AVITRADER - test system

Tuesday, January 06, 2015

AviTrader Daily Aviation News Alert

This is an overview of all articles linked within the selected daily newsletter.
Please scroll down to read the articles…

Emirates reject Delta’s apology regarding Anderson’s 9/11 comments

February 20, 2015 · 556 Views

The bitter dispute between US- and Gulf-based airlines has reached a new level after Emirates flatly rejected an open apology made concerning what was seen as incredibly tactless and insensitive remarks made by Delta’s Chief Executive, Richard Anderson. The unfortunate incident relates back to comments made by a group of American airlines that a number of the larger Gulf carriers had benefited from state subsidies amounting to a figure in excess of US$40bn. As a consequence the American airlines either wanted to renegotiate or scrap the current Open Skies agreement.
Offended by such claims, the Gulf carriers retaliated by questioning whether or not US airlines had received government subsidies totaling US$5bn in the wake of 9/11. Unfortunately Delta’s Anderson, responding to this claim on CNN, said: “It’s a great irony to have the United Arab Emirates from the Arabian Peninsula talk about that, given the fact that our industry was really shocked by the terrorism of 9/11, which came from terrorists from the Arabian Peninsula.” While the UAE and Qatar, two of the States’ allies who have offered either military or logistical support for international operations were particularly upset by these comments, Delta simply made it clear that Anderson had been responding to claims regarding post 9/11 subsidies. “He didn’t mean to suggest the Gulf carriers or their governments are linked to the 9/11 terrorists. We apologize if anyone was offended.”
Unfortunately the largest of the three main Gulf carriers did not see this as acceptable. “We believe that the statements made this week by Mr. Anderson were deliberately crafted and delivered for specific effect,” it confirmed in a statement. However US airlines continue to complain that they have lost significant numbers of bookings since 2008 as a result of Gulf competition and cited documents they indicate demonstrate aid which has allowed their competitors to offer cheap fares. In retaliation, Gulf officials say that most US carriers do not fly the same routes and are losing business only because they offer an inferior service.
This is not a dissimilar situation to the one between Gulf airlines and European carriers, including Lufthansa, and coincidentally has come at the same time as US airlines are trying to have US Exlm Bank closed down. They believe Gulf carriers are benefitting to a greater degree from the export credit agency. The tit-for-tat dialog continues with Western airlines showing concern for the safety of thousands of service industry jobs, a complaint to which Gulf carriers have responded by making it very clear they support at least as many jobs in the aerospace sector with their huge orders for aircraft.


Snecma and HAL to create joint venture and build a new production facility in India

February 20, 2015 · 655 Views

Snecma (Safran), a leading manufacturer of aircraft engines, and Hindustan Aeronautics  (HAL), a leading aerospace manufacturer, signed a Memorandum of Understanding (MoU) on January 28th, 2015 in Bangalore to explore establishing a joint venture in India for the production of aero-engine parts.  The proposed joint venture will initially focus on the manufacture of high-tech parts for the Dassault Rafale’s Snecma M88 engine, then subsequently contribute to other major aerospace projects of HAL & Snecma, in India and worldwide. Spanning over 30,000 m², the proposed joint venture’s new plant is expected to benefit from substantial investment by the two partners, providing it with state-of-the-art machinery and equipment. This agreement marks a major step forward in the long-standing collaboration between Snecma and HAL. The proposed joint venture will further broaden the scope of the excellent relations established over the past 60 years between Safran affiliates and the Indian aerospace industry. For example, Snecma manufactures the M53 engines powering the Mirage 2000H “Vajra” fighters operated by the Indian Air Force.


Design flaws led to 787 battery fire

December 2, 2014 · 197 Views

On the 7th January 2013 a fire was reported on board a Boeing 787 Dreamliner while parked at Boston’s airport in the USA. The fire was put down to a problem with one of the plane’s lithium-ion batteries. A week later an All Nippon Airways 787 Dreamliner had to make an emergency landing after smoke was discovered inside the plane which was subsequently traced back to another lithium-ion battery. As a consequence of this incident, all 787 Dreamliners were grounded until April of that year until further acceptable testing and improvements were carried out to the battery system on board the plane. The battery itself was manufactured by GS Yuasa and comprised eight individual cells making up a combined weight of 63lbs.
Nearly two years later and the results of the investigation into the first incident have concluded that the lithium-ion battery installed in the plane should not have received certification by the FAA. The National Transport Safety Board (NTSB) were also critical of Boeing who they believed had erroneously ruled out the chances of thermal runaway in its assessment of the battery’s safety. Boeing’s battery tests to obtain original certification included crushing battery cells, driving nails through them and deliberately introducing short circuits to cause failure. Boeing found “nothing adverse happened” while these tests were carried out, and so deemed the battery’s box and internal protection to be of an acceptable standard. Boeing stated that it had followed the certification process set out by the FAA. It would seem that while the cause of the fire has been clearly identified, responsibility for its occurrence has not been accepted in full by anyone.


Rolls-Royce forced to axe 2,600 jobs after second profit warning this year

November 5, 2014 · 164 Views

Back in February this year, Rolls-Royce, the FTSE-100 engine maker, lost over £3bn of its value after shocking the market with its first profits warning in a decade. To announce a second one this October has created considerable concern and Rolls-Royce has decided that over the next 18 months they need to reduce costs by up to £80m a year by axing 2,600 jobs, the majority of which will be in the aerospace sector in Britain and the United States. The focus is on Rolls-Royce’s key Trent engines as they move from the development to the production phase, which consequently requires fewer engineers.
Back in February John Rishton, Rolls-Royce group’s Chief Executive, had admitted that the future was “bumpier than I had expected”, while blaming the current problems on deteriorating economic conditions and a tit-for-tat trade war between the EU and Russia over the Ukrainian crisis which had affected its nuclear and energy business as well as its power-systems unit. This week Rishton has had to admit that “We are taking determined management action and accelerating our progress on cost. The measures announced today will not be the last; however they will contribute towards Rolls-Royce becoming a stronger and more profitable company.”
Another consequence of the situation is the unexpected departure of Finance Director, Mark Morris, leaving the company after 27 year without any explanation. He will be replaced by David Smith, who is being promoted from Finance Director of the Rolls-Royce Aerospace division. This second profit warning saw share value fall 11% to 832p, wiping a further £2bn off the company’s value. However, news of the redundancies was well received by investors and the share price rallied by 2%, currently standing at 832p. This is clear confirmation of comments made by Espirito Santo’s analyst, Ed Stacey, who indicated that investors would be expecting a clear message from the new Finance Director and tight control on all finances.


Air France-KLM selects GEnx engines for Boeing 787 fleet

March 25, 2014 · 113 Views

Air France-KLM selected the GEnx-1B engine to power its 25 Boeing 787 Dreamliners and 12 leased 787 aircraft. The total engine order is valued at more than $1.7bn. Air France-KLM and GE Aviation have also signed an agreement that will allow Air France-KLM to offer maintenance, repair and overhaul (MRO) services for the GEnx-1B engine. Under this agreement, Air France-KLM will be licensed to perform maintenance and overhaul work on the GEnx-1B engine and GE will provide technical support and assistance on overhaul workscoping and component repair licenses, comprehensive material support and training.


ILFC closes $1.5bn senior secured term loan

March 7, 2014 · 80 Views

International Lease Finance Corporation (ILFC) has closed a new senior secured term loan of $1.5 billion. The loan will bear interest at LIBOR plus 275 basis points with a 0.75% LIBOR floor, is priced at 99.5% of par value, and will mature in 2021. The collateral used to support the transaction has an initial weighted average age of 9.1 years. It will be secured primarily by a first priority-perfected lien on the equity of certain of ILFC’s subsidiaries, which directly or indirectly own a pool of aircraft and related leases. ILFC plans to use the proceeds for general corporate purposes, including purchasing aircraft and supporting the company’s liquidity cushion.


Airbus Commercial reports another year of financial improvement

February 26, 2014 · 80 Views

In 2013, Airbus achieved a new industry record of 1,619 gross commercial orders (FY 2012: 914 gross orders) with net orders of 1,503 aircraft (FY 2012: 833 net orders), excluding ATR. Gross orders comprised 1,253 A320 Family aircraft, 77 A330s, 239 A350 XWBs and 50 A380s. Fourth-quarter orders included Emirates Airline’s agreement for 50 A380s and Etihad Airways’ order for 50 A350 XWBs, 36 A320neos and one A330-200F. Airbus Military (now part of Airbus Defence and Space) received 17 net orders (FY 2012: 32 net orders). Airbus’ net order intake increased sharply to €202.3bn (FY 2012: €88.9bn). At the end of 2013, Airbus’ consolidated order book was valued at €647.4bn (year-end 2012: €525.5bn). The Airbus Commercial backlog was worth €627.1bn (year-end 2012: €505.3bn), comprising 5,559 Airbus aircraft (year-end 2012: 4,682 units) and representing over eight years of production. Airbus Military’s order book was worth €20.8bn (year-end 2012: €21.1bn). Airbus series aircraft deliveries increased to 626 aircraft (FY 2012: 588 aircraft, including three A330s without revenue recognition). Airbus Military delivered 31 aircraft (FY 2012: 29 aircraft). Airbus’ consolidated revenues increased seven percent to €42,012m (FY 2012: €39,273m), reflecting higher commercial and military aircraft deliveries. The Division’s consolidated EBIT rose to €1,710m (FY 2012: €1,252m). Airbus Commercial’s revenues rose to €39,889m (FY 2012: €37,624m). The Airbus Commercial reported EBIT was €1,595m (FY 2012: €1,147m) with the EBIT before one-off at €2,216m (FY 2012: €1,669m). Airbus Commercial’s EBIT before one-off benefitted from the improved operational performance, including favourable volume, some better pricing and an improvement in A380 losses. It also included higher A350 XWB programme support costs. Revenues at Airbus Military rose to €2,893m (FY 2012: €2,131m), driven by the A400M ramp-up and higher volumes from both light and medium transport planes and tankers. The EBIT at Airbus Military was €166m (FY 2012: €93m).


Boeing Commercial Airplanes reports full year revenue of $53bn

January 29, 2014 · 76 Views

Boeing Commercial Airplanes fourth-quarter revenue increased to $14.7bn and full-year revenue increased to a record $53bn on higher delivery volume. Fourth-quarter operating margin improved to 10.3% and full-year operating margin grew to 10.9% on the higher volume, favorable delivery mix and continued strong operating performance. During the quarter, the company launched the 777X with 259 orders and commitments. During the year, the 787 program completed first flight of the 787-9, successfully launched the 787-10 and began operating at a 10 per month production rate in final assembly. The 737 program delivered at a record production rate of 38 per month and has won nearly 1,800 firm orders for the 737 MAX since launch. In 2013, a record 648 commercial aircraft were delivered. In January 2014, the company reached an eight-year contract extension through 2024 with the International Association of Machinists & Aerospace Workers District 751 (IAM). Commercial Airplanes booked 465 net orders during the quarter and 1,355 during the year. Backlog remains strong with 5,080 airplanes valued at a record $374 billion.


A350 XWB in Bolivia for high altitude testing

January 9, 2014 · 67 Views

The A350 XWB development aircraft, MSN3, is in Bolivia where it will perform a series of tests at the high altitude airfields of Cochabamba and La Paz. Cochabamba is around 8,300 feet above sea level, and La Paz is one of the world’s highest airports at 13,300 feet. Operations at such high altitude airfields are particularly demanding on aircraft engines, Auxiliary Power Unit (APU) and systems. The aim of these trials is to demonstrate and validate the full functionality of engines, systems, materials as well as to assess the overall aircraft behaviour under these extreme conditions. A number of take-offs with all engines operating and with simulated engine failures are being performed at each of the airfields to collect data on engine operating characteristics and validate the aircraft take-off performance. The autopilot behaviour will also be evaluated during automatic landings and go-arounds. Since the A350 XWB’s first flight with MSN1 on June 14th 2013, over 800 flight test hours have been performed in close to 200 test flights by both MSN1 and MSN3. In total the A350 XWB flight test campaign will accumulate around 2,500 flight hours with the fleet of five aircraft. The rigorous flight testing will lead to the certification of the A350-900 by the European EASA and US FAA airworthiness authorities, prior to entry into service in Q4 2014.


Firefly welcomes first ATR 72-600

July 5, 2013 · 66 Views

Firefly, Malaysia Airlines’ subsidiary carrier has taken ownership of its first brand-new ATR 72-600. The aircraft is the first of 20 latest generation firm ATRs, plus 16 options, ordered by Malaysia Airlines in December 2012. Firefly currently operates 12 ATR 72-500s, and with the arrival of the new ATR 72-600s will almost triple its exclusively ATR 72 aircraft fleet, taking the total to over 30 aircraft.


GE’s Passport engine begins first full engine test

June 26, 2013 · 42 Views

Certification testing is underway on the first Passport development engine at GE Aviation’s Peebles Testing Operation in Ohio. The engine began ground testing on June 24th and ran for more than three hours, reaching more than 18,000 lbs. of standard day sea-level takeoff thrust. Eight Passport engines and one core will be involved in the engine certification program. Flight testing on GE’s flying testbed is scheduled for 2014. Engine certification is expected in 2015. The Passport engine certification program follows three years of validation testing. GE Aviation has conducted validation tests on the fan blisk design, including two fan blade-out rig tests, ingestion tests and a fan aero rig test to demonstrate fan efficiency. Testing is complete on the third eCore demonstrator, and GE has accumulated more than 300 hours of testing on eCore demonstrators to date.


Rolls-Royce wins order from CIT to power 23 aircraft

May 22, 2013 · 55 Views

Rolls-Royce has won an order from US leasing company CIT Aerospace for Trent XWB engines, to power ten Airbus A350 XWB aircraft and Trent 700 engines to power 13 Airbus A330 aircraft. The Trent XWB engines will power ten CIT A350 aircraft that were announced in January 2013 which were in addition to five A350 XWB aircraft already on order. The Trent XWB, specifically designed for the Airbus A350, is the fastest selling Trent engine ever, with more than 1,200 already sold. The engine variant that will power the A350-800 and -900 was awarded European Aviation Safety Agency (EASA) type certification in February. The engine will power the first flight of the Airbus A350 XWB this year and the aircraft’s first in-service flight in 2014.


Elbit Systems awarded US$90m maintenance contract for Israeli Air Force’s F-16 avionics systems

January 5, 2015 · 645 Views

Elbit Systems was awarded an approximately US$90m contract from the Israeli Ministry of Defense (IMOD) for the maintenance of the Israeli Air Force’s (IAF) F-16 array’s avionics systems. The project, to be performed over 11 years, will include the establishment of a new and cutting edge national maintenance center for the IAF’s squadrons and bases. Elbit Systems has extensive operational experience in performing outsourcing logistic support services for customers both in Israel and abroad. In addition to a variety of maintenance projects it provides to the Israeli Defense Forces (IDF), Elbit Systems also provides these services to many customers worldwide, including in the U.S. and Brazil.


Royal Air Maroc celebrates arrival of first 787 Dreamliner

January 5, 2015 · 86 Views

Royal Air Maroc this weekend celebrated the arrival into Morocco of its first 787 Dreamliner. The airline will be the first carrier in the Mediterranean region to operate the 787. The airplane, delivered to the airline on Dec. 31st, 2014 from Boeing’s Everett, Wash. Delivery Center, flew a 4,788 nautical mile (8,867 kilometer) nonstop flight to Royal Air Maroc’s home base in Casablanca at Mohammed V International Airport.


STG Aerospace wins LED cabin mood lighting contract with Thomson Airways

January 5, 2015 · 81 Views

Aircraft cabin lighting specialists, STG Aerospace, has been awarded a retrofit programme with the UK’s largest leisure airline, Thomson Airways. The contract will see STG Aerospace retrofit nine of Thomson’s Boeing 737NG fleet and fourteen of its 757 fleet with liTeMood, a true plug-and-play programmable blue/white LED mood lighting system designed specifically to retrofit commercial aircraft cabins. liTeMood offers airlines a cost effective, versatile and controllable solution to bring existing non LED equipped aircraft cabins up to the same quality standard as brand new aircraft helping them achieve impactful brand differentiation. Quick and easy to install, liTeMood is a cost-effective upgrade for airlines seeking to improve passenger experience and increase yields across its fleet. It features significantly increased reliability over traditional lighting systems, thereby reducing ongoing maintenance costs and also delivers important environmental benefits. Not only is liTeMood up to 40kg lighter than original-fit fluorescent lighting, it also consumes 70% less power, increasing both the aircraft’s fuel and electrical efficiency.


Bristol Associates complete sale of five ex-UTAir Ukraine 2012 vintage ATR72-500’s

January 5, 2015 · 212 Views

Bristol Associates (Washington, DC), on behalf of the owner BLF (Bermuda), has completed the sale of five ex-UTAir Ukraine 2012 vintage ATR72-500’s (MSN’s 994, 1000, 1029, 1036 and 1037) to ABRIC Leasing (Ireland).


Engine Alliance enters revenue service with Etihad Airways

January 5, 2015 · 98 Views

GP7200 engines have entered revenue service with Etihad Airways’ first EA-powered A380. The airline operated its first revenue flights on December 27th, 2014 between Abu Dhabi International Airport and London Heathrow Airport. The EA-powered A380 entered service in August 2008. Currently 82 EA-powered A380s are in operation around the globe: 57 with Emirates, ten with Air France, ten with Korean Air, four with Qatar Airways and one with Etihad Airways. The EA-powered A380 fleet is supported by the world’s largest network, with field service engineers available in more than 100 cities around the globe. We are excited to welcome Etihad Airways to the Engine Alliance family,” said EA President Dean Athans. “Etihad gains the benefit of more than 3 million hours of GP7200 experience, in addition to the PW4000, GE90 and GEnx experience that have directly benefitted the GP7200 engine. We are proud to be the engine of choice in the Middle East.”


GE’s Passport engine for Bombardier Global 7000/8000 begins flight-testing on historic 747

January 5, 2015 · 105 Views

GE Aviation’s Passport Integrated Propulsion System for Bombardier’s new Global 7000 and Global 8000 business jets began flight-testing on GE Aviation’s 747-100 flying test-bed. On December 30th, 2014, a single Passport engine successfully demonstrated aircraft systems and instrumentation functionality. Flight-testing will continue through January prior to expected FAA certification in 2015. To date, the Passport engine’s has accumulated more than 750 hours and 300 cycles of testing. Before entry into service, the Passport engine will accumulate the equivalent of 10 years of flying for an average Bombardier Global 7000 or Global 8000 aircraft operator, with more than 4000 hours and 8000 cycles. The first flight of the Passport IPS completes a busy year of testing. Most recently, GE completed hail and bird ingestion certification tests and is currently instrumenting Passport engines for water ingestion and fan blade out certification tests, which will commence in the coming weeks. In April, ice ingestion tests were completed at GE’s icing facility in Winnipeg, Manitoba. In February, ground testing in an altitude chamber at GE Aviation’s headquarters in Evendale, Ohio, demonstrated engine performance and operability from sea-level to 51,000 feet. The Passport engine’s first flight occurred on GE’s flying test laboratory, a modernized 747-100. It was the 16th aircraft shipped off the original Boeing 747 production line, entering service for Pan Am in 1972. The Passport engine for the Global 7000 and Global 8000 business jets will produce 16,500 pounds of thrust and will incorporate advanced technologies and materials to provide: 8% lower specific fuel consumption than engines in its class; margin to CAEP/6 emissions and to Stage 4 noise regulations; and world-class reliability and support.


Delta reports operating performance for December 2014

January 5, 2015 · 93 Views

Delta reported December 2014 traffic increased 2.1% compared to the same period in 2013, while capacity increased 4% year over year. The load factor for December was up 1.5 points to 85.2%.


Triumph Group completes agreement with Spirit AeroSystems to assume production of Gulfstream wing programs

January 5, 2015 · 363 Views

Triumph Group closed the previously announced agreement with Spirit AeroSystems to take over production of the Gulfstream G650 and G280 wing programs located in Tulsa, Oklahoma, effective December 30th, 2014. The business will operate as Triumph Aerostructures-Vought Aircraft Division-Tulsa and will be included in the Aerostructures Group segment. Under the terms of the agreement, Triumph received US$160m in cash plus assets required to run the business from Spirit to cover the anticipated future cash flow needs of the programs, with no additional capital contributions expected by Triumph. The business is expected to add approximately US$250m in annual revenue and to be immediately accretive to earnings per share, reflecting initial estimates of purchase accounting adjustments and excluding synergies resulting from the transaction and transaction related expenses. Triumph will update its fiscal year 2015 guidance to reflect the financial impact of the work transfer when it releases its third quarter fiscal year 2015 earnings in January.


Niall Cunningham to head up International Aerospace Coatings

January 5, 2015 · 445 Views

International Aerospace Coatings (IAC), reported that Niall Cunningham, founder and CEO of Eirtech Aviation, has also been appointed CEO of International Aerospace Coatings, which was established earlier this year following a merger between three leading aviation service providers in the US and Europe. International Aerospace Coatings comprises Leading Edge Aviation Services; Associated Painters and Eirtech Aviation.


PCX Aerostructures announces add-on acquisition of Cam-Tech Manufacturing

January 5, 2015 · 409 Views

PCX Aerostructures acquired Cam-Tech Manufacturing on December 23rd, 2014. Based in Mansfield, Texas, Cam-Tech will operate as a wholly owned subsidiary of PCX. Roger Hagger, Cam-Tech’s Vice President, will continue in this role in partnership with Alan Haase, President & CEO of PCX. With headquarters in Newington, CT, PCX Aerostructures is a world class supplier of highly engineered, precision, flight critical and structural components for rotorcraft and fixed wing aerospace platforms serving both the defense and commercial markets and the power generation industry. The company focuses on producing complex parts machined from hard alloys where tight tolerances and quality are imperative. PCX has manufacturing facilities in Newington, CT, Mansfield, TX, Ronkonkoma, NY and Farmingdale, NY. Cam-Tech is a premier manufacturer of large structural assemblies for aerospace platforms serving the commercial and military markets, producing flight critical structural parts which are precision machined from both aluminum and hard alloys. This integrated assembly capability allows Cam-Tech to offer complete structural airframe assemblies ready for delivery direct to tier 1 or OEM integration centers.


AerCap leases twenty-four A320neos to China Southern

January 5, 2015 · 160 Views

AerCap Holdings has signed an agreement with China Southern, the largest airline in both Asia and The People’s Republic of China, for the lease of twenty-four Airbus A320neo family aircraft from its order book. The A320/A321neos will be delivered to China Southern between 2016 and 2019 and equipped with PW1100G-JM engines from Pratt & Whitney. AeroTurbine, AerCap’s after-market subsidiary, has also agreed to purchase four older vintage aircraft from China Southern. These aircraft will be disassembled and parted-out.


Lufthansa Group aircraft fly from Oslo on biokerosene

January 5, 2015 · 215 Views

From next year the Lufthansa Group will be fuelling their aircraft at Oslo airport with a biokerosene mixture. The Group recently became the first airline group to sign this kind of contract with the Norwegian oil company Statoil Aviation. The Company is thus pushing forward along the path of research, testing and use of alternative fuels that it started on over four years ago. For a period of one year beginning March 2015, Statoil will feed 2.5 million gallons of sustainably produced, certified biofuel into the tanks at Oslo airport. The approximately 5,000 flights the Lufthansa Group (Lufthansa, Swiss, Austrian Airlines, Germanwings, Brussels Airlines) operates from the Norwegian capital will then be flying on a biokerosene mixture. Oslo airport is the world’s first large commercial airport to offer continuous provision of biofuel over a long period and to fuel aircraft with biokerosene directly from its hydrant system. For the Lufthansa Group, this is the next step from its previous test flights, made as part of the recently concluded burnFAIR project, toward the use of alternative fuels in regular flight operations. In 2011, Lufthansa was the first airline in the world to run regular flight operations with a biokerosene mixture by operating an Airbus A321 between Frankfurt and Hamburg for half a year as part of the project. The long-term testing was accompanied by detailed emissions measurements and research into production processes and biomass availability.


Falling oil prices means good news for all but Russian airline profitability

January 5, 2015 · 231 Views

Even the most optimistic projections for airline profitability in 2014 seem to be exceeded as the price of crude oil continues to fall. This year oil futures figures have virtually halved and the price of a barrel of crude oil dropped below US$50.00 this week. In June it was projected that globally, airlines would make a combined net profit of US$18 billion, this figure has now been revised upwards to $19.9bn and is expected to reach US$25bn for 2015.
Based on per passenger figures, airlines should make a net profit of US$7.08 in 2015, up from US$6.02 earned this year and more than double the US$3.38 earned per passenger in 2013. Because the airline industry is so incredibly competitive and flight prices so critical, response to a change in oil prices is reflected almost instantaneously in air fares. As a consequence, domestic flights are expected to fall by some 5.1% in 2015, while cargo and freight costs are expected to fall by 5.8%.
“The industry outlook is improving. The global economy continues to recover and the fall in oil prices should strengthen the upturn next year. While we see airlines making US$25bn in 2015, it is important to remember that this is still just a 3.2% net profit margin. The industry story is largely positive, but there are a number of risks in today’s global environment—political unrest, conflicts, and some weak regional economies- among them. And a 3.2% net profit margin does not leave much room for a deterioration in the external environment before profits are hit,” IATA’s Director General and CEO, Tony Tyler has stated.
However the news is not good for Russian airlines for a number of reasons. Firstly the value of the ruble is collapsing as much of Russia’s economy depends on revenue from oil – at the end of the 2014 the value of the ruble had fallen by 40%. The knock-on effect means fewer Russians are now travelling on the more popular routes, so despite lower fuel costs, this is negated by lack of ticket sales. While other airlines have reduced their prices, Russian airlines have increased fares twice last year, seeing an increase of 10%.
Russian airlines have substantial costs in foreign currency — predominantly aircraft leases — which have risen proportionately to the collapse of the ruble. According to Deutsche Bank, Aeroflot earns 90% of its income in rubles, while 60% of its outgoings are in foreign currencies. “The situation is very serious,” Oleg Panteleyev, editor-in-chief of the specialist website AviaPort, stated “The result is obvious: as a drop in traffic is inevitable, they must return planes to lessors, reduce foreign currency costs and lower the number of planes and flights.”
Russian airlines have leased and placed new orders for planes from Airbus and Boeing to replace an ageing fleet of fuel-thirsty Russian aircraft. However concern exists regarding the third-largest Russian airline, Utair. Currently unable to reduce its debts, Alfa Bank has been trying to seize Utair’s aircraft through court proceedings.