Expect Fees to Jump: Meltdown Cost Spirit $50 Million
The more than 2,800 flights Spirit canceled during its historic operational meltdown earlier this month cost the airline about $50 million, a figure it hopes to recoup quickly as it seeks 50 passengers desperate enough to check a bag for its new, temporary $1 million checked bag fee.
Spirit plans “tactical schedule reductions” for the rest of the third quarter – meaning through the end of September – to reduce the stress on its operation and its staffing shortcomings. Does that mean what happened previously were non-tactical schedule reductions?
The DOT reminded the carrier of its legal obligations including prompt refunds for cancellations and that it must continue provide seat belts at no additional charge, regardless of how much the airline wants to charge a seat belt fee.
The government also is monitoring the airline’s complaints to ensure consumers rights are not violated, which is a nice sentiment, but everyone knows once that put Spirit.com in their browser, they are foregoing any rights when it comes to air travel.
German Government Explores Lufthansa Sale
The German government is beginning the process to sell approximately 5% of Lufthansa – a figure that represents one-quarter of the government’s ownership stake in the airline.
Lufthansa took a 20% stake in the airline last summer in exchange for €300 billion in taxpayer funds to prop up the carrier during the worst of the pandemic. Thanks to positive signs relating to LH’s recovery, the government is planning on divesting itself of a portion of its holdings to fund what is sure to be its next bailout of the airline or one of its subsidiaries in the future.
Lufthansa lost €756 million in the second quarter, a figure that represented a €400 million improvement from the year’s first quarter. Cash burn decreased to just €6.5 million per day in June, totaling a €37 million improvement from Q1, with the airline hopeful for a positive cash flow in the third quarter.
The government does not have a timetable on the sale but does say it hopes to sell its entire stake, which is worth about $1.2 billion, by the end of 2023.
American Puts Pilot Training Move on Hold
Earlier this spring, American Airlines announced it planned to move all mainline pilot training from its Charlotte Flight Training Facility to its Flight Academy at its headquarters in Dallas/Ft. Worth. The airline still plans to make that move, but will not do so in the immediate future, due to the increased pressure to hire and train new pilots.
In a letter to pilots on Monday, the airline said it had not anticipated the increase in demand and unprecedented growth in passenger travel, causing the airline to re-examine its schedules and its pilot hiring and training practices. The Charlotte Flight Training Center will stay fully open and operational for the airline to allow it to increase the number of pilots it trains on a weekly basis.
AA has four A320 simulators in use in Charlotte and the four allow pilots to perfect their “disappointed voice” when announcing delays and cancellations to passengers for mechanical reasons. Pilots also use the simulators to practice breaking up fights in the cabin over mask wearing and how to explain to passengers not to gawk at the crazy guy in 33F who’s been duct taped to his seat.
Condor Challenges EW Discover US DOT Application
Lufthansa’s newest subsidiary, EW Discover applied for authority earlier this summer to codeshare with its Lufthansa Group cousins on transatlantic service to the United States. But on Friday, Condor submitted a motion to the DOT, filing an “unauthorized pleading and accompanying sur-reply,” which basically means Condor doesn’t want EW Discover codesharing to the United States.
The airline says the proposed codeshare is an anticompetitive scheme by Lufthansa to push Condor out on transatlantic routes and wants the DOT to investigate Lufthansa’s actions in being mean and hurtful. It also asked that if the codeshare is to be granted, that Lufthansa commit to sending passengers to Condor consistent with the current Special Prorate Agreement between the two.
Lufthansa recently extended the SPA through May of 2022 after the EU told it couldn’t unilaterally end the agreement to the benefit of EW Discover. The agreement covers Lufthansa’s, Austrian’s, and Swiss’ domestic and regional service feeding Condor’s long-haul service out of Frankfurt.
Condor is attempting to make the point that if allowed to occur as-is, the codeshare harms US passengers and US competition as it would leave Lufthansa in a monopoly, meaning that LH’s actions fall within the scope of US antitrust law. This one is sure to go a few more rounds with the DOT as two sets of German companies and their lawyers duke it out with precision and humorless arguments in the coming weeks.
Anything Goes at Uganda Airlines
Former senior-level directors and executives from Uganda Airlines have until the end of this week to convince the Ugandan government that they should not be prosecuted on charges of corruption and mismanagement.
Uganda’s president Yoweri Museveni ordered the dissolution of the airline’s board after he called it “dysfunctional, if not incompetent.” President Museveni is clearly not aware of what kind of month Spirit is having here in the United States. Those being accused of misdeeds include former board chairperson Perez Ahabwe (a former Cabinet Minister from 2009 -2011), and ex-board members Benon Kajuna (director of transport at the Ministry of Works and Transport), Godfrey Ssemugooma, Catherine Asinde Poran, Charles Hamya, and Rehema Mutazindwa.
A federal government investigation resulted in 15 charges of corruption, collusion and mismanagement. Actions ranging from bribery, extorting money from job applicants, nepotism, maintaining ghost workers on the payroll and a Cranky favorite – giving jobs to unqualified pilots.
In procurement deals, auditors and investigators found fraud and forgery, falsification of documents, best-evaluated bidders presenting forged tax clearance certificates; unfair evaluation, unjustified use of direct procurement, missing payment records, contracts signed against expired bids, and irregular procurements – but other than all that, the airline is clearly on the up and up and is expected to sign an interline agreement with a US ULCC any day now.
- airBaltic received approval to receive a €90 million investment into the airline.
- Air New Zealand is waving change fees and suspending on-board service as New Zealand goes into another pandemic-related lockdown.
- Alaska added Ravn Alaska as a Mileage Plan partner for earn and burn.
- ANA has put its fleet of A380-800 aircraft back into service after being mothballed for since March of 2020.
- Eurowings is adding Prague to its route map this this fall.
- Gullivair operated its first scheduled domestic flight between its Sofia (SOF) hub and Burgas (BOJ) on Sunday.
- Jazeera Airlines took delivery of its 7th A320neo.
- Ryanair announced 11 new winter routes from the UK for people who like their flights with a side of surliness.
- Samoa Airways is putting its acquisition of a B737 on hold as the new Samoan government reviews the deal.
- South African announced the appointment of Simon Newton-Smith into the position of SAA Interim Executive: Commercial. Reports from Johannesburg say that Newton-Smith’s favorite fruit is anything but mango.
- Wingo, the newest airline-o from Panama secured an AOC but has not announced when it plans to operate its first flights-o.
I just found out the company that produces yardsticks won’t be making them any longer.