MOL plays rough with Aer Lingus (again)

Its never a slow news day when MOL opens his mouth is it? His latest move really demonstrates how fiendishly clever he is. Ryanair handed its votes on the issue of director pay at Aer Lingus to the Irish government. This forces the state, and major shareholder, to decide whether the stricken airline's board members are paid too much in an unfettered way. No matter what happens with this vote, MOL wins.

Ryanair proposed cutting the salary of the former state airline's chairman Colm Barrington to just €35,000 ($50,000) a year in a bid to cut costs. No surprise, Aer Lingus rejected this proposal, and so now Ryanair wants Irish Transport Minister and 25% stake-holder Noel Dempsey to decide how the voting should go. Dempsey will want to vote in favor of Aer Lingus' management. But if he does, the state looks downright foolish and pandering. Readers no doubt know the Irish economy is in the tank and a vote for Aer Lingus will quickly be painted as more frivolous state spending.

"The fact that the board of Aer Lingus has refused to reduce its directors' fees... in recognition of the urgent need to reduce costs in the face of rising losses... leaves it with little or no credibility when it comes to negotiating further cost reductions with its workforce and trade unions," MOL said in a statement.

He said the way Dempsey decided to use the near 55% of the votes at next Friday's annual general meeting would also determine the credibility of the government. In chess this would easily qualify as check mate. A brilliant move by MOL and totally out of the box thinking.

In other news --

• OnAir wins EgyptAir
• Frontier reports profit - 6 times in a row
• Piasecki combo-chopper test video
• Emirates tips its hand

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Airbus tanker wins - again

The tanker story never seems to end does it? The Indian Air Force decided to buy six A330 MRTTs rather than six IL-78 aerial tankers. India has been using six IL-78s since 2003, but felt the MRTT was a better value. What a shock! Poor reliability and maintenance support, as well as unpredictable pricing, leads India to increasingly depend on Western military gear.

The MRTT carries 111t of fuel, plus 43t of cargo on 26 pallets. The MRTT can also carry 238 passengers, because its main deck does not have fuel containers as is the case with the IL-78. This makes the MRTT more flexible and capable of moving lots of cargo or troops.

India is buying these MRTTs for ~$167m apiece, delivery begins in three years. By the way we hear that Boeing is moving towards a 767-400 based tanker for the next round. Its no wonder why is it?

In other news --

• Premium Podcasts here
• ANZ happy with biofuel test data
• bmi and Virgin get closer
• IATA gives ore bad news

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Qantas ditches some first class

They are only doing this on selected routes and only on 747s. The deal is limited to Sydney-Buenos Aires, Sydney-San Francisco and Melbourne-Hong Kong-London between July 6 and October 31.

But this does tell us something. Traffic, especially premium traffic is off big time. More here. The long standing industry thinking of gouging business travelers has hit something of a wall. Now the airline industry keeps talking of things coming back.

Well there is no certainty anything like the good old days are coming back. Rather look at the evidence - firms like CISCO have probably cut back business travel for ever. Their future is in less travel and vastly upgraded tele-commuting and video conferencing.

So when the economy comes back, as it will, people will have learned new ways of getting their work done at much lower costs. The lost time of traveling will be seen as even more expensive than staying late in the NY office to speak with customers or colleagues in Hong Kong. The commute home sure beats 14 hours cramped in a seat. Moreover, when the economy comes back the consensus seems to be that oil will once more head towards $150/bbl. That will crimp airlines' business even more.

See when things go this way, the percentage of travel done for business at the expensive end of the plane may have shrunk permanently. Seriously, how many people can justify paying nearly $20,000 for a seat? Especially when maybe forty feet back somebody else paying under $1,000 for the same trip?

We are in the midst of a sea change in air travel.

In other news --

• BA's results
• Qantas charges for exit rows, gives first class away - yes, its true
• Air NZ ponders 737-300 replacements
• CH-47 - Boeing's next legendary aircraft (trifecta B-52, KC-135 & CH-47)

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Spirit changes roil contractors

There are people changes taking place within Spirit Aero which have yet to reach the industry media. That is likely to change rapidly over the next few days. Follow this interesting email exchange...

From: @zerochaos.com Sent: Thursday, May 14, 2009 9:19 AM To: Subject: ZeroChaos Conversion Information Spirit is moving all contractor labor under ZeroChaos. They will no longer be using Volt or PDS. Regards,

From: @spiritaero.com] Sent: Thursday, May 14, 2009 10:22 AM To: @zerochaos.com Subject: RE: ZeroChaos Conversion Information You said we will get paid for the hours we work...we will get overtime pay right?

From: @spiritaero.com] Sent: Thursday, May 14, 2009 9:44 AM To: @zerochaos.com Subject: RE: ZeroChaos Conversion Information Are you planning on getting rid of PDS and Volt also and if not why could we not transfer to one of them?

From: @zerochaos.com] Sent: Wednesday, May 13, 2009 5:08 PM To: undisclosed-recipients Subject: ZeroChaos Conversion Information Importance: High Welcome to ZeroChaos!
Please read this email in its entirety. ZeroChaos will become your W-2 employer of record while on this project. Any hours worked will be paid out by ZeroChaos and you will receive a W2 at the end of the year from us.
If I haven't already, I will be reaching out to you individually within the next couple of days to personally introduce myself, confirm information and field your concerns directly. However I wanted to provide you with the answers to the majority questions I have received thus far.
Can I choose another payrolling vendor? ZeroChaos has been named the primary payroll vendor for Spirit Aerospace. Effective June 5th 2009 all contractors whose employer will not be invited to participate in the MSP Program will be moved over to ZeroChaos for payroll.
Will I have vacation, holiday and sick pay?-- ZeroChaos does not reimburse for any holiday, vacation or sick pay unless approved by the client. At this time Spirit has made the business decision not to allow for these items.
Will my pay rate stay the same or be adjusted? Your base pay rate will remain the same. No adjustments will be made.
Will I receive my per diem (if applicable)? -- Per diems will only be allowed at a rate of $110 per week for the first year of service. Therefore if the start date on your project occurred prior to 5/13/08 you are ineligible for per diem moving forward.
To confirm your current pay rate for this conversion please fax your latest pay stub to my attention via 407-219-3191. Feel free to mask all information with the exception of your name, hours worked, per diem (if applicable) and gross pay.
By the beginning of next week, you will have received the Registration email. In that email your user name and password is provided with instructions to complete your on-line enrollment. You need to complete your on-line enrollment and then download your enrollment documents (W-4 form, I-9 form, direct deposit form, member agreement, etc) and fax the signature pages along with copies of ID's to (800) 675-8189. Once we receive the fax we will let you know via email if we are missing anything.
Please note that the Background and Drug screenings have been waived for this conversion, therefore you will not be required to sign and return those documents. If you have any questions about the enrollment process, please call me at 877-937-6242, Ext. xxxx
Please check your email daily during this Enrollment Process, so you don’t miss any updates from us.
Upon successful completion of your enrollment, you will receive a final email from me regarding timesheet entry and payroll procedures. You will continue to submit timesheets weekly through CATS and will be paid weekly. You will be paid for every hour worked. There are no paid vacations or holidays for this contract assignment.
If you have any further questions or concerns feel free to reach out to me directly. Best Regards,

From: @spiritaero.com] Sent: Friday, May 15, 2009 7:13 AM To: Subject: ZeroChaos Conversion Information Importance: High
Attention all Spirit contractors:
We are sorry that due to Economic circumstances, we have to layoff 300 Contractors effective immediately.
It appears that Spirit has elected to roll ALL engineering contractors into a new "company" shop called ZeroChaos on June 5, 2009.
They will be your new employer and you will work under their new terms (or not).
I believe the main change is that Chaos will not pay for vacation days, sick days, or holidays. This amounts to a reduction of 18 days of pay (if you stay a fill year to receive the 1 week of vacation pay).
Fortunately, Chaos states that the overtime pay will remain at 1.5 times the base rate, and the base rates will not change. It is still unclear if they will retain a "per diem" income split to reduce your taxes.
The per diem period remains the same, and terminates after 1 year of employment. Please see the following emails for more information. Welcome to the new world of Zero Choice.
Regards,

From: @prepaidlegal.com Sent: Friday, May 15, 2009 2:04 PM Subject: Class Action Lawsuit against ZeroChaos Conversion Information
DON'T JOIN THIS or LET IT HAPPEN...IT WILL CHANGE OUR ENGINEERING COMMUNITY FOREVER!!!!!!!!!!!!!!
SEND THIS TO EVERY CONTRACT ENGINEER YOU KNOW...
Gino has been informed that PDS contractors have access to an employee benefit called "The Pre-Paid Legal Family Life Events Legal Plan" and are being encouraged to use this benefit to form a class action lawsuit against Spirit Aerosystems and ZeroKaos. All contractors with other shops are being encouraged to join the plan and to notify their provider firm they wish to participate in the class. Spirit Tulsa is now 100% ZeroKaos. Spirit Wichita has just begun the transition (though Wyatt is not on the initial list of shops being cut - simply mentioning the class action got me layed off the very next day)
Incidentally, ZeroChaos has a mandate to keep contractors for no more than 180 days - they are to place those contractors into direct positions by the end of that period. Spirit is the guinea pig for this process - Boeing will be next! (Sure feel sorry for those contractors without a plan B ;-) )
(If this info was important to you don't forget I paid a rather high price for it - placements ARE still appreciated, but of course only if the rush gets to be too much for just one associate to handle!!)

From: Sent: Tuesday, May 19, 2009 12:46 PM To: Subject: RE: ZeroChaos Conversion Information
Low margin shop under bid the existing two shops in contract renewals. The low bid shop passes some of the cost on to the jobbers by not paying anniversary date (5 days pay) and holidays (6 days). The Chaos shop is trying to get market dominance by under cutting their profits some. Tulsa is history anyway. There is no work left that Wichita can’t handle.
http://orlando.bizjournals.com/orlando/stories/2007/05/28/smallb1.html?b=1180324800^1467437
http://dayton.bizjournals.com/orlando/stories/2008/06/16/daily36.html?jst=b_ln_hl
Looking at this from the shop’s perspective as owner:
Assume: designer gets $60 per hour, shop gets a mark-up of 20% on 40 hours worked.
$60*40(hours)*50(weeks)*.2=$24,000(shop’s sales revenue per designer)
Some of the costs to produce revenue is vacation and holiday pay: $60*11(days)*8(hours)=$5,280 another is employer’s payroll expense ( .062*$104,000=$6,448 employer’s FICA cost, .0145*52(weeks)*40(hours)*$60=$1,810, state unemployment $24,000*.025=$625, federal unemployment $120
Lets see in summation the profit after payroll costs: $24,000-5,280-6,448-1,810-625-120=$9,717
If you include overhead like rent and representative, the owner may get $2,400.
They need to have working capital of ½ years pay for all their jobbers. The working capital has an opportunity cost on the time value of money too. It is even worse with interest charges on a line of credit.
So Chaos under bid $5,280 per employee which is like taking .156 times the rate of $60 per hour on 40 hours worked as an exclusive contract. The usual shop rate is .20 times your rate on 40 hours worked

From: Sent: Tuesday, May 19, 2009 1:00 PM To: Subject: FW: ZeroChaos Conversion Information
Spirit is changing the game and it doesn't sound good.

In other news --

• Speculators behind the fuel price rise?
• Meet Congresswoman Richardson
• Republic to fly eJets for Midwest
• Emirates makes a profit

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The Bishop and the Germans

This cosy deal is coming apart fast and will probably end up in court. Lufthansa simply walk away from the takeover of bmi, unless Sir Michael Bishop provides more capital, the FT reported, citing Lufthansa finance chief Stephan Gemkow. The paper quotes Gemkow saying that bmi's weak finances mean that contractual conditions for the takeover have not been met. "What we want to have is the company in its contractually agreed state and that means the company has the licenses it needs to operate and the funds it needs to operate," the paper quoted him as saying. "We have a situation in which, to our understanding, the conditions have not been met... if they are not met, one day we will walk away." If any airline knows its takeover contracts its Lufthansa.

Last week, a Lufthansa spokeswoman said that the approval of the EU's anti-trust authority, granted on Thursday, meant that one of the conditions of the deal had been met, "but not all." So its a case of he said, she said. Bottom line is that the Bishop can be check-mated here - he's been very clever up to now. The deal was excellent for him and and his timing on selling was perfect. But the delay in consummating it has played out his advantages. He will have to end up in court. He dare not do anything to further fritter away value - like not using (and losing) LHR slots.

In other news --

• ATA reports bad news
• AF/KLM & Delta
• AMEX cuts deeper
• SuperJet revision

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Another scare...

Is there never enough of this sort of news? Take a look here.

If mechanics don't speak English, the international language of aviation, they can't read the manual and they can't record their activities.

...hundreds of mechanics with questionable licenses are working on aircraft in Texas.

The FAA declined to be interviewed for this report. This should cause a huge stink. This is worse than outsourcing. Insourcing trouble like this must be breaking some serious laws. Since this story made it to page one on Drudge, it has been seen by millions of eyeballs. We pity AA and WN and how they will get hammered by association (Dallas).

In other news --

• Rising oil prices
• Elbit & GD form UAV JV
• MiG-29s for training - this time in Israel; you paying attention Ahmadinejad?
• More bad news from IATA

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Olympic Airlines - hysterical!

Stupid is what stupid does - part of a series

This one is tough to beat - and it's NOT a US carrier! On Monday, Air Jamaica started charging passengers $25 for a second checked bag on flights from New York to Grenada and Barbados, but the second checked bag won't be on their flight. Really?

Air Jamaica will transport the first checked bag on passengers' flights, at no charge. All other bags will be transported within seven days and must be picked up at the airport, Air Jamaica says. Passengers ticketed on or before May 10 for travel after May 11 will be allowed two free checked bags in economy and three in executive class.

Get that? You pay and then you have to come pick up the bag. MOL is crying jealous tears of frustration he did not think of this first. Who goes on vacation to Jamaica for more than a week anyway?

Oh but it gets better - this policy is due to weight restrictions on the aircraft. Seriously? Take a look at their fleet. Wonder what Airbus has to say about this assertion? The PR heads should be banging against the wall.

In other news --

• Twitterati vent on Delta and SAA - this is good stuff with more to come
• Super Entendard doesn't really make it off a carrier
• China's first A320 flies - no comment on pirate parts please
• United builds ancillary revenues - with a VERY dumb fee

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BA to battle Virgin in a small way

Word is that BA will begin daily service between Heathrow and Las Vegas next fall. Right into the market Virgin has had to itself, quietly up to now. BA will use a 777 configured with 274 seats, 24 of which will be "world traveler plus," 36 business class and 214 economy class.

Virgin uses an A340-300, so the BA will have more seats and a faster plane. You know this means a fight. American will no doubt code share the BA flight, adding to the pressure. Then there is the bigger belly cargo the 777 offers. BA might do rather well in Las Vegas.

In other news --

• THY profit up 24%!
• Emirates expands regionally
• ATA seems a 7% drop in summer traffic
• MidEast traffic seems stable

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Deutsche bmi

The EU Commission in Brussels tonight gave the green light for the takeover of bmi by Lufthansa. The competition commissioners decided that while there are some overlaps on some routes, this would not have a major anti-competitive impact on the market served by both carriers.

Interestingly, the EU commission said it had compared the traffic figures and potential effects on 30 routes and has concluded that on most of these, the carriers already serve together under the Star Alliance roof and as such the novelty factor would be limited.

The Commission further highlighted that the parallel investigation concerning Lufthansa's takeover of SN Brussels did not have an effect on the bmi investigation, since the Commission regards SN Brussels as a subsidiary of Lufthansa, which is a wholly different scenario.

The only guessing game left is who will have a worse night's sleep over the news: WW or SRB?

In other news --

• V2500 engine breaks on wing record
• Guess who's traveling the most?
• The winds of change - India's expat pilots looking for gigs
• GEnx - family tree videos

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Amazing Qatar news

Take a look here.

Some really eye popping stuff - "How much do you expect it will save Qatar Airways once all your planes are fuelled by GTL?
GTL will not be a cheap fuel. It may not bring savings but it will increase the range of our aircraft significantly, by about 10-15 per cent (it is still being evaluated) with the same amount of fuel, while at the same time reducing carbon emissions."

That should get industry tongues wagging.

In other news --

• The web wins another round - Continental closes call center
• Bag fees here to stay - phooey!
• No way BA? Virgin deal with VisitBritain
• Ryanair's check-in costs you no matter what

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Lufthansa extends mobile boarding pass

The mobile boarding pass service Lufthansa introduced on its Frankfurt-Vancouver route has been extended and is now available on other routes, including nearly all long-haul flights departing Germany.

Many passengers are taking advantage of this check-in service - having a boarding pass sent to a smartphone in the form of a 2D bar code. About 85,000 passengers a month are already using this service. Mobile boarding passes can be used on flights from more than 30 airports in the EU and from all Lufthansa destinations in Canada.

In addition to flight data, such as the passenger’s name, flight number and departure time, the boarding pass contains a 2D bar code, which permits passengers to pass through security checkpoints and proceed straight to a departure gate. There, the bar code is read by a scanner, enabling passengers to board the aircraft.

Since the end of April, Lufthansa’s Online Check-in service has also offered a range of new options. In future, passengers who are traveling together will be able to check in independently and select seats next to one another even if they have not made a joint booking. All they have to do is click on “Add passenger” when checking in online. Passengers who have already checked in via the Online or Mobile Check-in service can now also change an existing seat assignment on the internet. Amazing!

In other news --

• Novel French security decision - they play well with others
• UK shies away from Typhoon order - can they afford the F-35?
• Brazil update - Azul makes its impact felt after 3 months
• Iberia focuses on cost cutting - just as BA gets interested again

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Lukla Airport , Nepal

Are you game for this ride? The Lukla airstrip was built in the 1960s under instructions from Sir Edmund Hillary. When using the runway there is no room for error. It is 351m long (1150ft) and rises over 30m (100ft) from the bottom to the top, giving it an angle of about 10 degrees. At the end of the runway their is an abyss to a valley 2500 feet below.

In other news --

• US buys a couple of Ukraine Su-27s
• UK LCC gets bashed - stupid is what stupid does
• Air Arabia profits +31% - wow!
• Delta sends a 744 to Eugene to bring to boys home

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David Field is back

Some people thought David Field, until recently with RBI's Airline Business, had retired. But you can't keep a good man down. He now has a blog that you can follow. You can enjoy David's perspectives on the industry from a much broader view now.

Australia's safety myth

The myth really got started with a movie (extra point if you guessed Rainman) - but it seems the recent snafus in Australia are part of something a bit bigger. Take a look here.

This is pretty scary reading - especially if you thought the Aussie's are truly aviation people. Turns out they are people just like the rest of us, only maybe a lot luckier. It is eye-opening reading.

In other news --

• GOL result - hanging on
• A400M remains at risk - but is too big to fail
• Lufthansa grows impatient - deals hanging, time's a wasting
• Qatar committed to growth - reality possibly suspended

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Prettiest picture you may have seen

Is this not one of the finest aviation pictures you have ever seen? It is for us.

In other news --

• The EU gloom
• Continental starts new Heathrow service - Cleveland?
• In-flight WiFi looking good
• US carrier results summary

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Has anyone else noticed the deals out there?

Tahiti for $860 (Airfare from LAX is $860 round trip (incl. all taxes) for Aug-Dec travel, if you can book by Mon). Beijing for under $1k (Emirates fans, they just dropped the price end of May New York - Beijing from $2000rt to $1000rt (going market price in coach $940rt)). Even United is in on the act - "Redeem 40,000 miles for round trip travel between USA and Buenos Aires and Brazil". There are amazing deals for anyone with cash or miles to buy a ride someplace exotic. Where do you find these awesome deals? Online - sort of.

We'd like to be among the first to advise you that there is an entirely new travel distribution system out there, which has quietly rolled on to the scene. This channel allows a seller to deal direct with you the buyer - no middleman, less cost to you.

Where is it? Get yourself a Twitter account and be prepared to be amazed at what is going on. Travel vendors - yes even airlines - are offering offline, unpublished Twitter only deals. Everyday, all the time. You would there is an endless supply. Particularly neat are deals from Icelandair.

A example of how bad it is for the travel industry can be seen here. Imagine that! Delta is offering travel agents 10% again.

Of course this is the place we all want a deal to visit, isn't it?

In other news --

• Etihad's new First Class
• THY signs for 777-300ERs
• Tougher times for easyJet
• Airbus slows A380 deliveries - breakeven who knows when?

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Weird fact

This day in 1945 the only Japanese launched balloon bomb killed six people in Oregon.

If you are wondering what this is all about, you're not alone. It came as a real surprise to us too. The link is recommended reading as this casts light on a weapon we had not heard of before. It is incredible that a bomb got as far as Detroit!

While the six who died were having a picnic, the pregnant wife of minister and 5 kids, is awful, it is a miracle of sorts that of over 9,000 launched, this was the only "success" for the Japanese.

In other news --

• Do we see a bottom?
• The coming fight at IAD/DCA/BWI
• BAA's results
• Various airlines report

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Emirates starts to show signs in indigestion

And there goes #75 for Emirates. A remarkable score really. That makes the airline one of the biggest operators of the 777. But where, oh where, are they going to put that plane? Since the A380 is too big for JFK and they already have 777s flying there, do they now add more flights? Which market do you think is crying for seats?

Indeed take a look at this story from The Chicago Tribune's Julie Johnsson. Ad its not just Emirates, now Etihad is also putting out their speed brake. In this last link Etihad's CEO makes one of his signature great comments "What people forget is that the [1.3bn] population within three hours flying time of here is the same size as China's" - all to the good. But a three hour flight is poor use of a 777 not to mention an A380.

Happily though, as reported here by Ivan Gale, Emirates is slowing its growth. With a 32% drop in its cash, Emirates should take a breather. Other than Airbus and Boeing, the rest of the industry will be delighted at this decision.

In other news --

• EADS gets around (the US)
• India's SU-30 crash - poor timing for Russia
• Sikorsky's X2
• The cash crunch among US airlines

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BA starts giveaway deal

BA launched a multi-million pound package of measures to help small and medium sized British businesses beat the recession and regain their rightful altitude. It teamed up with UK Trade & Investment (UKTI) and BritishAmerican Business (BAB) to offer 5,000 return flights worth up to £15m to help UK small and medium enterprises (SMEs) win new business abroad. BA is calling on other big businesses to throw their weight behind small British companies through a consortium to provide products, services or expertise that UKTI can offer as an additional package of help for SMEs, on top of the services already provided. WW said: "Small and medium businesses are the backbone of the British economy and they are hurting badly. 120 of them close every week. We are working with UKTI and BAB to give flights that will support British business as it tries to spearhead the UK's recovery. We live in a globalized economy so business opportunities don't always live on your doorstep. This initiative gives small businesses the chance to promote and sell their products overseas." "We'd love to see other British businesses pulling together in order to help the UK out of the recession. We've put up the flights to allow the SMEs to travel to do business and we'd be delighted if other companies would join us by offering services and skills that will bring real value and benefit."

In other news --

• Boarding a Dornier - funny video
• Another Chinese reality check
• IATA says industry ready for swine flu
• Air Arabia adds Athens

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