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A shortage of pilots will increasingly erode cost advantages long enjoyed by US discount airlines while improving the competitive position of behemoths like United Airlines. That is according to United head of corporate development Michael Leskinen, who on 23 February pointed to the USA’s controversial “1,500-hour” pilot rule as driving the change, which he calls a “new paradigm”. “We have never had a better set up,” says Leskinen, who is also United’s vice-president of investor relations and president of United Airlines Ventures, the airline’s technology investment arm. “The set up we have over the next three to five years is better than anything I’ve ever seen in my career,” adds Leskinen, speaking during a Barclays’ investor conference. Leskinen backed his comments by describing broad changes now affecting the US airline industry. He notes carriers are unable to expand their fleets as quickly as they would like due to Airbus and Boeing being unable to keep up with delivery commitments – a result of aerospace manufacturing supply constraints. He also says limited supply of pilots will increasingly hinder the ability of ultra-low-cost carriers (ULCCs) and low-cost carriers (LCCs) to maintain cost advantages. “There is no carrier out there – whether its a regional carrier, an LCC or a ULCC – that can attract pilots unless [they] want to pay the going rate for pilots,” says Leskinen. “The incremental capacity from legacy carriers is going to be [at] similar cost, or lower cost, than incremental capacity coming from the ultra-low-cost carriers.” “It is a new paradigm,” he adds. In search of new pilots, some US airlines – notably regional carriers – have significantly hiked pay in recent years, even offering $100,000 bonuses to new hires. Large legacy airlines – American Airlines, Delta Air Lines and United – are now negotiating new contracts with their pilots’ unions. Some ultra-discounters have a several more years before their pilots’ contracts become amendable. But those discussions will determine the degree to which discounters maintain their chief competitive advantage.<br/>

Scandinavian airline SAS on Friday posted a slightly smaller Q1 loss before tax than a year earlier, as bookings for the quarter and the summer months were better than expected. CE Anko van der Werff told Reuters he was optimistic that the summer would go better than last year, when the airline was hit by week-long strikes and airports struggled with labour issues and travel chaos. SAS said it was ramping up hiring to meet the higher demand it expected in the summer. The CEO did however say the situation was still complicated, with airports already announcing planned capacity caps. "At the same time, both Airbus and Boeing are still dealing with delivery delays. So we are dealing with that the entire ecosystem hasn't ramped up yet to a full 100%," the CEO said. "But really, it will be a very different and much better experience for travellers than that last year." SAS also warned in its quarterly report that economic uncertainties with increasing interest rates and cost inflation were likely to affect the industry. As a result of improved demand, SAS repeated that it expects to return to positive earnings before tax (EBT) in fiscal 2024. For fiscal 2026 it predicted profit would be above its previous assessment from September of around 3b-4b crowns.<br/>

Scandinavian carrier SAS is reviewing long-term financial projections for 2024-26, with preliminary indications that stronger-than-expected demand will generate higher revenues and earnings towards the end of this period. SAS had previously estimated revenues of SKr49b ($4.7b) for 2026 but believes this figure will be greater, while it is also predicts pre-tax earnings will be above the earlier projection of SKr3-4b. The airline is maintaining a forecast of SKr40b in revenues, and pre-tax losses of SKr4-5b, for fiscal 2022-23 and reiterates that it expects to return to positive earnings in 2023-24. “Economic uncertainties with increasing interest rates and cost inflation are likely to affect the travel industry going forward, but the overall underlying demand for travel remains healthy and continues its strong trend,” says chief executive Anko van der Werff. SAS disclosed the forecast revision as the carrier – which is still restructuring under US Chapter 11 bankruptcy protection – revealed first-quarter pre-tax losses of SKr2.45 billion in the three months to 31 January, and net losses of SKr2.7 billion. Revenues for the period reached nearly SKr7.9 billion as strong passenger demand continued, although this figure was still more than 18% below pre-crisis levels during the first quarter of fiscal 2019-20. But SAS’s load factor for the quarter reached 69.3%, practically level with the pre-pandemic figure for the same period. “We are pleased that so many passengers are returning to SAS,” says van der Werff. He says the carrier is preparing for a “busy” summer season, during which it will open 20 new routes and offer over 100 destinations.<br/>

South African Airways (SAA) has flagged that it is now covering its operating costs after the country’s finance ministry set aside R1b ($55m) to deal with a portion of its historic debts. In a budget unveiled yesterday, finance minister Enoch Godongwana included the allocation to ”assist the carrier with the business rescue process”. Following the move, SAA issued a statement saying the funds will be used to cover outstanding liabilities, specifically those relating to the final dividend payment to creditors and the refund of legacy unflown tickets to affected passengers. This dates back to when SAA was in formal restructuring between 2019 and 2021. SAA CE John Lamola says: “SAA’s operations have progressed positively since the airline emerged from business rescue, and as reported to parliament earlier this month, SAA is no longer technically insolvent, a milestone which we reached a year earlier than projected.” Airline CFO Fikile Mhlontlo adds: “SAA has reached a point where we cover our operating costs. It must be emphasised that the allocation announced relates only to historical debt. These funds are not meant to bolster the business plan we are currently executing.” The allocation is part of R3.5b originally needed for SAA to settle all the debt that administrators had ring-fenced during its restructuring. ”Due to the financial performance of SAA and the innovations of its management team, the total balance expected from the treasury has been reduced to R2.58b,” says SAA. ”The airline will continue to negotiate with the treasury for the balance of the funds and co-operate with all the conditions that may accompany the flow of these funds.”<br/>

Tata Group-owned Air India on Friday said it planned to hire over 4,200 cabin crew and 900 pilots in 2023, as part of a major revamp that saw the carrier seal orders for a record 470 jets earlier this month. The overhaul at Air India, once known for its stellar service, started after it returned to the Tata Group's fold last year, seeking to repair its reputation that declined in the mid-2000s as financial troubles mounted. The airline, aiming to capitalise on India's growing base of fliers and strong demand for air travel, earlier this month sealed a record deal for the new planes from Airbus and Boeing. The airline had recruited over 1,900 cabin crew between May 2022 and February 2023, it said in Friday's statement. "We are also looking to step up hiring of more pilots and maintenance engineers," said Sandeep Verma, head of the airline's in-flight services. The airline was in the spotlight last month after the aviation regulator penalised it for the handling of an unruly passenger on one of its flights. Air India de-rostered one pilot and four cabin crew as part of its investigation.<br/>