High costs fuel record loss at BA

Friday, 22 May 2009 15:51 UK, BBC

British Airways has announced the biggest loss since the company was privatised in 1987.

BA reported a loss before tax of £401m for the year to 31 March, after seeing its results hit by a weak pound and higher fuel costs.

The airline made a revised profit of £922m in the previous year.

BA also offered staff the option of taking unpaid leave or working part-time. Chief executive Willie Walsh said he would work for no pay in July.

Mr Walsh said: "I certainly want to make a contribution in recognition of the extremely challenging position we face. This is no stunt. I do not easily give up anything I have earned."

Mr Walsh earns £735,000 a year.

Finance director Keith Williams, who is paid £440,000, will also forgo his pay for the month of July.

Fuel pressures

Although revenues increased to almost £9bn, BA faced a near-£3bn fuel bill.

Mr Walsh said he saw "no signs of recovery anywhere".

It's difficult to avoid the impression that at least part of BA's agony, its descent in just 12 months from record profits to record losses, was of its own making Robert Peston, BBC business editor

Fuel costs rose 44.5% after the price of oil soared last year. The weaker pound also contributed to rising costs as fuel is bought in US dollars.

But the airline said it expected lower fuel prices to reduce its fuel costs by about £400m in the year ahead.

The results also included redundancy-related costs of £78m.

BA said it had cut more than 2,500 jobs since last summer and added that it was in talks with unions about "pay and productivity changes".

'Self-inflicted wounds'

Despite BA's claims that it has been a victim of a downturn in global conditions, analysts say the airline is not entirely blameless for its poor results.

Tom Symonds, BBC transport correspondent One of BA's biggest problems is the drop in numbers by 13% of the airline's real earners - the business passengers. The airline is doing all it can to keep them flying, including in recent months a Buy One Get One Free offer. It is much harder for BA to take on the likes of easyJet and Ryanair when it comes to offering cheap economy seats. And easyJet in particular is deliberately punting for business passengers forced to travel on a budget. The other big problem is an old one. BA's fuel bills have soared by 44.5% in the last year. The real problem is that the world's airlines buy their fuel in dollars, and the exchange rate against the pound is not good for BA. Read Tom's thoughts in full

"The first half of the year really was [a period of] self-inflicted wounds from the Terminal 5 opening problems," said airline consultant John Strickland.

Travel writer Simon Calder added that BA had been particularly hit by a fall in premium traffic - business class and first class passengers - which was down 13%.

"The premium traffic which accounts for half their income has simply dried up," he said.

"They base their business on the fact that there will be plenty of businesses wanting to fly and businesses are simply cutting back.

"British Airways has been losing £7 every second for the past year, which is pretty grim."

The BBC's business editor Robert Peston said that BA's loss was a result of "a lamentable rise in costs", including engineering and aircraft costs, landing fees and staff costs.

Fewer passengers

Shares in the airline were down 4.5% to 155 pence in afternoon trading, having lost as much as 7% earlier in the day.

However, BA said that it had seen a "significantly better" operational performance, and that it had received record customer satisfaction ratings.

The total number of passengers carried fell 4.3% to 33.1m.

The results also included the impact of the airline's first full year of operations at Heathrow Terminal 5, and BA said more than 24 million passengers had flown through Terminal 5.

BA added that it had had to take "significant pricing actions" to stimulate non-premium sales, which were broadly unchanged on the previous year.

"Fares have been going down and will continue to be very competitive," Mr Walsh told the BBC. "I don't expect to see any increase in fares in the coming year."

Tough year ahead

BA said the outlook for the airline industry was tough and it would not be paying a dividend this year.

It plans to reduce capacity by 4% over the winter by not flying up to 16 aircraft.

BA is not the only airline suffering in the global recession, as higher fuel prices and a drop in demand for air travel have affected the whole industry.

Also on Friday, the Emirates group reported a 72% fall in profits.

On Wednesday Air France-KLM revealed a net loss of 505m euros ($705m; £444m) in the three months to 31 March, compared with a 534m euro loss in the same period a year earlier.

More low fare bargains offered by MAS

Published: Sunday May 24, 2009 MYT 5:36:00 PM

KUALA LUMPUR: Malaysia Airlines (MAs) will be offering more all inclusive low-fare bargains starting from RM48 for domestic travels beginning June 25 to Nov 30.

MAS Network and Revenue Management senior general manager Dr Amin Khan said the offer demonstrates the company's commitment to provide customers with quality, affordable and convenient services.

The public can make their reservations at www.malaysianairlines.com from May 25 to June 7.

"With such competitive fares, customers can now consider travelling to destinations that previously did not fit their budget.

“For instance, fares from Kuala Lumpur to Cape Town are now going for as low as RM 988 while Los Angeles or Buenos Aires start from RM 1888," he said in a press statement Sunday.

According to Dr Amin, travellers on these low fares will still enjoy premium services such as snacks and meals on board, convenient schedules, punctual departures and a minimum 20kg baggage allowance.

Trips to Asean countries start from RM 198, one way trip from Kuala Lumpur to Singapore RM 98, Hong Kong from RM 398 whilst Seoul would cost RM 388 and Chennai RM 398.

Perth on the other hand starts at RM 498, Tokyo RM 688 and London RM 888, he added. - Bernama

Grey skies for Changi and SIA

April 23, 2009 STRAITSTIMES
By Karamjit Kaur, Aviation Correspondent










The first-quarter numbers are in and the skies remain dark for Changi Airport and its key partner, Singapore Airlines (SIA). --PHOTO: ST

THE first-quarter numbers are in and the skies remain dark for Changi Airport and its key partner, Singapore Airlines (SIA).
Between January and last month, Changi welcomed just 8.5 million passengers - a drop of 8.4 per cent compared with the same period last year.

SIA, which accounts for about half of Changi's total business, fared worse, with traffic for the first three months sliding 17.8 per cent to 3.9 million passengers.

Govt lifts 30% bumi rule for 27 services sub-sectors (Update)

Comment:"Transport service sector will not be imposed by bumi equity anymore, that will encourage competitive growth"

By JANE RITIKOS - THESTAR.COM.MY

PUTRAJAYA: The government has removed the 30% bumiputra equity condition in 27 services sub-sectors, with immediate effect.

Prime Minister Datuk Seri Najib Tun Razak said the sub-sectors, which involved health and social services, tourism services, transport services, business services and computer and related services, would have no equity conditions imposed.

He said the liberalisation was aimed at creating a conducive business environment to attract more investments, bring in more professionals and technology, encourage competitiveness and create higher value employment opportunities.

“We will be progressively undertaking liberalisation of the other services sub-sectors,” he told a press conference at his office on Wednesday.

Saying that the services sector would become a new growth sector of the economy, Najib said it contributed 55% to the GDP in 2008, and accounted for 57% of total employment in Malaysia.

The Government wanted to tap the sector’s full potential and raise its contribution to 60% of the GDP, he said.

However, he assured that the liberalisation would not adversely affect the domestic services industry, which would continue to be supported.

He said a RM100mil services sector capacity development fund was established under the first economic stimulus package, managed by the Malaysian Industrial Development Authority (Mida) to assist the industry to face the more liberalised services environment.

To facilitate investments into the sector, a National Committee for Approval of Investments in the Services Sector had been established under Mida which would receive and process applications of investment in the services sector, excluding investments in financial services, air travel, utilities, Economic Development Corridors, Multimedia Super Corridor and Bionexus status companies and distributive trade.

In a bid to develop Malaysia as an international Islamic financial hub, the legal profession would be liberalised to allow up to five international law firms with expertise in international Islamic finance to practise in Malaysia, Najib said.

Najib also said the liberalisation was in line with Malaysia’s commitment to Asean.

However, some of the measures were better than those undertaken by other Asean countries, he said, adding that they would also make Malaysia more equipped to compete internationally.

“Consultations were carried out and the decision was made based on the reception and acceptance by the sub-sectors,” he said on the selection of the sub-sectors.

Najib said that in 2008, approved investments in the services sector totalled RM50.1bil, exceeding the target of RM45.8bil per annum under the Third Industrial Master Plan.

The share of foreign investments was 11% of the total investments.

“With the liberalisation of the services sector, we expect greater inflow of investments,” he said.

Najib also said he would announce next week the liberalisation of the financial sector.

He declined to give details.

“I want it to be full of surprises” and “It is good for the market to digest (the announcement for the services sector) first.”

Obama unveils high-speed passenger rail plan

WASHINGTON (CNN) -- President Obama unveiled his administration's blueprint for a new national network of high-speed passenger rail lines Thursday, saying such an investment is necessary to reduce traffic congestion, cut dependence on foreign oil and improve the environment.

President Obama, with Vice President Joe Biden, called for clean efficient travel Thursday.

The president's plan identifies 10 potential high-speed intercity corridors for federal funding, including California, the Pacific Northwest, the Midwest, the Southeast, the Gulf Coast, Pennsylvania, Florida, New York and New England.

It also highlights potential improvements in the heavily traveled Northeast Corridor running from Washington to Boston, Massachusetts.

Each of the corridors identified by the president's report are between 100 and 600 miles long. The blueprint envisions some trains traveling at top speeds of over 150 mph.

Federal grants would also be directed toward separate individual rail projects that are deemed "ready to go," with preliminary engineering and environmental work already completed. Watch Obama talk about rail projects »

"My high-speed rail proposal will lead to innovations that change the way we travel in America. We must start developing clean, energy-efficient transportation that will define our regions for centuries to come," Obama said at an event near the White House.

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The president cited the success of high-speed rail in European countries such as France and Spain as a positive example for the United States.

His plan would be funded in part through the recently passed $787 billion stimulus plan, which includes a total of $8 billion for improvements in rail service. Obama has also proposed a separate five-year, $5 billion investment in high-speed rail as part of the administration's suggested fiscal year 2010 budget.

"We're going to make travel in this country leaner and a whole lot cleaner," said Vice President Joe Biden, speaking before Obama.

The president spoke one day after the governors of eight Midwestern states sent a letter to Transportation Secretary Ray LaHood requesting stimulus funds for the construction of a regional network of faster passenger rail lines.

The city of Chicago, Illinois, would be the hub of the proposed Midwest Regional Rail System, which would stretch to Madison, Wisconsin, in the Northwest; St. Louis, Missouri, in the South; and Detroit, Michigan, in the East.

During the 2008 presidential campaign, Obama pledged to support a national network of faster passenger trains. The administration has already dedicated $1.3 billion in federal funding for Amtrak.

The money for the rail service, which carried almost 29 million passengers last year, will go primarily to infrastructure repair and improvement.

Cathay Pacific Airways staff to take no-pay leave

Published: Friday April 17, 2009 MYT 11:40:00 AM

HONG KONG: Cathay Pacific Airways Ltd., Asia's third-largest carrier, has asked staff to take unpaid leave as it planned to cut passenger and cargo capacity, the company said in a statement Friday.

The Hong Kong flagship airline is requesting that its employees across the board take unpaid leave in the next 12 months, according the statement filed to the Hong Kong Stock Exchange.

Cathay Pacific said it would reduce planned passenger capacity by 8 percent and that of its subsidiary Dragonair by 13 percent starting next month.

It also planned to cut cargo capacity by 11 percent.

Turnover derived from passenger and cargo services of both airlines in the first quarter was 22.4 percent lower compared to the same period last year, the company said. - AP

Shrinking airlines park more planes in the desert

Published: Sunday April 5, 2009 MYT 11:33:00 AM

MARANA, Arizona (AP): Old jets come here, empty engine pods shrink-wrapped in white, tall red tails fading to pink in the desert sun. More will come soon. Some will never fly again.

Airlines have announced plans over the past year to take 1,700 planes out of service as fewer people fly. United Airlines is retiring all 94 of its Boeing 737s by the end of this year, and Northwest Airlines has cut its old DC-9 fleet by about a third.

The number of planes in storage has jumped 29 percent in the past year to 2,302, according to aerospace data firm Ascend Worldwide. That includes 930 parked by U.S. operators alone.

Eventually, some will be sold, some scrapped, some will sit at desert facilities in southern California, Arizona, and New Mexico. But at the moment, their number is growing faster than expected. The banking crisis has made it very difficult to get loans to buy aircraft, and the drop in commodity prices has gutted their scrap value.

That makes for busy times at facilities like Evergreen Maintenance Center near Marana. Its super-sized hangar fits a 747, and there are plenty of active planes on hand, including one 747 used to test Pratt & Whitney engines and another converted to fight forest fires.

But outside there's a ghost fleet of 204 parked planes. Some of Northwest's retired 747s are here. Planes from defunct ATA Airlines, 767s from Air Sahara and MaxJet, and a hodgepodge of other airlines from around the world are here, too.

The people who run these facilities chafe at the idea that they're groundskeepers in a graveyard. While Evergreen scraps roughly 15 planes a year, most of the stored planes still get checks, extensive record-keeping and federally mandated maintenance that will let them return to service if travel demand and the price of jet fuel cooperate in the future. Storing a 747 with the required maintenance checks costs $60,000 a year at Evergreen, half that for a smaller jet.

Steve Coffaro, vice president of marketing and sales at Evergreen, points all this out with pride as he drives around the airfield here, focusing on the company's ability to return these planes to the air safely. Out the left window: Planes that could fly again. Out the right: The scrap area, with the lower half of a fuselage standing upright, 20 or so rows of seats exposed, tray tables dangling open.

The deserts in the U.S. Southwest have become one of the top destinations for airliner storage because of the perfect combination of cheap land as far as the eye can see and a dry climate that preserves the planes. Planes deteriorate quickly in high humidity.

While the airline downturn is bringing some relatively new planes to the desert, most are old workhorses.

Northwest Airlines DC-9 No. 9918 is one of those. The plane was delivered new to Minnesota-based North Central Airlines on Oct. 25, 1973, according to Ascend. It stayed in the fleet when North Central was swallowed by rival Republic Airlines in 1979, which was absorbed by Northwest Airlines in 1986.

No. 9918 made 47 flights in the first 10 days of July 2008, to destinations from Grand Forks, North Dakota, to New York's LaGuardia. On July 10 at 7:21 a.m. it took off from Traverse City, Michigan, and flew its last paying passengers to Minneapolis, according to FlightAware. By the end of that day it was parked at Marana.

Now, like all the stored planes here, its two engine pods are empty so they can be wrapped separately and preserved for resale. The windows are covered to keep out the sun.

Inside, the plane looks ready for paying passengers again. Clear plastic sheets shield the blue seats from dust. Two blue blankets are still in the overhead bins. In the cockpit, orange tags dangle from some of the instruments and electronics, noting what has been removed and when they were last checked.

Mechanically speaking, the only thing standing between a return to the skies and No. 9918 are new engines, some cockpit electronics and a thorough inspection.

Coffaro says planes like this can be used for short-haul flights in Venezuela or Brazil. But the old red-tailed workhorse could also bleach like a cattle skull in the desert until it's turned into soda cans or iPod cases. An airliner that's been stripped of valuable parts like the cockpit, the landing gear, and the doors can still yield as much as 80,000 pounds (36,300 kilograms) of aluminum.

At Southern California Aviation's parking and maintenance facility in Victorville, California, the influx of planes surprised President Jeff A. Lynn. As recently as August he had about 60 airplanes. Now it's 200, and he expects as many as 240 by the summer. That includes some of the 737s being retired by United.

"I'm just swamped out here," he said.

He estimates that as many as 90 percent of those planes will go back into service again. The planes are on a regular schedule to be towed so they don't rest on the same spot on their tires, and the planes' electrical systems are started and run every couple of weeks.

"We don't really look at a boneyard or a graveyard as our business," he said. "Our business is get airplanes in, treat them well, keep 'em nice, keep 'em maintained," he said.

But so far this year only about 10 planes have gone back into service. The airplane finance market is locked up. With aircraft values falling, lenders are sitting on the sidelines. On Thursday, Boeing Co. reported just six new orders for February - down from 99 during the same month in 2008.

Normally that might lead to more planes turned into scrap. But Lynn said they have some Lockheed L1011s waiting on the tarmac where planes are pulled apart for their aluminum after being stripped of resaleable pieces.

But Lynn's recycling man "can't munch up the plane and melt it down," he said. "Nobody's buying his metal."