unaligned

Ultra-low-cost airline Spirit Airlines has its work cut out as it plots a future after the collapse of its $3.8b merger deal with JetBlue Airways. The airline has lost money for the past six quarters despite booming travel demand, and expects operating margins to drop as much as 15% in the current quarter. Analysts and industry officials say the airline will have to make drastic changes to become profitable, which is still not likely to happen this year. "Strategically, the company is challenged," said Jonathan Root, senior vice president at Moody's. "They have to lower their costs." That would mean cutting flights and exiting some markets, which would reduce its landing fees and airport charges, as well as lower fuel costs. Spirit is already taking some of these steps. The company has said it is adjusting its growth profile and has pulled flights out of markets like Denver and New Hampshire. The JetBlue merger would have created the fifth-largest U.S. carrier and potentially ensured the survival of Spirit. But the two carriers concluded there was no path forward after a US judge blocked the deal in January on anticompetition concerns. After calling off the merger on Monday, Spirit said it is confident in its strengths and is focused on returning to profitability. Industry experts say Spirit needs to do more. Excess capacity in key markets is hurting Spirit's pricing power, forcing the airline to discount heavily to fill planes. Average fare per passenger was down 25% in Q4 from a year earlier.<br/>

Flair Airlines CE Stephen Jones says he still hopes to add several Lynx Air planes to his fleet, even after their tentative merger fell through when Lynx shut down last month. Jones said the Boeing 737 Max 8s are the same model that comprise the bulk of his 20-plane fleet and would bolster the discount airline's stalled growth plans. “We would love to get access to those aircraft — not all of them, but we'd love to get access to some at least," he said. "We're very interested in an open process." In an Edmonton court filing, Flair's CE sought to have Lynx include it among those allowed to bid on the insolvent airline's assets. The court-supervised asset sale currently before the judge — who must approve the process — could lead to a "highly anti-competitive result" if large airlines are allowed to bid while Flair is locked out, according to an affidavit from Jones. Any process that gives Lynx the final say — which selects the "pre-qualified bidders" — over who can submit offers "unfairly prejudice" the sole remaining budget carrier in the Canadian market, the document argues. Court filings state that Lynx has $345m in property and equipment, with nine leased planes counted as assets, alongside $355m in long-term lease liabilities. Some observers question whether Flair has the financial stability to mount a serious bid, especially as consumers’ travel appetite levels off amid higher interest rates and inflation. "As much as Jones has got a lot of bravado that he's showing, he hasn't got the financials to support it," said John Gradek, a lecturer at McGill University's aviation management program. The cost of any planes transferred to a new lessor may be higher than those enjoyed by Lynx, which ordered 46 of them when prices were low during the COVID-19 pandemic.<br/>

WestJet is launching a St. John's to Hamilton, Ont., flight this spring as well as resuming its service to Tampa, Fla. The Hamilton route was initially flown by budget airline Swoop, which merged with WestJet in October, with Swoop being shut down. The St. John's-Hamilton route will take off May 17 and will fly up to five times weekly until it concludes on Oct. 14. "We recognize the importance of the return of WestJet's service between St. John's and Hamilton and are sincerely grateful for the overwhelming support and advocacy from the community," vice-president of external affairs Andrew Gibbons said. "We heard loud and clear how critical connectivity from Ontario is for the region and we look forward to strengthening the connection between these two vibrant provinces." The statement added that the Tampa route — which flew last year — resumes March 17 and will fly weekly until June 2. The announcements come amid rapid contractions and expansions in airlines' offerings out of Newfoundland and Labrador.<br/>

Brazilian airline Azul said on Tuesday it has not negotiated or approved any specific deal, as Bloomberg News reported on Monday the company mulls the acquisition of its rival Gol. In a statement to address formal questions from Brazil's exchange B3, Azul said it's always paying attention to the sector's dynamics and potential partnership opportunities. <br/>

Turkish low-cost carrier Pegasus Airlines posted a full-year operating profit of E489m in 2023, down around E100m on the previous year. The reduction in operating profit reflects rising costs outpacing revenue growth. Pegasus’ revenues climbed 9% in 2023 to E2.67b, while its costs rose 15% to just over E2b. Higher revenues in part reflect capacity increased 22% over the year, helping the airline boost passenger numbers 19% to almost 32m. Notably ancillary revenues jumped 30% to E810m and account for almost a third of the airline’s turnover. While full-year operating and pre-tax profits were both down for the year, a deferred tax gain – reflecting inflationary impacts – helped drive a sharp rise in net profits from E431m to E790m. Pegasus expects to lift capacity in term of available seat kilometres by between 10-12% this year. While it projects “a flattish trend” for yields, it sees ancillary revenues per passenger rising again, by around ‘mid-to-high single digit’ levels compared to 2023.<br/>

Air Baltic is pursuing its plan for an initial public offering after recording its first annual profit since 2018. The airline reported net income of E33.7m last year, after a net loss of E54.2m in 2022, it said in a stock exchange statement. The Latvian carrier plans to refinance a E200m bond that matures in July, and raise an additional E100m through private or public debt markets, it said in the report. It has also engaged several advisers on its IPO plan with a view to strengthen liquidity and its equity base, Air Baltic said. “We would announce such a step earliest in the second half of 2024,” CEO Martin Gauss said at a press conference in Riga on Tuesday. Air Baltic plans to list on the Nasdaq Riga and is considering a secondary listing, CFO Vitolds Jakovlevs said during the conference. London, Amsterdam or another exchange could be options for a dual listing but it was still early days and the airline will address the issue once investment banks are on board, he said. Russia’s invasion of Ukraine has investors demanding higher interest rates for Air Baltic’s debt, Gauss said in January, after the airline shelved plans for a junk bond sale last year to refinance the euro bond. The airline could turn to its shareholder, the Latvian government for financing if its unable to raise the funds in the market, the company said in the report. Air Baltic is among the carriers to be impacted by the Pratt & Whitney engine issues affecting Airbus aircraft. COO Pauls Cālītis said the airline faced a shortage of engines last year which meant it was unable to fly all of its A220 fleet and had to temporarily lease planes in the peak summer season. Air Baltic expects the engine shortage to carry on into 2024 and impact the company’s overall performance, he said.<br/>

Israeli leisure operator Israir Group is estimating its full-year net profit at $16-18m, on revenues of around $391m. The company has given the preliminary results after disclosing plans in February to purchase an additional Airbus A320. Israir Group states that it has yet to finalise the figures covering the 12 months to 31 December 2023. The operator achieved an average load factor of 81%. It predicts a gross profit of $59-61m. Israir Group has identified the A320 it intends to purchase as MSN6200, which is operating in its fleet as 4X-ABT. The airline had been considering issuing convertible bonds to finance the transaction. It says the company’s controlling shareholder, Rami Levy, has confirmed his intention to participate in this bond issue in the amount of 10m shekels ($2.8m).<br/>

Singapore Airlines Ltd.’s budget carrier is ramping up services across Southeast Asia as the carrier looks to win market share in the post-Covid recovery in regional tourism. Scoot Pte Ltd. will add two destinations to its current regional network, including the Thai tourist hotspot of Koh Samui, and increase the number of flights to four other cities across Thailand and Malaysia it already services, it said Tuesday. The airline said it expects to take delivery of the first of nine E190 E2 jets from Embraer in April, allowing the expansion of services in May and June. The deal to acquire jets from the Brazilian planemaker has added a third manufacturer to Singapore Airlines, diversifying a fleet built around Boeing and Airbus aircraft. It also offers the carrier more nimble jets that are better suited to catering to fast-growing markets across Southeast Asia amid bets tourism is set to recover from its Covid-era doldrums. “Our fleet expansion reflects our confidence that the demand for air travel will continue to grow within this region,” Scoot CEO Leslie Thng said.<br/>