star

Air Canada reported a better-than-expected quarterly profit on Friday compared with a year-ago loss and sees solid passenger bookings into early 2024 as the country's largest airline cashes in on strong international travel demand. A rush by North American travelers to make up for lost time during the pandemic has bolstered earnings for legacy carriers, with international destinations enjoying especially high demand. But North American carriers face pressure from higher labor costs, with pilots at U.S. legacy carriers nabbing steep pay increases in new contracts or tentative agreements. Air Canada pilots anticipate sitting down for labor talks with the carrier in the next couple of weeks, a union official said. Their contract expires at the end of September. Charlene Hudy, chair of the Air Canada Pilots Association, said some of the Canadian airline's pilots earn up to 300% less than their US counterparts, depending on categories like seniority and type of aircraft. "We have to be in the same ballpark as our American colleagues," Hudy said. Air Canada raised the lower end of its earlier 2023 guidance of C$3.5b to C$4b for earnings before interest, taxes, depreciation and amortization (EBITDA) to C$3.75b. CE Mike Rousseau said advanced passenger bookings remain solid for the balance of 2023 and into the first quarter of 2024. Montreal-based Air Canada said it expects to grow available seat mile capacity for 2023 by 21% compared with a year earlier. The carrier wants to fly more American passengers on non-direct international routes through stops at its Canadian hubs. So-called sixth freedom revenues, generated from carrying passengers from a second country to a third via a stop in a local hub, were the strongest in the second quarter that Air Canada has ever achieved, the carrier said.<br/>

Brussels Airlines, a Belgian subsidiary of Lufthansa, has temporarily stopped flying to Angola after Niger's junta closed its airspace on Sunday, a spokesperson for the airline said on Friday. The airline flew to Angola two times a week through a triangle flight that connected Brussels to Congo's Kinshasa and Angola's Luanda. The triangle flight will now be a direct flight between Brussels and Kinshasa to save fuel and shorten the flight time for crew members as well as passengers. The closed Niger airspace has forced airlines to take detours, with Brussels Airlines previously stating that this means an extra one and a half to three and a half hours for rerouted flights to the African continent. The measure, which will be evaluated every week and will last until at least Aug. 26, affects about 30 of the 290 passengers per flight, Brussels Airlines said in an email. It added that affected passengers will be offered an alternative flight to Luanda through Lufthansa and Frankfurt Airport.<br/>

Strong demand in the passenger business during the first half has prompted Turkish Airlines to lift its full-year EBITDA expectations, despite a sharp fall in cargo revenues. The carrier has been one of the strongest performers since the Covid crisis and posted a profit of $794m from its main operations in the second quarter. It marked the carrier’s eighth consecutive profitable quarter. Speaking on a Q2 results call on 10 August, Turkish Airlines CFO Murat Seker said: “Our revenue performance in the second quarter saw significant year-on-year improvement, despite strong headwinds from the decelerating global cargo demand and the [February 2023] earthquake impact.” Revenues increased 13.5% to $5.1b – a record for the second quarter. “Passenger revenue increased by 31%,” Seker says. ”I believe that is particularly noteworthy considering the high base we had last year.” It carried 22m passengers over the three months ended 30 June, a 19% increase on the previous year. “As a result of robust international demand, particularly in the Far East and the Americas, total load factor climbed by more than two percentage points to 71.7% – exceeding 2019 levels,” he says. Excluding the financial impact of the earthquake and inflation-driven pay rises, profitability would have been $240m higher in Q2. “This summer is going strongly, demand to Turkey is also strong,” Seker adds. “We are expecting the number of tourists to increase by 17% to reach 60m visitors to Turkey and given our dominance in the Turkish market, we will be able to get the benefits out of it.” Story has more.<br/>

China’s three largest airlines are expected to be in the red in 2023, despite improving recovery prospects and the likelihood of a small profit in the second-half of the year, a HSBC Global Research report notes. The report, which was issued on 11 August, points to lower yields, as well as a swing to foreign exchange losses, for the forecast. It also is a change from HSBC’s previous forecast that the ‘Big Three’, which comprise Air China, China Eastern Airlines and China Southern Airlines, would turn profitable in 2023. Still, it notes that in the July-December period, the three airlines are “set to return to profit trajectory” as traffic continues to recover. As at June, the ‘Big Three’ saw domestic capacity and traffic exceed pre-pandemic levels, with ASKs about 30% higher than the same month in 2019. “We remain confident about the pent-up travel demand despite the slowing economic momentum and each travel/holiday season should see robust bookings,” says HSBC. On the international front, the “Big Three’ now stand at around 50% pre-pandemic capacity, only a marginal increase from 46% in early July amid recovery bottlenecks. However, HSBC notes that Beijing’s decision to lift a group travel ban to key markets like Australia and the USA will provide lift to international recovery. China only eased its onerous ‘zero-Covid’ policy in late-2022, and international travel recovery has been slower than anticipated, even as airlines continue to increase flights to the country. The ‘Big Three’ are expected to release their financial results for the half-year imminently, where they expect to remain loss-making. <br/>

Thai Airways International announced a group net profit of 2.2b baht ($62.6m) for the April-June quarter on Friday, with the turnaround owing to a rebound in demand, particularly for flights serving China and Japan. The flag carrier, which filed for bankruptcy protection in 2020, had suffered a 3.2b baht net loss in the April-June quarter of last year. Total revenue, excluding one-time transactions, increased 74% on the year to 37.3b baht, partly from resuming service to mainland China after the country lifted its zero-COVID restrictions. Demand for other key routes, including to Europe and Australia, was strong as well. The airline served 3.35m passengers in the April-June quarter, up 67% on the year. Thai Airways had initially aimed to complete its restructuring in 2025 but is now on track to do so as early as 2024. It aims to relist on the Thai stock exchange soon after to raise fresh funds. The carrier is pursuing new tie-ups to help bolster its performance. It announced a strategic partnership with Turkish Airlines on Tuesday, with plans to coordinate their schedules for increased efficiency. It also aims to start code-sharing flights with Singapore Airlines to the US and South Africa by November.<br/>

Several Asian carriers are set to increase flying to Australia, with Singapore Airlines upgauging capacity on a number of key routes into the country, as part of a broader network ramp-up. For the 2024 northern summer operating season, which starts 31 March next year, SIA will deploy the Airbus A350-900 on flights to Cairns. It marks the first time it will serve the route with a widebody for 20 years. It is a significant increase in capacity from current services, where the airline deploys the Boeing 737 Max 8. It will also add one additional rotation on Cairns, taking frequencies to five flights per week. SIA is also adding additional frequencies on its flight flights to Darwin (from five weekly to daily flights), Melbourne (from four to five times daily), as well as Perth (from four daily to five daily flights). Cathay Pacific is increasing flights to Brisbane from 1 December, from four weekly flights to six. Cathay, which is the only carrier flying between the two cities, will operate all flights with its 777-300ERs. Apart from a rise in tourist arrivals, the ramp-up is expected to boost Queensland exports of beef, seafood, manufactured goods and pharmaceuticals, says Brisbane Airport. Low-cost carrier VietJet announced plans to launch twice-weekly flights between Ho Chi Minh city and Perth from 21 November, operated with A321s. Alongside announcing more flights to Australia, SIA will also boost capacity in other areas of its network during the 2024 northern summer period, including reinstating direct flights from Singapore to Barcelona, as well as returning the A380 to continental Europe. From 31 March next year, it will deploy the superjumbo on daily flights from Singapore to Frankfurt, an upgauge from the A350s currently on the route. In China, SIA will add daily flights to Beijing from May 2024, as well as Hong Kong and Shanghai from October this year. As for Japan, SIA will boost flying to Tokyo Haneda back to pre-pandemic frequencies, with the addition of two daily flights in October and September 2024, respectively. Flights to Kuala Lumpur in Malaysia will increase from the current 47-times a week to 66 weekly flights by April next year, bringing it closer to pre-pandemic levels. The latest increases “support the strong demand for air travel to… key markets”, says the Star Alliance carrier. <br/>