JetBlue Airways shares jumped 12% on Tuesday after the airline posted a surprise profit and said it would defer another $3b in aircraft spending through 2029 to improve cash flow. The carrier posted a $25m profit for the second quarter, down nearly 82% from last year. Wall Street analysts had expected a quarterly loss. JetBlue hasn’t posted an annual profit since before the pandemic. It has spent recent months cutting unprofitable routes and reducing costs to try to stop losing money as it faces higher expenses and an oversupplied domestic market. JetBlue said Tuesday that it has halted 50 routes and is focusing more on service from New York, New England and Puerto Rico, where it has historically been strong. It also is trying to better deploy its planes outfitted with premium seats like its Mint aircraft to maximize revenue. JetBlue says the changes will help it add $800m to $900m in pretax profit from 2025 through 2027. It’s deferring delivery of 44 Airbus A321neo aircraft until 2030 or later. The airline has also been impacted by a Pratt & Whitney engine recall. “We have and are taking aggressive action on every front,” CEO Joanna Geraghty said on an earnings call on Tuesday. Geraghty said Tuesday the airline is taking additional steps to improve reliability, such as adding more buffer time to flights. JetBlue has consistently ranked toward the bottom of U.S. carriers in punctuality. The airline plans to cut capacity by as much as 6% in the third quarter and as much as 5% for the full year. Even with the reductions it expects third-quarter revenue to drop as much as 5.5% from last year and full-year sales to be down as much as 6% over 2023. Airline executives have blamed weaker-than-expected revenue this summer on an oversupply of capacity.<br/>
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JetBlue Airways Corp.’s loyalty program could be a source of collateral if the airline were to pursue financing in the debt capital markets, its chief financial officer said on Tuesday, adding that it is looking to address convertible maturities “as quickly as possible.” JetBlue has about $11b of unencumbered assets — those not already pledged as collateral — that could be used for fresh financing, CFO Ursula Hurley said on an earnings call. The company’s loyalty program represents about half of that, she said. Long Island City, New York-based JetBlue has $750m in a convertible note that carries a 0.5% coupon coming due in 2026. Management wants to address it quickly, Hurley said. Debt that matures within 12 months, including some due in 2025, becomes current on the company’s balance sheet. JetBlue had $5.3b of long-term debt as of the end of June, including finance lease obligations, according to regulatory filings. “We’re currently assessing all markets to see the most effective and the most constructive in terms of all-in cost of funding,” Hurley said on the call with analysts. Using a loyalty program as collateral has become a popular tactic for airlines, which are capital intensive but have valuable assets like their mileage programs. When the pandemic sent airlines into a cash crunch, Delta Air Lines Inc. and United Airlines Holdings Inc. were among borrowers that pledged their loyalty programs as collateral.<br/>
Free Wi-Fi? Free checked bag? Free snacks? On Spirit? The Florida-based carrier that is practically synonymous with budget air travel in the U.S. said Tuesday that it plans to offer packages for its highest-priced tickets, wrapping in perks it used to charge for a la carte. It’s a bid to increase revenue as it struggles with the aftermath of a U.S.-blocked takeover by JetBlue, engine recalls, an oversupplied domestic market, and larger rivals who have capitalized on premium and cost-conscious travelers alike. Starting late next month, Spirit will offer four categories of service (story has details.) The options will be available to book Aug. 16, and all four will be available on flights from Aug. 27. Spirit is competing with larger airline rivals like United that have capitalized on cost-conscious travelers with their own bare-bones products but still offer higher-priced options like extra legroom and first class. “What we realized now is that we were sort of ceding other markets to other airlines,” Christie said in an interview. “Now we’re saying, no, we can still do what we were doing before, but we’re also going to compete for people who are willing or want a little bit more of a premium feel and and would pay for that. They just didn’t have it on us.” Spirit earlier this month warned of a wider-than-expected loss after nonticket revenue — what it collects in the form of fees — came in lighter than it had previously forecast. The carrier has also warned pilots about potential furloughs in the coming months.<br/>
Hawaiian Airlines is aiming to boost its domestic business to offset a decline in Japanese demand, due mostly to the impact from a sharp fall in the yen against the dollar. The Hawaiian Holdings Inc. brand has been hurt by weaker revenue from Japan, its largest international market, forcing a redeployment of capacity between the islands and US mainland, Peter Ingram, the company’s CEO, said Tuesday on an earnings conference call. The sagging yen increases costs for Japanese travelers to the US and erodes the US dollar value of revenue generated by American companies in Japan. “We’ve backfilled some of this missing Japan point-of-sale demand by proactively intensifying our focus on the US and other international” markets, he told analysts on the call. Chief Revenue Officer Brent Overbeek said the carrier has added flight service between Hawaii and US cities such as Sacramento, California, and Salt Lake City to absorb the extra capacity. Hawaiian’s overall international yields and load factor continue to trend lower in the current quarter, continuing declines it reported for the second quarter. <br/>
A fight between a couple on a recent Aer Lingus flight allegedly became so violent that the pilots were forced to declare an emergency and had to divert the plane. The incident occurred on flight EI738 from Dublin to the Spanish island of Majorca. About an hour into the journey, the pilots issued a Squawk 7700 emergency alert code after the husband and wife’s argument turned physical. The plane landed at Nantes Airport in France and a woman was treated for facial injuries while a man was arrested for domestic violence and for causing injury, according to Ultima Hora. An added complication for the pilots was this happened while French airspace was operating a no-fly zone over Paris due to the opening of the Olympics. The flight continued on its journey after a two-hour delay.<br/>
Long-haul low-cost operator Norse Atlantic Airways has eased some of its financial pressure through an agreement which releases cash from credit-card payment providers. The airline had disclosed earlier this month that it was encountering near-term cash and liquidity issues after a weaker-than-expected second quarter. While summer bookings have been “satisfactory”, it says, they are being made later. Bookings being made closer to the travel dates are leading to later cash inflow from sales as the carrier awaits collection of credit-card receivables. But Norse states that it has agreed improved terms with credit-card payment providers, and that this has generated an “immediate cash release”. It has not elaborated on the size of the cash influx. Norse says, however, that the new terms have been arranged at no cost, adding that they “represent the most favourable working capital solution and resolve the near-term liquidity issue”. “We continue working to optimise our liquidity and our general financial position going forward,” it adds. Norse operates a fleet of Boeing 787s primarily on transatlantic routes.<br/>
India’s Akasa Air plans to add destinations across Southeast Asia and the Indian subcontinent to tap the booming demand for overseas air travel in the world’s most-populous nation. The Mumbai-based budget carrier is gearing up to start flights to Kathmandu in Nepal and Bangladesh’s capital Dhaka, Praveen Iyer, CCO at Akasa’s parent SNV Aviation Pvt, said in an interview. Other travel hotspots such as Thailand, Vietnam, Malaysia and Indonesia are also on the airline’s radar, he said. “Indians in general love traveling. That prompts us to look at the next set of expansion,” Iyer said. Outbound traffic from India starting October is “very strong” with Southeast Asian destinations emerging as big contributors, he said. The rapid ramp up by the fledgling airline — which begun flying two years ago and has added five overseas routes this year — underscores the demand for air travel, as Indians get wealthier and countries ease visa restrictions for its citizens. Akasa is also preparing for intensifying competition as its local rivals bulk up: Tata Group-owned Air India and Vistara are merging while market leader IndiGo plans to fly long-haul international routes. Meanwhile, at least a half-dozen overseas carriers such as Etihad Airways and Malaysia Airlines have added or introduced flights to Indian cities.<br/>
Philippine Airlines said it is in talks with financial institutions to secure approximately $500m in funding for the acquisition of three additional Airbus aircraft. “These three that we ordered are just options. It is for our buffer,” PAL President and COO Stanley K. Ng told BusinessWorld on Tuesday. This additional aircraft purchase is on top of the nine A350-1000s planned by the company, Ng said, adding that, overall, PAL is now ordering 25 aircraft. “Maybe half a billion [for these three], more or less around that. We are talking to the banks right now for the funding,” Ng said. “For the buffer, it will be by 2025,” he said, when asked about the expected arrival of the additional three Airbus A350s. Deliveries for the nine A350-1000s are scheduled until 2027 and will be operated on nonstop services from Manila to North America, including the East Coast and Canada. In April, PAL said that it was targeting to purchase 13 A321 New Engine Options (NEOs). These aircraft will start arriving next year and continue through to 2028, he said.<br/>
Australian airline Regional Express Holdings will cut hundreds of job after it entered voluntary administration, the second small airline to do so this year, in a move that will further concentrate the country's aviation market. Traditionally focused on servicing Australia's vast regional areas, Rex in 2021 began flights in the lucrative "golden triangle" between Sydney, Brisbane and Melbourne, which is dominated by Qantas Airways and Virgin Australia. However the airline failed to meaningfully dent their control of the overall market, which was over 90% in March, according to the competition regulator. On Tuesday, Rex called in administrators Ernst & Young. The administrators will shutter the subsidiary which operates Rex's Boeing 737 flights between major cities and make 360 workers redundant, according to the Transport Workers Union (TWU). A further 250 jobs will be cut elsewhere, it said. Regional flights on its fleet of Saab 340 aircraft will continue. Transport Minister Catherine King said the government had already provided Rex some support to keep its regional flights in the air but stopped short of guaranteeing a rescue package. "I think it is fair to say that we would be reluctant to just throw money at the problem," she said. "What we would want to do is ensure that there is a long term solution to the security of regional aviation."<br/>
The collapse of another Australian airline — at least the fourth in as many years — highlights again the overwhelming local dominance of Qantas Airways Ltd. and increases pressure on the government to rein in the century-old giant. Rex, an established regional airline that recently tried to take on Qantas on busy and lucrative capital city routes, fell into administration late Tuesday. Regional Express Holdings Ltd., as the listed entity is known, canceled all flights between major airports and grounded its fleet of Boeing Co. 737 jets. Rex’s existential struggles, after two decades of regional operations, stem from its ill-fated expansion into major intercity services such as Sydney-Melbourne — one of the world’s busiest domestic routes — in 2021. Stymied by a crippling fare war with Qantas and Virgin Australia Airlines Pty, and insufficient slots at Sydney Airport, Rex bled cash and its market share wallowed at just 5%. Qantas and its budget brand Jetstar control 62% of the market, while Virgin has a 31% share, according to the latest data from Australia’s competition regulator. Rex appointed Ernst & Young as administrators, and its shares, which had fallen 35% this year, were indefinitely suspended from trading. The process of voluntary administration is designed to resolve a company’s future, either by securing a deal to save or sell the business or by achieving the best outcome for creditors. Rex’s fate reinforces the findings of a government review last year, which concluded Australian fliers were being short-changed by out-of-date and inadequate regulation. There was concern, the government said at the time, that major airlines were manipulating rules to hoard more airport slots than they needed in order to keep out smaller competitors. <br/>