passengers. The estimate was disclosed Wednesday in a presentation for investors as Boeing released Q1 financial results, which missed Wall Street expectations. While lacking many details, the disclosures gave the clearest picture yet of the financial damage that the accidents are causing to the aerospace giant. <br/>
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Boeing removed 210 aircraft from its order backlog to reflect concerns about customer credit quality and took an impairment at its Boeing Capital financing unit Wednesday. The planemaker did not disclose the name of the airline involved but the move came days after India's Jet Airways halted operations after lenders rejected a plea for emergency funds. The order adjustment pushed Boeing net orders into negative territory up to the end of March, with a total of minus 119 net orders despite a slew of wide-body orders in Europe and Asia. Under recent changes in accounting rules, Boeing hives off orders that do not meet its criteria for recognising revenue into a separate category, while holding onto contractual claims. <br/>
Airlines take note: America’s surging shale oil production is bringing with it ever more jet fuel. The combination of rising output of the petroleum product in the US and expansion in refinery capacity in Asia has led to a growing surplus just as the northern hemisphere summer peak period approaches. That’s pushing down margins on the fuel. The US is currently producing about 300,000 barrels a day more than a decade ago, Energy Information Administration data show. The growth alone is equivalent to about 4% of global demand. Airlines may struggle to reap immediate benefits from weakness in the market because they typically hedge against the risk that one of their biggest costs will increase. The falling premium to crude will help to damp the impact of rising oil prices. <br/>
Airlines that are adding tracking at more points of the baggage journey are enjoying a huge improvement in bag delivery globally. The SITA 2019 Baggage IT Insights shows that where tracking is done at check-in and loading onto the aircraft, the rate of improvement is as high as 66%. These results come as the record drop in the baggage mishandling rate achieved globally over the past decade plateaus, with the rate steady at around 5.7 bags per thousand passengers over the past 3 years. In 2018, the rate was 5.69 per thousand passengers. Over the past year, an increasing number of airlines and airports have started to introduce tracking at key points in the journey to improve baggage management and further reduce the chances of a bag being mishandled. SITA’s research provides the first glimpse of the success of this tracking. <br/>
Austria’s Salzburg Airport shut down operations for 5 weeks beginning April 24 to renovate its 59-year-old runway. Aircraft operations are scheduled to resume May 28. The runway work is part of a E60m (US$67.4m) project, including water drainage, The closure will also take a toll on revenue, airport CE Bettina Ganghofer said. “It’s not just about landing fees, but also about the nonaviation area—so our shops, parking lots, etc. In addition to the investment for the new runway, the airport must therefore also expect revenue losses between E4m and E8m,” she said. Most of the airport’s carriers—including Austrian Airlines, British Airways, EasyJet and Eurowings—have postponed services during the closure. Turkish Airlines switched its Istanbul flights to Linz Airport, located 100 km east of Salzburg. <br/>