Airberlin (airberlin.com) (Berlin) and Etihad Airways (Abu Dhabi) will  integrate their Boeing 787 Dreamliner fleet affecting 56 firm aircraft according to a report by Reuters. Airberlin says this will save millions of dollars for both airlines. On the financial side, Air Berlin PLC issued this report for the first quarter:

Air Berlin PLC has realized a group revenue of EUR 761.8 million ($1 billion) in the first quarter of 2014 as compared to EUR 791.9 million ($1.08 billion) in the first quarter of 2013. Due to the shift of Easter business to April, revenue decreased by 3.8 per cent during the first quarter in 2014.

The operating result (EBIT) amounted to EUR -182.8 million (a loss of $176.5 million) in the first quarter of the current year as compared to EUR -188.4 million (-$258.3 million) in the prior year’s quarter.

Compared to the same quarter of the previous year, EBITDAR decreased from EUR -31.5 million to EUR -37.0 million. The financial result amounted to EUR -30.5 million as compared to EUR -25.0 million in the previous year.

Pre-tax earnings in the first quarter of 2014 amounted to EUR -213.4 million after EUR -213.4 million in the same quarter of the previous year. The net result in the first quarter of 2014 amounted to EUR -209.8 million (-$287.6 million) after EUR -196.3 million (-$269.1 million) in the corresponding quarter in 2013. Earnings per share based on an average number of 116,800,508 shares outstanding in the first quarter of 2014 thus amounted to EUR -1.80 compared with EUR -1.68 in the first quarter of 2013 (basic and diluted)

As of March 31, 2014, Air Berlin’s total assets amounted to EUR 2,032.2 million (December 31, 2013: EUR 1,885.5 million), its total equity amounted to EUR -399.1 million (December 31, 2013: EUR -186.1 million) and its net debt amounted to EUR 801.1 million (December 2013: EUR 796.0 million).

The airline commented on its first quarter results:

Airberlin’s operating result for the first quarter of 2014 in a difficult market environment with high pressure on capacity utilization and yield was slightly better than that of the previous year. In particular, the effects of the Turbine turnaround program led to a clear cost reduction. As a result, Airberlin was able to reduce the cost per available seat kilometer (CASK), excluding fuel cost, by 8.2% over the corresponding quarter of the previous year. In this manner, especially aircraft costs and airport infrastructure costs were reduced due to productivity increase and by renegotiating better terms and conditions for leasing contracts. Due to the Easter travel not starting until April, total sales for the first quarter decreased by 3.8% to EUR 761.8 million (previous year: EUR 791.9 million). Revenue per available seat kilometer fell to 6.54 Eurocents (previous year: 7.10 Eurocents). airberlin’s operating loss (EBIT) for the first quarter slightly decreased by 3% to EUR -182.8 million (previous year: EUR -188.4 million).

Copyright Photo: Javier Rodriguez/AirlinersGallery.com. Boeing 737-86J D-ABKK (msn 37753) arrives in Palma de Mallorca (PMI) in the special “35 years – The way to your heart” color scheme.

Airberlin: 

Air Seychelles (Mahe) has announced it will resume flights to Paris (CDG) on July 2, 2014.

The flag carrier will operate two weekly roundtrips from the Seychelles to Paris via Abu Dhabi, with Air Seychelles deploying its brightly-colored Airbus A330-200 aircraft (above) on the route, offering 18 lie-flat seats in Business Class and 236 seats in Economy Class.

Partner Etihad Airways (Abu Dhabi) will also place its EY code on the flights.

Copyright Photo: Rainer Bexten/AirlinersGallery.com. Leased from Etihad Airways, Airbus A330-243 A6-EYY (msn 751) completes its final approach into Johannesburg (JNB).

Air Seychelles: 

Etihad Airways (Abu Dhabi) today (June 1) launched its new daily EY 171 service between Abu Dhabi (AUH) and Los Angeles (LAX).

Los Angeles is Etihad Airways’ fourth US destination, joining Chicago (O’Hare), New York (JFK) and Washington, D.C. (Dulles) on the airline’s expanding network. This will increase further on December 3, 2014 with the addition of nonstop flights to Dallas/Fort Worth.

Guests and their checked-in baggage flying from Abu Dhabi are also processed through all new US immigration, customs and agriculture inspections, before boarding the aircraft, eliminating the need to do so on arrival in the US.

The aircraft initially serving the new Los Angeles route is a three-cabin, long-range Airbus 340-500 (A6-EHA) which can accommodate 240 guests with 12 First Class suites, 28 Business Class flatbed seats, and 200 Economy Class seats.

In mid-July, the service will transition to a three-cabin, long-range Boeing 777-200 LR which will be configured with 237 seats, including eight First Class suites, 40 Business Class flatbed seats, and 189 Economy Class seats.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Airbus A340-541 A6-EHA (msn 748) had the honor of operating the first flight to LAX.

Etihad Airways: 

Airberlin (airberlin.com) (Berlin) is adding another feeder route to its partner Etihad Airways (Abu Dhabi). Airberlin will introduce a daily flight between Stuttgart and Abu Dhabi on December 1, 2014, opening up 41 onward travel destinations for flight guests.

The new Abu Dhabi route, still subject to government and regulatory approvals, is Airberlin’s first long-haul destination from Stuttgart. The service will be operated by an Airbus A320 aircraft configured with 12 seats in Business Class and 132 in Economy Class.

Altogether, airberlin will offer 63 flights per week this coming winter season from Germany to Abu Dhabi jointly with Etihad Airways, flying twice daily from Berlin, Düsseldorf, Frankfurt and Munich, as well as daily from Stuttgart.

Copyright Photo: Bernhard Ross/AirlinersGallery.com. With the upcoming FIFA World Cup in Brazil, Airberlin has decorated its Airbus A320-214 D-ABFK (msn 4433) in this special “Fan Force One Bitburger” color scheme. D-ABFK taxies at Frankfurt.

Airberlin: 

Etihad Airways (Abu Dhabi) yesterday (June 1) confirmed that it will forward a letter detailing the conditions precedent and the criteria for a proposed equity investment by Etihad Airways that have been negotiated with Alitalia (2nd) (Rome) and its stakeholders over the past months.

The Italian Government appreciates the strategic importance of this transaction and looks favorably at the Etihad Airways – Alitalia partnership.

Upon confirmation by the Board of Alitalia and its stakeholders of their acceptance of these terms, the airlines will proceed to final documentation in order to complete the proposed transaction, in line with EU and other regulatory requirements.

President and Chief Executive Officer of Etihad Airways, James Hogan, said: “We are delighted to be able to move forward with this process and look forward to the successful conclusion of the proposed transaction with Alitalia.

“An equity investment in Alitalia will be beneficial not only for the both airlines, but, more importantly, it will give more choice and broader travel opportunities to business and leisure travellers into and out of Italy.”

Gabriele Del Torchio, Chief Executive Officer of Alitalia, said: “This is an excellent outcome for Alitalia. This investment will provide financial stability and confirms Alitalia’s key strategic role as an infrastructure player in the travel and tourism industry in Italy for long-term growth.”

Roberto Colaninno, President of Alitalia, said: “We are delighted to move forward with Etihad Airways providing Alitalia with an ideal strategic partner enhancing the Company’s long term growth perspectives.”

In other news, also on June 1, Etihad Airways’ Flight EY 073 was met with the customary water cannon welcome as it touched down on schedule at Zürich Airport, marking the start of the airline’s new daily nonstop service between Zürich and Abu Dhabi.

The new Etihad Airways service builds upon the airline’s existing daily flights between Abu Dhabi and Geneva launched on June 5, 2004, bringing to 14 the number of flights linking Zürich and Geneva to Abu Dhabi, the capital of the United Arab Emirates, each week.

The new Zürich – Abu Dhabi route is served by an Airbus A330-300 aircraft configured with 8 seats in First Class, 32 in Business Class and 191 in Economy Class.

Copyright Photo: Paul Denton/AirlinersGallery.com. Airbus A330-343X A6-AFA (msn 1071) in the special “Visit Abu Dhabi” c odor scheme is pictured arriving on a regular flight in Geneva.

Etihad Airways: 

Alitalia (2nd:): 

Niki (flyniki.com) (Vienna) on November 24 will launch a new long-range daily route from Vienna to Abu Dhabi, the hub of partner Etihad Airways, following in the path of owner Airberlin (Berlin). The six-hour flight will be operated with Airbus A320 aircraft.

Copyright Photo: Jacques Guillem Collection/AirlinersGallery.com.

Niki: 

Alitalia’s (2nd) (Rome) CEO stated upwards of 2,200 jobs could be cut as a result of a planned alliance with Etihad Airways (Abu Dhabi) as reported today by the La Repubblica newspaper and this report by Reuters. The report also states Etihad Airways is not flexible on this amount of job cuts.

Read the full report: CLICK HERE

Copyright Photo: TMK Photography/AirlinersGallery.com. A lingering question is Alitalia’s role in the SkyTeam alliance when Etihad Airways makes its investment in the flag carrier. Will it leave the alliance? Airbus A330-202 EI-DIR (msn 272) in the SkyTeam motif arrives at Toronto (Pearson).

Alitalia: 

Air Seychelles (Mahe) has issued this first quarter financial statement. Previously the airline in April announced its second profitable year in a row. Etihad Airways (Abu Dhabi) controls 40 percent of its stock and has been very helpful in its turnaround. Its turnaround continues in the first quarter:

Air Seychelles, the national airline of the Republic of Seychelles, has recorded strong 2014 first quarter results with a 38.2 per cent increase in passenger numbers to 95,372, compared to the same period in 2013 (69,009 passengers).

Passenger numbers on Air Seychelles’ international network increased 77.3 per cent to 58,971, a result of more traffic between the Seychelles and Abu Dhabi, Mauritius, Johannesburg and Hong Kong.

A 66 per cent increase in revenue was attributable to improved connectivity with codeshare partner, Etihad Airways’ global network, and enhanced cargo services.

Cargo tonnage for the period rose 126.8 per cent to 1,602 tonnes, driven by strong demand from Paris, Hong Kong, and Johannesburg, enhancements to Air Seychelles’ on-ground cargo handling capability in Mahé, and the launch of Seychelles domestic cargo services.

Manoj Papa, Chief Executive Officer of Air Seychelles, said: “Our first quarter passenger and cargo performance indicates that we are delivering on our mandate to support the Seychelles economy both through tourism and trade.

“We remain committed to meeting these objectives in the months and years ahead, by building depth and scale into our network, organically and through partnerships, taking delivery of new aircraft, hiring more Seychellois, and bringing more guests and trade to the Seychelles.

“Air Seychelles will continue to focus on operational efficiencies, while maintaining a commitment to our guests to offer value, convenience and comfort, and being their airline of choice in the Indian Ocean region.”

At the end of the first quarter of 2014, Air Seychelles’ combined passenger and cargo network stood at five destinations in the Seychelles, Africa, Europe and Asia. The airline also has codeshare partnerships with Airberlin, Cathay Pacific Airways, Etihad Airways, and South African Airways, extending its network to 39 cities around the world.

Read the full report from the Seychelles News Agency: CLICK HERE

Copyright Photo: Rainer Bexten/AirlinersGallery.com. Airbus A330-243 A6-EYY (msn 751) on lease from Etihad Airways arrives in Johannesburg.

Air Seychelles: 

Etihad Airways (Abu Dhabi) has agreed to take a 49 percent share of struggling Alitalia (2nd) (Rome).

The two airlines issued this short statement:

Alitalia and Etihad Airways today (June 25) confirmed that they have agreed the principal terms and conditions of a proposed transaction whereby Etihad Airways will acquire a 49 percent equity stake in Alitalia.

The airlines will now move to finalize the transactional documents, that will include the agreed upon conditions, as soon as possible. The conclusion of the investment is subject to final regulatory approvals.

Alitalia will become the latest equity partner airline for Etihad Airways. Are there more partnerships coming, especially in Europe?

Copyright Photo: TMK Photography/AirlinersGallery.com. Alitalia’s Airbus A330-202 EI-EJG (msn 1123) in the special promotional Calabria livery prepares to touch down in Toronto (Pearson).

Alitalia (2nd): 

Etihad Airways: 

Gol Linhas Aereas Inteligentes S.A. (Gol Transportes Aereos) (Sao Paulo) has signed a codeshare agreement with Etihad Airways (Abu Dhabi). The agreement depends on approval from ANAC (National Civil Aviation Agency) and CADE (Brazil’s antitrust authority).

The companies already have an interline agreement and the expansion of the partnership through the codeshare agreement will initially allow Etihad Airways to include its code on flights operated by Gol, giving its customers a greater number of connections for destinations in Brazil and South America.

Both companies will soon sign a Frequent Flyer Program (FFP) agreement offering all their customers the benefits of their respective mileage programs – GOL’s Smiles and Etihad’s Etihad Guest.

In other news, Gol has announced it has filed a formal request to Brazil’s National Civil Aviation Agency (ANAC) to operate domestic flights to Carajás and Altamira, in the state of Pará. These destinations have an accelerated level of growth, generating demand for new services.

The request was made to operate in Carajás – with four weekly frequencies and Altamira – three weekly frequencies. The operation, still pending approval by ANAC, is expected to begin in September 2014.

Top Copyright Photo: Rodrigo Cozzato/AirlinersGallery.com. Boeing 737-8EH PR-GUO (msn) of Gol in the special FIFA World Cup 2014 livery prepares to land at Sao Paulo (Congonhas).

Gol: 

Etihad Airways: 

Bottom Copyright Photo: Rodrigo Cozzato/AirlinersGallery.com. The 2014 version of the Etihad Airways special Abu Dhabi Grand Prix Formula 1 livery on Airbus A340-642 A6-EHJ (msn 933) prepares to land at Sao Paulo (Guarulhos).

Etihad Airways (Abu Dhabi) has announced the launch of a four times per week service between Abu Dhabi and Hong Kong starting on June 15, 2015.

The new flights will complement the existing services offered by Etihad Airways’ codeshare and network partner, Air Seychelles, ensuring a daily frequency between the two cities, and bringing the combined number of weekly seats offered on the route to 3,620.

Hong Kong will become Etihad Airways’ seventh destination in Northeast Asia and its fourth destination in China joining Beijing, Chengdu and Shanghai.

Etihad Airways will operate a two-class Airbus A330-200 aircraft, configured to carry 262 passengers, with 22 seats in Business Class and 240 seats in Economy Class, offering a total of 2,096 seats per week.

The airline has announced six new routes for the first half of 2015, starting with Kolkata in February, Madrid in March, Entebbe in May, and Edinburgh, Hong Kong and Algiers in June.

Copyright Photo: Andi Hiltl/AirlinersGallery.com. Airbus A330-243 A6-EYD (msn 658) taxies at Zurich with the special promotional “Abu Dhabi Grand Prix 2014 Formula 1″ markings.

Etihad Airways: 

Etihad Airways (Abu Dhabi) and Alitalia (2nd) (Rome) today announced that they have signed the transaction implementation agreement which will result in a €1,758 million ($2.36 billion) investment to build a reinvigorated Alitalia as a competitive, sustainably profitable business.

The recapitalized Italian national airline will now be able to invest in a comprehensive strategic business plan which will see new long-haul routes from Rome and Milan, a revitalized brand, and a greater focus on Italian tourism and trade promotion. Italian travellers will be able to benefit from a wider choice of destinations while new global connections will boost inbound tourism.

Etihad Airways’ investment of €560 million will be provided through a combination of equity injections, asset purchases and other financing facilities and funding arrangements to re-structure the airline’s balance sheet. This is to be complemented by a further equity investment of €300 million from existing core Alitalia shareholders, including Intesa San Paolo (€88m), Poste Italiane (€75m), UniCredit (€63.5m), Atlantia (€51m), IMMSI (€10m), Pirelli (€10m) and Gavio (€2.5m).

Additionally, up to €598 million in financial restructuring of short and medium term debt has been provided by financial institutions and existing bank shareholders. €300 million of new loan facilities have also been extended by Italian financial institutions.

Etihad Airways will take a 49 per cent shareholding in Alitalia, for an investment of €387.5 million. Its total investment also includes €112.5 million to acquire a 75 per cent interest in Alitalia Loyalty Spa, which operates MilleMiglia, the airline’s frequent flier programme, and the purchase by Etihad Airways of five pairs of slots at London’s Heathrow Airport valued at €60 million. The slot pairs will be leased back to Alitalia on an arm’s length basis. The transaction is due to be completed on 31 December 2014.

Completion of the equity investment remains subject to completion by Alitalia and its key private and public stakeholders of certain conditions precedent and is also subject to final regulatory approvals.

Etihad Airways President and Chief Executive Officer, James Hogan, said: “For Etihad Airways, this is a strategic, long-term commercial investment. On completion, we are committed, with the other shareholders, to build a reinvigorated Alitalia as a competitive, sustainable and profitable business that can operate successfully in the global air travel market.

“We believe in Alitalia. It is great brand with enormous potential. With the right level of capitalization and a strong, strategic business plan, we have confidence the airline can be turned around and repositioned as a premium global airline once again.

“Alitalia is the perfect ambassador for Italy and all that it represents. As we revitalise the brand, the airline will increasingly embody all that we recognise as quintessentially Italian – the history, culture, food and fashion. It must be an airline of which Italians can be proud.

“However ultimately it has to work as a business and the goal is for sustainable profitability from 2017.”

Mr Hogan said he recognized that many steps had been taken by current Alitalia shareholders, management and workers to stabilise the business ahead of new investment.

“Alitalia can succeed and it can grow again but it needs to build from solid foundations. We have made it clear from the start that our entire investment should be focused on supporting the implementation of the new business plan, which will see this goal come to fruition.

“The winners from this successful strategy will be Italian and international travellers, who will see better service, new routes and greater competitive choice; Alitalia’s employees, who can look forward to a brighter future over the long term, in a business which will grow again; and the Italian people, who can be proud once again of their national airline.

“There is a long road ahead, first to complete the transaction and then to deliver this new vision. Today marks a critical step on that journey and we are proud to take our place as a strategic investor in the new Alitalia.”Gabriele Del Torchio, Chief Executive Officer of Alitalia, said: “This is an excellent outcome for Alitalia. We have had to take some tough decisions in a very robust negotiation process but we have achieved the consensus we require to create the right shape and size for Alitalia in the future.

“This investment will provide financial stability and enable us to position Alitalia, and the travel and tourism industry in Italy, for long-term growth.

“And for this important result I’d like to thank all the Alitalia staff – men and women, managers and workers, pilots, crew and office staff – who have worked with passion and commitment for our new launch. The transition to a sustainable and profitable Alitalia has required tough decisions but we all share the conviction that this new beginning, oriented towards growth, will bring new opportunities for everyone.”

The comprehensive business plan provides for the revitalization of Alitalia’s brand, to embody all the things for which Italy is renowned – food, fashion, culture and lifestyle – in a ‘Made in Italy’ premium service concept and guest experience.

This will be accompanied by the implementation of measures to drive increased inbound tourism into Italy and to support the country’s economic growth.

While maintaining the relevance of short-haul routes, the proposed network plan focuses on the profitable growth of long-haul flying from both Rome Fiumicino and Milan Malpensa. This will include flights to new destinations, increased frequency in certain existing markets and an enhanced network to Abu Dhabi to capitalise on growing traffic between Italy and the UAE, and provide Alitalia’s passengers with seamless connectivity to Etihad Airways’ global network.

Starting from Winter 2014, Alitalia will increase frequency between Rome Fiumicino and Abu Dhabi from five per week to a daily service, and commence a new daily service between Milan Malpensa and Abu Dhabi. This flying will complement Etihad Airways’ existing daily services on these markets and open up a range of new connecting opportunities for passengers of both airlines.

From Summer 2015, Alitalia will also begin to implement connections between other Italian cities and Abu Dhabi, with plans for direct flights from markets such as Venice, Catania and Bologna.

Rome Fiumicino will emerge as a larger European intercontinental hub, with up to five new routes over the next four years, while long-haul flights from Milan Malpensa will more than double to 25 flights a week by 2018. Alitalia’s widebody fleet is planned to grow by a third, while its narrowbody fleet will be rightsized to meet the requirements of the new network plan.

Members of the MilleMiglia frequent flier program will be able to ‘earn and burn’ on Etihad Airways and partner airlines, with future integration of the programmes planned.

While network integration and optimization will deliver top-line revenue growth for Alitalia, the cost synergies inherent in the partnership will provide substantial opportunities. These include streamlined hub operations, and joint procurement in the areas of aircraft, engines, maintenance-repair-operations, training, catering, ground-handling and fuel. The partnership will also pave the way for the redesigning and automating processes and working arrangements in line with best practice, and the adoption of leading IT platforms.

To better serve the Italian cargo market, which is the third largest in Europe, Alitalia’s cargo business will be relaunched and expanded, with the establishment of a centre of excellence in Northern Italy, investment in handling capabilities at Italian airports, and the optimization of an integrated cargo network.

James Hogan said: “Italy is a hugely important market for Etihad Airways, from both trade and tourism points of view. The UAE is Italy’s top trading partner in the Middle East and North Africa region, and is home to more than 10,000 Italian citizens and 300 Italian companies.

“The possibilities when we knit together our network with those of our existing equity partners, including airberlin, Air Serbia, Etihad Regional, Jet Airways, Virgin Australia, Air Seychelles and Aer Lingus, and of course our strategic codeshare partner, KLM-Air France, will provide the most compelling customer offering.”

Etihad Airways currently operates daily services from Abu Dhabi to Rome and Milan, which complement Alitalia’s five flights a week from Rome to Abu Dhabi. The two airlines also codeshare to a total of 31 other destinations.

Copyright Photo: Karl Cornil/AirlinersGallery.com. Alitalia is very likely to receive a brand overhaul including a new aircraft livery. Airbus A330-202 EI-EJO (msn 1327) arrives back at the Rome (Fiumicino) hub painted in the updated 2006 livery.

Alitalia (2nd): 

Etihad Airways: 

Guest Editor Aaron Newman

Guest Editor Aaron Newman

Power Shift; Gulf Carriers Threat to Alliance Airlines

By Aaron Newman

There are not many days that go by without seeing news come from the Middle East’s emergent airlines. Emirates Airline (Dubai), Etihad Airways (Abu Dhabi) and Qatar Airways (Doha) have been populating the headlines with large aircraft orders, launching new routes, new state-of-the art airports, and lavish onboard improvements. These three airlines have made established legacy carriers across the globe uneasy as they present a real threat to the established airlines bottom line. Alliance airlines like British Airways, KLM-Air France, Lufthansa, American and United have long dominated trans-oceanic high-yielding business markets. Are these industry mainstays slowly losing their grip?

Emergence of Gulf Carriers

Rapid economic development of Persian Gulf countries in the 1970’s and 80’s were due largely in part of the discovery of vast oil and gas reserves and the growth of OPEC. This caused large amounts of capital to flow into these small Gulf nations. Over time, small oil nations began looking for ways to diversify their country’s portfolio in a fear that oil reserves will eventually run out. These three state owned airlines are now an integral part of their countries respective economies. Qatar Airways for example, claims to count for 11% of the state’s GDP. Supported by friendly regulatory environments, government spending on airport infrastructures, and new, reliable long-haul aircraft, these carriers have transitioned from small regional airlines to global mainstays in a decade’s time.

Keys to Success

Access to cheap capital; the Gulf States have access to large cash reserves from oil and gas resources. This enables Persian Gulf nations to finance rapid growth, and offers support with airport development and infrastructure.

Graph Source: wsj.com

Regional competition; the Gulf airlines cooperate on many issues but also vigorously compete with each other, creating the need for efficient operations and continual product development to attract new customers.

Geography; the Middle East is ideally placed to link major global population centers. It sits at a cross-road between Europe, Africa and Asia.

Emerging market demand; demand from emerging markets is rising fast as a rapidly growing middle class has the time and money to consider travelling by air for leisure and business. The Gulf is located between the mature economies of Europe and the emerging markets of South East Asia, India, China and Africa.

A New Formidable Opponent

The Gulf airlines have combined home markets of only 7.5 million people, and so must rely on connecting passengers with a hub and spoke system. European airlines have been particularly hard hit by this, watching their natural customers travel on Gulf carriers instead of the country’s national carrier. Christoph Franz, former CEO of Lufthansa Group, highlights the challenging future of his prior company on a new Emirates route from Lisbon to Dubai saying , “we are talking about passengers who until now were primarily attracted by flights from Lisbon to Munich, in order to go on to Asian destinations. At least part of them are not flying via Germany anymore,” he says. “In the beginning we were talking about a competitive threat on paper – now we are talking about reality in our markets” (ft.com).

Copyright Photo: Keith Burton/AirlinersGallery.com. Etihad Airways Airbus A340-642 A6-EHF (msn 837) departs from London’s Heathrow Airport.

In a June warning to its investors, Lufthansa cautioned the possibility of downward revisions to the airlines earnings outlook. Chief Financial Officer Simone Menne cited pricing pressure from the Gulf carriers’ expansion into Europe as a major contributing factor. Gulf airlines, which are adding capacity in major European cities such as Paris and London, are also ramping up service in secondary cities like Barcelona and Hamburg. This means that they’re grabbing market share from the European carriers not only at their hubs, but also at their spokes.

Competing on American Soil

The Gulf three now send nearly 120 large, new planes weekly to a growing number of American cities (WSJ.com). Though the United States and Canada are geographically better positioned than their European counterparts, the Gulf carriers still pose a credible threat. Airlines and governments in North America have been fighting back where they can. In Canada, the government has limited the number of planes that Etihad, Emirates and Qatar can land at its airports–a move to protect Air Canada, and its partner Lufthansa.

Graph Source: Emirates.

“Essentially, these are not airlines—they’re governments,” said Delta CEO Richard Anderson. “They have the ability to gain advantages in markets because profitability doesn’t matter.” He said the U.S. government should revisit its air treaties with other nations to ensure there is “equity” in commerce (wsj.com). Many industry analysts say U.S. opposition has slight chance of slowing down the Gulf carriers in the deregulated era. Washington is unlikely to alienate its Mideast allies, and Boeing, the U.S.’s biggest exporter, gets 10 percent of its wide-body orders from the Gulf carriers.

Looking Into the Future

With a backlog of more than 500 wide body aircraft orders, do not expect these airlines growth to subside. According to a recent report by Credit Suisse, Etihad Airways, Emirates, and Qatar Airways will increase the number of seats offered on their Europe-to-Asia flights between 8 and 18 percent a year between now and 2020 (thefinancialist.com). I believe you will continue to see these airlines enter more secondary markets to grab market share from legacy carriers. I envision cities like Chengdu, Sapporo, Brasilia, and Charlotte N.C. as cities that Gulf carriers will have their eyes on for future growth. With new airports and new aircraft, growth is inevitable; at this point it is not a matter of if Gulf carriers will continue to grow, but it appears to be a matter of when and where.

What can European, Southeast Asian and North American airlines do in response to the new threat to their long-haul business? Airlines must first cut costs. This is critical, particularly for European airlines to remain competitive. For example, Lufthansa needs to reduce costs on flights to Southeast Asia by 40 percent to stay competitive. Another example, according to Credit Suisse, Air France and IAG (British Airways Parent Company) has 30 percent higher unit costs on flights to Southeast Asia than some Asian competitors, Turkish Airlines, and Emirates (thefinancialist.com). Secondly, airlines could reduce route competition and shelter revenue by developing mutual partnerships with the Gulf carriers.  These relationships would make it easier for both Eurasian and North American carriers to get more customers into the Middle East, India and developing nations in Africa with little investment required. As the saying goes; if you can’t beat em,’ join em.’

Emirates: 

Etihad Airways: 

Qatar Airways: 

Bottom Copyright Photo: Stefan Sjogren/AirlinersGallery.com. Airbus A380-861 A6-EDJ (msn 009) of Emirates arrives at London (Heathrow).

Airberlin (airberlin.com) (Berlin) reported a net profit of €8.6 million ($11.4 million) for the second quarter, reversing a net loss of €38 million ($50.4 million) for the same quarter a year ago.

The company issued this full report:

In a difficult market environment, Airberlin achieved a slightly improved operating result (EBIT) in the second quarter of the year with turnover up by 2,9% to 1,146.4 million euros. Compared to the same quarter of the previous year, Airberlin was able to improve EBIT (Earnings before Interest and Tax) to -6.9 million euros from -8.1 million euros in the previous year. Taking into account other operating income of 4.8 million euros (previous year 39.2 million euros) the annual comparison on operating level shows an improvement of more than 35 million euros. Net profit was with 8.6 million euros, an increase of 46.6 million euros on the previous year (-38.0 million euros).

In particular, Airberlin was able to increase the yield by 3.0% to 120.52 euros (previous year 116.97 euros). Offering increased by 2.9% flights and 3.5% available seat kilometers (ASK). In line with market conditions, load factor was with 82.4%, 1.3% percentage points below that of the same quarter the previous year. However, higher yield revenue per available seat kilometer (RASK) was nearly stable with 7.16 cents (previous year 7.20 cents).

The cost reduction initiatives launched under Turbine last year are on track and are also showing effects in the second quarter. Year on year, airberlin managed to lower the costs per available seat kilometre excluding fuel (CASK) by 2.8% to 5.50 cents (previous year 5.66 cents). Including fuel, CASK fell by 3.7% to 7.24 cents (previous year 7.51 cents). The cost reduction was achieved despite a rise of 8.3% in expenditure for aviation tax, as well as an increase in personnel cost of 13.9% driven by wage increases and one-off costs.

A high level of liquidity

Following a successful recapitalization program, Airberlin has liquid assets in the amount of 600 million euros cash on hand and nearly 300 million undrawn cash facilities available. Compared to year-end 2013, available cash increased by 378 million euros. Following the injection of the subordinated perpetual convertible bonds equity, increased by nearly 130 million euros compared to the end of the first quarter 2014 and stood at -270 million euros at the end of the second quarter. As a reporting date under IFRS, the equity capital has no effect on the financial operation of the company.

Airberlin’s partnerships with Etihad Airways and its network partners and oneworld® have developed very well in the second quarter. The number of passengers on the shared route network with Etihad Airways continued to grow at 7% in the first half year, with approximately 270,000 guests in absolute numbers. Additional routes from Stuttgart, Berlin and Vienna will contribute to future growth. Also the number of passengers on codeshares within the oneworld alliance rose by 7% in the first half year.

First elements of restructuring program announced

When presenting the results for Q2 2014, Airberlin’s CEO Wolfgang Prock-Schauer said: “We were able to improve the net result and our operating result is looking better than it did a year ago, but this is not sufficient. We are determined to restructure Airberlin to ensure the airline moves back to a sustainable profitability within three years. Over the last few months we have been intensively working on the restructuring program. After diligently weighing and validating all of our options in the past months, we decided that airberlin will continue to serve the three core segments, namely Europe, touristic and long haul. We substantially change the way we do business and the way we serve our market. We are able to share some first elements today.”

First elements of the program include:

Focused network:

Airberlin will focus on the largest travel markets in the DACH region (Germany, Austria, Switzerland) as well as Palma de Mallorca and connect these high volume routes with high frequencies in point-to-point traffic. The new network design will lead to a more stable operation throughout the year, reducing the effects of traditional high seasonality. The more focussed network design could equate to a capacity reduction in the region of 10% and will lead to a significantly more efficient operation.

Closer cooperation: closer cooperation with Etihad Airways and its network partners: Airberlin and Etihad Airways are in a process of exploiting synergy potentials in all areas in a win-win-situation for both airlines and other network partners. As a next important step Airberlin is in a process of putting together a framework for a close bilateral cooperation with Alitalia, subject to regulatory approvals.
Narrow body fleet harmonization: In order to achieve a more efficient operation airberlin will strive for narrow body jet fleet harmonization in its entire network.

Streamlining operating platforms: Airberlin is in a process of streamlining and restructuring the operational platforms it uses (AOCs). In line with network adjustments, it intends to reduce its fleet by approximately 10 aircraft. Combined with the new network approach this will enable us to eliminate underperforming elements of our business.

Close down of crew stations: Airberlin has decided and agreed after negotiations to close down five of its smaller crew bases, which will result in higher efficiency and productivity of crew resources. This measure affects the work location of pilots. This does not mean that these airports are not served by Airberlin anymore.

Enhanced commercial capabilities: Airberlin will drive commercial effectiveness with state-of-the-art commercial capabilities by optimizing our overall market approach. This includes a dedicated distribution approach in the segments we serve including our tour operator business.

Copyright Photo: Bjoern Schmitt/AirlinersGallery.com. Airberlin and the official marketing organization for the United States of America, Brand USA, are strengthening their collaboration and jointly unveiled this Airbus A320-214 registered as D-ABNB (man 5246) with this special USA livery at Dusseldorf Airport.

For Airberlin, the USA is a strategically important core market. Airberlin flies nonstop from Germany to five destinations in the USA and this summer has also increased the frequency of five different routes. There is now a daily flight from Berlin (Tegel) to Chicago (O’Hare) and the connection between the German capital and New York (JFK) has been topped up by three flights to make ten weekly connections. From Dusseldorf, Airberlin also offers ten flights a week to the Big Apple, as it did last summer. This summer there are also flights four times a week from Berlin and daily from Dusseldorf to Miami, as well as several times a week from the North Rhine Westphalian capital to Fort Myers and Los Angeles. Recently there were celebrations to mark 20 years of the connection (previously by LTU) between Dusseldorf and Fort Myers: Airberlin is the only airline to serve this destination nonstop from Europe. There are feeder flights to Berlin and Dusseldorf from numerous German and European cities. In the USA, Airberlin also offers its flight guests around 60 additional destinations through the codeshare agreement with oneworld® partner American Airlines.

Airberlin: 

Etihad Regional (Darwin Airline) (Lugano and Geneva) will add Brussels, Belgium on March 29 with two routes radiating to Dresden (three days a week) and Leipzig (four days a week). The new routes will be operated with ATR 72s.

Etihad Regional is the new European brand operated by Darwin Airline, the leading regional carrier of Switzerland. The airline is a full service carrier with a fleet of eight 50-seat SAAB 2000 turboprop aircrafts and four 68-seat ATRs 72-500s, operating to over 30 destinations in 9 European countries: Switzerland, Germany, France, Italy, Spain, Austria, Serbia, Netherlands and UK. Besides serving a range of key secondary cities in Europe, Etihad Regional offers international destinations across the entire world through its future 33.3 per cent shareholding equity and codeshare partner, Etihad Airways.

Copyright Photo: Karl Cornil/AirlinersGallery.com. ATR 72-212A (ATR 72-500) HB-ACC (msn 664) arrives in Toulouse.

Etihad Regional: 

Current routes from Geneva:

Air Seychelles (Mahe) has announced the launch of nonstop flights to Antananarivo, Madagascar, commencing on December 3, 2014.

The twice-weekly flights to the capital’s Ivato International Airport (TNR) will be operated using a two-class Airbus A320 aircraft with 16 Business Class and 120 Economy Class seats.

In other news, Air Seychelles has also announced the launch of twice-weekly flights to Dar es Salaam to commence on December 2, 2014, marking the next stage of growth in the airline’s regional strategy.

The Tanzanian capital becomes the third destination in Air Seychelles’ Indian Ocean and African network, after Mauritius and Johannesburg. The route will be operated using a two-class Airbus A320 aircraft.

Air Seychelles recently added a leased Airbus A320 from partner Etihad Airways.

Air Seychelles: 

Route Map: The route maps now shows the connecting routes of Etihad Airways growing list of “family airlines”.

Etihad Airways (Abu Dhabi) has 10 new Airbus A380-800s on order. The airline is intending to introduce a new special livery (or a new color scheme for the fleet?) with the first delivery. The company has not yet unveiled this special design but we now have a clue. Today in Toulouse the first Airbus A380 took to the skies.

Copyright Photo: Eurospot/AirlinersGallery.com. Airbus A380-861 F-WWAB (msn 170) is the first copy and wears this temporary registration until it is handed over in December.

Etihad Airways: 

Etihad Airways (Abu Dhabi) has unveiled a new look for the delivery of the first Airbus A380. The first Boeing 787 will follow in the same eye-catching color scheme. This new livery will be painted on the entire fleet. The fast-growing carrier issued this statement and photos:

Etihad Airways, the national airline of the United Arab Emirates (UAE), today (September 26) unveiled a stunning new livery design which will be introduced across its fleet.

Created by leading brand consultants Landor Associates in partnership with Etihad Airways, the new livery is inspired by traditional Emirati design patterns, the landscapes of the desert and the geometric shapes found in the modern architecture of Abu Dhabi.

The result is a striking and unique livery design which will present Etihad Airways as the airline of a progressive and innovative cultural hub, firmly rooted in its rich history.

The new livery was unveiled as Etihad Airways’ first A380 rolled-out of the paint hangar at the Airbus Finkenwerder facility in Hamburg, Germany.

James Hogan, President and Chief Executive Officer, Etihad Airways said: “Only a few months ago Etihad Airways unveiled the new cabin interiors for our A380 aircraft and we are now proud to show the world how this aircraft will look on the outside.

“The striking new livery also continues our commitment to breaking from convention and doing things differently. This is a real divergence from the norms of traditional airline livery design and will stand out in the sky and at every airport we fly to.”

The design pattern named ‘Facets of Abu Dhabi’ uses a colour palette which reflects the varying hues of the landscape of the UAE, from the darker sands of Liwa to the lighter colours seen in the Northern Emirates. The design development involved researching design options amongst Emiratis and international travellers to help select the final ‘winning’ livery.

The UAE national emblem is given prominence along the fuselage next to the Etihad name and the national flag is respectfully featured forward near the cockpit.

The design pattern is also a key feature of the new cabin interiors being introduced on Etihad Airways’ Airbus A380 and Boeing 787 aircraft, and is being rolled out across the airline’s corporate branding – from advertising to brochures to premium lounges.

Peter Knapp, Global Creative Officer of Landor Associates, said: “Etihad Airways is undoubtedly a leading airline on the international stage and this new livery is a real step change in the industry. I believe there will be nothing like it on any apron in the world.

“It tells the remarkable story of this region and of Abu Dhabi’s past, present and future, providing a narrative for an innovative airline brand. We used the ambient geometry present in the architecture and culture of the emirate and reinterpreted it with a sense of Arabian modernism which has become synonymous with Etihad and Abu Dhabi itself.”

The entire Etihad Airways fleet of more than 100 aircraft, as well as those to be delivered, will be painted in the new livery during the next three years ensuring that the Facets of Abu Dhabi is seen across the world.

Etihad Airways will take delivery of seven wide-bodied aircraft in 2015 – four Airbus A380s and three Boeing 787-9s – and seven narrow-bodied aircraft – one A320 and six A321s.

Etihad Airways, which celebrated its tenth anniversary in 2013, has introduced unique liveries on several of its aircraft to mark special events and occasions.

These include an Airbus A340 and A320 in Formula 1 livery to celebrate the Formula 1 Etihad Airways Abu Dhabi Grand Prix. The airline also flies a Manchester City FC Airbus A330 painted in the Premier League club’s sky-blue colours with the name and crest clearly visible on both sides of the aircraft.

Etihad Airways’ first Airbus A380 will operate on flights between Abu Dhabi and London Heathrow from December 27, 2014. The two subsequent deliveries of the A380 in early 2015 will also service the route, making it a triple daily A380 operation.

Later in 2015, A380s will operate to Sydney and New York as Etihad Airways receives its fourth and fifth aircraft. The airline has currently 10 of the giant double-decker airliners on firm order.

The Etihad Airways A380 is set to transform luxury air travel with The Residence by Etihad, which features a living room, separate double bedroom and ensuite shower room, making it the first three-room luxury suite in history of commercial aviation.

The Residence by Etihad, located on the forward upper deck of the A380, can accommodate one or two guests who will also have a personal Butler trained by the Savoy Butler Academy in London.

Etihad Airways’ A380 will also feature new First Apartments, which are fully private suites with a separate reclining lounge seat and full-length bed; as well as the new Business Studio and Economy Smart Seat.

Copyright Photo: Airbus (all others by Etihad Airways). The first A380, the pictured A380-861 A6-APA (msn 166), is pictured at the Hamburg (Finkenwerder) Airbus facility.

Etihad Airways: 

Previously the airline unveiled images of the Airbus A380 interiors: CLICK HERE

Video: the painting of the Airbus A380:

Video: The unveiling of the new livery:

Video: The new livery:

Video: Time lapse video of the assembly of the first Airbus A380:

Boeing (Chicago) last night (September 27) rolled out of its paint hangar the first 787-9 Dreamliner that will be delivered to Etihad Airways (Abu Dhabi). Boeing 787-9 A6-BLA (msn 39646) is painted in the airline’s new ‘Facets of Abu Dhabi’ livery with colors reminiscent of the desert landscape, inspired by the culture, Islamic design and architecture motifs of the United Arab Emirates.

Etihad Airways, the national airline of the UAE, will take delivery of its first 787-9 later this year. Etihad Airways is one of the world’s largest customers for the 787 with a total of 71 Dreamliners on order, including 41 787-9s and 30 787-10s.

The new 787-9 complements and extends the super-efficient 787 family. With the fuselage stretched by 20 feet (6 meters) over the 787-8, the 787-9 can fly more passengers and more cargo farther with the same exceptional environmental performance – 20 percent less fuel use and 20 percent fewer emissions than the airplanes it replaces.

Nearly 60 customers from around the world have ordered more than 1,000 Dreamliners, approximately 40 percent of which are 787-9s.

Etihad Airways’ first Boeing 787-9 will be delivered in December 2014, and more than 40 international routes have been identified for future operation by the airline’s Dreamliners. The aircraft will initially operate between Abu Dhabi and Düsseldorf and between Abu Dhabi and Doha. Services to Brisbane, Mumbai, Moscow and Washington D.C. will follow in the first half of 2015.

Etihad Airways has also revamped its product offering on the Boeing 787 based on extensive consumer research, with refinements in all three cabins.

The new First Suite on the B787 will offer guests a private sanctuary with many new features, including a chilled mini-bar and 5-star cuisine prepared on board by world-class chefs. The new Business Studio offers larger seats, all of which have direct aisle access and convert to a fully flat, pneumatically adjustable bed. The Economy Smart Seat is an industry-first and provides unparalleled comfort for travellers with a new ‘fixed wing’ headrest, maximising comfort and enhancing the sleep experience. The B787 will also feature the latest Panasonic eX3 entertainment system, providing more than 750 hours of on-demand entertainment, improved gaming and high-definition screens in all cabins.

The new ‘Facets of Abu Dhabi’ livery uses a color palette which reflects the varying hues of the landscape of the UAE, from the darker sands of the Liwa desert to the lighter colors seen in the Northern Emirates. The result of extensive research, the design will also be a key feature of the new cabin interiors being introduced on Etihad Airways’ Boeing 787 aircraft.

Copyright Photo: Boeing.

Etihad Airways: 

Video: Building the 787:

Video: The painting of A6-BLA:

Video: Etihad’s new 2014 livery:

Etihad Airways (Abu Dhabi) today (October 8) unveiled Etihad Airways Partners, a new brand which brings together like-minded airlines to offer customers more choice through improved networks and schedules and enhanced frequent flyer benefits.

Initially, six airlines will participate in the new partnership – Airberlin, Air Serbia, Air Seychelles, Jet Airways, Darwin Airline (Etihad Regional), and Etihad Airways.

However, any airline can become an Etihad Airways Partner even if it is part of an existing alliance, such as Airberlin, which is a member of oneworld.

The key emphasis for Etihad Airways Partners is a strong commercial partnership and shared values.

James Hogan, President and Chief Executive Officer of Etihad Airways, said “We are broadening our business model to articulate and define a partner proposition for like-minded airlines which will result in synergies and efficiencies for participating airlines on the one side, and enhanced network choice, service and frequent flyer benefits for the consumer on the other.

“The Etihad Airways Partners logo is a seal of excellence and global cooperation. It will be displayed on aircraft and on branded materials by a group of airlines working together to connect travellers around the world, and increasingly to harmonise standards in the air and on the ground.”

Mr Hogan said Etihad Airways Partners differed from legacy airline alliances by offering benefits well beyond pure commercial cooperation.

“The potential for network alignment to maximise flight connectivity for passengers, together with a shared passion for superior service, are central to the ethos of the Etihad Airways Partner concept,” he said.

“Frequent flyers will benefit from the formation of Etihad Airways Partners as it will remove the complexity and confusion that exists within the global alliances.

“We’re aiming to deliver a consistent experience for frequent flyers when they travel, as well as a consistent framework for earning and using their miles.”

This will include standardised mileage and tier benefits across all partners, no blackout periods and priority services.

Etihad Airways Partners will also have access to economies of scale and operational synergies such as centers of excellence, shared sales teams in certain destinations, joint procurement of services and supplies, and shared pilot and cabin crew training at the Etihad Airways facilities in Abu Dhabi.

Above Photo: (Left to right): Maurizio Merlo, CEO Darwin Airline; Wolfgang Prock-Schauer, CEO airberlin; James Hogan, President and CEO Etihad Airways; Cramer Ball, CEO Jet Airways; Dane Kondić, CEO Air Serbia, Manoj Papa, CEO Air Seychelles; celebrate the launch of Etihad Airways Partners.

Etihad Airways: