HSBC Global Research: AirAsia Earnings Plans Rise Joint Venture with Domestic Firm to Develop By Domestic Business

The earnings of AirAsia, the leading low-cost carrier in Asia is supported by Malaysia’s domestic business, says HSBC Global Research.

In its research note on “Asian Airlines”, HSBC Global Research said AirAsia’s planned listing of joint ventures in Indonesia and Thailand, will help reduce strain on the balance sheet.

“The prospects of contributions from joint ventures listing is rising,” it added.

On the risk side, HSBC Global Research said a strengthening of the US dollar versus the ringgit, will negatively impact business.

“Earnings are sensitive to a further rise in fuel prices,” it added.

HSBC Global Research has a overweight call on AirAsia.

On the airline industry, HSBC Global Research said economic uncertainties and collapsing share prices, normally signal the best time to revisit the Asian airlines.

“Timing the cycle will be more complicated than in the first quarter of 2009, but similar valuations suggest stocks are attractive,” it added.

The focus of HSBC Global Research was on Asian premium carriers, namely Cathay Pacific Airways and Singapore Airlines.

It has upgraded Cathay Pacific to an overweight from neutral amid its strong home base, which is the best positioned gateway into southern China, while the weakening Hong Kong dollar should provide a superior medium-term outlook.

HSBC Global Research also upgraded Singapore Airlines to neutral from underweight as it believes the airline will remain profitable over the next year due to its strong brand and high margin at home.

Airbus Delivered Five A380 to China Southern Airlines

Airbus has delivered the first of five A380s to China Southern Airlines (CZ), the first A380 operator in China.

Powered by Rolls-Royce Trent-900 engines, the aircraft will be initially operated on domestic routes between Beijing, Shanghai and Guangzhou. Later on, the airline will deploy the A380 on international routes.

“We are proud to become the first A380 operator in China,” said CZ chairman Si Xianmin. “The introduction of the A380 in our fleet is a very important step for the development of China Southern. The economics offered by the A380 will undoubtedly improve our competitiveness on international routes and is the perfect asset to make China Southern Airlines achieve its goal of becoming a leading global carrier,” he said.

All Nippon Airways Immediately Operate Boeing 787 Dreamliner Aircraft

Plane-maker to celebrate in Everett, Wash., but experts note plenty of challenges ahead for Chicago-based Boeing.

Boeing marks a milestone in its long history Sunday when the aircraft-maker officially delivers the first Dreamliner, a twin-aisle plane that offers the best fuel economy and range for a craft its size and promises passengers far greater comfort while flying.

“It’s a very big deal, not just for Boeing but for the airline community,” said Aaron Gellman, professor of transportation at the Kellogg School of Management at Northwestern University.

The journey to delivering the 787 aircraft, which sells for about $185 million, has been long and problem-plagued for Boeing, which this month marks the 10-year anniversary of moving its world headquarters to Chicago.

Sunday’s contractual delivery of the plane to All Nippon Airways and a celebration on Monday in Everett, Wash., come about three years late because of design and construction problems. Those troubles earned the 787 jet the unflattering nickname “7-late-7.” ANA originally ordered the plane in 2004 for delivery in 2008.

Delays haven’t hurt sales, however. Boeing said it has more than 800 orders from 56 customers around the world.

While the 787 aircraft itself is a big deal, the celebration around finally delivering the first one is more fanfare than progress, said Richard Aboulafia, aircraft and aviation analyst with Virginia aerospace market analysis company Teal Group. More work lies ahead for Boeing, which will be pressed to deliver on its promises for the much-ballyhooed plane, he said.

“They have so many more challenges ahead of them,” he said. Chief among those are figuring out how to build the plane at a profit — Boeing will likely lose money for years on the ones it builds initially — and ramping up production to the rate of 10 planes per month by 2013.

The Dreamliner is the most technically advanced commercial aircraft ever built, and its information technology systems have been a selling point for Boeing, along with the jet’s lighter, largely composite structure, which promises greater fuel efficiency and creature comforts. The first version will hold 210 to 250 passengers; a typical 737-size plane holds about 150. A subsequent version will carry nearly 300 passengers.

For passengers, there’s the industry’s largest windows and overhead bins. The smoother-riding and quieter plane will have wider aisles and seats, lower cabin pressure and cleaner air using a filtration system that will remove offensive odors. The windows will even be dimmable, via electrochromatic window shades rather than physical pull-down shades. Boeing says these features combine to allow passengers to arrive at their destinations more refreshed.

For airlines, the midsize 787 offers fuel economy and the ability to fly long range.

If it lives up to expectations, the Dreamliner would burn 20 percent less fuel than other midsize jets but boast the range of far larger aircraft: 7,650 to 8,200 nautical miles. That would enable carriers to bypass airport hubs and directly connect city pairs, like Auckland, New Zealand, and Houston, that otherwise wouldn’t generate enough passenger traffic to fill jumbo jets.

“It is going to enable airlines to fly between points that they never served directly before,” Gellman said.

Air India Plans Purchase 27 Dreamliner Aircraft from Boeing

Air India has decided to go ahead and purchase the 27 Dreamliner aircraft from Boeing despite poor financials and doubts about its ability to repay the 17,000-crore loans needed for the planes.

The Air India board, which met in New Delhi on Thursday, agreed that the 27 aircraft are essential to expand operations and swing the airline back into profitability. Rohit Nandan, the chairman and managing director, said that the board has recommended purchase but declined to elaborate. The recommendation will now be discussed by the group of ministers (GoM) who will take the final call when they meet some time next month.

The national carrier’s fortunes have plummeted in recent years, thanks to rising fuel prices, the global slowdown and a hastily-arranged, ill-advised merger with Indian Airlines. Its monthly loss ( 600 crore) is equivalent to the market cap of a small-cap company and its brand image has been badly dented by a series of mishaps both in the air and on the ground. It has accumulated losses of 13,000 crore.

A number of people, including the civil aviation minister, Vyalar Ravi, have raised doubts about the airline’s ability to pay for the purchase. Talking to ET a few days ago, Ravi had said that Air India does not have the money. “Well, everybody knows about the financial health of Air India. That is precisely the reason I say AI simply does not have the funds to pay for the Dreamliner Boeing 787 aircraftâ that is the fact,” he told ET two days ago.

Though Boeing has offered help in the form of loans at low rates from US Exim Bank, Air India’s current financial predicament could impair its ability to service the loan. Its debt burden of 43,000 crore is likely to swell to an unmanageable 60,000 crore after the Dreamliner buy.

But the other big problem is that orders have already been placed and the aircraft is likely to be delivered in the next few months. Cancelling or restructuring the order now will be an extremely time-consuming and controversial exercise apart from leading to a diplomatic row between India and the US.

One AI member said that the board discussed the cost and the need for more aircraft. “Air India wants the Dreamliners but there are issues about repayment. Who’ll pay for the loans remains the bone of contention,” he said on condition of anonymity.

Thousands Airline Passengers Failed to Fly As Qantas Airlines Workers Continue Strike

At least eight flights and some 1,300 passengers have been affected by another workers’ strike at Australian air carrier Qantas, the second this week.

In report by the Australian Business Traveller, the following flights were affected:

* QF449 Sydney-Melbourne: cancelled
* QF462 Melbourne-Sydney: cancelled
* QF627 Brisbane: Melbourne: 55 minutes delay
* QF634 Melbourne-Brisbane: 50 minutes delay
* QF453 Sydney-Melbourne: 10 minutes delay
* QF481 Melbourne-Perth: 45 minutes delay
* QF455 Sydney-Melbourne: 10 minutes delay
* QF466 Melbourne-Sydney: 10 minutes delay

Members of the Australian Licensed Aircraft Engineers Association (ALAEA) are currently holding a one-hour work stoppage in Melbourne on Friday.

The workers are striking over pay and claims, alleging Qantas management is trying to move Australian jobs elsewhere.

Qantas engineers have been holding work stoppages for some time.

Earlier this week some 4,000 ground crewmembers staged a strike.

At least 6,000 passengers were affected after more than 50 schedule changes and 28 cancellations were made by Qantas management.

Delta Air Lines Profit Forecast Review by Evercore Partners

Equities research analysts at Evercore Partners raised their earnings per share estimates on shares of Delta Air Lines in a research note issued to investors on Wednesday. They currently have an “underweight” rating and a $8.00 price target on the company’s shares.

Separately, analysts at Barclays Capital cut their price target on shares of Delta Air Lines from $16.00 to $14.00 in a research note to investors on Thursday, September 1st. They now have an “overweight” rating on the stock. Also, analysts at Dahlman Rose upgraded shares of Delta Air Lines from a “hold” rating to a “buy” rating in a research note to investors on Monday, August 1st. They now have a $10.00 price target on the stock.

Delta Air Lines, Inc. (Delta) provides scheduled air transportation for passengers and cargo throughout the United States, and around the world. The Company’s route network is centered on the hub system it operate at airports in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York-JFK, Salt Lake City, Paris-Charles de Gaulle, Amsterdam and Tokyo-Narita. The hub operations include flights, which gather and distribute traffic from markets in the geographic region surrounding the hub to domestic and international cities and to other hubs. The network is supported by a fleet of aircraft, which is varied in terms of size and capabilities. On December 31, 2009, the Company’s wholly owned subsidiary Northwest Airlines, Inc. (NWA) merged with and into Delta. The wholly owned subsidiary of the Company is Northwest Airlines Corporation (Northwest). In July 2010, Pinnacle Airlines Corp. acquired Mesaba Aviation, Inc. from Delta Air Lines.

Delta Air Lines last announced its quarterly results on Wednesday, July 27th. The company reported $0.43 earnings per share (EPS) for the previous quarter, missing the Thomson Reuters consensus estimate of $0.49 EPS by $0.06. The company’s quarterly revenue was up 12.1% on a year-over-year basis. On average, analysts predict that Delta Air Lines will post $0.09 EPS next quarter.

Shares of Delta Air Lines traded up 5.01% during mid-day trading on Thursday, hitting $8.39. Delta Air Lines has a 52 week low of $6.41 and a 52 week high of $14.54. The stock’s 50-day moving average is $7.35 and its 200-day moving average is $9.20. The company has a market cap of $7.098 billion and a price-to-earnings ratio of 25.61.

Spring Airlines Allowed to Serve Shanghai-Beijing Flight Route

Well, we sure didn’t see this one coming. Budget carrier Spring Airlines has finally been allowed to fly the highly lucrative Shanghai-Beijing route.

This will no doubt be welcome news to frequent travellers between the two cities as flight ticket prices on the sector have sprung back to pre-high speed rail rates in the aftermath of the Wenzhou train crash.

Still, by giving the airline the rights to only one round trip per day, the civil aviation authority seems to be only willing to take baby steps. Spring Airlines will depart from Shanghai daily at 6am and return to the city at 12pm.

Ticket prices will cost as low as RMB399 (all taxes in), but as is the case with budget airlines, you’ll need to book early to enjoy those special rates.

All Nippon Airways First Airline to Use Boeing 787 Dreamliner

All Nippon Airways is all set to become the first airline with Boeing 787 Dreamliner in its fleet. After developmental delays of almost three years, the first 787 is due for delivery to the Japanese flag carrier next month.

On Monday, the first Boeing 787 Dreamliner for All Nippon Airways rolled out of the paint hangar at Boeing’s facility in Everett, close to Seattle in the United States.

To celebrate the event, the aircraft was painted in bespoke white and blue colours, signifying Boeing’s 787 Dreamliner brand and ANA’s service goals. UK carriers, Thomson Airways and British Airways are among other international airlines that have placed orders for the 787 Dreamliner.

Boeing 787 Dreamliner will be configured by All Nippon Airways for use on short-haul international flights. However, to smooth the progress of staff training the aircraft will be deployed on domestic routes in the beginning.

On domestic routes, the aircraft will feature 12 Premium Class seats and 252 standard class seats. On long-haul international flights, Boeing 787 Dreamliner will have a total of 158 seats, including 46 Business Class seats and 112 Economy Class seats. On short-haul international flights, the Dreamliner will have 222 seats that will include 42 Business Class seats and 180 Economy Class seats. Travellers who seek cheap air tickets on flights will have more options once the Boeing 787 spreads its wings.

All Nippon Airways will fly the commemorative first commercial flight as a charter service from the Narita International Airport, Tokyo to Hong Kong. The 787 Dreamliner will then operate scheduled air travel services on the Haneda-Okayama and Haneda-Hiroshima routes.

Mitsuo Morimoto, Senior Executive Vice President of ANA was present at the aircraft roll out in Seattle. Mitsuo Morimoto is also handling the airline’s Operations & Airport Services, Corporate Safety and Audit.

Mr. Morimoto was quoted in the company’s press release as stating: “We intend to use the Dreamliner to expand our business, particularly our international routes. We are aiming to increase our revenues from international operations significantly and the 787 will play an instrumental role in this.” Mr. Morimoto also emphasised on the airline’s focus on customer satisfaction. He remarked, “We want to be number one in Asia, not just in passengers and revenues, but also in terms of quality, customer satisfaction and value creation. Becoming the 787’s launch customer was a strategic management decision designed to help us reach that goal.”

Airlines Jobs : SkyWest Airlines Plans to Cut 170 jobs from Salt Lake City Airport

SkyWest Airlines has announced it will cut 170 positions from its Salt Lake City workforce.

The Deseret News reports that some baggage handler and ticket agent jobs at Salt Lake International Airport will be eliminated.

Airline spokeswoman Marissa Snow says the layoffs are a result of service reductions on several daily flights.

She says the cuts would be effective late next month for the SkyWest employees who serve Delta Connection flights.

St. George-based SkyWest employs about 11,000 workers in more than 160 locations nationwide, including about 3,000 in Utah.

Norwegian Plans to Launch Cheap Direct Flight from Scandinavia to Bangkok, Start 2013

Budget airline Norwegian is planning to launch direct flights from Scandinavi to Bangkok and from Stockholm to New York from the end of 2012 or beginning of 2013, the company has confirmed.The company plans to operate 3-5 flights a week to the US east coast destination which has become increasingly popular among Swedes keen to exploit the weak dollar to meet their shopping needs.

“We are going to maintain our cut price profile even on the long distance flights,” Åsa Larsson at Norwegian told news website svd.se, forecasting that tickets to New York will be sold from around 2,500 kronor ($420).

Sweden’s largest airport operator, Swedavia released figures recently showing that demand for flights to New York had reached record levels and invited more actors to take advantage of the city’s renewed popularity.

Norwegian announced on May 26th that it had signed an agreement to buy three 787-8 Dreamliner aircraft. The firm has a prior agreement to lease a further two planes.

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