Alaska’s Fortunes Improve
Alaska Airlines raised its Q2 cash flow expectations by $100 million dollars in its 8-K filing with the SEC this week. The airline now expects anywhere from $650 to $750 million during the quarter which ends on July 31. That figure is up from a previous expectation of $550-$650 million.
The positive outlook comes from “ongoing strength in demand” for its product and greater revenue from its partnerships. It says in the filing that consumer spend levels have surpassed 2019 and that load factors are expected to nudge up slightly, with a forecast of 74-76%, up from its previous thought of 70-75%.
In more good news, Alaska will realize a savings of about $10 million through SkyWest’s CARES Act funding which will allow it to offset some staffing costs. It will also get a $5 million reduction in rates it pays an unnamed vendor which we can only assume is payment to American for “protection” any time it has to land in Philly.
The filing closes with Alaska saying it expects its Q3 pre-tax margin to be in the black, that Pumpkin Spice Latte season will start earlier than ever at Starbucks, and that the airline is eager for fall weather as many of its employees have new fall clothes they’ve been dying to debut.
Frontier Channels Inner Spirit with New Surcharge
Frontier Airlines is adding a “Covid Recovery Charge,” a fee that will come bundled with its fares. It is not an optional fee, even for those travelers who are not interested in recovering from COVID. The airline says this will offset costs due to COVID-related measures such as increased sanitation, shields at ticket counters, and PPE for staff.
The new charge certainly comes with odd timing – 15 months after the onset of the pandemic and at a time when we’re much closer to pandemic-era precautions being removed than new ones being added. Hasn’t Frontier been providing PPE for employees for over a year? If they haven’t, maybe that’s the real story.
To add this mandatory surcharge just as domestic travel is recovering feels dirty at best, even if it will be bundled in the fare as required by law. Frontier is certainly not going to win any friends… except for Spirit which we assume is taking notes and probably kicking itself for not coming up with this idea first.
Delta Expects to Add 1,000 Pilots
Delta Air Lines told employees on Monday that the airline intends to hire as many as 1,000 new pilots by summer 2022 due to the robust recovery of the air travel industry. Delta’s sales volume for domestic leisure travel has already met pre-pandemic levels and the airline believes international travel will follow in the latter half of this year.
In the memo to staff, Delta VP of Flight Operations John Laughter bellowed that Delta planned to record a profit in June – its first month in the black since prior to the pandemic.
Delta has had three staffing shortage-caused operational meltdowns over three holiday weekends – Thanksgiving and Christmas 2020 and Easter earlier this spring. The addition of these 1,000 pilots will give Delta much-needed breathing room for its pilot staffing as demand continues to grow, and it will also give the airline ready-made candidates to either be furloughed the next time there’s a downturn in demand or help clean the lounges, whichever is more useful.
Delta’s Flight to Cape Town Rejected by South Africa
When Delta announced that its service to South Africa would no longer include flying to Cape Town (CPT), most assumed it was a marketing or operational decision based on shifting dynamics since Delta announced the route last spring. But we all know what assuming can do….
It turns out that the South African government turned down Delta’s application to fly to the city. Delta first applied to the South African government last May for authority to fly the route, but despite months of lobbying from both the airline and the United States government, the request was formally denied on May 14 of this year. The U.S. government responded by denying South African Airways’s request to operate to Los Angeles, New York, Miami, Philadelphia, and Washington, DC on a co-terminal basis, meaning it cannot operate “tag flights” even without carrying local traffic.
Most commercially-viable airlines wouldn’t dare operate tag flights or circle trips except in very rare circumstances anyway… like Delta turning to Cape Town since it can’t take-off from Jo’burg with a remotely full load. But, well, this is South African we’re talking about, and it’s hard to even consider the company an airline since it hasn’t flown an airplane in a year and probably won’t return to the US for a long time. In the meantime, if its employees need to come to the US, they probably won’t be able to fly Delta because all the seats will be blocked due to a weight restriction.
United Adds a Pair
United Airlines added two tiny new airports to its route map, expanding its offerings to outdoor-based leisure destinations in the west.
The airline will operate seasonal service between three hubs at Eastern Sierra Regional Airport (BIH) located near Bishop, California. BIH will receive commercial service for the first time this century – its last scheduled service was in 1988 when Alpha Air operated turboprop service to Los Angeles, Oakland, and San Jose. Let that tell you what demand looks like at the airport.
BIH will receive flights to Denver, Los Angeles, and San Francisco. All three cities will operate once-daily beginning December 16 through March 26. SkyWest will fly on behalf of United Express using 70-seat CRJ-700s. The flights will replace United’s previous service to Mammoth Lakes/Yosemite (MMH), because MMH is no longer supporting commercial air service, making BIH the next best option for flyers headed to Mammoth Lake.
The second new destination will be Lewiston, ID (LWS). Lewiston will see daily, year-round service from Denver on 50-seat SkyWest CRJ-200s. This will be the second route for LWS, with Delta currently flying to the airport from Salt Lake City.
- Air France and SNCF French Railways are offering combined “train and air” tickets on seven additional routes beginning July 19.
- Delta will unveil a renovated SkyClub in Fort Lauderdale opening tomorrow, June 23. Admission is available for SkyClub members, AMEX Platinum holders, Delta One passengers, or the general public for the cost of 1 million SkyMiles per hour.
- Emerald Airlines won a contract to operate regional service on behalf of Aer Lingus. Research shows that Emerald Airlines is the real name of the Liverpool-based airline and wasn’t added simply to win the favor of Aer Lingus.
- Etihad is beginning flights to Vienna this summer with twice-weekly B787 Dreamliner service beginning July 18.
- Gulf Air is beginning to operate point-to-point routes outside of its Bahrain hub… because that seems like a fool-proof way to make money.
- Norwegian plans to close its Irish subsidiary and has told staff to prepare to hang out with newly-unemployed CEO Jacob Schram.
- Pasifika Air, a New-Zealand based startup that hasn’t yet flown… never will. The plans for the new airline have been canceled with founder Mike Pero blaming the Cook Islands government which seems like a pretty lame excuse.
- SKY express has made Heraklion (HER) a hub in its system, with routes from the city including four domestic destinations and seven international destinations in three countries.
- Sunclass Airlines, the next of kin of Thomas Cook Scandinavia, received tentative DOT approval to inherit the charter operating authority between the United States and Europe.
I’m on a health kick. I’ve decided to stop using the drive-thru at fast food places!
I’m going to park the car and walk in.