JULY 2009

IATA sees no sign of an early economic recovery  in what is for airlines a late cycle industry.

B787 breaking system is the first all-electric braking system for a commercial aircraft and replaces hydraulic breaking technology.

B787 GE Solution: GE Aviation said brake-control software can be changed in the future & phased into later production.

B787 delays: Crane Co. & GE designers of the software for the B787’s braking system has not completed upgrade work because of a disagreement as to who should pay for it.

B787 Progress: Crane and GE redesigned the B787 brake-control system in 2008. This problem delayed the first flight of the B787.

B787 risk: Boeing’s $8Bn financial exposure is increasing following to two years of B787 delays and redesigns.

B787 first flight: Boeing has not yet scheduled a dates for the first flight and first delivery of the B787.

Ethiopian Airlines ordered 5 Boeing B777-200LRs ($1.3Bn) & 12 Airbus A350-900s ($2.9Bn). Deliveries of the B777-200LRs begins in October 2010 & the A-350-900s in 2017.

A350 closes the delivery gap on the B787: It is likely to enter service by 2013 vs. 2010 or 2011 for the B787.

Virgin Blue (Australia) raised $111M in fresh equity & plans to raise a further $82M aimed at building up cash reserves to protect against losses from weak travel demand & expansion of international routes.

Virgin Blue lost $138M in the year ending June 2009 and is projecting breakeven results for fiscal year 2010.

Rolls-Royce is to invest $490M in 4 new plants in the U.K. for engine development after receiving $250M in government support.

Safety: Air France pilot reported the possible failure of a new generation speed sensor pitot tube on a flight from Paris to Rome. It was installed after the June crash.

Safety: Due to the increased risk of bird strikes the NTSB wants the FAA to upgrade its requirement that airframes withstand a collision with a 4 lb bird and that a tail withstands an 8 lb bird.

US Air Force Research Laboratory (AFRL) is identifying ways to reduce air airlift and tanker aircraft fuel usage 90% by 2030-2035.

Airbus reported a 20% increase in Q1 revenue to $11.6Bn. Earnings rose $620M vs. $108M the same period a year ago.

Boeing reported Q2 earnings of $998M, a 17% increase over the same period a year ago.

Airbus delivered 254 aircraft to customers in the first half of 2009 vs. 245 in the first half of 2008. Boeing delivered 246 aircraft.

Airbus booked 90 gross orders & 22 cancellations in the first half of 2009 & is expecting 300 orders for the full year.

Airbus has been providing some financial help to a few buyers but this is not proving to be a big drain on the $11.8Bn cash on hand.

Recession near end:  The U.S. recession may be ending but as aviation is a late cycle industry, the turnaround may be in mid-2010 or early 2011.

Recession, who decides? The National Bureau of Economic Research could declare the recession officially ended in Aug/Sept after 22 months.

Recession indicators turning: 7 of the 10 leading economic indicators have been reported for June and some of these may be revised dampening hopes for a recovery.

Economic upturn: Leading economic indicators are not a good indicator of an upswing in the economy, more a guide that a bottom has been reached.

Coincident economic indicators index has been volatile at best which suggest that the U.S. recession may not have ended yet. 

Interest Rates: Three month LIBOR drops below 0.5% for the first time.

Honeywell Q2 revenues down to $7.6Bn as aerospace sales fall 17%. Overall the Transportation division was profitable when a loss was expected.

EADS business model hangs in the balance as the 7 NATO governments buying the troubled Airbus A400M military aircraft a six month extension before backing out of the program. 

Airline industry losses: British Airways CEO Willie Walsh says IATA’s projection of $9Bn in losses and a 15% drop in sales may be optimistic.

Capacity cuts in Q4: Airlines supplied14.2Bn available seat miles weekly in Q4 2007. Capacity is expected to fall to 12.4Bn in Q4 2009 says ATA.

Ryanair Q2 net income was $175M & is picking up former full-service travelers as the worst recession in half a century prompts fliers to seek better deals.

Ryanair (Dublin) CEO of Europe’s largest LCC says he is willing to fill seats at almost any price over the fall and winter as he withdraws more capacity from the UK.

Jet Airways cut flights to the U.S. and other long-haul destinations in a move to cut cost by $600M through the end of the year. 

Jet Airways cut flights to the U.S. and other long-haul destinations in a move to cut cost by $600M through the end of the year. 

Jet Airways generating lower yields due to intense competition and over capacity in the Indian market, interest costs and finance charges.

Air India: Government owned parent company NACI has to submit a cost cutting proposal as part of a bailout plan. 

Iran Air: Concluded agreements to buy 400 TU-154s, TU-204s and replace 70 old aircraft say Iran Air CEO.

Virgin Blue (Australia) forecasts a $136M loss for 2009 vs. $80M profit in 2008 & asks shareholders for $189M equity injection as CEO steps down.

CIT turned down low-ball offers from Berkshire Hathaway Leucadia National Corp. (previously bought aircraft lessor Finova). Puts aircraft & rail portfolios on the block.  

Revenue/Traffic Mix: Number of passengers carried in June by US airlines fell 6.5% as the average ticket price fell by 20.7%, exceeding the declines post-9/11.

Business travel structural change: A tool developed by Southlake's Sabre Holdings Corp.'s GetThere division allows corporations to videoconference instead of fly

Video Conferencing: Cisco has one of the top 25 travel spending budgets at $300M p.a. & is using new tools to cut nearly all travel for internal meetings and deeply cut its overall spending

Travel Procurement reports that the use of new technology cuts corporate travel expenses by 50% p.a. meaning travel budgets will not rise anytime soon.

Travel Procurement says companies are finding ways to "travel smarter" through better tracking tools and discouraging all but the most necessary trips.

Business traffic lost: “We're all suffering from a decline in business travel demand that is evident throughout the travel industry, whether it's airlines, hotels or restaurants – you name it," said Southwest Airlines chairman and chief executive Gary Kelly.

Teheran, Iran - Seventeen people died & 19 were injured when an Aria airline IL62 aircraft caught fire as it was landing and skidded off the runway. 

Ilyushin 62 crash: The tires of the aircraft and the cockpit caught fire as the aircraft crashed into walls near the runway.

Ilyushin 62 first flew in 1963 and entered service in 1967 as the USSR's first pressurized aircraft with a non-circular cross-section.

Ilyushin 62 is similar in design to the VC10 with 4 engines fitted in paired nacelles beneath a "T" shaped empennage.

Cerberus, an active investor in the aircraft trading market, is looking for cash generating investments after some heavy losses this year.

Recover:  The Asian Development Bank is projecting a V shaped recovered to begin in Asia from 2010.

Write downs: The Asian Development Bank estimates that from September 2008 to date the global financial sector has lost $1.5Tn.

Alaska Air/Horizon Air reported Q2 profits of $29.1M vs. $63.1M for the same period a year ago.

Alaska Air revenue fell to $843.9M vs. $930.8M for the same period a year ago.

Alaska Air traffic fell 2.6% in Q2 as capacity was cut by 4.1%.

Alaska Air has $1.Bn in unrestricted cash and marketable securities sufficient to take it through Q3 and Q4.

CIT: is to amend buy back terms for the notes due in August in an effort to avoid filing for Ch11.

CIT is reported to be taking bids for its aircraft and rail portfolios.

Fortress, the hedge fund that established Aircastle, a leading aircraft lessor, is looking for buying opportunities.

B777: EASA & FAA propose an AD requiring the installation of redesigned Rolls-Royce Trent engine oil-cooler systems by 2011 as a fix designed to prevent

ice buildup.

B777 engine ice buildup can lead to a loss engine thrust.

B777AD was proposed following the British Airways B777-236ER crash landing at London’s Heathrow in 2008.

ADs & SB’s: Airworthiness Directives and Service Bulletins are part of the normal regulatory process designed to maintain and upgrade aircraft safety.

Boeing says the KC-767 aerial refueling tankers being built for the Italian Air Force have passed a development milestone - fueling contacts with other aircraft.

KC-767 Vs KC-45 A330: Boeing KC-767 competition with Northrop Grumman-EADS’ KC-45 (A330) for the US Air Force tanker contract.

Dassault (Falcon business jet) will furlough workers in September due to a collapse in demand for business jets that has left it with a net order deficit of $1.6Bn to June 2009.

Pilotless Aircraft: U.S. Air Force may build large UAV’s (Drone aircraft) that could replace bombers and cargo aircraft with implications for the commercial aircraft market.

Pilotless Aircraft: development of large UAV’s requires the development of technologies that are not yet available to execute such a plan on a large scale.

Electric Aircraft: The AirVenture aviation show in Oshkosh, Wisconsin will feature electric aircraft, flying cars & jet packs.

Electric Aircraft proponents say these rechargeable aircraft concepts address concerns about noise, rising fuel costs and CO2 emissions.

US Airways posted a $58M profit in Q2 vs. a $566M loss in the same period a year ago.  Revenue dropped 18% in Q2 vs. the same period a year ago.

US Airways profits attributed to one-time financial gains from fuel contracts, aircraft leases and other financial items.

US Airways Q2 sales were $2.65Bn, down from the $3.25Bn reported for Q2 of 2008. 

JetBlue earned $20M in Q2 vs. a loss of $9M in the year-ago period.

JetBlue sales fell 6% to $807M.

JetBlue operating revenue per available seat mile fell to 9.80 cents (down 4.4%). Pax revenue per available seat mile fell to 8.76 cents (down 5.7%).

UAL as parent selected John Tague as President of United Airlines; he will remain an XVP at the parent.

United: John Tague as President will be responsible for sales, marketing, customer service and operations.

American & United “B-“ratings: S&P put American & United and their parents on watch with negative outlooks, a precursor to rating downgrades.

UAL had $2.6Bn of unrestricted cash as of June 30, 2009, & raised $155M in early July.

American had about $2.8Bn in unrestricted cash and short-term investment as of June 30th, 2009, down from $5.1Bn billion a year ago,

American has assets that could be refinanced to raise more cash.

S&P says cash held by American & United will decline without new liquidity measures in the third and fourth quarter of 2009.

World trade volumes, a key driver for airline traffic, are expected to shrink 10% this year, the World Trade Organization said.

World exports of merchandise goods grew 15% in nominal terms in 2008 to $15.78Tn, the WTO said in the World Trade Report issued on Wednesday.

WTO reports that trade rose 2% in real or volume terms in 2008 after rising 6% in 2007.

Total world imports rose 15% to $16.12Tn, $345Bn more than exports, due to different ways of measuring imports and exports, the WTO data show.

Air Cargo: The severity of the slowdown was reflected in a fall of 23% in air cargo traffic in December 2008 vs. a year earlier, the WTO said.

The decline recorded in September 2001, when most of the world’s aircraft were temporarily grounded following the attacks on the United States, was

14%.

Exports: The share of developing country exports in world trade rose to a record 38% in 2008, the WTO said.

Germany retained its position as the world’s leading merchandise exporter in 2008, with exports of $1.47Tn, slightly larger than China’s $1.43Tn.

China’s export performance faltered at the end of 2008. Its exports to the United States rose only 1% over the whole year after growth of 14% in the 3rd quarter.

USA was the biggest importer in 2008, $2.17Tn of merchandise goods, 13.2% of the total, followed by Germany with 7.3% or $1.21Tn according to the WTO.

CIT: Bond holders that provided the $3Bn rescue financing may guide this major aircraft lessor into a prepackaged reorganization in August once a $1Bn debt swap is completed.  

CIT may have lost $1.5Bn in Q2 and lost $3Bn in the last 8 quarters.

CIT-CNN report: Could raise more than $8Bn from the sale of its profitable transport assets, though the value likely would be pressured by weakening end  markets and rival sellers.

CIT has not announced plans to sell its aircraft or rail assets.

CIT Asset Sales: Aircraft & rail businesses attracted interest from prospective bidders over the past two years says CNN.

CIT dropped plans last year to sell the rail unit after finding offers unattractive caused by overcapacity amid a sharp decline in freight volume in the U.S. and Europe.

CIT Aerospace is in the top five in the aircraft leasing industry by value. Leases and manages 302 aircraft with 109 on order.

CIT Assets: The aircraft and rail leasing portfolios have been the most profitable for CIT In recent quarters says CNN.

CIT Collateral: Will used part of its aerospace unit's assets as collateral for the $3Bn in fresh funding. Lenders would likely have to approve any transaction involving aircraft says CNN.

General Electric Co. (GE), which owns the largest aircraft leasing business (GECAS), also explored a sale of its rail unit according to CNN

CIT’s aircraft business would join 3 or more rival lessors seeking buyers, and market conditions have softened says CNN.

Royal Bank of Scotland PLC (RBS) has canvassed buyers for its RBS Aviation Capital business says CNN quoting leasing industry sources.

RBS dropped orders for 25 B787s to avoid pre-delivery payments and improve the marketability of the aircraft leasing business.

Aircraft portfolio buyers: According to CNN these include Chinese banks, Aircastle, AerCap & Genesis Lease.

CIT faces competition from the effort to sell AIG’s aircraft leasing subsidiary ILFC (International Lease Finance Corp.)

AIG's price tag for ILFC has fallen from around $7Bn to less than $4 billion says CNN quoting people familiar with the process.

Quoting CreditSights CNN reports that CIT’s aircraft portfolio could realize around $5.3Bn. 

PNC, an aerospace bank and owner of National City Bank: Profits fall 87% in Q2 due to defaulting loans.

Traffic: U.S. domestic demand for air travel is down dramatically, with industry traffic back at 2004 levels. Full-fare travel in particular has declined sharply says Southwest.

Southwest rating: Moody's lowered Southwest Airlines' senior unsecured debt rating to Baa3 from Baa1due to continuing weak fundamentals of the airline sector.

Southwest Moody's believes that weak yields in the North American airline industry will likely constrain Southwest's credit metrics until overall economic conditions materially strengthen.

Southwest full-fare mix is down 5% from a year ago to 18%.

Southwest: Heavy discounting since April has been necessary to stimulate traffic due to the sharp falloff in business travel.

Southwest: Aggressive discounting drove Q2 load factor to 77%, which was close to a record but passenger revenue yields per RPM declined 8.2%.

India: Boeing cut its commercial aircraft sales 2029 forecast for India to 1,000 aircraft valued at $100Bn.

AirTran (Orlando), a low cost carrier that competes with Delta, reported a net profit of $78.4M profit in Q2 vs. a net loss of $14.8M in Q2 of 2008, helped by lower capacity and fuel costs.

AirTran Q2 revenue decreased 12.9% to $603.7M.

Air Trans Q2 earnings included $31M of unrealized gains on its fuel hedge portfolio, $3.3M gains on debt payoff & $2.4M write-off of capitalized interest on aircraft sales.

Delta, with a Q2 loss of $257M, no longer expects to post a profit in 2009 because of the recession and its negative effect on air travel.

Delta: with a load factors of 83% (full aircraft), total operating revenue fell 23% as unit revenue fell 17%, had $390M in fuel hedge losses.

United is to cut 9,000 jobs by the end of 2009.

Iberia’s chairman, Fernando Conte steps down earlier than planned for former Altadis chairman Antonio Vazquez as BA merger remains open.

CargoItalia is owned by Intesa SanPaolo & ALIS. Operates MD11Fs on an ACMI basis. Has 8 A330-200Fs on order. 

CargoItalia is a merger of CargoItalia (suspended ops in 2008), Alitalia full cargo division.

CargoItalia is owned by ALIS, & Intesa SanPaolo Bank.

ALIS is owned by the family of CargoItalia chairman and CEO Alcide Leali, Benetton, van den Heuvel & Banca Intermobiliare

ABX Air is to cut over 1,000 jobs from its Wilmington, Ohio, base when its airport services contract with DHL ends on August 15th.

DHL Express moved out of the US market in November 2008 moving its freight operations back to Cincinnati-Northern Kentucky International Airport.

B787 delays: The two year delay in deliveries is not showing up in Boeing’s quarterly income results. The stock is down 57% from its peak.

Boeing Q2 profits rise 17% as aircraft deliveries hold steady.

Delta losses beat expectations as fuel costs decline.

Aerospace banks:  Q2 profit reports generally faring better than expected but not as a result of aerospace financing activity.

BNY Mellon Q2 earnings are up 33% compared to a year ago.

CIT: The $3Bn loan from bond holders comes with $100M in fees and interest plus collateral estimated at 5 times the value of the loan.

Credit Suisse may report a second straight quarterly profit on trading gains.

GE Capital gets approval from the FDIC for a plan to exit from its liquidity program.

KeyCorp reported a Q2 loss of $290M as bad loans climbed.

Morgan Stanley posted a Q2 net loss that was three times as much as analysts expected. Revenue fell 11.3% from a year ago to $5.41Bn.

SunTrust reported a third straight quarterly loss due to weak real estate markets and a weak economy.

Wells Fargo Q2 net income surged 81% based on a surge in mortgages. Revenue rose 28% from a year ago to $22.5Bn.

Wells Fargo's credit losses are raising concerns as net loan charge-offs rose to $4.39Bn and nonperforming loans rose to $18.3Bn, an increase of 45.4% from Q1.

Passenger rights: U.S. airlines would have to let passengers off aircraft stuck on tarmacs after 3 hours under legislation approved by a Senate panel.

Continental-united merger talk a possibility now that Larry Kellner is leaving Continental says USA Today.

American Airlines (AA) reported a $390M loss for Q2 due to the depth of recession, loss of business travel & vacation revenue. 

American ticket sales fell 23% in Q1 & the loss  was $390M reflecting a global economic downturn that is affecting demand for air travel to volatile fuel prices to challenging capital markets says AA CEO.

American: This is the steepest revenue decline the airline has seen since the two quarters following the 9/11 attacks says AA CEO.

American cut capacity response to higher fuel prices & in anticipation of the recession compounded by the H1N1 flu virus which hit in May & June. 

American will cut capacity by 7.5% by the end of 2009.

American losses have been tempered by paying nearly 60% less for fuel than a year ago, and by new fees charged for checked baggage.

Airline Sales: For the 8th consecutive month June U.S. passenger revenue fell 26% on domestic & international routes vs. same month last year – ATA.

Airline measure of health:  could be unrestricted cash on the balance sheet because money-losing quarters use up cash & without enough to pay debts, airlines can wind up like CIT - Forbes.

Airline debt burden: Weighs heaviest on United, Delta & Continental.

United had $2.5Bn in unrestricted cash at the end of Q1 with $977M debt maturing within 12 months – S&P.

Delta had $5Bn in cash at the end of Q1 & $1.8Bn in debt due within 12 months (7.5% of revenues); the largest share of any major airlines says S&P.

Continental has $578M debt maturing within 12 months – a comparatively light 3.9% of trailing revenues – S&P.

Economy 2010: Larry Summers, economist & Director of the White House's National Economic Council says 2010 U.S. growth rate is in doubt.

Oil: Oil futures for Q3 & Q4 are averaging $70 per barrel. Airlines need that figure to be $60to be profitable.

Southwest to cut capacity by 5% to 6% by the end of 2009.

Southwest has cash or cash equivalent of $2.4Bn as of July 20th.

Southwest (Dallas, Texas) earned $54M in Q2 vs. $321M a year ago. Revenue fell 9% to $2.6Bn. Unit costs fell 4.6%.

Southwest fuel cost: Fuel costs fell 22.8% to $1.79 per gallon, including taxes in Q2.

Southwest CEO Gary Kelly says he cannot predict a Q3 profit due to weak travel demand and fuel price volatility.

Southwest expects Q3 unit revenue to fall more than 6%.

Continental (Houston, Texas) reported a Q2 net loss of $213M including special charges of $44M.

Continental expects to raise $100M in 2010 increasing domestic checked bag fees & telephone reservation service fee by $5 for those who do not paying online.

Credit Crisis: Congressional special inspector general Neil Barofsky overseeing the $700Bn TARP funding reports that the U.S.  Federal government has devoted $4.7Tn to help the financial sector through its crisis.

Credit crisis: The $4.7Tn government support for the financial sector is about 1/3rd of the overall U.S. economy.

Credit crisis: Government support is provided through 50 initiatives and programs set up since 2007 by the Bush and Obama administrations, the Federal Reserve & Treasury.

Wall Street performance: Earning trending to beat estimates in Q3 but revenues come in short- attributed due to cost cuts.

Regions Financial recorded a $244M loss for Q2 vs. $206M profit a year ago & nearly tripled the provision for loan losses to $912M

CIT: confirms lenders to provide $3Bn in support. Sources are reported to be PIMCO, Oaktree Capital, Silver Point Capital, Centerbridge Partners & Baupost Group. Reported to be secured by CIT’s highest quality loans.

CIT: Goldman Sachs, JPMorgan Chase, Morgan Stanley & Barclays were reported to be willing to provide $2Bn to $3Bn in new money or debtor-in-possession financing.

CIT: 10.5% lending rate has to compete with rival lenders with lower funding costs who could charge lower interest rates and make money.

CIT:  $75Bn in assets, lending supports less than 1% of the total U.S. retail & manufacturing business.

CIT may get $3BN in bond holder rescue financing as early as today (Monday) from PIMCO & others. Interest rate 10.5%.

CIT received $2.3Bn in TARP funding in 2008 but the US Treasury will not provide more support.

CIT has $1Bn of bond repayments due in August and $10Bn due in 2010.

CIT, with 1% of the U.S. lending market, may need as much as $6Bn to avoid filing for bankruptcy protection. 

CIT: It costs $4.45M plus a $500,000 annual fee to insure $10M of CIT's senior bonds against default for 5 years.

CIT may declare bankruptcy after negotiations with the FDIC and other government agencies fail to win fresh financial-aid support.

CIT Aid: The $2.3Bn in TARP funding provided to CIT in November 2008 may be lost if CIT collapses. CIT rescue: CIT is in advanced discussions for emergency US government aid causing stock price to bounce.

CIT rescue: CIT is in advanced discussions for emergency US government aid causing stock price to bounce.

CIT bankruptcy: CIT warns that bankruptcy would be devastating for US manufacturers.

CIT bankruptcy? Hires leading New York bankruptcy law firm Skadden Arps as the stock & bond prices of this major aircraft lessor slump.

CIT: FDIC is said to be unwilling to back CIT bonds because of deteriorating credit. Has a preference for CIT to raise fresh capital.

CIT shares are down 75% in 12 months just behind AIG and Citi.

CIT, a major aircraft lessor, may be close to winning $775M in government aid as a cash crunch looms.

CIT credit rating: Standard & Poor's lowered CIT credit ratings to CCC+/C, citing increased near-term liquidity concerns.

CIT aid 1: The US Treasury gave $2.33Bn to CIT in December 2008 as part of an emergency rescue package.

CIT aid 2: Federal Reserve may let CIT pledge some of the assets at its discount window as it moves to refinance debt.

CIT Debt due: CIT has $1Bn+ of unsecured notes maturing in Q3 & Q4 that could become increasingly difficult to pay says S&P.

CIT Bank: CIT Group changed its charter to a bank holding company in December 2008.

CIT business: Is a major provider of industrial loans to small & mid-sized companies, aircraft leasing & financing but sold its real estate lending business in 2008.

Southwest credit rating: Moody’s moves to review Southwest's senior unsecured Baa1 rating, its corporate debt & the ETC's (enhanced equipment trust certificates) used to aircraft financing.

Bankruptcy outlook: American Airlines $3.7BN in unencumbered assets, sufficient to enable it to raise more cash, even beyond the nearly $586 million raised in the past month says JP Morgan analyst Jamie Baker

Bankruptcy outlook: United & US Airways are more likely bankruptcy candidates because they lack assets that can be monetized and could violate bank debt covenants says JP Morgan analyst Jamie Baker

Bankruptcy outlook: American's $3.7BN in unencumbered assets, sufficient to enable it to raise more cash and avoid bankruptcy says JP Morgan analyst Jamie Baker

Learjet 60 problems: NTSB tells Bombardier to change the thrust reverser design— devices on the back of engine that divert thrust forward, helping to slow the aircraft  or force it backward

General Electric reported a steep fall in quarterly profit, hurt by its finance business. (Source: New York Times July 19th, 2009, Page 8).

GE, a bellwether for the global economy and the aircraft trading market, Q2 profits beat estimates (but not revenues) based on cost cutting not revenue growth.

General Electric (GE) reported 17% lower Q2 revenues of $39Bn & a 47% fall in Q2 earnings to $2.9Bn from a year ago.

GE’s Q2 revenue was $3Bn less than forecasters had estimated.

GE’s capital equipment orders are expected to decline by 25% for the full 2009 according to GE.

GE customers are delaying capital equipment purchases until the economy begins to recover.

GE generates 40% of its cash in the first half of the year, generated $4.3Bn in cash in Q2.

GE to generate surplus cash in the 2nd half of 09 as it reduces the dividend from $6.7Bn to $2.3Bn.

GE Capital revenues fell 29% to $12.8Bn and earnings fell 80% to $590M in Q2.

GE Capital leverage is improving & is now at 5.6:1 compared to 7:1 a year ago.

GE Capital is still tied to raising debt in the short term commercial paper market where it raised $50Bn in Q2 compared to $70Bn a year ago.

GE may have to sell GE Capital if new rules proposed by the US Treasury are implemented but GE plan to oppose such a move.

GE Aviation (Engine division) Q2 revenues fell 6% to $4.6BN pre-tax operating profit edged up 1% to 20% at $923M.

GE has a backlog of $21Bn in orders & $55Bn in service.

GE Aviation’s equipment orders fell 44% in Q2 to $1.7Bn.

GE Aviation’s engine service orders increased 5% to $2.5Bn.

GE Aviation: Service earnings accounted for more than 75% of GE Aviation’s overall earnings in the first half of 2009.

British Airways (BA) wants to sell a majority share in loss making business airline subsidiary OpenSkies for $70M to $100M.  Reynolds Partners investment bank has been appointed to find buyers.

Aer Lingus appointed Christoph Mueller ex TUI as its new CEO. He has German experience running low-cost airlines that prepares him to compete with Ryanair.

Cessna has officially dropped plans to build its new Columbus business jet & canceled a $1Bn contract with Vought to build the jet's complete wing assemblies.

Delta: Raymond James initiated coverage of Delta with an outperform rating.

Delta: Raymond James notes Delta’s Northwest merger, its equity and a potential industry-wide 2010 recovery.

Recession: Raymond James says look toward recovery in 2010 for airline stocks with sufficient liquidity.

Air France-KLM denies reports that it could run low on cash in 2010 amid higher losses traffic does not pick up & oil prices stay high.

Air France $6.6Bn in cash and $1.8Bn available through credit lines.

B757 costs are too high says American CEO Arpey & he is giving serious consideration to the role they will play in its long-term fleet plan.

Rural air travel subsidies to increase by more than 40% under a spending bill unveiled in the U.S. congress.

Lufthansa-Austrian take over: EC gave a cautious response to antitrust concessions by Lufthansa as markets react favorably.

JetAmerica (Clearwater, FL) the fledgling low cost airline has closed without getting off the ground.

AIG may take years to unwind and may be left with a toxic asset pool that could include aircraft lessor ILFC.

Bank of America, a leading aerospace bank, reported Q2 profits of $2.42Bn, declining less than expected.

Bank of America reserve provision for non performing loan rose from $26Bn to $31Bn in Q2, adding $4.7Bn to reserves. Sees credit problems into 2010.

Citi, a leading aerospace bank, most of the Q2 $4.28Bn profit came from the sale of a majority share in Smith Barney. 

Goldman Sachs & JPMorgan Q2 profits resulted from fee income taken over from defunct Lehman Brothers & Bear Stearns, not market growth.

J.P.Morgan Chase investment bank record results: Q2 profits up 36% to $2.7Bn on $8.3Bn in revenues of which $2.2Bn came from fees.

J.P. Morgan Chase builds $30Bn in credit reserves representing about 5% of the outstanding loan book. AIG may take years to unwind and may be left with a toxic asset pool that could include aircraft lessor ILFC.

Terrorism: Two U.S. hotels (Ritz & Marriott) bombed in Jakarta, Indonesia resulting in fatalities, with adverse implications for regional tourism. 

Oil prices are falling but gasoline is trading above heating oil through October suggestions airline fuel costs will not fall before the end of the peak summer season.

Traffic: Premium ticket air traffic worldwide fell 19.2% in Q1, 23.6% May & 22% in April says IATA.

Traffic: Economy ticketed traffic fell 7.6% in May from a year ago after growing 0.7% in April.

Traffic share: Premium passengers account for 7% to 10% of seats booked and 25% to 30% of global passenger revenues. , but represent only, IATA said.

Airline losses: U.S. carriers lost $1.7Bn in Q1 and expect to report losses of $1Bn in Q2 leading up to the peak summer season.

Continental Airlines CEO Kellner leaves to open Emerald Creek Group LLC, a new private-investment firm in Houston and is replaced by COO Jeff Smisek.

Continental traffic fell by 8.3% in the six months to June 2009 as revenue per seat mile fell 20% in May and June. 

Continental Q2 sales estimate is a fall of 22% to $3.15Bn and an operating loss of $166.9M.

Copa (Panama) ordered 13 B737-800s worth $1Bn at list price & now has 27 B737s on order. Delivery is from 2012 through 2015, plus 8 options for 2015-2017.

Aerolineas Argentinas and Austral expropriated from Spain's Grupo Marsans in 2008 SA have a new President Mariano Recalde.

Aerolineas is renewing its fleet for the first time in 16 years. Two B737-700s are due for delivery plus 9 leased aircraft by the end of 2009.

Aerolineas Argentinas is buying 15 A330s and 20 A340 in a contract taken over former owner Spain's Grupo Marsans.

Austral, the Aerolineas Argentinas domestic subsidiary is buying 20 aircraft costing $600M from Embraer of which 85% is financed by BNDES.

Pluna, the Uruguayan flag carrier is looking for potential airline partners to invest $12M in a second round of financing by June 2010, says president

Campiani.

Pluna is 75% owned by Matias Campiani’s investment group Leadgate since 2007.

Air India could get a $513M equity injection from the Indian government to be paid back when it goes public in 2010. 

Air India may have to cancel some of the 111aircraft on order, return some leased aircraft and develop a restructuring plan. 

WestJet (Canada) and Air France-KLM sign an interline agreement.

Safety: In 2007 & 2008, there were 109 people killed in accidents involving on-demand flights in the USA but there were no commercial airline fatalities.

Safety: 50 passengers were killed this year when a Colgan Air Q400 crashed near Buffalo, N.Y.

Safety: DOT's inspector general reports that the FAA does not effectively target inspections it make to the highest-risk operations -"on-demand" operators.

Safety risk: On-demand operators face risk because their flights are shorter; they take-off and land more frequently & fly from small airports with no air traffic control towers and emergency equipment.

On-demand operators include unscheduled cargo & passenger flights of less than 30 passengers, aerial sightseeing & medivac.

Aircraft inspections: Inadequately inspected aircraft types include single-engine piston aircraft, helicopters, turboprops & business jets.

Pilot times: On-demand operators can employ pilots with a minimum of 500 hours of flight time vs. a minimum of 1,500 hours for commercial pilots.

On-demand operations are allowed under FAA regulations and to operate aircraft that do not have the same safety equipment as commercial aircraft.

Many safety rules that apply to on-demand operators have not been updated since 1978.

DOT says the FAA has not implemented 16 NTSB recommendations focused the safety of on-demand operators

DOT says the FAA has addressed the 2005 recommendations made by its advisory committee, some of which paralleled NTSB recommendations.

The new FAA approach to safety oversight for on-demand operators that will target the most risky operations will not be ready for full deployment for at least 4 years.

Bad Assets: Morgan Stanley quoting the IMF says that by the end of the credit crisis $4Tn of bad bank assets will be written down.

Bad Assets write down: Morgan Stanley says that thus far financial institutions have written off  less than $2Tn of bad assets on their books.

Hedge Funds: The White House sends legislation to Congress that will give the SEC oversight of hedge funds that have been unregulated up to now.

GE profits may decline pending any boost to consumer spending from the U.S. government stimulus package.

Harley-Davidson, a participant in the aircraft leveraged lease market, reduces 2009 earnings forecast.

Lloyds bank, an active participant in the aircraft lending market, is to but 600 UK jobs.

China takes over from Japan as the world’s second largest stock market

Consumer strain: U.S. foreclosures hit a 1.5M record high in the 1st half of 2009.

Consumer Debt in the USA stands at 125% of disposable income and will be a drag on the economy until 2011 or 2012.

British Airways to ground 3 B747s & 3 B757s.

Vietnam Airlines forecasts profit of $1.6M for the first half of 2009 & plans to triple its fleet of 50 aircraft by 2020.

Thai Airways International wants Airbus to delay the delivery of 6 A380s or change the order to A350-1000s.

Estonian Air 2008 loss was $15M. Carrier will not be able to survive long while operating on a loss says CEO.

AirBaltic (Latvia) to purchase cargo aircraft for 2010 launch of freight operations.

AirBaltic could reregister its fleet in a third country because of claims that the quality of Latvia’s CAA is poor.

flyLAL Charters (Lithuania) leased a B737-300 from Avia Asset Management.

Air India parent NACIL receives US Ex-Im Bank guaranteed loan of $1BN for 12 years from JPMorgan Chase to fund fleet expansion.

ALAFCO (Lessor, Kuwait) reports $29M net profit in first half. Total assets climb 33%.

Air Canada bankruptcy avoided: IAMAW, the largest union at Air Canada has approved a 21-month labor contract, critical in keeping the airline out of bankruptcy.

American Airlines reported a Q2 $390M loss as collapsing demand erased gains from lower fuel costs.

American reported a loss of $319M excluding a one-time charge of $70M due to the sale of aircraft and grounding of leased A300 aircraft prior to lease expiration.

American B737-800 financing: American has financing to take delivery of 84 B737 from Boeing through 2011.

American raised $520M in public debt in Q2 & combined with previous financing commitments, gives American the ability to buy aircraft through 2011.

American raised $66M in cash in Q2 from the sale-leaseback of aircraft.

American’s new B737-800 burns 35% less fuel per seat-mile than the MD-80 it is replacing for an average savings of 800,000 gallons of fuel per aircraft per year.

American is also refurbishing its aircraft interiors and airport facilities in a variety of ways.

Lufthansa aims for big cost cuts by shedding 20% 0of its 2,000 office staff to save $1.5Bn annually from 2011 all designed to get passenger costs to fall.

Lufthansa’s recovery strategy called Climb 2011 focuses on passenger transport activities which have slumped amid the global economic downturn.

Lufthansa warns that higher fuel costs and falling passenger numbers posed a serious threat to the carrier.

Lufthansa traffic: Air traffic is mired in the worst crisis in its history," says Lufthansa CEO.

Lufthansa posted a Q1 loss and Lufthansa's first-half results will show that this negative trend is continuing," says the CEO.

Lufthansa losses will increase significantly in the coming year owing especially to the rise in fuel prices.

Lufthansa full year results: Slumping passenger and freight traffic will force the airline to take measures to avoid a full-year loss.

Singapore Airlines (SIA): J.P.Morgan analyst Corrine Png, upgraded the stock to overweight from neutral and lifted its target price by 9.4%

SIA: Analysts are pricing in an SIA profits recovery over the next 12 months.

SIA: Png says the airline market is in the worst of the cycle right now with traffic collapsing and then potentially booking losses for the next one or two quarters.

SIA is the world's second largest airline by market value and some analysts are starting to see a recovery.

TU154 & Caspian Air crash: About 1,000 TU154s were built in the 1970

TU154 vs. B727 & B737: TU154 safety record equals that of the Western built B727 and B737.

TU154 safety: An estimated 40 TU154s, out of 1,000 produced, have been lost in fatal accidents since it was introduced in the early 1970’s.

TU154 Jet: Most of the Russian built TU154s are 30 to 40 years old and are working at the limits of their lifespan potential.

Noise levels near U.S. airports: In the late 1970s aircraft noise affected about 7M people. Today fewer than 500,000 affected.

Noise: Future noise reductions will depend on advances being developed through the Next Generation Air Transportation System (NextGen).

Noise levels: Aircraft noise levels have dropped 20 decibels since the late 1960s about 25% lower noise levels than 50 years ago.

Noise is at a minimum but the FAA predicts that it will start to increase again soon and continue climbing due to continuing growth in traffic. 

Noise Division of the FAA continues to investigate ways to keep aviation quiet, notably through the CLEEN (Continuous Lower Energy Emissions and Noise) program.

Noise & NextGen New Optimum Profile Descents (OPDs) enable pilots to reduce power, nearly to a glide, as they land their aircraft, eliminate noise. 

De-globalization: IATA warns about the negative impact ”de-globalization" has on traffic as  government economic stimulus packages focus spending on boosting domestic economies.

B737-300 hole in fuselage. A small-sized hole opened in a Southwest B737-300 fuselage located approximately mid-cabin, near the top of the aircraft causing the aircraft to decompress at 30,000 ft.

Southwest inspected all 181 B737-300s overnight with minimum impact on their schedule.

Southwest B737-300: Airline inspectors have found "nothing unusual" in the rest of the fleet of 200+ 737-300s. The cause of the incident remains unknown.  European Commission (EC) says Africa must improve aviation safety.

EC says the need to improve aviation safety in Africa is so that the continent could attain its full development potential.

EC Administrator for Internal Market, Air Transport Agreements and Multilateral Relations said that increasing air accidents affects Africa's potential for developing air transport and other branches of economies such as tourism.

Safety & Africa: The rate of fatal air accidents in Africa is 8 times higher than the world average, according to the EC.

One in four accidents world-wide takes place in Africa although Africa represents only 4% of the global volume of air traffic says the EC.

Europe and Africa have common interests for the development of air transport, which could bring economic development and more mobility between

Africa and other continents & within Africa., says the EC.

Aircraft values:  Continental Airlines will record a $44M charge in Q2 mainly related to the lowered fair market value of retired B737-300s.

Garuda, Mandala, Premiair & Airfast were removed from the EU international blacklist of banned carriers. EU placed all Indonesian airlines on it after series of deadly air accidents in 2007.

Goldman Sachs, the Wall Street banking giant topped analysts' earnings predictions with a Q2 $2.72Bn after paying preferred dividends, only two quarters

after posting a steep loss during the peak of the credit crisis.

Boeing is to cut 1,000 defense jobs as the US government cuts its defense budget. Defense is a key component of Boeing’s business model.

US Air is to cut 600 jobs due to sluggish demand, declining revenue and cut in schedules say the CEO. 

Safety: Tupolev 154 crashed in Iran. The 1987 built aircraft was operated by Caspian Air, a Russian-Iranian JV. All 168 people on board were killed.

Trade embargoes encourage Iranian carriers to Russian built aircraft due to the lack of access to new and used Airbus and Boeing models.

European Defence Agency (EU) has decided to build its own heavy-lift helicopters to replace its aging CH-53 Sikorsky Sea Stallions.

EU decision is a response to a shortage in heavy lifts for European military missions in Afghanistan and Chad.

Helicopter shortage: So serious is the shortage that European countries have had to charter Russian Mil-26s to move their troops and materiel by air.

EU plans to build 200 ‘Future Transport Helicopter’ when the current generation of heavy lift helicopters reach their end of life because no such helicopter on the market now.

EU’s Future Transport Helicopter design and manufacturing is scheduled to begin in 2011.

Capacity cuts: When the capacity cuts takes effect in 09/09, the number of seats on US domestic flights will drop to 66.5M.

Capacity at 1984 levels: The 09/09 seat count will be the lowest since 1984 (OAG Aviation data) says New York Times.

Unsafe airlines: ICAO rejects a European Commission proposal for a worldwide blacklist of unsafe airlines.

United Airlines stock is trading at levels indicating bankruptcy may once again be likely. NYT

United Airlines finds itself in danger of running out of cash. NYT

Cash is exactly what United needs right now with reports of more than $1.5 billion in debt due early next year. NYT

Fitch Ratings: "They [United Airlines] could be in a position where they are in danger of running out of cash."

Now the company [United Airlines] is possibly headed once again into bankruptcy and seems to be a prime candidate for being liquidated.

United Airlines will be part of the industry consolidation but they may not survive it. NYT

ALLCO problems. Non-recourse lenders unhappy with the sale to HNA Group/ Bravia Capital. Asked Macquarie to bid to manage the 68 a/c portfolio. Ferrier Hodgson objects.

B737-300 hole in fuselage. A small-sized hole opened located approximately mid-cabin, near the top of the aircraft causing the aircraft to decompress at 30,000 ft.

Southwest inspected all 181 B737-300s overnight with minimum impact on their schedule for today.

British Airways may opt for an $800M rights issue of new stock to boost its balance sheet unless passenger numbers recover soon.

Virgin Blue (Australia) halts trade in its stock. Is poised to source up to $310M to boost its balance sheet

Majors: Top five US Majors may report losses in Q2, the quarter that should report strong traffic and profits risking bankruptcy for some by year end.

Revenue: IATA says global airlines would face a 12% decline in revenues for 2009 affecting both flag carriers & LCCs.

Travel Budgets: More than 70% of corporations are cutting travel budgets by 10% to 20% this year. Association of Corporate Travel Executives

China Eastern confirms it will merge with Shanghai Airlines ending price war and boost earnings by $145M.

Aircraft lease rates fell 4.3% in Q1. Includes cost of aircraft lease payments, depreciation, amortization, including airframes and parts, engine and parts, capital leases and other flight equipment.China Eastern: Synergies are expected from the integration of fleet, routes, distribution and maintenance/ground services.

China Eastern: The merger is expected to lead to "new opportunities for state bailouts and strategic investments” says Citi.

China Eastern: The financially troubled carrier will also raise more than $1Bn.

China Eastern is now China's largest airline. A larger market share & improved pricing power in the Shanghai market will be crucial to a turnaround

Airline Cost Index: ATA Q1 2009 composite cost index fell 22% to 176.91 vs.Q1 of 2008 & outpaced the 0.2% fall in the CP), not enough to counter the increased outflow of cash.

Airline Cost Index: The three largest components of the ATA composite cost index are labor, fuel and transport-related expenses.

Airline labor costs rose 5.6% in Q1 2009, fuel prices fell 36%. Landing fees rose.

China riots: Air travel has been affected by the July 5 ethnic violence that claimed at least 184 lives in the northwest Xinjiang province 24 hours ago from web

China’s General Administration of Civil Aviation said the unrest harmed civilian air transport in the province gravely.about 24 hours ago from web

Xinjiang: There are 14 airports in Xinjiang service servicing 114 air routes.about 24 hours ago from web

Pollution: Commercial aviation is the first global industry to commit to a carbon-neutral growth target by 2020 says IATA about 24 hours ago from web

Pollution: Aviation industry' 3 targets:1.5% fuel efficiency gain p.a. to 2020;carbon-neutral growth by 2020 & 50% commissions cut by 2050 vs. 2005about 24 hours ago from web 

Pollution:G8 asks ICAO & UN Framework Convention on Climate Change(UNFCCC) to guide aviation's reduction in global emissions by 50% by 2050.9:01 AM Jul 12th from web    

Air India bailout plan? Losses of $1Bn forecast for fiscal year 2008/09. Government explores $2Bn bailout as part of a 2 year work-out plan8:44 AM Jul 12th from web    

Air India bail plan? Losses of $1Bn forecast for fiscal year 2008/09. Government explores $2Bn bailout as part of a 2 year work-out plan.8:44 AM Jul 12th from web    

Cambodia: Sets up first state-owned airline Cambodia Angkor Airline (CAA) . To fly on domestic routes initially, a local daily reported.8:26 AM Jul 12th from web    

Austrian Airlines-Lufthansa merger: EU Commission is unlikely to give antitrust clearance by end-July deadline, risking future of Austrian.8:22 AM Jul 12th from web    

Real Estate: $1.8Tn of US bank debt is secured by commercial RE of which 25% is expected to default!8:18 AM Jul 12th from web    

Jason Bitter, ex CEO of SkyEurope joins LCC Air Arabia Maroc as CEO. Is a Air Arabia & Casablanca-based Regional Air Lines JV.8:14 AM Jul 12th from web

  

Continental gets modified DOT approval to enter the Star Alliance, a cooperative agreement with 9 other airlines for international routes.

OIL: IEA, representing consumer countries, says oil demand will recover in 2010 after 2 years of decline – implies higher prices for airlines before recovery begins.

OIL: Prices may fall in the short term as recession and payroll cuts reduce demand.

OIL: Commodity Futures Trading Commission may set limits on the speculation that takes place in oil futures traded on markets that are not regulated (Dark Markets).

Oil speculation, based on the physical withholding of oil from the market, in the form of high inventories is driving up prices says Paul Krugman, New York Times (NYT).

Oil inventories are bulging, with huge amounts held in offshore tankers as well as in conventional storage. NYT

Oil: The assumptions justifying inventory hoarding; that a vigorous recovery is just around the corner, & demand will shoot up, look less reasonable by the day. NYT

VALUATION:  Based on fair market value the US Treasury is getting 66 cents on the dollar for

TARP warrants sold back to banks.

CHINA: Exports decline for the 8 month in a row as the economic recovery relies on the domestic stimulus.

Airbus & Boeing new aircraft orders collapse in the first half of 2009 as cancellations surge.

Airbus & Boeing gross orders were 69 new aircraft after 106 cancellations and 175 orders of which 90 were for Airbus & 85 went to Boeing

Airbus & Boeing delivered 500 new aircraft in the first half of 2009 vs. 486 in the same period in 2008.

B787: Boeing completed a six hour low-speed taxi test and maximum braking rejected take-off test on July 7th.

B787: Test aircraft remain grounded and prohibited from undergoing high-speed taxi tests until the wing to center wing box connection reinforcement action is completed. 

Lockheed Martin F-22 needs 30 hours of maintenance for every flight hour. Maintenance cost per hour is $44,000, higher than for the aircraft it replaces.

BUSINESS JETS: Used jets on the market have dropped for the first time in 18 months, possibly signaling the bottom says UBS Securities.

BUSINESS JETS: The number of jets listed for sale dropped by 2% in June, though the backlog is still 48% higher than the same month last year.

Delta Air Lines and Australia's Virgin Blue announced a code sharing agreement & coordination of frequent flier benefits.

Delta Air Lines and Australia's Virgin Blue will seek regulatory approval for a joint venture across the Pacific.

American Airlines has announced code share agreements with Brazil's GOL Airlines and Etihad Airways, the flag carrier of the United Arab Emirates.

Deep cuts in capacity should allow U.S. carriers to avoid bankruptcy in 2009 says AirlineFinancials.com.

Fares that are reaching 15-year lows will have to rise for airlines to remain viable in the long term.

The Airlines Reporting Corporation (ARC) says total airline ticket sales dropped to $5.7Bn in June down 20% from June 2008.

Airline sales, including taxes and fees, reported by ARC-appointed agencies fell almost 25% in the first half of 2009.

ARC reported that more than 99% of all airline tickets sold in June were e-tickets.

BA: Moody's Investors Service cut its rating on BA to junk status (Ba3) but stable citing weakening travel demand and higher fuel prices.

Allco Finance: New owner HNA (China) may have to purchase SPC’s to get control of the 68 aircraft in the portfolio.

Biman Airlines (Bangladesh): Returning 2 leased B737-800s, to lease 3 B777-200ERs in October as DC-10s near retirement.

Oil speculation, based on the physical withholding of oil from the market, in the form of high inventories is driving up prices says Paul Krugman, New York Times (NYT).

Oil inventories are bulging, with huge amounts held in offshore tankers as well as in conventional storage. NYT

Oil: The assumptions justifying inventory hoarding; that a vigorous recovery is just around the corner, & demand will shoot up, look less reasonable by the day. NYT

HAFTHOR Hafsteinsson, chairman of Avion Aircraft Trading died in a private aircraft accident in. He grew Avion to a fleet of 60 aircraft.

European Court of Justice fined Greece $2.9M for not recovering illegal state aid from Olympic Airways, now Olympic Airlines.

•The Greek government gave Olympic $60M in 2002 as part of a failed attempt to restructure the carrier.

•The European Commission ruled that the aid was unlawful and demanded that Greece recover the money.

•The new privatized company will start flying as Olympic Air on 1 October.

IMF projection of global economic contract in 2009 and weak growth in 2010 pushes back airline recovery to 2011. www.aviationregister,biz

IMF increased its estimate for global economic growth in 2010 to 2.5%, a figure too low to sustain employments levels.

IMF downgraded its estimate for global economic contraction in 2009 to 1.4%.

G8 countries agree that economic recovery is too weak to withdraw economic stimulus efforts.

CIT Group, a bank holding company & a leading aircraft lessor and lender is urging the FDIC to allow it to issue government backed debt to allay financial concerns.

CIT is seeking funding under the FDIC’s Temporary Liquidity Guarantee Program (TLGP).

CIT lends to an estimated one million businesses and could be considered as too big to fail.

CIT's long-term Issuer Default Rating (IDR) is downgraded to 'BB+' from 'BBB' and the Rating Outlook for CIT remains Negative.

Fitch downgraded CIT debt because of risk that it may not be able to service its debt beyond April 2010.

CIT will need to refinance $10Bn of debt over the next 18 months.

CIT: Pressure on asset quality and liquidity reduced financial flexibility, says Fitch Ratings.

Gulf banks, including some who participate in the aviation financing industry, face rising defaults and debt restructuring says Alvarez & Marsal

ALCOA, a key aerospace supplier, lost $454M in Q2 and was cash flow negative for the 8th of 10 quarters raising concerns about debt load.

ALCOA has a $1.9Bn revolving credit line due before the end of 2009.

ALCOA: 3rd quarterly loss in a row is evidence of slumping orders from key customers in the aerospace, automotive and construction industries.

ALCOA, the largest U.S. aluminum producer, suffered as the global recession continued to dampen demand and prices for the lightweight metal.

Air traffic controllers in the US ask a mediator to settle a pay dispute after pay talks fail.

Regional aircraft.  Regional aircraft manufacturers booked more firm orders than Airbus and Boeing.

ATR, Bombardier, Embraer & Sukhoi won firm orders for 77 aircraft (or 56% of total) vs.

•Airbus & Boeing with 60 firm orders (44% of the total).

Embraer sees a turnaround in the commercial jet market by 2011 but it could be more than 5 years before corporate aircraft deliveries return to the 2007 peak levels.

Embraer may close the Harbin China production line for the 50-seat ERJ145 regional. The production contract expires in 2011,

Aviacsa, operator of 26 aircraft, grounded by the Mexican government for the 3rd time in a month, Owes $22M in navigation charges.

Air Berlin: revenue per available seat kilometer increased 14% in June.  Pax fell 5% to 2.5M

Air Berlin: the number of pax carried from Jan to June 2009 fell by 5.8 percent to 12.7M.

Austrian Airlines sub Austrian Arrows is to remove 14 CRJ200s from its fleet of 55 aircraft. Part of a restructuring plan. 

Hawaiian Airlines traffic rose in June by 7.4% and is up 1% for the first six months of 2009.

Tassili Airlines (Algeria) signs contracts to buy 3 ERJ-190 regional jets in additional to the 4 B737-800 announced

SunExpress orders 6 B737-800s from Boeing worth $460M (list price). Operates 18 aircraft today.

Comair (regional airline) tells staff to expect more layoffs because of service cuts coming in September by parent Delta Air Lines.

Cargo B (NYK Group) (Belgium), established in ‘07 with B747-400s to shut down due to lack of sufficient investment to sustain operations & weak cargo demand. 

Boeing bought the Vought Aircraft Industries manufacturing operations, part of the B787 supply chain, from Carlyle Group because of financial problems, not production glitches. 

A350 aid: British parliamentary committee told that the UK made a fresh offer of financial assistance for the A350 project. Amount not specified.

A400M: Britain may not be part of any renegotiated contract for the Airbus SAS A400M military-transport plane says British Defense Minister Quentin Davies.

H2: The world's only piloted aircraft (glider) using fuel cell propulsion technology took off from Hamburg airport on Tuesday on its first public flight.

The purpose H2 test flight is to proving that hydrogen-powered transportation is not a pipe dream.

The H2 is completely CO2-free and considerably quieter than conventional gliders, and it represents a major leap in fuel cell technology.

The H2 test aircraft reached a speed of 105 mph and work is underway to raise that to 180 mph.

B737 AD: FAA issues a final AD for more than 500 B737-100 though -500 to replace wire bundles in the outboard landing light and fuel shutoff valve wire harnesses within five years at a total cost of $13M fleet-wide.

FAA inspections: EU regulators may take retaliatory action if the US government requires the FAA to inspect Part 145 foreign repair stations at least twice a year

EASA could carry out oversight of all 1,233 US repair stations in the US that are EASA 145 approved but are now supervised by the FAA.

France may wants to transfer technology to Brazil to help develop its military aircraft industry.

US airlines traffic fell 8.6% in the first 6 months of 2009, now down for 13 months in a row.

•Aircraft are full because airline downsized capacity by 5% to 10% since January.

•Costs cuts not keeping up with revenue loss.

•US carriers have withdrawn 500 aircraft and cut 31,700 jobs since January 2008 to reduce costs as ticket prices fall. 

XL Insurance, the global insurance operations of XL Capital Ltd is expanding its US Aviation operations with four new appointments to its New York-based underwriting team.

Passenger revenue fell for some airlines by 26% in May, the 7th consecutive down month, passengers dropped 9.5 percent, says ATA.

Fares for travel in June are 63% lower than last summer, according to an analysis by farecompare.com

Logistics spending in the US fell to $1.3Tn in 2008 for the 1st time in 6 years. Fell   by $49Bn from 2007, says Council of Supply Chain Professionals' (CSCMP)

Business logistics costs rose by more than 50% from 2002-2007.

Business logistics costs fell to 9.4% of US GDP in 2008 down from 10.1% in 2007.

Rail carloads in North American were down nearly 20% through May says the Association of American Railroads

Cargo volumes may drop more than 10% in ‘09 and report no cargo growth in 2010, says A.P. Moeller-Maersk A/S, the world's largest container shipper.

Load factors are good for US carriers as capacity is cut but revenue per seat mile flown is falling because of lost business travel revenue.

Boeing wins order for 4 B737-800s (value $228M at list) from Algerian carrier Tassili Airlines, a sub of state-run oil & gas company Sonatrach; transports oil and gas personnel.

Boeing would be challenged to deliverer a larger aerial-refueling tanker the same schedule as the A330 offered by Airbus.

B777 has yet to be developed for military applications as had the previously offered tanker proposal, the B767  

If schedule is the most important thing to the tanker procurement officials then the A330 tanker is what they want and Boeing has a challenge to deliver the B777 alternative.

The aerial tanker contract is valued at $35Bn.

B 777 tanker would carry 23% more fuel, 44% more payload & 42% more passengers than the A330 tanker but may not use the GE engines now on the B777.

American Airlines warns that an effort by the U.S. DOJ to sway DOT policy on airline alliances threatens the landmark liberalization pact with the EU.

S&P 500 Q2 profit outlook predicts an overall drop of 34% vs. a year ago, with Q3 decline forecasted at 21% decline.

Manufacturing and service sector reports show signs that the 18-month-old U.S. recession, the most protracted in decades, may soon bottom.

U.S. service sector was shrinking in June but at a slowing pace with activity at the highest since 9/2008

The services sector represents 80% of the U.S. economy including airlines, hotels, restaurants & banks.

Institute for Supply Management says that for its index the 50-level divides contraction from expansion.

Institute for Supply Management (ISM) said its index of the service sector rose to 47.0 in June from 44.0 in May but it is still not indicative of a definite turnaround.

DOJ looks into whether U.S. telecoms companies AT&T Inc. & Verizon Communications are abusing the market power pointing to the Obama administration's stance on antitrust enforcement.

BA’s 2,000 cabin crew voted unanimously to reject the airline’s cost-cutting plans. May strike in 5 weeks time, peak of UK travel season.

BA made a profit of $1.5Bn in the 2007/08 financial year but lost a record $642M in 2008/09.

AirAsia, Southeast Asia’s largest low-cost carrier, may sell all of a new 20% stock issue in August to single fund or tourism industry investor as part of a plan to reduce debt

Indonesia has taken steps to remedy air safety shortcomings in order to comply with ICAO standards.

European Commission banned all 57 Indonesian carriers from entering the EU airspace following a series of accidents in July 2007.

Garuda is to resume flying to Europe in 2010 as the EU Air Safety Committee recommends lifting the flight ban on Garuda & 3 other Indonesian carriers.

EU Commission could allow Garuda, Mandala Airlines, Airfast Indonesia and Prime Air to fly in EU airspace within 20 days.

Republic Airways downgrade: Equity-research firm Avondale Partners cut its price target for Republic Airways to $4 a share from $19 due to the riskier business model & the purchase of Frontier & Midwest.

The 9 Major U.S. carriers may have a combined Q2 loss of $1Bn vs. previously expected $600M loss says FTN Equity Capital, New York.

Etihad Airways (Abu Dhabi) and Cyprus Airways plan a new code-share agreement.

Aer Lingus reported a 7.5% increase in passenger numbers in June compared to June 2008.

Aer Lingus carried 1M passengers in June, short-haul flights were up 11% to 0.92M, long-haul passenger numbers were down 14% to 0.11M.

American Airlines traffic fell 8.1% in June.

United June traffic fell 7.5%. Improved business at regional affiliates failed to offset dropoffs on domestic and international routes.

US Airways traffic fell 4.1% in June.

Insurers of aircraft likely posted their biggest monthly loss in June since 9/11.

Insurers may need to raise prices for the rest of the year to help cover losses.

GAMA says GA aircraft deliveries fell 41.1% in Q1 of 2009 compared to the same time period last year.

GA aircraft deliveries in Q1 totaled 462 vs. 785 for Q1 of 2008.

Business jet deliveries fell by 35.7% from 297 in Q1 2008 to 191 in Q1 2009.

GA turboprop deliveries increased from 89 in Q1 2008 to 92 in Q1 2009.

Piston aircraft deliveries fell 55.1% from 399 in Q1 2008 to 179 in Q1 2009.

Bank regulation:  U.S. to downsize banks so that they are no longer too big to fail. Will need to hold more assets and more cash as cushions against failure.

Hotel occupancy rates at the lowest level in 70 years signals a weal summer season for air travel revenues.  www.aviationregister.biz

The Lehman Brothers liquidator says he has $12Bn in cash to cover $100Bn+ in claims plus an unknown liability in derivatives claims.

Fuel price volatility hurts airlines: Oil price was $145 p/b in June 2008, fell to $33 p/b in Dec. 2008, back at $70 p/b in June 2009.

Oil prices trending towards IATA's $60 p/b break-even target in July 2009 but too late for Q3 airline earnings.  www.aviationregister.biz

Safety: IATA says the total number of airline accidents worldwide in 2008 was 502, down from 692 accidents in 2007.

Alaska Airlines passenger traffic fell again in June. Rev. pax fell by 9% to 1.4M vs. 1.54M in 2008.

Alaska Airlines demand: Rev. pax miles fell to 1.6Bn vs. 1.7Bn in 2008.

Alaska Airlines supply: Available seat miles fell by 4% to 2Bn vs. 2.1Bn a year ago. year ago. www.aviationregister.biz

Horizon Air passenger traffic fell in June. Rev. pax fell by 10% to 608,000 vs. 678,000 a

Horizon Air demand: Rev. pax miles fell 9% to 226M vs. 248M a year ago.

Horizon Air supply: Available seat miles fell by 11% to 284M vs. 319M in 2008

Pax  satisfaction:  72% of pax are satisfied with low cost airline service vs.  62% for the Majors. Baggage fees are THE concern.  North American Airline Survey, JD Powers & Associates.

Air Safety Commission (ASC) of the EU recommended revoking air travel ban on 4 of 51 restricted Indonesian airlines.

ICAO & EU considers a new global blacklist of aircraft unfit to fly.

Spirit Airlines buys Air Jamaica

•Jamaican Prime Minister Golding says Air Jamaica is losing $141M a year.

BA is to cut spending by 20% to $960Bn from $1.2Bn deferred its order for 12 A380s to 2012 through 2016. 

BA passenger traffic dropped 5% in June.

BA and its partner in the USA American Airlines have a combined market value of $3.43Bn, 42% of Ryanair’ market value.  

AirTran Airways traffic, capacity and load factor fell in June vs. the same month last year.

Air Tran flew 1.76Bn RPMs, down 6.5% from 1.89Bn it flew in June 2008.

EU regulators to take 90 extra days to examine the Lufthansa-Austrian merger on antitrust grounds and concerns over price. www.aviationregister.

Air France-KLM's Q1 revenue fell 20% on an 18% drop in traffic and a 35% fall in cargo.

•Air France-KLM's fiscal year 2008/09 (March) Q4 revenues fell 12.2%.

•Air France-KLM will not return to profit again until the 2011/12.

FlyDubai, Dubai gov owned LCC financed 4 B737-800s, value $320M, via GE Capital, delivery 2009. 50 on order ($4Bn).

Austrian Airlines to struggle if the EU decides to extend the Lufthansa merger and the $702M government aid by 90 days.

Lufthansa threatened to cancel the merger with Austrian Airlines if the EU does not approve the plan by the 1st of July 2009.

East Star Airlines, China, private A319 operator, was ordered by the courts to stop flying in March, now hopes for creditor takeover.

U.S. economy lost 467,000 jobs in June vs. 325,000 economists expected. Unemployment rate is 9.5%, the highest level since August 1993.

Unemployment rate globally plays into the dropping consumer confidence acting as a drag on travel demand. 

JetAmerica (Fla.) is delaying start-up for a month due to problems securing landing and takeoff slots at Newark. Refunding passengers. register.biz

U.S. Court of Appeals affirmed injunction in favor of Mesa Air Group Inc. blocking Delta  from terminating a regional service agreement.

Continental Airlines Inc. says its traffic fell 6.5 percent in June and a key revenue measurement tumbled by about one-fifth amid a continuing slump in business travel.

Continental said late Wednesday that paying passengers flew 8.07 billion miles in June, compared with 8.63 billion miles in the same month last year.

Continental revenue per available seat mile fell 20% compared with a year ago. 1st half traffic fell 8.7% & capacity fell 7.5%.

U.S. airlines have tried to raise fares in recent weeks to prop up their revenue and cover rising fuel prices. Continental estimated it paid $2.07 a gallon for fuel in the second quarter and $2.18 in June, up from $1.99 in May.

Shares of Continental rose 46 cents, or 5 percent, to $9.68 in morning trading Thursday.

All Nippon to issue shares to raise $1.9Bn to shore up its finances and buy 5 more B787s.

U.S. Lawmakers scrutinized F AA oversight of commercial airlines at a hearing on Capitol Hill.

FAA missing inspections at airlines. Criticized over voluntary airline safety plan.

Boeing delivered 125 aircraft in Q1 and 246 aircraft year to date.

Amerijet International, Inc. today announced its acquisition of a majority interest in Nations Express, a nationwide express trucking company based in Charlotte, NC. Nations Express operates a fleet of approximately 200 trucks in a unique express charter truck service.

Airline mergers are at the center of the US DOJ antitrust division goal to preserve competition to the maximum degree.  www.aviationregister,biz

Analyst predicts airline revenues fell 17% in Q2 and will fall 13% for the full 2009 fiscal year. FTN Equity Capital Markets Corp.

Air traffic controllers who direct planes in and out of Chicago's O'Hare International Airport have too little time off between shifts,

US DOT audit criticized the FAA for not acting sooner to alleviate air controller fatigue at three of the busiest air traffic facilities in the USA contributing to fatigue & safety risks. 

Continental to sell $390M in 9% equipment notes due 2016 to finance 12 used & 5 new Boeing aircraft.

Continental notes: Wilmington Trust Co & Wells Fargo Bank participating in the deal.

Continental June traffic fell 6.5% from the same period a year ago revenue yield fell 20% in Q2.

Safety: Worldwide 71,900 aircraft departures carry 6.2M pax daily, in the USA 29,700 departures carry 2M pax daily.

BA is to cut spending by 20% to $960Bn from $1.2Bn deferred its order for 12 A380s to 2012 through 2016.  www.aviationregister.biz

BA passenger traffic dropped 5% in June.

BA and its partner in the USA American Airlines have a combined market value of $3.43Bn, 42% of Ryanair’ market value.  

AirTran Airways traffic, capacity and load factor fell in June vs. the same month last year.

Air Tran flew 1.76Bn RPMs, down 6.5% from 1.89Bn it flew in June 2008.

Wilmington Trust has no credit exposure in the SEC filed Continental $390M financing of 12 aircraft as serving solely in trust and agency capacities.  

Delta's $5 billion in liquidity, and lower costs, provides the carrier with a bigger margin of safety than most of its legacy carrier competitors, Warlick wrote.

EU transport commissioner announced he would start consultations on a worldwide aviation blacklist. www.aviationregister.biz

EU's regulation of aviation has now hit an all time low placing passengers at an unacceptable level of risk. Source AEI.

The Yemenia A310 that crashed had been banned in France since 2007 after failing security checks.

BA traffic switching to Ryanair.  BA carried 2.93M passengers in June own 5%, Ryanair carried 5.8M passengers in June up 13%.

Air India staff staged a nationwide strike on Friday to protest management's failure to pay salaries on time.

An airplane must move fast enough to generate the aerodynamic lift force that holds its weight aloft. The stall speed is the minimum for flight. Stall speed increases with altitude because the atmosphere becomes thinner. The stall speed for the AF447 Airbus A330-200 at 35,000 feet was 759 kph (472 mph).

Aircraft are designed to fly at high subsonic speeds because supersonic travel requires much higher fuel consumption.

Aircraft have swept wings that remain behind the curved pressure wave the airliner’s nose plows before it, and which becomes a shock wave when the airplane moves at or above the speed of sound.

CSA Czech Airlines downsizing. To end trans-Atlantic flights as part of an “acceleration of its 2009 Action Plan”.

The two bidders for CSA remain for the privatization of CSA Czech, Czech Unimex Group and Air France KLM, are to get more time to finalize their offers and consider their options.

CSA Czech will reduce services on some European routes.

CSA Czech will use its 2 A310s for charter flights.

AviationRegister   E-Xpert Witness Journal

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

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Headline News was last updated: December 19, 2009

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