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Why United Airlines’ huge bet on Newark airport is not paying off

On a good day, passengers flying into Newark airport in New Jersey can catch a glimpse of the Statue of Liberty. On a bad day they have to sleep on the floor. No company’s fortunes are more entwined with the airport than United Airlines, which accounts for 57% of passengers. Roughly an hour from Manhattan, Newark is a central pillar of CE Scott Kirby’s plan to use bigger, more efficient jets to grow the carrier. It is also United’s transatlantic gateway at a time when international travel is rebounding sharply from the coronavirus pandemic. But last month, the airport was the source of operational difficulties, which undercut Kirby’s claim that United was better prepared for the busy summer season than rivals. Kirby has since said the airline will operate fewer flights from Newark to minimise disruption, something that analysts fear could create an opening for competitors. “It hurts,” said Savanthi Syth, an analyst at Raymond James. “It’s good, high-quality demand that you want to be able to meet. It’s never a good thing if you have to cut down capacity. The risk is that you cut it, and someone backfills.” The meltdown at the end of June was caused by thunderstorms, but Kirby was quick to blame understaffed air traffic control towers for failing to deal with weather that airlines were once able to take in their stride. “Airlines can plan for things like hurricanes, sub-zero temperatures and snowstorms,” he wrote in a memo to employees on July 1. “United has never seen an extended limited operating environment like the one we saw this past week at Newark.” Passengers at Newark camped out on chairs, tables and luggage carts, while the disruption at the airline’s hub had a knock-on effect on services departing from and arriving at other airports. In total, 3,300 United flights were cancelled over a seven-day period and 7,800 were delayed.<br/>

United adds Tokyo, Manila and Taipei flights to cater to international travel boom

United Airlines on Tuesday mapped out another expansion of Asia flights in the coming months, part of its push to capitalize on a boom in long-haul international travel that has helped drive airlines back to profitability after the Covid-19 pandemic. International travel bookings surged this year, airline executives have said, as travelers seek long-distance trips they put off during the pandemic amid a web of travel restrictions and concerns about the virus. Airlines have been beefing up their schedules in response. “In general, the Pacific is as strong if not stronger than the Atlantic is today,” Patrick Quayle, United’s senior vice president of global network planning and alliances, told reporters. United announced new flights to New Zealand and Australia in April. Starting Oct. 29, United will fly daily nonstop flights between San Francisco and Manila, becoming the only US airline to offer nonstop service to the Philippine capital from the continental US. It will use its largest aircraft, a Boeing 777-300ER, for the route. The carrier will also add a second nonstop flight between San Francisco and Taipei, Taiwan, also starting Oct. 29, and it plans to resume service to Tokyo’s Narita International Airport from Los Angeles in addition to flights between Los Angeles and the more city-centric Haneda International Airport. Quayle said Tokyo flights have been in high demand since Japan lifted travel restrictions earlier this year. Still, there are constraints to United’s growth in China, including Russian airspace restrictions. Quayle said as a result, United won’t resume other routes like New Jersey’s Newark Liberty International Airport to Hong Kong. The airline will offer Los Angeles-to-Hong Kong flights, however, bringing its daily nonstop service to Hong Kong to three flights a day including flights from San Francisco. He said United and other airlines are in communication with the US government about negotiations with Chinese counterparts on adding back service. There are 312 flights scheduled between the US and China between June and the end of August this year, down from more than 4,800 in 2019, according to aviation data firm Cirium.<br/>

United Airlines grapples with pilots avoiding the captain's chair

United Airlines first officer Phil Anderson has turned down opportunities to be promoted to captain as he does not want the unpredictable schedule that comes with the bigger paycheck. Anderson is one of many who have passed on that promotion at United, and analysts and union officials said a resulting shortage of captains - who function as head pilots - could cut the number of flights available to travelers by next summer. One industry official dubbed it the "no one wants to be a junior captain syndrome." Some smaller regional carriers have already been forced to reduce their flights by as much as 20% due to staffing constraints, said Robert Mann, a former airline executive who now runs a consulting firm. If pilots refuse to take the captain's seat, Mann warned that airlines like United could face the same problem even as consumers are returning more to travel. "You can't fly with two first officers," he said. "You have to have a captain." Finding pilots willing to take career upgrades is not just a United problem. At American Airlines, more than 7,000 pilots have chosen not to take a captain's job, according to union-supplied data. Dennis Tajer, a spokesman for American's pilots union, said the number of pilots declining promotions has at least doubled in the past seven years. A first officer helps navigate and operate flights, but a captain is the pilot in command of the plane and is responsible for its safety. While both are union jobs, they fall in different categories and have different pay rates. At United, bids for 978 captain vacancies, or about 50% of the vacancies posted, have gone unfilled in the past year, United pilot union data shows. In June, 96 of 198 openings went unfilled. Currently, the Chicago-based carrier has about 5,900 captains and 7,500 first officers, according to its union data.<br/>

Panama’s Copa Airlines to use cash to redeem 2025 bonds

Copa Airlines parent company Copa Holdings plans to use cash it claims to have on hand to redeem US$350m worth of 4.5% convertible bonds due in 2025 ahead of schedule, it announced in a statement on July 14. The Panamanian carrier expects to redeem the bonds on September 18, offering to pay “a redemption price” which it described as “equal to 100% of the principal amount of the notes redeemed plus accrued and unpaid interest up to but excluding the redemption date.” The airline also offered bondholders the option to convert the 2025 notes into common shares by September 15, at a rate of 20.1603 shares of Copa Holdings’ common stock per USD1,000 principal amount of notes, it said. “Unless Copa defaults in making payment of the redemption price, interest on the notes will cease to accrue from and after the redemption date, and thereafter the only remaining right of a holder of the notes will be the right to receive payment of the redemption price upon surrender of notes to the paying agent,” the company explained. United States-based Wilmington Trust, as trustee for the bonds, is sending a Notice of Full Redemption to all registered holders, Copa Holdings concluded.<br/>

Brussels Airlines reopens Sunrise Lounge in Brussels

Brussels Airlines has completed renovating its Sunrise Lounge at Brussels Airport, now offering 25% more capacity and nap rooms for longer layovers. The lounge is dedicated to customers flying to Sub-Saharan Africa and includes themes from the region it serves passengers from. Brussels Airlines’ Sunrise Lounge at Brussels Airport (BRU) comes with many innovations. The renovated lounge not just comes with 25% more seating capacity and a wide range of food via a large buffet but also has five nap boxes and a self-service beer tap. The shower suites have been renovated too. As ​Dorothea von Boxberg, the CEO of Brussels Airlines, shared in the statement, “We are delighted to offer our passengers travelling to Africa a very premium and homey lounge that caters to the needs of long haul travelers such as rest and relax, good food and the possibility to work. Focusing on what really matters to our guests, we are proud of our new Sunrise Lounge. Moreover, this complete make-over highlights our strong and long-standing connection with the African continent.”<br/>

Turkish Airlines establishes subsidiary to run AnadoluJet

Turkish Airlines has established a wholly-owned subsidiary to run low-cost operation AnadoluJet. The carrier had earlier this year reiterated its intent to spin out the brand, which it established in 2008 at Sabiha Gokcen International airport. Announcing the new subsidiary in a stock-exchange filing on 14 July, Turkish Airlines said the decision was partly aimed at ”strengthening [AnadoluJet’s] competitive position in the market”. The filing indicates the unit – AJet Hava Tasimaciligi Anonim Sirketi – has been established with capital amounting to TL450m ($16.7m). The AnadoluJet brand covers around 80 aircraft but today operates without its own air operator certificate (AOC), as part of the main Turkish Airlines business. The filing does not mention progress on securing a new AOC or a timescale for AnadoluJet’s operations formally moving to the new subsidiary. Turkish Airlines has been contacted for comment. The airline said earlier this year that it was also working to spin out its Turkish Cargo operation into a separate subsidiary. Turkish Airlines has also said that it would consider IPOs and joint ventures as strategic options for AnadoluJet and Turkish Cargo, once they are standalone operations.<br/>

Asiana pilots' union tentatively OKs wage deal

Asiana Airlines, Korea's second-biggest carrier by sales, said Wednesday it has reached a tentative wage deal with its pilots' union for the 2019-2022 period. The tentative agreement came after two international and 10 domestic flights were canceled as around 100 Asiana pilots began a work-to-rule protest on June 7 for higher wages. Pilots only did what is stipulated by company policies and rules during the work-to-rule campaign. The campaign includes such tactics as the "overuse" of jet fuel and "excessive" maintenance work, and disrupts flights, causing delays. Asiana pilots have accepted a 2.5% increase in basic pay, an increased flight allowance, 50% of basic pay in cash incentive, and improved welfare benefits, the company said in a statement. The pilots originally demanded a 10% increase in basic pay for the four-year period as there was no wage increase due to the COVID-19 pandemic. It was far higher than the company's proposed 2.5% rise for the period. Other unionized workers, except for pilots, have already accepted the 2.5% wage increase for the pandemic-hit period. The pilots' union was planning to begin a strike this week, raising concerns over the planned walkout's impact on passengers planning to travel, businesses that transport their products via aircraft and the tourism industry.<br/>