Airline Stocks Tumble as Oil Price Goes Up, Up, and Away
With fuel prices at their highest point in 13 years, airlines stocks took a sharp downturn on Monday, with the big three U.S. airlines all dropping double digits.
Fuel prices have increased more than 50% this year, presenting challenges to carriers who have generally not hedged on oil prices in several years. Analysts expect first quarter revenue and profit estimates to be revised downward as the price of oil continues to climb. United’s stock dropped more than 15%, with American and Delta both down about 12%. Southwest, which does not fly overseas but is the largest domestic carrier in the country saw its stock drop about 9%.
Second quarter schedules are generally flat compared to 2019, and airlines are unlikely to cut capacity to save on fuel costs. Instead, they’re expected to cut costs in other ways, including seat belt fees, coin-operated toilets, and a donation box on the jetway.
United Challenges Delta for Cape Town Slots
United Airlines requested 3x-weekly service between Washington/Dulles and Cape Town, South Africa with the DOT on Friday, matching the request made by Delta for similar service from Atlanta. Both carriers would fly 3x-weekly service, but both cannot get what they want as only four weekly slots between the United States and South Africa remain.
United’s request asks for year-round authority, while Delta also asks for year-round service but notes it wants to reserve the right to reduce capacity or frequencies during off-peak periods. United’s Star Alliance partner South African Airways previously served both IAD and New York/JFK but has flown neither since going into the financial crapper last year.
In United’s filing it suggests the government split the difference and award two weekly slots to both carriers. It also says that by granting service to Cape Town to both airlines, it will allow United to offer competition to Delta and keep fares in check.
To earn the goodwill of the DOT, both airlines are wooing the government with treats – Delta sent a case of Biscoffs to the DOT’s headquarters in Washington, while United sent four “connect somewhere other than Newark” cards that would allow the holder to force a connection at another hub with 24 hours’ notice.
Boeing Strives to Double MAX Production by Next Year
Boeing plans to nearly double its production levels of the 737 MAX by the end of next year, hoping to push as many as 47 airplanes off the assembly line each month.
The manufacturer has a backlog of 335 MAX that it’s currently looking to clear, hoping to deliver everything on order by the end of 2023. It is currently finishing about 27 planes each month with a desire to push that monthly figure to 31. To finish more quickly, Boeing is near an agreement with airlines to leave the seats out of the back two rows of each plane, since basic economy passengers don’t deserve a seat anyway.
Boeing was producing about 42 MAX aircraft per month when production was shut down in 2019.
- Aeroflot will end all international flights, with the exception of service to Minsk — which hardly counts as international — by tomorrow, March 8.
- airBaltic said do svidaniya to Russian operations for the indefinite future.
- Airlink would like Madagascar to restore service between there and South Africa.
- Arajet added its first aircraft, a B737 MAX.
- Calafia Airlines will begin twice-weekly service between Tijuana and Puerto Peñasco (PPE) beginning April 29.
- Delta reduced its fee to bring a small pet in a pet carrier on a U.S. or Canadian flight from $125 to $95.
- El Al posted a 2021 loss of $413 million.
- Ethiopian will acquire five B777-8 freighters from Boeing.
- Express Air Cargo will add B737NG to its fleet.
- Finnair will operate once-weekly service to Shanghai beginning March 10, and 3x-weekly to Seoul/Incheon beginning March 12.
- flydubai posted a $229 million profit in 2021.
- Lufthansa Cargo posted a record €3.8 billion in revenue in 2021.
- PLAY is no longer playing around as it named Guðni Ingólfsson its new managing director of aviation operations.
- Qatar will operate a weekly cargo flight between Sau Paulo/GRU to Hong Kong.
- Virgin Australia will officially end its partnership with Delta on June 12.
What’s the difference between a hippo and a zippo?
One is very heavy and the other is a little lighter.