SAS delays A350 delivery to cut costs

SAS Scandinavian Airlines has confirmed it will defer delivery of its first A350-900s by as much as a year due to cost-cutting measures. The carrier aims to save USD164 million by the year 2019.

A render of a SAS A350-900. Copyright: Airbus

SAS had originally planned to add the aircraft to their fleet from 2018 onward, but the new Financial Year report has pushed that date back to November 2019 – October 2020. During that time, three A350s will be delivered followed by five more during the 2020/21 Financial Year (November 1, 2020 – October 31, 2021).

In addition to these eight A350s it has on order, SAS also has options for a further six but the carrier is yet to choose this option. SAS will use the A350s to eventually renew its widebody fleet, currently consisting of eight A330-300s and eight A340-300s.

As well as the delayed deliveries, SAS Group also has plans to cut 1,000 administrative jobs in preparation for rising fuel prices and increased competition.

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Lufthansa confirms takeover of Brussels Airlines

Lufthansa has reached a deal to fully take over Brussels Airlines. The Belgian carrier announced on Wednesday this is to help their growth of budget travel and consolidate the fragmented industry of European airlines.

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©Adrian Cilia
“I can confirm that a deal has been reached,” says a spokesperson for Brussels Airlines, saying they would give further details in a conference on Thursday morning.

Lufthansa had previously bought 45% of Brussels Airlines from their owner SN Airholding in 2009 for a price of 65 million euros ($73 million), with the option to acquire the rest from 2011.

The decision was taken in September to acquire the rest forms part of the expansion of the budget Eurowings division, the carrier’s answer to competition from Ryanair and Easyjet.

A source has previously said that because Lufthansa had loaned 45 million euros to Brussels airlines, the German carrier can buy the remaining stake for as little as 2.6 million euros.

The Lufthansa Group
The deal for Brussels airlines, plus a plan to lease 35 planes and crew from Air Berlin will see Eurowings grow their fleet to over 160 planes from their current 90 aircraft by the end of the year.

Lufthansa management has praised restructuring efforts at Brussels, which have reduced costs to almost the lowest in the Lufthansa Group. Brussels airlines also has strong routes to Africa, whereas Lufthansa has gaps in their network.

Brussels Airlines has served a record 7.5 million passengers in 2015 and made a record net profit of 41.3 million euros, although that is expected to fall this year due to the previous Brussels airport attack in March.

SW Italia secures STO Express contract

SW Italia has secured a new contract with STO express for freight movement between Asia and Europe.

I-SWIA SW Italia Boeing 747-4R7F photographed at Milan - Malpensa (MXP / LIMC) by Simone Previdi
SW Italia B747-4R7F I-SWIA | Photo Copyright Simone Previdi
With the new deal, the Italian freight specialist will run weekly flights from Hong Kong Chek Lap Kok to Prague, Czechia using a B747-8(F) (VQ-BVB, msn 44444) with an STO Express livery.

As a subsidiary of Azerbaijan’s Silk Way Airlines, SW Italia also operates a B747-400 (FSCD) on behalf of Qatar Airways.

LOT Airlines to resume intercontinental operations from Krakow

LOT Polish Airlines has announced they will be continuing intercontinental operations from the southern city of Krakow during summer 2017.

SP-LRF LOT - Polish Airlines Boeing 787-8 Dreamliner photographed at Warsaw - Okecie (Frederic Chopin) (WAW / EPWA) by Patryk Bromboszcz
LOT Polish Airlines B787-8 SP-LRF | Photo Copyright Patryk Bromboszcz
The carrier said in a statement that weekly, year-round flights to Chicago O’Hare would launch from July 2017 onward using one of their new B787-8s. The service was in response to growing demand for travel between the two cities, as Chicago is home to a large expatriate Polish community.

“According to our analyses, the interest in this connection is high and continues to rise. Over 90,000 passengers that fly between Krakow and Chicago each year via Warsaw Chopin, will be offered a direct flight next year. Thus, as the results of business analyses were positive, it was decided to launch additional, direct connections next July.”
– Radosław Włoszek, Chairman of the Management Board

LOT last operated this route, alongside a similar Krakow-Toronto Pearson service in 2010.

Air France boss confirms long-haul LCC plan is an option

Air France CEO Jean-Marc Janaillac has confirmed that the Air France – KLM Royal Dutch Airlines group is looking to set up a long-haul, low-cost venture as part of their plans to regain lost international market share.

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Air France 787 | Image Copyright Boeing

“The issue is we have new competitors, so how do we address this situation?” he told Bloomberg TV in an interview. “We’re not going to discuss it publicly because we have many possibilities we’re studying, and we’ve not yet decided what options to put together in order to cope with the arrival of new, long-haul, low-cost carriers.”

Air France is currently fighting the arrival of new low-cost, long-haul carriers such as Norwegian and Groupe Dubreuil’s French Blue, alongside existing pressure from Emirates, Etihad Airways, Qatar Airways and Turkish Airlines.

The move to long haul budget operations is one of three options currently being considered by the Franco-Dutch group, as first mentioned during the tenure of Janaillac’s predecessor, Alexandre de Juniac. 

It came after the carrier revealing that only 50% of long haul routes are currently profitable. At the time, the plan entailed operating a number of B787-9s under an undisclosed brand using a cost base similar to that of Lufthansa Group’s Eurowings long haul budget subsidiary.

Any project like this would depend on the carrier’s workforce approving new labour contracts, a feat that seems to have proven very difficult in the past. 

It is worth mentioning that in late 2014, a two week-long pilot strike over plans to change Transavia France into a regional European LCC with foreign subsidiaries, cost Air France EUR500 million in lost revenue.

In an effort to placate combative unions, Janaillac is due to present a new, revised business plan in November, ‘Trust Together’, which the French press ay will try and engender a greater sense of trust between management and the workforce.

Biman Bangladesh delays launching of new Asian routes

Biman Banglades Airlines has delayed launching five new regional Asian routes, claiming they need to revise their business plan and also have a lack of available capacity.

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Biman Bangladesh A310 as due for retirement this month | Photo Copyright: Faisal Akram

The airline was set to start flights to Guangzhou, Colombo Int’l, Malé, Delhi Int’l and Hong Kong Chek Lap Kok as of this winter, following a board decision to focus closer on the regional Asian market as opposed to the long haul market. Also, services to Tokyo Narita were planned to begin during the 2017 summer season.

Biman’s CEO, Air Marshall Mosaddik Ahmed, told the Financial Express daily that a new study on feasibility will be conducted for their planned routes.

The airline previously examined viability of flights to Guangzhou, Colombo and Malé. However, the board recently concluded that the studies were outdated and should also be revisited.

The decision to put off the new route comes as they decide on the lease of new aircraft following the retirement of their A310-300 fleet from active scheduled service later this month. S2-ADF (cn 700) and S2-ADK (cn 594) are due for replacement by two dry-leased B737-800s. The five new routes are going to be operated with these aircraft.

LOT set to grow B787 fleet and increase Asia/North America flights

LOT Polish Airlines has created plans to operate a seventy aircraft fleet, of which sixteen will be Boeing 787s. They also aim for an annual passenger throughput of 10 million by 2020, says chairman Rafal Milczarski.

Milczarski said their new four-year business plan (adopted during the 26th Economic Forum in Krynica this week) will see the airline place more focus on international expansion, justifying their need for widebody aircraft.

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LOT’s first B787 Dreamliner (SP-LRA) departs Paine Field. | Photo copyright LOT

The Polish carrier is coming under greater pressure on both domestic and regional European fronts from carriers like Ryanair, hence the need to fly further abroad to newer and more commercially viable markets.

“Long-haul flights are the most profitable part of our business and being the only airline in the region, LOT has the related growth potential. We are mostly going to focus on developing flights to North America and the most important business centers in Asia.” – Rafal Milczarski, Airline Chairman

The new markets the airline are going to target will include Shenzhen, China (Asia) and switch New York services back to Newark with 4x weekly flights initially, then 5x weekly in Summer 2017 (North America). The flights targeting China will be in the same location as their fellow Star Alliance member Shenzhen Airlines (ZH, Shenzhen) and their primary hub.

“Connections to Central Asia and to the Middle East are particularly interesting from our perspective. Warsaw’s geographical location allows to develop an unmatched offering of flights to countries such as Kazakhstan or Iran. We are going to take advantage of that potential.”said Milczarski

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LOT B787 Dreamliner (SP-LRB) at Budapest – Ferenc Liszt International | Photo Copyright Viktor Laszlo

Whilst expanding their international footprint, LOT airlines are also trying to recover lost local market share. The chairman stated LOT was looking to reclaim 25% share by the year 2020, requiring them to exceed 10 million passengers annually as oppose to 2015’s 4.3 million.

“As new long-distance flights are launched, the number of short-distance flights, especially from Central and Eastern Europe, is going to go up as well. We assume that the percentage of transfer passengers, that is, those who change planes in Warsaw, is going to reach approximately 50% in 2020.”

Currently, LOT airlines operate six B787-8s, but are due two more from Boeing this year and next year. Milczarski said the new B787s are going to be acquired through sale/lease back agreements with third party firms in order to ease the financial situation.

Fifteen new 150+ seater narrowbody aircraft will also be joining LOT from next year onward despite Milczarski saying negotiations are at an early stage. Based on LOT’s intentions to standardize their fleet, it is likely that the aircraft will be Boeing.

Polish Treasury Minister Dawid Jackiewicz said that the government (LOT’s largest shareholder) had no intention of letting them go.

“We’re not going to let go of control,” he said. “We intend to keep LOT in our hands and prove that it can become a leader in Central and Eastern Europe.”