October 2011 GSW News

Business Buzz

The International Air Transport Association reiterated the aviation industry’s commitment to reducing CO2 emissions and urged the European Union to abandon its plans to include aviation in the EU’s Emissions Trading Scheme to begin next year. IATA invited governments to join industry as committed partners in a global approach to reducing aviation’s carbon emissions that could also include a global ETS or other compensation measures. In related news, The International Air Cargo Association also wants to suspend ETS. TIACA says ETS is inefficient and will drive up air freight costs. TIACA is instead trying to get the EU to go after a carbon emissions agreement with the International Civil Aviation Organization.

At last count, 27 aviation industry groups signed letters to both U.S. House of Representatives Speaker John Boehner (R-OH) and U.S. Senate Majority Leader Harry Reid (D-NV) opposing the $100-per-flight user fee as part of the Obama administration's deficit reduction proposal. The letter encourages Congress to "focus on increasing U.S. international competitiveness rather than viewing the industry as a national piggybank," and states, "Furthermore, we need to increase jobs while ensuring that tax and infrastructure policy are strengthening U.S. aviation and furthering the safety and modernization of the aviation system."

IATA Raises 2011 Profit Projection, But Expects A Tougher 2012

The International Air Transport Association announced an upgrading of its industry profit expectations to $6.9 billion up from $4 billion projected in June. IATA emphasized, however, that despite the improvements, profitability at these levels is still exceptionally weak.

“Airlines are going to make a little more money in 2011 than we thought,” said Tony Tyler, IATA’s Director General and CEO. “That is good news. Given the strong headwinds of high oil prices and economic uncertainty, remaining in the black is a great achievement. But we should keep the improvement in perspective. The $2.9 billion bottom line improvement is equal to about a half a percent of revenue. And the margin is a paltry 1.2 percent. Airlines are competing in a very tough environment. And 2012 will be even more difficult.”

In its first look at 2012, IATA is projecting profits to fall to $4.9 billion on revenues of $632 billion for a net margin of just 0.8 percent.

In other 2011 news, IATA included the following forecasts:

Passenger: Passenger demand has been stronger than anticipated given the gloomy economic outlook. The forecast for the year stands at 5.9 percent growth.

Freight: Air freight has stagnated since the start of the year. IATA slashed its full-year volume growth projection to 1.4 percent from 5.5 percent.

Fuel: Oil prices have remained consistent with the previous forecast of $110 a barrel. This is 39 percent higher than the average 2010 price. A total fuel bill of $176 billion is expected to account for 30 percent of industry costs.

News agency Bloomberg reported last month a sharp decline in cargo shipments in the belly of passenger jets. United’s cargo traffic, for example, plunged 17 percent in August for the fourth straight drop that exceeded 10 percent, while Delta’s cargo was little changed for three months in a row. Meanwhile, American Airlines extended a streak of decreases that began in May.

The U.S. government’s effort to eliminate longer delays on airport tarmacs has made it more likely that airlines will cancel flights, according to a study by the Government Accountability Office. U.S. airlines were 24 percent more likely to cancel a flight in 2010 after the three-hour tarmac delay rule went into effect compared with the previous year, according to the GAO report.

Shares in FedEx, operator of the world’s biggest cargo airline, dropped the most in 2 1/2 years after the company cut its full-year profit forecast amid declining demand in the United States and Asia. Per-share earnings for the year will be $6.25 to $6.75, 10 cents lower than the previous range.

SG Biofuels, a San Diego-based company backed by Airbus, said it will plant 75,000 acres of jatropha in Brazil to power aircraft for about $50 a barrel less than traditional jet fuel. SG Biofuels says it will produce unrefined jatropha oil that will sell for $75 a barrel. Refined jet fuel costs about $126 a barrel in New York Harbor spot market last month.

Denver will become Icelandair's ninth North American gateway next May. The airline will operate four nonstop flights between Denver and Reykjavik.

Vector Aerospace Corporation held a grand opening last month for its newly relocated and expanded engine service center. Vector Aerospace Engine Services Atlantic-Dallas, Grapevine, TX, will offer a variety of specialized services including engine and engine accessory repair and overhaul, hot section inspections, boroscope inspections and field service support for the Pratt & Whitney Canada PT6A, JT15D and PW100 series engines.

KTSDI has opened a new parts and repair shop in Youngstown, OH. Servicing both towbar and towbarless tractors with Kessler axles and Transfer cases, Mobil Elektronik Steer-X-Wire and complete controls, Alfred Heyd tie rods and Neumeister Hydraulik. For more information, log on to www.ktski.com.

At last month’s Deutsche Bank Aviation and Transportation Conference, American Airlines did not rule out the possibility of seeking bankruptcy protection to reorganize its labor agreements.

U.S. Senators John Thune (R-S.D.), ranking member of the Commerce Committee's Subcommittee on Aviation Operations, Safety, and Security, and subcommittee member Mark Begich (D-AK) last month led a bipartisan group of 27 senators sending a letter to the EPA and FAA urging all to work together to find a safe, viable, readily available, and cost-efficient alternative to leaded avgas used by the general aviation community before taking steps to ban the fuel. Leaded avgas is currently used to fuel approximately 150,000 piston-engine aircraft across the nation. Despite ongoing research and testing, there is currently no safe or affordable alternative fuel to leaded avgas that can meet the needs of the GA aircraft fleet and FAA flight safety standards

Business Deals

China Cargo Airlines Launches Service to St. Louis;

Awards Ground Handling Contract to ATS and WFS

Airport Terminal Services in partnership with Worldwide Flight Services has won the aircraft ground handling and cargo warehouse handling contract for China Cargo Airlines’ launch of direct cargo services between Lambert-St. Louis International Airport (STL) and its main base at Shanghai Hongqiao International Airport (SHA).

The new contract commenced with the launch of air services on Sept. 23. The cargo service represents the first phase in an economic development program planned by the Midwest-China Hub Commission, a group of prominent Missouri-based associations dedicated to regional growth through international trade opportunities.

China Cargo Airlines is based in Shanghai and was established in 1998 as China's first all-cargo airline.

“We are immensely excited to be a part of this pioneering opportunity with St. Louis to stimulate a new global trade lane with China,” said ATS President and COO Sally Leible. “We have created a dynamic partnership by combining our 35-plus-year history of operating at STL with Worldwide Flight Services’ specific knowledge of China Cargo Airlines to produce a winning result.”

 

Industrial Energy Products, Inc. has named Ship It AOG as its exclusive national distributor of the HOT-STOP 'L' Fire Containment Bag to the aviation industry. The bag has been tested twice in live fire evaluations at the FAA Tech Center. The HOT-STOP 'L' Fire Containment Bag safely contains fires, explosions and smoke emissions from lithium-ion-powered devices as well as any combustible item aboard an aircraft.

Menzies Aviation LAX has contracted with A&V Rebuilding to remanufacture its existing baggage/cargo tractor fleet. The noncompliant Ford 300 engines are being replaced with New CARB/EPA Certified Ford DSG-423, 2.3L LPG fueled engines.

JetStream Ground Services has been awarded the ground handling services contract for Delta Air Lines at Jackson-Evers International Airport (JAN), Jackson, MS. Providing full below-the-wing support for Delta's 12 daily departures, this represents JetStream's first contract award with the airline. 

Avfuel Corporation has expanded its branded dealer network to include Monterey Jet Center at Monterey Peninsula Airport (MRY), providing the FBO with fuel and service solutions as well as marketing and branding support.

Delta Air Lines’ maintenance division, Delta TechOps, has signed a five-year, agreement with Air Canada to provide repair and overhaul services to the airline’s entire fleet of Pratt & Whitney 4060 engines. 

Lufthansa Consulting helped the Republic of the Congo launch a new airline. Equatorial Congo took off on its premiere flight Sept. 24 between the country’s capital Brazzaville and the port city of Pointe-Noire. Lufthansa Consulting managed the complete startup process and continues to consult with the Congolese government.

ASIG announced in September it was awarded a 20-year license to provide aviation fuel service at Panama’s Tocumen International Airport (PTY). Under the agreement, ASIG will manage and operate the airport’s sole jet fuel facility as well as provide aircraft refueling service to all airlines serving PTY. The company expects to fuel approximately 3,900 flights a month.

Poland’s Chopin Airport (WAW) issued an invitation to tender for the construction, funding and operation of a centralized fuel infrastructure. Currently, only one fuel supplier has the infrastructure needed to provide aircraft refueling. The winning bidder will design, construct, finance and operate the project for a fixed time period in return for fees from service users.

Chorus Aviation Inc. announced a quarterly dividend of $0.15 per Class A and Class B share. Chorus owns Jazz Aviation LP, among other aviation operations.

Swiss WorldCargo is the first airline to partner with a new International Air Transport Association initiative to deploy key IATA managers to airline headquarters. The organization will be the “seconding” staff to Swiss WorldCargo in a development program to enhance IATA’s capabilities in the cargo field and ensure even closer alignment on the key issues facing global cargo. During the placement period, the “secondee” will be exposed to key management functions including revenue management, tracking and tracing, e-commerce activities, operations, security and network management.

Airbus will deliver more than 110 new airplanes to airlines in China this year, accounting for 20 per cent of its total global deliveries. At the end of 2001, Chinese airlines operated only 88 Airbus airplanes. By August 2010, however, Chinese airlines operated 717 Airbus aircraft, including models that accounts for 46 per cent of the total aircraft in China with more than 100 seats.

Embraer S/A expects to deliver 975 new regional jets to China between 2011 and 2030. In its outlook for China's regional aviation market, Embraer forecasts that deliveries to China over the next 20 years will include 15 jets for 30-60 seats, 440 jets for 61-90 seats, and 520 jets for 91-120 seats, accounting for around 13 percent of global market demands.

The maker of China's largest commercial aircraft said it hopes to capture one-third of the country's single-aisle aircraft market in 20 years. Following the first 100 orders for C919s announced last November, the Commercial Aircraft Corporation of China was expected to announce new orders last month at the Aviation Expo China 2011. The corporation says its 150-seat C919 and the 90-seat ARJ21 regional aircraft will be the "main force" for the country’s 55 new airports, which are expected to be built by 2015. China is expected to have a passenger plane fleet of 5,400 planes by 2030, including 3,800 single-aisle jetliners, according to the market outlook released by the corporation.

Two-Thirds Of Russian Airports Need Renovation

About two-thirds of Russia's civil aviation airports need urgent rebuilding and modernization, Transport Minister Igor Levitin said last month. Only 62 percent of the country's 332 airports have runways with an artificial surface, according to his report to the State Duma, the country’s lower house of parliament.

Most of the country’s airports were built 40 years ago. Some 160 billion rubles ($5 billion) was planned to be spent on developing airport ground infrastructure between now and 2015, which would be enough to modernize 70 airports.

Russian Prime Minister Vladimir Putin ordered the government last week to draft proposals on how to solve the problem of Russia's poor air safety records, including improving technical conditions for planes and airports, upgrading air traffic control systems and training crew.

NetJets has signed a long-term lease with Van Nuys, Calif.-based fixed-base operation Maguire Aviation to build a dedicated, private terminal at Van Nuys Airport (VNY). The private-use facility will be custom-designed and operated to NetJets’ specifications and owner preferences. The project includes a new terminal with a range of amenities, conference and business center capabilities, crew lounge and rest areas, and flight planning facilities. Construction of the new facility is expected to be completed by next summer.

People in the News

Martin Burdorf took over as head of the marketing department in Continental Tire’s Industrial Tires Business Unit last August. In other personnel news, Ivonne Bierwirth will be responsible for the newly created marketing new media role in the unit. Heike Hansmann also took over as head of the unit’s ContiServiceCenter. She is now responsible for customer support in the German market.

(HAVE PIC) West Star Aviation, Inc. appointed Jeff Messmer Operations Manager at its newest facility at Spirit of St. Louis Airport (SUS) in Chesterfield, MO. In his new position at West Star Aviation, Messmer will be responsible for all maintenance, avionics and customer service and support operations at SUS.

(HAVE PIC) Leighton “Lee” M. Yohannan was named co-CEO of Rampmaster last month. Yohannan is currently director emeritus and founder of LiquidHub, a systems integrator and technology strategy consultancy with revenues of more than $60 million in annual sales. Previously he was owner and CEO of The Reohr Group, Inc., a $55 million global technology consultancy.

Southwest Airlines announced several executive changes at the company effective last month:

Bob Jordan, Southwest's current Executive Vice President Strategy & Planning, has been promoted to Executive Vice President & Chief Commercial Officer, and he maintains his role as President of AirTran Airways.

Jeff Lamb, Southwest's current Senior Vice President Administration & Chief People Officer, has been promoted to Executive Vice President & Chief People & Administrative Officer.

Ellen Torbert, Southwest's current Vice President of Customer Support & Services, has been promoted to Vice President of Diversity & Inclusion.

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