unaligned

Brazilian airline Azul on Tuesday reduced its forecast for core earnings this year due to slower capacity growth and higher jet fuel price volatility but raised its view on 2024, lifting its Sao Paulo-traded shares. Azul, which also reported better-than-expected Q3 results in the day, cut its forecast for 2023 earnings before interest, taxes, depreciation and amortization (EBITDA) to about 5.2b reais ($1.06b) from some 5.5b. The company said in a securities filing the move was related to a fresh projection of available seats per kilometer (ASK) - a measure of capacity - expanding by 11% in 2023, down from an earlier forecast of 14%. Longer term outlook, however, was brighter from Brazil's largest carrier by number of flights and cities served, helping its shares jump more than 6% in the day - among the top gainers on Brazil's Bovespa stock index (.BVSP), which rose 2%. Azul said it now expects about 6.3b reais in 2024 EBITDA, up from a previous outlook of "more than 6b", due to continued demand strength and an accelerated fleet renewal process. "We remain encouraged by the industry environment," CEO John Rodgerson said in a statement, "with robust demand, strong tariff dynamics and disciplined capacity addition, especially during the upcoming high season."<br/>

Argentine low-cost airline Flybondi is considering an expansion into Brazil, a move that could eventually be financed through public markets once it completes a merger with a blank-check company in the first half of next year. The company, which announced its plan to go public on the Nasdaq on Oct. 20 through special purpose acquisition company Integral Acquisition Corporation 1, may not see immediate proceeds from the transaction but it would be a first step in being able to tap a broader group of investors down the line, said CEO Mauricio Sana in an interview. “The move isn’t aimed at raising funds: we don’t need them, we haven’t asked for a capital injection in three years. And you never know how much you’ll get in the end,” Sana said on the sidelines of a conference. The benefit is that if next year Flybondi wants to upscale quickly “and our shareholders don’t necessarily want to give us more funds, we can do a follow-on round without having to wait a year to execute a business plan.” That’s where a Brazil expansion could come in. The company is actively analyzing the move, Sana said, but Brazil’s “aggressive” consumer protection laws and frequent fines for companies operating there are risks. “We want to be in Brazil, and we’re working toward announcing our possible entry there next year,” Sana said. “But now we’re looking at regulatory issues. If that barrier is reduced, we’ll probably go forward, we’re working on it.” The company already flies to Rio de Janeiro, Sao Paulo and Florianopolis from Argentina. An expansion would mean doing domestic routes within Brazil where Latam Airlines Group SA, Azul Linhas Aereas Brasileiras SA and Gol Linhas Aereas Inteligentes SA are dominant. Buenos Aires-based FB Lineas Aereas SA began operations in 2018 when discount airlines were first allowed to fly in Argentina, increasing competition for state-owned carrier Aerolineas Argentinas. Flybondi’s market share for domestic routes is up to 22% and 5% for regional routes as of October, according to the latest government data. <br/>

Russian airline Aeroflot has resumed regular flights from Moscow’s Sheremetyevo Airport to Abu Dhabi International Airport, the Emirati airport operator said in a statement on Tuesday. Aeroflot will operate four weekly flights between the Russian and Emirati capitals using Boeing 737-800 jets, it said.<br/>

Kazakhstan carrier SCAT Airlines has placed a follow-on order for seven Boeing 737 Max 8s. The order, which was previously attributed to an unidentified customer in Boeing’s official backlog figures, will add to SCAT existing fleet of three Max 8s and five Max 9s. The airline plans to use the additional aircraft, which are powered by CFM International Leap-1B engines, to open new routes to Europe. SCAT Airlines president Vladimir Denissov says: “Replenishing the fleet with seven more [Max 8s] will increase the airline’s carrying capacity. “It will also positively affect the timely execution of flight schedules. The company will get an opportunity to expand its route network and offer passengers even more travel destinations.”<br/>

Dubai-based Emirates airline has ruled out buying Airbus A350-1000 jets until durability issues on its Rolls-Royce engine are ironed out. Sir Tim Clark, Emirates’ president, said the fuel-efficient engine did not meet the Dubai government-owned carrier’s maintenance requirements. “We don’t buy aeroplanes that are defective,” he told reporters at the Dubai Airshow on Tuesday. If Rolls-Royce makes technical adjustments to allow it to operate better in Emirates’ hot, dusty base of Dubai, the airline would consider purchasing up to 50 of the aircraft, he added. “Rolls-Royce knows what we want it to do and it would then re-enter the mix of assessment for our fleet plan,” he said. Rolls-Royce defended its engine, rejecting the suggestion that it was “defective”. “The Trent XWB engine family is the most efficient, most reliable large gas turbine that is out in the market today,” Rob Watson, president of civil aerospace at Rolls-Royce, told the Financial Times, adding that the company had “just closed a deal this morning”. Watson acknowledged, however, that the company’s largest engine, the Trent 97-XWB, faced durability issues in hot, dusty climates. “What we are all seeing [across the industry] when these engines operate in hot sandy environments is that the durability is less good than in benign environments.” Rival engine maker Pratt & Whitney’s latest-generation engine has encountered similar durability challenges in recent months. Rolls-Royce is looking to insert some technology upgrades into the existing fleet of engines to help them cope better with hotter climates, Watson added. Christian Scherer, Airbus chief commercial officer, earlier on Tuesday said that the Rolls-Royce engine was “perfectly fine” and “operated by many customers around the world”.<br/>

Emirates Airline President Tim Clark said on Tuesday he was growing more confident in the development and certification schedule of the Boeing 777-9 and that he expected the 777X to receive Type Inspection Authorization (TIA) from the US FAA around February 2024. Clark was speaking to reporters at the Dubai Airshow, where on Monday Emirates placed an order for 90 more 777X jets.<br/>

Britain’s Rolls-Royce said on Tuesday it was taking steps to improve the durability of its Trent XWB-97 jet engines but denied a suggestion from one of the industry’s most influential leaders that the Airbus A350-1000 engine was defective. Chief Customer Officer Ewen McDonald acknowledged that the company’s largest engine faced challenges in climates like Dubai, where Emirates has held off ordering the A350-1000. “The engine works really well in what we call benign operations ... But in sandy, hot conditions it is challenged, as all modern engines are, because the temperatures are very high. We see it across the industry,” he said in an interview. Emirates president Tim Clark earlier voiced concerns about the durability of the Trent 97-XWB and Rolls-Royce maintenance prices, a day after placing a major order for 90 Boeing 777X with rival engines from GE Aerospace. Clark told reporters the engine of the aircraft was able to spend only a quarter of the time “on wing” between service visits, compared to expected levels, and said this amounted to a level of performance that he described as “defective”.<br/>

Middle East low-cost carrier Air Arabia has placed an order for 240 CFM LEAP-1A engines for its existing order of 120 Airbus A320neo aircraft, it said on Tuesday. The airline said the list price value of the deal was $3.36b. The deal was signed on day two of the week-long Dubai Airshow, an industry event that has previously produced a frenzy of commercial aircraft and other aerospace orders.<br/>

Kuwait Airways expects compensation from planemaker Airbus (AIR.PA) for delays in delivering commercial jets, the chairman of the Middle Eastern airline told Reuters on Tuesday. Aerospace and other manufacturers are struggling with supply chain bottlenecks. This year, pressure has been growing on planemakers to start paying penalties. "We are discussing it with them. There will be some compensation from Airbus themselves, they have to because we are affected," Abdulmohsen Salem Alfagaan said in an interview at the Dubai Airshow. Alfagaan said delivery delays had forced the airline to adjust its network and reschedule flights, without specifying the length of delay or aircraft type. An Airbus spokesperson said conversations with customers were confidential. State-owned Kuwait Airways currently has orders for seven Airbus A330-900 and two A350-900 wide-body jets, as well as nine A321neo and one A320neo narrow-bodies, according to Airbus data. Kuwait Airways' current business plan envisages profitability this decade, Alfagaan said, adding it was unlikely to place a new aircraft order for three to four years. The airline is reducing frequencies on certain routes in the Middle East and Turkey due to a drop in demand for some destinations by as much as 50% as a result of the Israel-Hamas war, Alfagaan said. Travellers have cancelled bookings to the region amid fears the war could spark a regional conflict.<br/>

Etihad Airways chief executive Antonoaldo Neves believes supply chain challenges are likely to remain an issue impacting aircraft availability for the next two or three years, as the Abu Dhabi carrier embarks on its third decade with a fresh growth vision. Neves was speaking to journalists at the Dubai air show from on board a soon-to-be-delivered Boeing 787-9, which is on the static display at the show. “There are no planes in the market. I would love to be flying this plane, but it’s not delivered yet,” he joked. “I need the planes.” To help meet that capacity shortage, the airline has just brought back the third of four Airbus A380s it is deploying on its Abu Dhabi-London Heathrow route. “It was great to bring them back,” says Neves. “Customers love it. It’s important [because] I need the planes. “It’s getting really hard to get a plane, and that has a consequence for the entire supply chain, for seats, for parts,” he adds. “That for me, if I had to pick one big challenge, is how can I address that supply chain problem… which is going to last for two, three years more, because there is a lot of demand but our ability as an industry to provide what we need is not there.” It is an issue for Etihad because the carrier has returned to growth after a period of consolidation, in part from the unwinding of its equity-alliance strategy and then from the Covid pandemic. “Now I think we have the right size and we have an opportunity to grow again,” says Neves. “The plan is to double the size of the fleet in the next seven years; the plan is to get to about 33m passengers in the next seven years. We have a clear mandate from the shareholder. And the mandate is very simple. Deliver extraordinary customer service and at the same time, make money.” He adds: “We are in a region where GDP is growing at least 5% every year, and … aviation usually grows two times [as fast], at least. So I don’t see any reason we cannot grow 10% per annum over the next seven years.”<br/>

Two Pakistan International Airlines (PIA) flight attendants on a flight to Canada disappeared after arriving in Toronto last week, confirmed an airline spokesperson on Tuesday, adding that eight PIA employees have gone missing in the North American state over the past two years due to its “liberal asylum” policy. In recent years, there has been a noticeable increase in the number of Pakistani nationals attempting to reach developed countries in Europe and North America, seeking to escape challenging economic circumstances through illegal means. Earlier this year in June, a weathered trawler carrying 750 illegal migrants, including 350 from Pakistan, sank near Greece. The incident prompted local officials to sign a memorandum of understanding (MoU) with the Greek authorities to cooperate against human traffickers and prevent such incidents in the future. The recent disappearance of PIA employees in Canada suggests that a similar trend may also be emerging among white-collar workers in the country. “The two flight attendants disappeared upon arriving in Toronto and didn’t show up on scheduled time of return,” Abdullah Khan, PIA spokesperson, told Arab News, saying that eight crew members of Pakistan’s national flag carrier had disappeared in Canada in two years. The flight attendants, Khalid Mehmood and Feda Hussain, went to Canada from Islamabad on PK772 on November 10, but they failed to report back before the flight departed from Toronto. The airline notified the local authorities in Canada and launched a departmental investigation against its missing employees that may lead to their termination of services. Khan informed that four PIA cabin crew members had disappeared in the same way last years, while four more managed to vanish in 2023. “The reason for this is overly liberal asylum and asylum program by the Canadian government,” he added.<br/>

SkyMark Airlines has reported a significant jump in its six-month operating profit, amid a “full-fledged recovery” in passenger travel demand, with passenger volume hitting record highs. The Japanese domestic operator posted an operating profit of Y3.2b ($21m) for the six months to 30 September, up almost 94% year on year. SkyMark also posted a net profit of Y3.3b, up almost 23% year on year. The carrier recorded a 28.3% increase in revenues to Y52b, outpacing a 26% rise in costs to Y45.9b. It carried a record 3.97m passengers in the six-month period, up 23% year on year. SkyMark attributes the rise in costs to an increase in flights – it operated 3% more flights than the year-ago period – as well as in fuel costs and outsourcing fees. “The strong passenger demand is expected to continue because of the shift of travellers to domestic travel and the increase in the number of tourists visiting Japan due to the weak yen,” SkyMark says in brief remarks about its outlook. Separately, the airline disclosed a change in its major shareholder. In a filing dated 14 November, SkyMark says its largest shareholder Integral 2 has transferred a portion of its shares to financial consulting services firm Suzuyo Holdings. The deal, valued at around Y7b, will see Integral’s shareholdings reduce from 16.6% to around 5%. Meanwhile, Shizuoka-based Suzuyo will take a 13% shareholding in the carrier. <br/>

Cebu Pacific expects to ground 10 Pratt and Whitney PW1100G-powered jets in January alone, with up to 20 aircraft likely to be taken out of operations through next year. Airline chief Mike Szucs says the ongoing engine issues – which he notes had “unexpectedly confounded” the airline – have forced Cebu Pacific to forecast seat capacity growth “admittedly more modestly than we would have anticipated”. The airline now projects between 5% and 8% seat growth in 2024, and Szucs says the airline “would have hoped to be well in the double-digit percentages of growth” were it not for issues on the PW1100G, which powers its A320neo and A321neo aircraft. It is the latest update from the low-cost operator on the impact of the PW1100G’s technical issues. On 11 September, P&W parent RTX said that around 600-700 engines must be removed and inspected between now and 2026 for defective high-pressure turbine and compressor discs. Days later, Cebu Pacific said it would be revising downwards its fleet growth rate for 2024, given that an unspecified number of aircraft will be impacted. Speaking on 14 November, Szucs also flagged other challenges, including a lack of MRO slots and limited parts availability, as well as delivery delays. He says this is the second time this year that the airline has had to contend with PW1100G issues. Earlier this year, the airline grounded several A320neo family aircraft for engine hot-section durability improvements. That issue leaves four jets currently grounded awaiting maintenance slots, and Cebu Pacific expects the latest round of technical issues to affect six more jets in January. Still, Szucs stresses that the airline has plans to “ensure operational resilience” against the latest groundings. For one, Cebu Pacific “remains committed” to fleet growth in the new year, and has secured leases on new or used aircraft and engines.<br/>

Cebu Pacific is seeing slow recovery into Mainland China, as it takes a “wait and see” approach to fully restoring capacity into the country. The sentiment comes as the Philippines low-cost operator expects systemwide recovery by the end of this year, as it swung to a Q3 profit on strong travel demand. Speaking at an investors’ briefing following the release of the airline’s Q3 results, commercial chief Alexander Lao says: “We are reintroducing the network slowly. We restarted [flights to] Shenzhen [from Manila] but have deferred [resuming flights to] Beijing. We are ramping up for the Lunar New Year period [in February 2024], but at this point it’s just wait and see.” The airline’s systemwide capacity as at end-September stood close to full recovery, as domestic ASKs continue to track above pre-pandemic levels. By the end of year, Cebu Pacific expects systemwide capacity to be 3% higher than 2019 levels, with international ASKs to be at 93% pre-Covid-19 levels. Cebu Pacific mounted more than 35,900 flights in Q3, up 18% year on year and 1% more than pre-pandemic levels. It carried 5.3m passengers, up 27% against the year-ago period, but down 4% on 2019 levels. In the quarter to 30 September, Cebu Pacific posted an operating profit of nearly Ps2.4b ($42.8m), swinging from the Ps3b loss in the year-ago period. The airline, which is the Philippines’ largest carrier by market share, saw a 39% jump in operating revenue to Ps23.3b, far outpacing a 5% increase in costs. The airline adds: “[Cebu Pacific] saw a notable increase in travel demand in the third quarter, attributable to the change in school calendars, which shifted graduation and school breaks towards the months of June to August.” The airline reported a net profit of Ps1.3b, against the Ps2.5b net loss in the year-ago period. <br/>

Virgin Australia wants emissions reductions laws changed so Australian carriers can buy greener fuel to power other airlines’ planes overseas but be recognised as if it had used the fuel on its domestic flights. At the Australian Airports Association (AAA) national conference in Melbourne on Tuesday, aviation leaders acknowledged sustainable aviation fuel (SAF) was the only currently feasible path for airlines to reach climate commitments without decreasing their operations. While airlines struggle with the prohibitive price – on average 2.5 times more than existing jetfuel – and scarce availability globally, Australia’s aviation industry experiences these barriers more acutely, as there is no SAF currently produced at commercial quantities in Australia. The Australian government’s Jet Zero Council remains in its infancy, having met just once since its formation earlier this year. With private-sector initiatives years away, Australian airlines must import the fuel source to meet their obligations under the safeguard mechanism, which requires the country’s largest polluters to reduce emissions intensity by 4.9% each year to 2030. For companies that do not reduce their emissions intensity enough, they must buy carbon offset credits from companies who cut pollution beyond what is required. However, Virgin Australia’s chief sustainability officer, Christian Bennett, suggested that Australian airlines should be able to buy more readily available SAF to reduce foreign airlines’ emissions and for this to be recognised as having a net benefit under the safeguard mechanism, instead of requiring Australian carriers to import SAF – and burn fuel in the process – or pay for credits under the scheme.<br/>“If we wanted to buy SAF in this country right now we can’t,” Bennett told the AAA conference. “It’s not produced, it’s not commercially affordable and so I think there’s a very delicate policy discussion to be had, because it’s important to distinguish between actually having physical access to SAF and having access to the environmental benefits of SAF. “Arguably if we’re not going to be able to access SAF physically in Australia for the next decade … we’re going to need to think about innovative mechanisms like booking claim and how we leverage partnerships with countries like the United States to see whether there’s a way that we can actually access the environmental benefits of SAF well before we’ve got the ability to actually physically inject it in our airplanes at Australian airports.<br/>