There Can Only Be One: United to Drop a Regional Partner
1 Rumors have been circulating for days, and now Reuters has confirmed that United Airlines informed its two partially-owned regional airlines flying as United Express — ExpressJet and CommutAir — that it will be dropping its contract with one of them. Both airlines work exclusively with United and whichever one loses the contract would most likely disappear.
Prior to the pandemic, United had been expanding its domestic flying through its regional partners, including ExpressJet and CommutAir. But now with the pandemic continuing with no end in sight, United has been forced to look even deeper for ways to save money.
Eliminating one airline could save a significant amount in wages. If that’s the most important criteria, then CommutAir appears to be best-positioned. ExpressJet has a more senior (read: expensive) pilot group than CommutAir and a larger fleet of about 95 planes, versus around 37 at CommutAir. Rumors that ExpressJet is pushing for a CEO death match instead seem to be unfounded.
Hawaiian Releases Q2 Financials
2 Hawaiian Airlines became the latest U.S. airline to release its gloomy Q2 financial report with the airline posting a Q2 loss of $107 million compared to a Q2 2019 profit of $58 million.
The loss comes despite Hawaiian managing to reduce its expenses by 66.5% from a year ago, from $623 million down to just $209 million.
The airline reported only $60 million in revenue in Q2 with the state’s quarantine shutting down almost all air travel to and from Hawai’i. In Q2 2019, Hawaiian saw revenue of $712 million, showing a 91% drop this year.
Hawaiian ends the quarter with $761 million cash and 11,000 gallons of POG juice on-hand.
JetBlue Gets Ultra Serious About Cabin Cleaning
3 The arms race between U.S. airlines to outdo one another with regards to cleaning standards, partnerships, and brand names has seen another salvo as JetBlue is introducing a partnership with Honeywell for an Ultraviolet Cabin System. The UV Cabin System is designed to help reduce viruses and bacteria on surfaces throughout the aircraft.
With its mechanical wings fanning out over seats — in its booked cabin only, we presume — into galleys and lavatories, the Honeywell UV Cabin System is designed to harness the power of ultraviolet-c light (UV-C) technology that, when properly applied, reduces certain viruses and bacteria on airplane cabin surfaces. It is supposed to be able to treat an aircraft in less than 10 minutes.
If JetBlue decides it wants to start boarding during the process instead of waiting for it to finish, we suggest all Mint passengers be given sunglasses to avoid the bright and dangerous rays. Coach passengers can just squint and avert their eyes. Basic economy passengers can just operate the machine and earn their keep.
Allegiant Also Releases Q2 Financials
4 Allegiant Air announced its Q2 financials today, posting a loss of $93 million on revenue of $133 million. A year ago, Allegiant made $70 million on revenue of $492 million, so this year is…worse.
Allegiant was only able to reduce its costs by 35% as compared to Q2 in 2019, but in the airline’s defense, its costs were already quite low compared to other legacy carriers. The airline spent just $246 million this year, after expenses of $383 million in 2019. We assume the airline could have reduced its costs further, but it instead went crazy spending millions in legal fees for a myriad of DOT exemption requests under the CARES Act.
Allegiant’s daily cash burn during the quarter was $900,000 and the airline remarkably achieved cash breakeven in June. That is unlikely to last as leisure travel to Florida has dropped precipitously. Ending the quarter, Allegiant has $663.1 million cash on-hand.
Ryanair to Shut Down its Austrian Subsidiary
5 European LCC Ryanair plans to end operations of its Austrian subsidiary Lauda, moving its assets into the new Malta-based Lauda Europe which plans to launch operations in November.
Ryanair said that Austria’s tax laws made continuing the Austrian-based airline untenable, and the switch will allow Ryanair to relocate many of the subsidiary’s employees to Germany and Spain. Specifically, all employees of the Austrian company were required to pay Austrian income tax regardless of their place of residence.
With the move from Lauda to Lauda Europe, employees outside Austria won’t be required to pay Austrian taxes while wizzing buzzing around Europe. Employees will be required to pay Ryanair €39.99 each as a fee for new uniforms due to the change in name. Staff will also be responsible for the €2.99 processing fee and €4.99 unpacking fee when the new uniforms arrive.
Airline Potpourri
- British Airways & and its parent company IAG sold $965 million worth of Avios to American Express.
- Emirates is matching Etihad’s requirement of a negative PCR test within 96 hours of departure to enter or transit the UAE.
- Hawaiian has extended its suspension of service to Pago Pago in American Samoa through August 31.
- Pobeda is is looking to cancel its pending order of 15 737 MAX aircraft.
- Silver has been granted permission from the DOT to reduce its presence at Miami and Orlando from 3x weekly to 1x weekly through September 30.
- Turkish, who we know will codeshare with anyone, will begin a codeshare with TAROM beginning next month.
- Vietnam Airways is suspending flights to and from Da Nang (DAD) for 15 days due to a virus outbreak in the city.
- Vistara plans to operate flights in August from its Delhi hub to Frankfurt, London/Heathrow and Paris/CDG.
Andrew’s Moment of Levity
In high school I worked each summer with a lumberjack to make some extra money. In the four years I worked for him, I cut down exactly 31,844 trees. I know because I kept a log.