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Archive for the ‘Jet Fuel’ Category

Volatility of fuel prices is still an issue with the crude oil taking the highs of around $150 per barrel to the current lows of $42 per barrel. The scare of very expensive oil has caused airlines about alternative fuel and hopefully with current lows, the effort will not fade.

On January 7th 2009, Continental Airlines will test the use of a biofuel blend (derived from Algae and jatropha plants) on a Boeing 737-800 with nobody on board except for the test pilots. The test pilots “plan to run one engine on the biofuel blend and take it through power
accelerations and slowdowns, in-flight engine shutdown and restart and
other maneuvers. The airline said it expected a post-flight analysis
would show that the lower-emission biofuel plan can substitute for
regular fuel without loss of performance or safety.

The test is in partnership with airplane manufacturer Boeing, airplance engine
maker GE, Snecma, Honeywell technology and oil producers Sapphire
Energy and Terrasol.

From MSNBC

An average Continental flight burns 18 gallons of fuel to fly one passenger 1,000 miles.
Alternative fuels for aircraft have been studied for years, but the
push got new urgency this year when jet-fuel prices hit record highs in
July. Fuel is one of the largest expenses for an airline.
Some fuels such as hydrogen lack the acceleration of traditional
kerosene-based jet fuel and would require planes be outfitted with
massive fuel tanks.
Airlines in South Africa use a coal-based fuel blend developed by
petrochemicals group Sasol that doesn’t require altering aircraft
engines or other parts. Air New Zealand is testing jatropha fuel in a
747 jetliner.

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There has been a lot of news recently with regard to big losses realized by airlines in India due to high price of oil, weakening demand, fierce competition causing inability to raise fares to requirements and rapid growth over the past years.

Jet Airways
On Tuesday October 14th 2008, the airlines laid off 850 cabin crew members (total employees – 13,000) and a day later announced plans for laying off another 1,050 across different departments and functions (including pilots and management personnel). The the salary and benefits saving is reported to be around 50 million rupees (around US $1 million). The layoffs caused protests and have caused some political interest in the country. The airline has already announced capacity cuts along with discontinuation of some routes.

From Times of India

“The
number of flights that Jet Airways will offer as part of its winter schedule
will be approximately 15% lower than originally planned. This is inevitable in
view of declining traffic volumes,” Jet Airways’ chief executive officer
Wolfgang Prock Schauer said.

Some international flights — like
on the Mumbai-Shanghai-San Francisco sector — have already been
discontinued. There are plans to withdraw the Amritsar-London service and
postpone the foray into Saudi Arabia.

Kingfisher Airlines
Kingfisher seems to be going the same route with a possibility of a “less painful” (with respect to Jet Airways) layoffs. There are talks about layoffs to come mostly from ex-Air Deccan employees.The airlines is already planning to return 7 aircrafts to the lessors. Also, the airline canceled orders for 3 Airbus A340 aircrafts and deferred deliveries of 32 Airbus A320 aircrafts.

From Times of India

“The last time when they fired 300 employees, they discarded a lot of good talent, which was surprising. However, they did it with much more dignity and grace than what Jet has displayed,” said a former Deccan employee. “This time around, they’re being more careful with who they want to fire.”
Pilots with little or no experience will be the first to go, while more experienced hands will be retained. “It’s the cabin crew that will be axed mercilessly and that will most certainly be from the Deccan side. As it is, Kingfisher has always looked down upon the Deccan staff, particularly the cabin crew. Their cabin crew are projected as models and they will not sack them as easily. There is a lot of panic among the Deccan cabin crew girls and they’ve been sending out their resumes to a lot of international airlines since hiring has seen an overall slowdown in all Indian airlines,” said a source.

Air India
Air India, the country’s national airline, announced that it is considering to offer leave without pay to as many as 15,000 employees for a period of up to 5 years. The airline added that the employees who will take this offer will be allowed to return back to same job with same seniority and pay rate. The airline did mention that the reduction plan was not mandatory and is not a retrenchment. It is hard for me to understand why the employees would take this offer unless there is a lay-off plan to follow.

From BBC

Civil Aviation Minister Praful Patel has stressed there were no plans compulsorily to prune staff numbers which currently total about 25,000 people.
“Air India is not going to have any job cuts. Certainly it [the aviation crisis] will affect the growth plans, it will affect the future employment opportunities which would have come the way of Air India in case the aviation industry was in a much better financial health,” Mr Patel told PTI.
“But as of now I do not have the luxury to say [anything] beyond the fact that those who are working for Air India shall continue to do so and we shall not have any issue of people being laid off.”

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On Monday, October 6th 2008, Sun Country Airlines, Mendota Heights Minnesota based airline, filed for Chapter 11 bankruptcy. Last week, I had blogged about the WARN email to their employees and a possible cash crunch. Couple of days back, the parent company, Petters Group Worldwide, “became the target of a federal probe for allegedly defrauding hedge funds“. CEO and Chairman Stan Gadek said that the airline plans to continue on its normal operations. Please note – Chapter 11 bankruptcy allows a company to reorganize its finances with protection from creditors.

The airline was already going through a finance crunch and was trying to bridge in some credit from the current slow times to the profitable winter months. The airline is a small carrier with 9 Boeing 737, but does employ 858 to 1110 workers (normal to peak periods). On a happy note, the airline did not cease to exist and passengers will definitely not be affected!

From Wall Street Journal

Sun Country had planned on a short-term bridge loan from its owner to
get through the slow autumn period and into its heavy winter travel
season.
But that plan fell through after the parent company ran into legal
troubles. Over the weekend, Stan Gadek, Sun Country’s chief executive,
learned that federal authorities were thinking of putting the Petters
companies into receivership. To avoid that fate and keep control of the
airline, which isn’t being investigated by prosecutors, his board voted
to seek court protection instead, Mr. Gadek said.
The airline chief said Monday that Sun Country doesn’t expect any
disruptions because of the bankruptcy filing, which also includes its
parent, Petters Aviation LLC.
“I think it’s a positive move,” Mr. Gadek said. “It removes the
uncertainty and distraction” for employees, customers and airline
vendors. “It’s my goal to attract new capital and ownership to this
company,” he said. “Our business model is not broken. We made money in
July and August.” The companies filed in U.S. Bankruptcy Court in
Minneapolis.

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Sun Country Airlines, a low cost US airline based in Mendota Heights, Minnesota, is fighting to survive a cash crunch. As a federal regulation to send out “WARN” letters, the company send out emails to its employees to prepare for the possibility of major layoffs/ furloughs or a shutdown of the airline – as early as December 1st 2008. The airline did send out a follow up press release to convince passengers that they have no plans to shutdown and in case any flight gets canceled the ticket money will be refunded.

The airline seems to be seeking credit to get into a winter season which the company predicts to be profitable, but with the current credit crunch, it might be a very difficult task!

Best of the luck to the airline!

The text of the letter read –

“I
am providing this Notice in order to comply with federal legal
requirements. As you were notified last week, Sun Country is currently
facing a serious financial crisis.  We are actively seeking solutions
to this crisis and are confident that we will find ways to get through
this.  However, there are obviously risks that no solution will be
found.  With that in mind, in order to satisfy any possible obligations
Sun Country might have under the federal Worker’s Adjustment and
Retraining Act (WARN Act), this is to notify you that should Sun
Country not be able to obtain additional financing or obtain relief
from our major creditors in the near future there is a distinct
possibility that the airline will be shut down and/or you will
be furloughed.  While the timing of this action is not predictable at
this time, you should prepare yourself for the possibility that such a
shut down or furlough could impact your employment as early as December
1, 2008.  Depending on what happens, such an employment loss could
be temporary or permanent and could affect all Sun Country employees or
a subset of employees that includes you.

I
want to reiterate that this is only a conditional or contingent notice
of a pending job loss, and that we are sending this Notice only because
of legal requirements. Sun Country is doing, and
will continue to do, everything within our power to solve our current
financial crisis and avoid a shutdown or mass layoffs.  We apologize
that we are in this uncertain situation but are providing you with the
best notice we can under these very difficult
circumstances.  We will continue to update you on developments
affecting your potential loss of employment as events unfold.  Please
contact me if you have any questions or need additional information
about these matters.”

John Fredericksen
Vice President and General Counsel
MN Airlines, LLC dba Sun Country Airlines

On a October 2 2008, the airline issued a statement –

(more…)

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A new “fractional ownership and block charter company” has been launched (at a launch event at Farnborough Airport) in Europe that seeks to challenge NetJets Europe. The airline is called Jet Republic will be based in Lisbon, Portugal and will fly to more than 1000 airports in Europe (including UK). The company has already placed orders for 110 Bombardier Learjet 60XRs (25 orders and 85 options) worth 1.5 billion dollars. The airline plans to start operations on September 29th 2008.

About the CEO –

  • Name -Jonathan Breeze
  • 36 year old former RAF pilot

Investors

  • Austrian Private Bank
  • European American Investment
  • Consortium of the airline’s clients

Target Clients

  • 3 million ultra-rich population across Europe

(more…)

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New Zealand’s largest airline, Air New Zealand announced that it  will retrofit winglets to its Boeing 767-300ER. The makeover is supposed to cost about 4 million NZ dollar project but is supposed to save around 6.5 million litres (or 1.6 million gallons) of fuel savings with a payback in 3.5 years (and will continue to pay itself for 20 years). The airline is also considering adding winglets to its Boeing 777-200ER fleet as they become available.

About these winglets –

  • The winglets will be 3.4 meter in height.
  • Will increase performance and cut fuel consumption
  • Faster Take-offs
  • Lesser noise
  • Can increase the resale value of the aircraft
  • This refit will be largest ever installed on a commercial aricraft

And More –
Air New Zealand has also decided to install “new Swedish
dryers in all 42 of its jet aircraft.

They will remove up to 400 kilograms of moisture from the floors
and ceilings of aircraft and reduce fuel costs even further.
The electrically powered dryers will be fitted in the
company’s 777s, 767s, 737s and its Airbus SA A320 aircraft.

A lot of US Airlines have fitted winglets on Boeing 737s (look at any of the Southwest airlines’ airplanes). I think the step by Air New Zealand is worth all the praise. Rather than just saving on the fuel bill, their carbon emmissons will be lower, which means that they are doing a great job for the environment for us, our kids and their kids. 

From One News

It’s the mother of all winglets, designed for a jumbo. And while
the four-metre version never made it into production, Air New
Zealand’s chief pilot Dave Morgan wants them on all the airline’s
jets.

“The shape of the winglet reduces the drag, we get more lift,”
says Morgan.

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United Airlines increased the second bag fees to $50 citing high cost of fuel. The fees will start for tickets bough beginning Tuesday September 16th 2008 for travel beginning November 10th 2008 in US or to/from Canada, Puerto Rico and US Virgin Islands.

The fees will not apply to –
1. First/Business Class
2. Premier frequent fliers
3. Active duty military personnel

Funny but hasn’t the crude oil being going down on downward trend from a high of $147 a barrel to almost $96 a barrel? Do we assume that United Airlines has hedged itself at a higher oil price?

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