August 2009

Banks in the USA reported $3.7Bn Q2 losses vs. $4.7Bn losses a year ago as the FDIC deposit insurance fund falls 20% to $10.4Bn.

Bank assets: Total assets of troubled U.S. financial institutions increased from $220Bn in Q1 to $299.8Bn in Q2.

Bank in distress: FDIC reports that 416 banks are distressed vs. 305 in Q1, the highest number since June 1994 during the S&L crisis.

Federal Deposit Insurance Corp. (FDIC) reported that surging levels of soured loans at banks dragged down profits. The $3.7Bn Q2 loss compared with profits of $7.6Bn Q1.

Southwest: In March 2009 the airline was fined $7.5M for allegedly failing to perform aircraft maintenance inspections.

FAA & Boeing determined that the parts installed on the affected Southwest B737s, do not pose an immediate safety hazard and can remain in place for 10 days.

Southwest grounded 46 B737s on Saturday after the FAA found that a component had not been approved for use.

Safety:The FAA is investigation how and why unauthorized parts were installed on 46, Southwest B737 by a U.S. based third party maintenance contractor. 

Air New Zealand posted a net profit of $14M for the year ended June 30, compared with $153M last year.

Air China, the world's largest carrier by market capitalization, reported a Q2 net profit of $286M vs. $35M a year ago.

China provided cash support to Air China's two rivals, China Eastern and China Southern earlier in 2009.

Air China carried 19.5M passengers in the first half of 2009 up 11% from a year earlier as cargo volume fell 16%.

China traffic: Travel volume rose 24.6% to 17.7M passengers in June, the fastest growth rate in three years.

Air China is buying a further 12.5% percent of Cathay Pacific for a HKD$6.3 billion deal to buy $922M. Cathay owns 18% of Air China.

Air Berlin reduced capacity by 3.4% in July.

Air Berlin reported Q2 operating profit rose 33% to $25.5 as revenues fell 3.8% to $1.2Bn.

WestJet, Canada's No. 2 airline plans to operate between 108 and 111 aircraft in 2013 and between 112 and 135 aircraft by 2016 & orders 4 additional B737s for delivery in 2015 and 2016.

CSA Czech Airlines Czech companies Unimex and Travel Service are bidding to buy the carrier.

CSA will reduce its fleet to 44 aircraft during the winter and will not renew two A310 leases due to expire in 2010. CSA will sell three B737s in order to obtain sufficient cash to survive into 2010.

CSA Czech Airlines reported a net loss of $103M for the first half of 2009, almost double, what was expected, and payloads fell by 9.7%. 

A300-600 fleet stored. American Airlines has flown its last flights with the A300-600, 21 years after it first entered service with the carrier.

US aerospace companies will to cut 30,000 jobs in 2009, or about 4.5 percent of the workforce, and layoffs will continue through 2010.

Qantas is cutting costs by $1.2 Bn over three years in response to its first loss in six years that resulted from 8.7% drop in annual revenues.

Government spending: U.S. government revenues for 2010 will reach $2.074 Tn, spending will hit $3.653 Tn & the budget deficit will decline to 11.2% of GDP

Interest rates: Funding a smaller U.S. budget deficit will require the sale of fewer bonds & hold down long-term interest rates and boost economic recovery.

Interest rates & budget deficit: The U.S. government has vowed to halve the budget deficit within it is for year term boosting hopes for sustained lower interest rates.

Emerging technology: General Motors is now selling the Chevrolet Volt, a petrol-electric hybrid car; GM claims can do 230 miles per gallon, a capability that could bridge the technology gap by 20 years.

Emerging technology: Industry forecasts, based on extrapolation of past trends, do not see electric cars or non-fossil fuel power plants having a big impact for another 20 to 30 years.

Oil: global oil demand was 3M barrels a day lower in Q2 vs. the year earlier period. Demand may not go above that until 2011 says Banc of America Securities-Merrill Lynch.

Oil production: OPEC deliberately cut production by 5M barrels a day, which is more than the drop in global demand, to keep prices in the $60-$80 range. 

Oil power: OPEC members account for 35% of world supply, Russia, a non-member, accounts for 11.5% & co-operates with OPEC.

Oil: Gulf nations that dominate OPEC (a group of 12-nation) have the largest oil reserves and lowest production costs making it easier for them to control global output.

OPEC exports: The value of OPEC crude oil exports increased from $746 Bn in 2007 to 1 Tn in 2008, a 35% increase year over year.

Oil & OPEC reserves: Total proven reserves are 1.027 Tn barrels of oil, a 7.9% increase year over year.

Capacity growth: OAG says the total supply of seats is up 0.2% in August for the first time in a year with 314.2M on sale.

Frequency of flights: OAG says scheduled flight frequencies are down 2% from August 2008 to a total of 2.53M or 52,043 fewer flights.

CSA: Air France-KLM withdraws from the tender process to privatize CSA Czech Airlines leaving Aeroflot & Czech financial institution Unimex and Travel Service as sole bidders.

CSA Czech Airlines (CSA) Q1 pre-tax loss was $73M for the first quarter, as passenger demand fell by 10% and is not expected to recover before 2010

Qantas reported an 87% drop in annual profit as passenger demand slumped.

Qantas said pre-tax profit for the year to June 30 fell to $150M; net profit after tax fell 88% to $98M.

Jetstar, the Qantas LCC, is to lease 4 A330-200s on six-year leases for long-haul international operations beginning in November 2010.

Gulfstream Int. (regional airline) reported Q2 profits of $2.2M vs. $3.5M loss in the year-ago period, after a $2M non-cash tax benefit, & as sales fell 24% $23.7M.

Gulfstream Int. sited by the FAA in June for discrepancies between its computer records and manual flight log times for pilot scheduling & problems with dispatcher scheduling and aircraft maintenance.

Air Mauritius reported a Q1 (June) net loss of $18.5M vs. a loss of $16M in the year-ago period as sales fell 20% to $105M compared to the year-ago period..

Safety & MD82: NTSB wants the FAA to enforce safeguards protecting against pilot error in the deployment of moveable wing surfaces, improve safety checklists, & incorporated a reliable warning system into the pilots' pre-flight procedures.

Iran bans airlines from buying or leasing used Russian-built aircraft following recent Tupolev & Ilyushin Il-62 crashes & expresses a preference for Western-built aircraft

Russia will not support loss-making aircraft manufacturers that have until October 1st to propose recovery measures and singled out state-run

Russia: United Aviation Corp, created in Russia 3 years ago to lead the revival of Russia's domestic aviation industry has been criticized for signing unprofitable deals.

Pratt & Whitney PW100: Completed the 20,000 hour accelerated endurance test for service operation on the PurePower PW1000G fan drive gear system.

Oil: The ATA says Alaska, American, Continental, Delta, Southwest, United , UPS & US Air agreed to buy up to 1.5M gallons per year of synthetic diesel fuel for use in ground-service equipment at LAX starting in late 2012.

.

Oil:  Rentech's synthetic fuel was recently approved for commercial airline use including use as a synthetic jet fuel

Oil: Renewable RenDiesel is a low-emissions profile and low carbon footprint diesel fuel that meets or exceeding all applicable fuel standards.

Oil: Rentech produces renewable synthetic diesel fuel in Rialto, CA, from urban woody green waste such as yard clippings.

Capacity cut plans for Q4: ATA says US Airlines to fly 6,600 fewer domestic flights in Q4 vs. the same period a year ago.

CIT ( A key aircraft lessor) Q2 loss comes in at $1.6 Bn. Credit provisions surge as CIT completes a $1 Bn tender offer.

Keycorp is rumored to be a takeover target.

Swedbank is to raise $2.1 Bn, its second capital raising in twelve months.

Finnair’s business to be divided into 5 operational entities: Commercial Ops, Production, Customer Service, Travel Services, and Aviation Services.

SkyEurope: Suspends operations from Vienna after missing an Aug. 14 deadline to pay outstanding $5.5M fees to the airport.

SkyEurope: One B737 is been parked at Paris Orly for two months because a court ordered until the airline pays debts owed in France.

Weak markets around the world make the US dollar popular as investors shift to buying US Treasury securities.

Interest rates were lower, and the dollar was higher against the pound and euro, although lower against the yen. 

Oil has dropped below $66. Crude has dropped 3.9% this month.

New York Federal Reserve Bank report shows that US manufacturing expanding for the first time since April 2008.

Retail sales: Report on consumer confidence suggested that consumers, who drive 65% to 70% of the US domestic economy, are reluctant to spend.

Consumer stress: 5.8% of US mortgage holders are 2 months behind on payments – up 65% on the same date a year ago.

Traffic: IATA reports that total airline passenger numbers in June were 7.1% lower than a year earlier, vs. a 9.2 percent fall in May. Premium revenues fell 40%.

IATA survey: Many airlines do not expect traffic to recover until 2011.

Traffic vs. yield: stabilization of passenger numbers is being achieved at the expense of much lower yields, as airlines seek to boost cash flow by making cheaper seats available.

Traffic mix: First & business class passengers make up 7-10% of traffic & 25-30% of revenues.

Surplus aircraft: A record 2,860 jet aircraft are now in storage representing a record 13% of the global commercial fleet.

Air China is to add to its 17.5% share in Cathay Pacific by buying a 13% block for $765M from CITIC Pacific. Swire Pacific will remain the largest shareholder in Cathay.

B787 Fuselage wrinkle: The Seattlepi.com blog says that in June Boeing ordered Alenia to stop work on B787 sections 44 & 46 barrel bond assemblies, 2 major structural sections because of flaws in the parts.

B787 structural issues:  According to Seattlepi.com Boeing attributes the decision to 'stringer edge steps' causing wrinkle in the skin of the carbon-fiber fuselage potentially leading to significant degradation of the structure.

A350 XWM subsidy cut: The UK government is to give Airbus $500M to develop the A350

XWB, half the amount the company sought

Oil: The Energy Information Administration reported a much larger-than-expected rise of 2.5M barrels in U.S. stockpiles and in distillates stocks, which gained 800,000 barrels and a lower-than forecast 1M draw in gasoline stocks.

Oil price vs. airline stock price! Since their March 9 low, airline stocks have risen 78%, despite jet-fuel jumping almost 60%.

Imports rise in the USA for the 1st time in 11 months. Signals easing of the recession.

ACG won Ex-Im support for a $900M bond financing for 22 B737NGs. Deliveries are scheduled through 2011. 

Ex-Im is providing a new source of liquidity to the aviation capital market in response to the financial crisis that began in 2008.

AC is using an aircraft funding structure that relies on guarantee for bonds issued by U.S. Ex-Im.

Aviation Capital Group (ACG): Operating activity during Q2 involved transactions for 16 aircraft owned by ACG.

Inflation: Consumer prices hold steady easing inflation fears but suggest that slack remains in the American economy even as the recession bottoms out & some industries ear-up production.

Consumer rights: The Consumer Bill f Rights has been included in the FAA re-authorization bill approved by the U.S. Senate

Safety: Merpati Nusantara Airlines crash: The 1979 Twin Otter 300 that crashed was carrying 16 passengers and crew.

Safety: The Continental Airlines B767-200 on a flight from Rio de Janeiro encountered severe turbulence. At least 26 occupants were injured, four seriously.

Safety: Airbus tells airlines to replace the Thales pitot probes implicated in the recent crash of an

Air France-KLM aircraft with Goodrich models on all A330s/A340s as a "precautionary measure".

Safety: An FAA federal task force has been given 10 days to see if anything can be done to improve safety procedures for pilots flying in airspace around New York City.

Safety: FAA sets a new standard for transport category aircraft requiring either the automatic activation of ice protection systems or a method informing pilots that they should be activated.

FAA Part 23 certification process review is examining the entire lifecycle of aircraft. The average age of the US small aircraft fleet is now about 40 years.

FAA Part 23 certification process is being reviewed for the first time since 1984 by the FAA’s small airplane directorate. 

India is the ninth biggest aviation market in the world and is still the least penetrated. The country accounted for 0.02 air trips per capita, compared with 0.1 in China and 2.2 in the US.

Jet fuel contributes nearly 40% to the total operating cost of airlines in India. 

Cruise industry: Cruise Lines International Association report says nearly 34M Americans who intend to cruise over the next three years will have to fly to these ports of embarkation.

Traffic shrinking: U.S. Bureau of Transportation Statistics reported that U.S. airlines flew 282M passengers in the 1st  5 months of 2009, down 9.5% from the 311M carried in the same period in 2008.

Fees lead to revenue loss. The $1.2 Bn airlines charge in extra passenger fees is offset by the average 70M loss in passengers that translates into a reduction of $1.2 Bn in fees & $14 Bn in passenger revenues annually.

Ancillary fees:  Airlines have been reducing costs, cutting capacity and looking to ancillary fees to survive the economic downturn. Now about $17.50 per passenger.

Lost baggage: More than 31M bags (1.4% of all checked luggage) arrived late of which 1.8M bags never arrived.

Lost baggage: Airlines pay $3 Bn annually compensating passengers and shipping late bags.

Greenhouse gas emissions: ATA is objecting to Europe's "unilateral" approach to regulation based on the cap-and-trade program beginning in 2012.

Air Transport Association (ATA) claims that international flights are traditionally governed by treaties rather than unilateral regulations that violate national sovereignty.

Greenhouse gas emissions: Every major U.S. carrier operating flights to Europe will have to abide by EU emissions caps within three years. 

Greenhouse gas & competition: A new UK government policy states that it is in the public interest that the UK replaces short-haul aviation with $12 Bn, 250 mph high-speed railway network which could be built by 2020 as part of a plan to reduce the UK's CO2 emissions by 80% by 2050.

Yuneec manufactures the E430 LSA in Shanghai.

The 1st light LSA design, the Chinese built Yuneec E430 is powered by lithium polymer (li-poly) battery packs.

Electric light sports aircraft (LSA) may be a green alternative for aviation by 2011.

Airport gate leases. About 8% of airports have terminal leases of 10 years or longer, about 82% have terminal lease terms that are 5 years or less, up from 71% with leases of similar duration 5 years ago, says ACI.

Airport gate leases: Under the current Atlanta gate-lease, airlines’ costs amount to less than $5 per passenger, vs. $17 at New York’s Kennedy & $11 at LaGuardia.

Airport gate lease rates: The new 30-year 142-gate/terminal lease at Hartsfield-Jackson Atlanta International Airport will cost Delta $1.35 Bn. 

Hartsfield-Jackson Atlanta International Airport has 182 gates & is adding 12 more. Delta & its regional partners transport 73% of the airport’s passengers.

Airports are factories for airlines, and cost between $5 & $10 per enplanement.

Delta has reported 7 straight quarterly losses and a 64% jump in jet-fuel prices since March 2009.

Slot swap: Delta & US Air have agreed to trade slots (time-specific landing rights) that will make Delta stronger in New York and US Air stronger in Washington, D.C.

Slot swap: Continental & AirTran propose to swap at LaGuardia, Reagan National & Newark airports.

Downsizing: American's fleet has been reduced from 800 jets to 620. United’s fleet of 409 jets is 30% fewer than in 1999.

Southwest served 40.6M passengers between January and May, a 5.3% decline from 2008.

US Airways served 21.3M passengers from January to May 2009 -- a 7.5% decline from 2008.

American Airlines traffic dropped 10.6% in the first 5 months of 2009.

United Airlines traffic fell 14.3% in the first 5 months of 2009.

Continental traffic fell 11.5% in the first 5 months of 2009.

Northwest Airlines traffic fell 20.2% in the first 5 months of 2009.

Air Arabia reported a Q2 profit of $24.4M vs. $22M in the year-ago period on revenue of $125MAir France A380 flight from Paris Charles de Gaulle to New York JFK on November 23 will be the first to fly transatlantic between Europe and the US.

AirAsia will accept 16 new A320s in 2010 but defers 8 A320 orders scheduled for delivery between January-August 2014 without penalty.

Air India may cancel six new B777s part of the 2006 order for 23 B777s, 27 B787s & 18 B737-800s. AirAsia reported net profits of $40M for April-June vs. $2.7M a year earlier & plans to raise  $170M - $180M in a private placement.

Airlines PNG, Twin Otter with 13 people on board disappeared over dense jungle in the South Pacific island nation of Papua New Guinea.

AirAsia deferred the delivery of 8 A320s to 2014 from 2010 due to projected overcapacity.

American Airlines parent AMR Corp. closure a $276M private placement offering of senior secured notes due 2016 in part to be used to refinance debt due for repayment in October.

ANA emergency $315M income recovery plan through March 2010 based on cutting domestic routes & implementing a la carte items to achieve a full-year profit of $280M.

ANA It reported a $28M net loss in fiscal Q1 ended June 30

Austrian Airlines is to retire its fleet of CRJ200s in Q2 of 2010, will reduce its fleet of Dash8-300s, & add larger Q400’s.

Austrian Airlines Group said it is "highly probable" that its deal with Lufthansa will be by the end of September the latest now that the EU Commission approved the merger.

China Eastern reported a 1st half US$140 profit vs. a $30M loss for the same period last year.

China Southern Airlines is selling 6 A300-600Rs + 5 PW4158-3 engines and spare parts for $124M. 

Ethiopian Airlines reported a 165% increase in full year profits to US$120M. Revenues increased 33% to $1.1Bn, traffic increased 12% & cargo 38%

Gol (Brazil) reported Q2 net profits of $192M vs. a loss of $90M a year earlier as operating costs rose 26%, fuel costs fell 41%, & maintenance cost fell 46%

Gol (Brazil) reported its 2nd straight profit in 7 quarters as fuel and aircraft repair expenses dropped and a 195 gain in the Brazilian currency cut its debt servicing costs

Jazeera Airways (Kuwait), an LCC, reported a Q2 loss of $4.5M vs. a loss of $3.1M in Q2 of 2008.

Korean Air Lines Q2 net income was $64M vs. a net loss of $235M a year earlier as sales fell 16% to $1.68 Bn.

Malaysia Airlines reports a record $250M Q2 profit vs. $11.5M profit in the same period a year ago helped by hedging gains as revenues fell by 32%.

Norwegian:  US lender Private Export Funding Corp., supported by the US Export-Import Bank is providing a term loan for 7 B737-800s scheduled for delivery between this summer and winter 2010.

Ryanair reached agreement with BNP Paribas, Calyon, and Sumitomo Mitsui Banking Corp. for the $1.6 Bn Ex-Im funding agreement financing 55 B737-800s scheduled for delivery between November 2009 and October 2010.

Southwest bids $170M for bankrupt Frontier Airlines.

SAS cuts staff as its net loss increases and passenger numbers decline. 

Thai Airways reported a Q2 $158.6M loss resulting from falling passenger demand, foreign exchange losses, political unrest, & the H1N1 flu outbreak.

Nigeria: The Nigerian central bank sacked the management & injected $2.6 Bn into five of 40 banks because they were undercapitalized and posed a systemic risk.

Nigerian banks that are distressed include Afribank, Finbank, Intercontinental Bank, Oceanic Bank & Union Bank

Colonial Banc Group has become the biggest US bank to collapse in 2009 so far.

Colonial Banc Group is a property lender based in Montgomery, Alabama, with $25 Bn in assets says the FDIC.

Colonial Banc Group’s $22 Bn of assets & $20 Bn in deposits sold to North Carolina-based BB&T

Bank failures: The total number of U.S. bank failures is now over 70 in 2009.

Boeing, rolled out the 1st of 117 new P-8A Poseidon, a military version of the B787-800 for the

US Navy to replace P-3 Orion turboprops beginning in 2013.

The U.S. Navy for anti-submarine warfare, intelligence gathering, reconnaissance, and patrol will use Boeing’s P-8A Poseidon.

CAE: A 27.5% rise in revenue from military orders mostly offset a 19.9% drop from the civil market.

CAE, the flight simulator and aviation training company, had a backlog of $3 Bn at the end of June 2009. Military orders made up $2 Bn of that.

Cessna &Business Jet Cancellations: Cessna’s cancellations continued to soar as revenues fell by $630M or 42% in Q2 of 2009.

Cancellations topped 240 including the 74 orders for the now defunct Citation Columbus. Other cancellations included 59 aircraft orders from large fleet operators, 58 from authorized sales representatives, & 52 from the rest of the customers.

Cessna delivered 84 business jets in Q2 2009, down from 117 in the same period in 2008.

Cessna profits fell by $214M to $48M due to lower sales volume, higher write-downs of its used aircraft inventory & unabsorbed overhead costs from lowered production levels and temporary plant shutdowns.

Cessna removed doubtful orders from the books in Q2, particularly from customers asking for delivery in 2012 and beyond.

Cessna has 277 jets sold for 2009 and should deliver about 275 jets for the full year. Any other cancellations or deferrals could be offset by new orders.

Cessna reports it booked three gross orders a month on average through the 1st 5 months of 2009. That number increased to seven in June. 

Cessna used aircraft sales: For the first time in over a year used Citation transactions increased as the availability of used Citations dropped slightly from 17.6% in May to 17.3% in June

Cessna market predictions: Cessna is predicting lower deliveries in 2010 than they did for 2009 but it is too early to call volumes for 2010.

Bell Helicopter profit increased $4M due to improved performance as revenues fell $28M in Q2 due to an unfavorable commercial product mix & program cancellation. Higher commercial pricing helped offset the decreases.

Embraer reported that Q2 earnings fell 49.5% to $68M on 10.9% less revenues of $1.46 Bn vs. $134M in the year-ago period largely owing to fewer higher-value commercial aircraft deliveries.

Embraer reported that Q2 total deliveries numbered 56 aircraft, up from 52 in the year-ago period as E-Jet deliveries declined from 41 to 33. 15 Phenom 100 microjets were delivered.

Embraer reported that Q2 revenue from commercial aircraft sales dropped 14.1% to $972M represented 66.7% of total company revenues. 

Embraer reported that the firm commercial backlog numbered 340 aircraft including 328 E-Jets As of June 30, 2009.

Embraer reported that its total backlog including commercial, defense and business aviation was $19.8 Bn compared to $20.7 Bn in the year-ago period.

GE Honda HF1202 engine will reach several milestones in 2009 including its 1st complete engine firing and its 1st flight before the end of 2009.

GE Honda plans to build 13 production quality HF1202 engines by the end of December 2009.

GE Honda HF120Is being prepared for its 1st flight on a Citation CJ1 test bed & certification in late 2010.

Rolls-Royce reported a $2.6 Bn profit in the first half of 2009 vs. a $566M profit in the same period a year-ago largely due to profits from financing

Rolls-Royce: Civil aerospace division reported an underlying profit before financing of $430M down 5.5% year-over-year as revenue rose 8.5% to $3.8 Bn.

Rolls-Royce delivered 424 engines in the first half of 2009 vs. 462 in the year ago period. 

Rolls-Royce expects engine deliveries to fall in 2009.

Rolls-Royce: The civil aerospace order book grew by $5.4 Bn in the first half of 2009 to $78 Bn.

Air France-KLM reported a 3.3% drop in traffic in July based on a 4.1% capacity cut. Load factor increased 0.7% to 85.1%.

Airline ticket sales: ARC reports that total sales including airfares, taxes, and fees were $5.65 Bn, down 16.7% vs. July 2008, and a 20.3% year-over-year decline in June.

Airline ticket sales: ARC says US domestic fares dropped 14.9% to $2.72 Bn on a 0.24% fall in transactions and international fares were down 20% to $2.09 Bn on a 2.3% decline in transactions.

Airline ticket sales: Airline Reporting Corp (ARC), representing 180 airlines, says total fares sank 17.7% to $4.81 Bn in July, a slight improvement over the 21.3% decline in June.

FAA under pressure to act: The NTSB says the FAA is slow to implement safety recommendations & when the FAA acts, it has taken them years to do.

Eclipse Aviation: Bankruptcy court accepted August 20th as the date for the sale of the assets of the insolvent VLJ Company

Eclipse Aerospace may emerge as the winning bidder for the Eclipse VLJ fleet, parts & service by September. The goal is to bring it up to a common standard.

Eclipse Aviation trustee accepted the $40M lead or "stalking horse" bid for Eclipse assets as offered by Eclipse Aerospace.

Eclipse Aerospace's stalking horse bid requires that potential competitors offer at least $42M & S5M cash down as earnest money, plus equal or better terms.

Eclipse Aerospace owned by Mason Holland or a more qualified bidder plans to be the new owner of the Eclipse Aviation.

Eclipse Aviation, $1Bn-plus VLJ program, is burning through its remaining $300,000 in cash and needs a savior.

World population will reach 7Bn in 2011 expanding potential air transport demand currently in decline.

Germany & France, two major aerospace markets, with a 0.3% increase in Q2 GDP, are officially out of recession.

Hedge funds indexes are up 12% year to date.

FASB is to consider expansion of the Mark-to-market rule.

Foreclosures in the USA are up 42% from a year ago.

Fuel cost: DOT says U.S. airlines' $1.88 average fuel cost per gallon for scheduled flights fell $3.46 (46%) in June from a year ago but rose $1.73 (8.7%) from May.

Fuel cost/International: DOT says the average price of fuel for international airline service fell 4.3% from May, while it rose 9.8% for domestic service.

Fuel consumption: DOT says total U.S. airline fuel consumption was 1.44Bn gallons in June, down 8.8% from a year ago period period & up 4.8% from May.

Interest Rates & Federal Reserve: U.S. central bank’s Open Market Committee will not raise target interest rates from their record-low levels of nearly 0%.

Debt & Federal Reserve: Fed to end program to buy $300Bn in longer-term government bonds at the end of October.

Consumer Trends: Fed says tight credit, job losses, and reduced wealth were all restraining consumer spending which accounts for 70% of the US economy.

Global warming will cost $8 Bn over 10 years to pay for expanded federal bureaucracy needed to combat global warming under a bill passed by the U.S. House of Representatives.

Oil: OPEC, which controls 1/3 of the oil market, says world oil demand to increase by 500,000 barrels a day in 2010 and projects a decline of 1.65M for 2009 vs. 2008

CIT delayed filing Q2 results until Monday & would seek bankruptcy protection if it fails to complete its debt tender or arrange other financing.

Bombardier cancelled firm orders with Italian low cost carrier MyAir for 15 CRJ1000s because its license was suspended. Four CRJ900 aircraft have been delivered to date.

Hanover Re. will retain earnings to strengthen its capital base.

ING Bank profits sink more than expected on higher bad loan provisions.

Congress to study pax charges as government statistics show U.S. carriers collected $1.1BN in fees for "excess" baggage in fiscal year 2008 & $400M in charges for ticket cancellations & changes in Q1 of fiscal 2009.

Bank in the USA now collect $38.5 Bn in overdraft charges echoing the trend by airlines to charge for extra services.

China’s failure to show sustained economic recovery as lending and exports decline is a blow to the international air cargo market.

Productivity in the USA (Non-farm) increased by 6.4% in Q2 cutting labor costs for businesses including airlines.

Labor costs in the USA fell by 5.8% in Q2 as businesses reduce labor levels.

Interest rates in the USA are expected to hold steady following tomorrow’s Federal Reserve meeting.

Russian economy, a BRIC economy, and a major future market for aircraft economy, contracted by a record 10.9% in Q2 as the slump deepened.

Russian ruble falls against the dollar making aircraft imports more expensive. 

TARP oversight panel says smaller US banks may need an additional $14Bn capital injection.

Mortgage loans in the USA that are underwater have reached 25% of the total and may go as high as 50% affecting 25M borrowers by the time the recession ends.

Bank of America-Merrill Lynch issue remains unresolved as the Federal Judge in the case refuses to approve the $35M settlement with the SEC.

CIT says US bondholders do not intend to call for a bankruptcy filing.

UBS to bolster its debt unit (fixed-income) by hiring former Merrill Lynch staff.

Virgin America expands into the Fort Lauderdale market and may move into the Atlanta and Dallas markets.

Airline industry account for about 5% of GDP and 2% of global warming. Proposed climate change rules will result in airlines paying higher prices for fuel.

Berkshire Hathaway, a strategic aviation investor, returned to profit in Q2, up 14% from investments and derivatives trading.

Bank in the USA now collect $38.5Bn in overdraft charges echoing the trend by airlines to charge for extra services.

Mesa Air Group reported a Q3 profit of $1.7M on operating revenues of $232.6M.

Mesa Air Q3 operating revenues decreased by $121.3M or 34.3% from a year-over-year decrease in capacity and lower fuel revenue.

Finnair posted its 4th consecutive quarterly net loss, a $37M Q2 loss vs. a net profit of $19M in Q2 2008. CEO resigned.

GE owner of GECAS, the number 1 aircraft lessor: NY Times article reports on 4 separate accounting violations by GE since 2000, broadly similar to Enron charges. To pay SEC fine.

TSA USA plans to demand more passenger data for all flights by the end of 2010.

Consumer spending increased in the USA in July as the cash-for-clunkers program stimulated auto sales.

DJIA remains 33% off its October 9th 2007 peak for 22 months of continued market weakness.

Japan Airlines (JAL) reported a $1Bn net loss for its fiscal Q1 ended June 30, vs. a $355Bn loss in Q1 2008.

JAL is to downsize capacity: B747-400s will be replaced by B777s as B767 services are changed to B737s.

Air Canada reported a Q2 $143M profit on $325M foreign exchange gains vs. $112M profit in Q2 2008.

SkyWest Holdings, parent of SkyWest Airlines & Atlantic Southeast Airlines, reported a Q2 net income of $26.2M vs. $36.4M in Q2 2008 as revenue fell 26.5% to $698.8M

Skywest had $732M in cash and marketable securities as of June 2009 vs. $705M on December 31st 2008.

Skywest started removing 12 CRJ200s in June that were operating under an agreement with Midwest Airlines.

SkyWest Airlines & Atlantic Southeast Airlines fleet of 444 aircraft operate under contract with Delta & United Airlines.

Aer Lingus agreed with Airbus to cap its long-haul fleet at eight aircraft until 2013 and will adjusted the delivery of 5 more until the 2013-2015 period.

Air Canada said it needs a minimum of $545M in new financing in order to avoid a second bankruptcy in 6 years.

Air Canada $910M financing: Includes a $635M credit facility provided by its holding company ACE Aviation Holdings, government owned EDC & GE

Canada Finance & $275M from other sources.

Safety: NTSB wants the FAA to strengthen the 1970 design standards for commercial aircraft so that they can withstand collisions with large birds.

GA deliveries: Q1 new aircraft deliveries fell by 41% to 462 aircraft vs. 785 in Q1 of 2008 says GAMA.

GA piston engine aircraft deliveries fell by 55.1% from 399 to 179 aircraft.

GA business jets deliveries fell by 35.7% from 297 to 191 aircraft.

Ex Im Support: Provided a $500M credit facility to Bell & Cessna via parent Textron to help customers finance new aircraft purchased through December 2009.

Dassault (France) will deliver 80 aircraft by the end of 2009 as scheduled.  by year's end -- despite the fact it had shipped only 26 by mid-year.

Airbus has an order backlog of 3,500 aircraft & at 500 deliveries annually this gives it a cushion of seven years of production

Recovery & Embraer: Embraer CEO expects a slow turnaround in the commercial jet market through 2011 & 2013 or’14 for corporate aircraft deliveries.

Cycle Bottom: Airbus & Boeing expect 2009 to be the bottom of the new aircraft order cycle.

Recovery & unemployment high: National Association for Business Economics predicts that the 2009 unemployment rate will average 9.1%, the highest since 1983, leading to a slow recovery.

Recession ending: Though aviation is a late cycle industry a survey of economists by the National Association for Business Economics predicts the recession will end in 2009. 

B787 first flight may come soon but the delivery to launch customer, All Nippon, is still not certain for the schedule March 2010 handover.

A330-200 freighter construction is set to take its first flight in November in time for the  US Air Force tanker re-bid. 

CSeries challenged: Airbus & Boeing say the CSeries is a large aircraft as Bombardier seeks more liberal terms from the OECD for export credit financing for what it says is a 110 to 130-seat regional jet.

UAV Market: Boeing & Raytheon plan to compete against Northrop Grumman in the UAV market which is estimated to double in ten years.  

EADS’ Barracuda pilotless-aircraft military drone prototype, the largest UAV built in Europe, has successfully completed four test flights.

     

Competition: A new UK government policy states that it is in the public interest that the UK systematically replaces short-haul aviation with 250mph high-speed railway network starting 2020.

Safety: Vueling A320 engine caught fire & 169 passengers were evacuated from an aircraft being readied for departure in Paris. Vueling is an Iberia LCC subsidiary.

Lloyds Bank reports a $5.2Bn quarterly loss & predicts in losses from defaulting loans. 

Swiss Re (Insurer) reports a Q2 loss due to bond hedging.

Jobs: The U.S. economy lost 371,000 private sector jobs in July according to the ADP Employer Service.

Spending power: The incomes reported by Americans are falling and will likely slow any recovery in discretionary spending including travel.

B787 Boeing response: Boeing rejects claims as to the scale and time required to fix B787 side-of-body modification structural problem reported in June, stating that it is a local issue with a local fix.

B787: The ST claims that the wing damage that grounded the first B787 is more extensive and occurred under less stress than reported by Boeing.

B787:  The ST report suggests that the B787 damage happened when the stress on the wings was well below the load the wings must bear to be federally certified to carry passengers.

B787: According to the ST report the damage occurred on the B787 outer wing as well as on both sides of the wing-to-body join inside the fuselage.

B787: The ST says its sources claimed that the B787 wing-to-body join requires a thorough redesign that will be difficult to install on existing test aircraft.

B787 technical problems claim: The Seattle Times (ST) reports that B787 side-of-body modification structural problem would require constant monitoring and potentially costly repairs by operators.

AviationRegister   E-Xpert Witness Journal

Global developments presenting risks and rewards for the aircraft trading and financing market

Comments are subject to the site's terms of use and do not necessarily reflect the opinion or approval of the publisher, editorial staff or employees. Users whose comments violate the terms of use may have their comments removed or all of their content blocked from viewing by other users without notification. The publisher does not guarantee information accuracy and disclaims all liability.

Headline News was last updated: December 19, 2009

Service

Guide.

M

Southwest Emergency Landing Incident: Click on Video tab above for photos and video.