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Virgin Australia posts $A186m net loss

Borghetti Virgin Tigerair Tasmanstep down
Former Virgin boss John Borghetti.

Virgin Australia says subdued domestic trading and a move to simplify its fleet are largely responsible for an annual net loss of $A185.8 million ($US146.5m).

But chief executive John Borghetti expects positive momentum seen in the fourth quarter of 2016-17 to continue into the start of the current financial year.

He also pointed to balance sheet improvements that saw the airline free cash flow positive for the first time since fiscal 2012 and an $A839 million reduction in net debt.

The 2016-17 net profit was an improvement of $A38.9 million on the 2016 financial year and included restructuring charges from its Better Business program as well as an income tax benefit of $A103.8m.

This put the airline’s pre-tax loss at $A289.6 m, down from $426.6m the previous year, and saw it remain in the red on an underlying pre-tax basis with a loss of $A3.7 million

Group revenue rose $A26.3 million to $A5.05 billion.

The group’s underlying performance improved by $A38.4 million in the fourth quarter and Borghetti said improving yields were due to a number of factors.

“The first is that I think capacity is at more sustainable, rational levels across the industry so there’s a better match… between demand and capacity, he said.

Borghetti also pointed to reports that business confidence in Australia was running ahead of consumer confidence was consistent with what the airline had seen in the fourth quarter of last financial year.

He said business travel appeared to have picked up more than leisure travel and had translated to improved yields and that was expected to continue in the current quarter.

“And of course, importantly, the better business plan, which has helped us in our efficiencies and aircraft utilisation as we’ve simplified the fleet,’’ he said.

The restructuring charges incurred last financial year mostly relate to the fleet simplification and the airline still has to replace the Tigerair fleet of Airbus A320s with Boeing 737s.

But chief financial officer Geoff Smith said the Airbus planes were “much more marketable and tradeable in the international aviation market’’.

“So I would say the bulk of those restructuring charges have indeed been incurred,’’ he said.

Borghetti also noted the restructuring charges were an upfront cost that would deliver “significant long-term cash flow savings”.

Virgin is a year into a three-year structuring program that Borghetti said was ahead of schedule as he announced an increase in savings targeted by the program of $50m a year to $350m annually.

Commenting on the airline’s business segments, Borghetti said the airline’s domestic performance was affected by subdued trading conditions and reduced demand for regional and corporate travel.

Although the trading conditions had been subdued, he said this did not mean the airline had lost share to bigger rival Qantas.

“We managed capacity prudently in response to these conditions, with sectors flown declining 5.9 per cent on the prior financial year,’’ he said, adding that domestic had also seen a fourth quarter improvement.

Underlying earnings before interest and tax at the domestic operations came in at $A92.9m with International recording underlying EBIT of $0.5m, $A49.3m head of the previous year.

Borghetti said that although trading conditions had been subdued, this did not mean the airline had lost domestic market share to its bigger rival.

“Virgin Australia International was profitable for the 2017 financial year, a result supported by growth in yield and unit revenue,’’ Borghetti said. “These positive outcomes have been driven by the international improvement strategy that the group commenced two years ago.’’

Tigerair Australia recorded an underlying EBIT loss 24.3m, a decline on the previous year of $A26.5m

“Tigerair Australia’s domestic operations were also profitable, with the business delivering passenger and unit growth revenue,’’ Borghetti said. “Tigerair’s overall underlying performance, including international operations, was impacted by the launch and withdrawal of operations from Denpasar (Bali).’’

The airline’s Velocity program continued its growth trajectory to exceed its 2017 membership target and reach more than 8 million members and reported revenue of $A371m.

“Velocity also improved its underlying profitability this year and forged a number of important new partnerships, including deals with Flybuys, Energy Australia and Bupa,’’ the Virgin chief said.

Australia’s Virgin to offer international wi-fi, free basic domestic connectivity

Virgin Australia

Virgin Australia is set to offer a basic free Internet service on its domestic aircraft and plans to become the first Australian carrier to offer wi-fi on international flights.

The successful completion of a three-month trial of its wi-fi system on a Boeing 737 will see the airline roll out connectivity to other aircraft in its 737 fleet and start adding it to its international Boeing 777s from October.

It expects to have wi-fi available on the  B777s and most of the B737s by the end of 2018 with the A330 fleet expected to join them by the second half of 2019.

The three- month trial saw 77 per cent of Virgin passengers report a high level of satisfaction with the inflight wi-fi, with emails, social media and news the most used services.

Virgin Australia chief executive John Borghetti said wi-fi would ultimately be available on 90 per cent of the airline’s fleet.

The airline is using Gogo’s 2Ku technology linked to Optus satellites, while rival Qantas is using a high-capacity Ka system offered by ViaSat through nbn’s Sky Muster satellite. Qantas plans to have 80 Boeing 737s and Airbus A330s fitted by late 2018, offering it to 15 million passengers a year.

Borghetti said Gogo provided inflight wi-fi to airlines around the world , including Delta Air Lines, Virgin Atlantic, and British Airways.

“Through our partnership with Gogo and Optus Satellite, we will have access to the largest fleet of satellites servicing Australia and New Zealand, providing our guests with a fast and reliable wi-fi experience on board,” he said.

Virgin plans to release more details of its pricing structure shortly and Borghetti said he did not want to pre-empt the announcement.

“All we’ll say at this stage is that it will be a basic free offering for our guests domestically,’’ he said. “But clearly, depending on what the guests want, they can upgrade that to further access.’’

Separately, Australia’s competition regulator on Thursday approved  Virgin’s partnership with the HNA Group, Hong Kong Airlines, Hong Kong Express Airways for the next five years, saying it will likely realise significant public benefits.

Virgin has already started five times weekly services between Melbourne and Hong Kong under an interim authorisation while it awaited full approval.

The Australian carrier and Hong Kong Airlines also offer codeshare connectivity to 11 destinations across their flight network and an interline agreement to 10 destinations in mainland China. There is also some reciprocity between the Velocity and Fortune Wings Club frequent flyer programs

It also plans to launch services between Australia and mainland China using existing Airbus A330 aircraft with speculation focusing on Beijing or Shanghai as potential destinations.

The full ACCC authorisation allows them to further advance plans to coordinate their international passenger transport services such as codesharing, frequent flyer program participation, lounge access, route planning, and scheduling.

“The ACCC considers the alliance will likely realise significant public benefits, primarily through supporting the introduction of new services between Australia and mainland China and Hong Kong including by Virgin,” ACCC Commissioner Roger Featherston said in announcing the approval.

The announcement came as Virgin posted a $A186m net loss but revealed earnings at its international arm had nudged its way into the black on an underlying basis.

Read: VIrgin Australia posts $186m net loss.

The alliance with HNA Group is likely to accelerate that improvement.

Virgin boss Borghetti said the full approval meant Virgin could proceed with plans to bring more competition to the market.

“Which is what we’re all about and, frankly, it would be virtually impossible for us to do without the cooperation of HNA and its companies, Hong Kong Airlines and Hong Kong Express,’’ he said.

Borghetti said the airline’s new Hong Kong route had started in “a positive light’’ and was helped by the alliance with the HNA group and its airlines.

“We started the route and we automatically had distribution at the other end in sales capability which clearly showed in the southbound bookings,’’ he said. “So I’m quite happy with the way it’s going and quite optimistic.’’

In addition to Virgin’s planned services to mainland China, the alliance partners also plan to continue to expand their codeshare and interline arrangements and offer passengers further benefits through their loyalty schemes.

These include lounge access, priority check in, priority boarding and additional baggage and the ability to redeem frequent flyer point.

Sinagpore Airlines launches classy new safety video

Singapore Airlines has joined trend to take in-flight safety videos outside the aircraft with a classy production made in conjunction with the city state’s tourism board.

The video takes viewers on a panoramic journey hosted by one of the airline’s trademark Singapore Girls across landmarks such as Boat Quay, The Intan Peranakan Home Museum, River Safari, Haji Lane, and Gardens by the Bay.

The move away from conventional aircraft-based safety videos led by Air New Zealand has become increasingly popular among airlines but this is a first for the Singaporean carrier.

“Our new safety video provides a more captivating way of effectively presenting safety information to our customers as compared to the more conventional approach that we have taken up to now, said Singapore Airlines senior vice president sales and marketing Campbell Wilson. “At the same time, it proudly showcases many familiar spots in our home base of Singapore to a global audience.”

The airline said new safety video is a result of a bilateral agreement signed between SIA and Singapore Tourism Board in June, 2017 “aimed at jointly promoting inbound travel to and through Singapore, and showcasing the city state to a global audience’’.

The partners will invest $S10 million over three years on joint marketing activities, event promotion campaigns and technology initiatives to make travel easier.

The new in-flight safety video will be screened on SIA flights from the end of the year.

 

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Roller-coaster ride as American flight hits turbulence.

Video has emerged of American Airlines passengers enduring a roller-coaster ride that left 10 hospitalised after their aircraft hit severe turbulence during a flight from Athen to Philadelphia Saturday.

The American Airlines Airbus A330 operating flight 759 hit the turbulence about 35 minutes out of Philadelphia but went on to land safely with 299 passengers and crew.

American said the seatbelt sign was on at the time.

“Three passengers and seven crew members were transported to a local hospital for evaluation,’’ the airline said in a statement. “We are taking care of our passengers and our crew members at this time and want to thank our team members for keeping our passengers safe.”

The video shows passengers screaming as the plane bucks due to the turbulence.

Photographs posted on social media showed debris strewn throughout the cabin and the remains of drinks splashed over the ceiling.

“They were giving us our drinks,” passenger Ian Smith told TV station WPVI. “The flight attendants were in the last couple rows when they said ‘fasten your seat belts.’

“And then they said for the flight attendants to get to their seats, and they didn’t even have time. It started shaking, then it took a big drop. Babies screaming, people in front of us hitting the ceiling,”

Passenger Ervin fang tweeted: “Turbulence mess! Flight attendants tossed. I provided medical help (shoulder relocation mid-air).’’

Another passenger said there was coffee inside the cabin lights.

 

Emirates crash probe finds no problems with aircraft systems

Air safety investigators probing a fiery Emirates crash a year ago say they have found no evidence of problems with the aircraft’s systems or engines.

The Boeing 777-300 was landing at Dubai International Airport after a flight from Trivandrum International Airport in India on August 3, 2016, when it crashed trying to perform a go-around.

The new interim report by the United Arab Emirates General Civil Aviation Authority boosted the number of reported injuries among passengers and crew from 24 to 30.

It said 21 passengers, one pilot, and four cabin crew sustained minor injuries while four cabin crew were seriously injured.

A firefighter also died from injuries sustained in a fireball when the centre wing fuel tank exploded.

The aircraft landed too far down the runway as a headwind turned into a gradually increasing tailwind and the rear wheels touched down as the crew unsuccessfully attempted the rejected landing.

As the aircraft reached an altitude of 85ft, it began to sink back towards the runway.

Full thrust was applied three seconds before the crash but by the time the engines responded, one second before impact, it was too late.

The rear of the aircraft hit the runway at 125 knots with the nose pitched up and one of the engines was ripped off the wing as the aircraft burst into flames.

The interim statement said that a large number of aircraft systems had been tested with the help of manufacturers.

An analysis of the data downloaded “indicates that there were no aircraft systems or engine abnormalities up to the time of the accident’’.

“Regarding the operation of the flight the investigation is working to determine and analyse the human performance factors that influenced flight crew actions during the landing and attempted go-around,’’ the report said.

“In addition, the Investigation has reviewed and has identified safety enhancements related to the validity of weather information that was passed to the flight crew, and communication between air traffic control and the flight crew.’’

Seat crunch court ruling could affect the way we fly.

seats airfares and skyways versus the hgihways

In a move that could have major implications for the way we fly, a US court has ordered the Federal Aviation Administration to look at minimum standards for seat pitch and width on commercial airliners.

The United States Court of Appeals For the District of Columbia, considered by some to be the second most influential court in the land,  was responding to a petition by lobby group Flyers Rights.

The court said the consumer group contended narrower seats and closer spacing were “endangering the safety, health and comfort of airline passengers.”

Judge Patricia Ann Willett said the FAA asserted that seat spacing did not affect the safety or speed of passenger evacuations.

“To support that conclusion, the Administration pointed to (at best) off-point studies and undisclosed tests using unknown parameters,” she said.

In a written statement after the court’s ruling, the FAA said it did consider seat pitch (essentially leg room) in testing and assessing the safe evacuation of commercial passengers aircraft.

“We are studying the ruling carefully and any potential actions we may take to address the court’s findings,” it said.

The fundamental rule the FAA uses before certifying an aircraft can carry passengers is the ability to evacuate all passengers within 90 seconds, in low visibility with half the exits blocked.

Flyers Rights said seat scrunch could not only affect evacuation time but threaten longer-haul passengers with DVT Deep Vein Thrombosis—blood clots.   AirlineRatings has written extensively over the years about the DVT threat.

“This is the Case of the Incredible Shrinking Airline Seat,” wrote Judge Millett. “As many have no doubt noticed, aircraft seats and the spacing between them have been getting smaller and smaller, while American passengers have been growing in size.”

Flyers Rights says seat width has shrunk from some 18.5 inches in the early part of the 21st Century to 17 inches in the middle of this decade. Meanwhile, seat pitch has gone from 35 inches to 31 inches and, in some planes, to 28 inches. At the same time,  it argued, Americans had become bigger.

The court was notably pointed when it criticized FAA’s record- keeping when it comes to testing.

Judge Millett wrote: “That type of vaporous record will not do—the Administrative Procedures Act requires reasoned decision making grounded in actual evidence.”

US. airlines and their passengers will be waiting to see if and how FAA lifts those vapors in the coming months.

Malaysia urged to take up private offer to resume MH370 search.

ocean Infinity MH370 malaysia
The Ocean Infinity search system

Families of MH370 victims have urged the Malaysian, Chinese and Australian governments to take up an offer by a private firm to continue the search for the missing aircraft on a no-find, no-fee basis.

The offer, revealed by independent expert Victor Iannello, would see US exploration company Ocean Infinity use a collection of underwater drones to sweep the search area now thought most likely to contain the wreckage of MH370.

They would be paid only if they find the wreckage and while there are no details about what that would entail, it is understood the company is not seeking excessive compensation outside the realms of normal commercial expectations.

The Malaysia Airlines flight’s disappearance in March, 2014, remains one of aviation’s great mysteries and the new offer ramps up pressure on the Malaysian government to restart the search.

Deputy Malaysian Transport Minister Aziz Kaprawi confirmed to Reuters that authorities had received the offer but said no decision had been made on whether it would be accepted.

MH370 victim group Voice370 said news of the search offer and a narrowed search area made the lack of communications from the governmen5ts involved “very distressing for family members whose agony festers’’.

“Family members have been holding in abeyance their plans to proceed with a privately-funded search with the hope that the Malaysian Government  (and its search partners) will respond favourably and expeditiously to what appears as a very fair offer presented to it at this opportune moment,’’ the group said in a statement.

A CSIRO report released in April concluded a region in the Southern Indian Ocean near the so-called seventh arc and latitude 35°S was the likely resting place of the airliner.

The finding was consistent with findings in 2016 by a group of international experts that the airliner is probably in a 25,000 sq. km area north of where the plane was originally thought to be.

A  CSIRO team led by Dr David Griffin has since made further refinements and narrowed down the prospective search area after looking more closely at an ocean current flowing towards the northwest in the weeks after the crash.

Read: Scientists more confident about location of MH370 wreckage.

A two-year sweep of the original 120,000 sq, km. search area failed to find any signs of the wreckage and was ended by the Malaysian, Australian and Chinese governments in January amid criticism it was abandoned too soon.

Transport Ministers from the three countries said the search would not be resumed unless there was credible new information which could be used to identify the aircraft’s position, although they failed to define what this meant.

Ocean Infinity uses six HUGIN autonomous underwater vehicles capable of operating at depths of up to 6000m to collect high-resolution data at what it says are “record-breaking speeds’’.

Six unmanned surface vehicles accompany the underwater drones to ensure precise positioning and constant communication.

“With multiple autonomous vehicles working simultaneously utilizing innovative technology, we are able to survey huge swathes of the seabed, quickly and with outstanding accuracy,’’ the company’s website says.

Voice370 said the governments had an obligation under ICAO rules to find the plane as well as make public offers by government or private organisations in relation to the search.

They were also obliged to bring closure to family members’ “continued suffering at heart”.

Iannello described the prospect of exploiting Ocean Infinity’s technology as “great news”.

“That means that Malaysia, Australia, and China need to make a decision: Either the tripartite countries should provide funds to re-start the search; or, the countries should fully cooperate with Ocean Infinity and other qualified entities that are interested in re-starting the search,’’ he said.

“Any other action is unacceptable.”

Australian Transport Minister Darren Chester said the decision was Malaysia’s.

“Malaysia, as the state of registry for the aircraft, retains overall authority for any future search and any questions regarding possible future search efforts should be directed there,’’ he said. “Australia stands ready to assist the Malaysian Government in any way it can.”

 

AirNZ adds seats on trans-Pacific routes

Air New Zealand is significantly boosting peak capacity on select trans-Pacific routes with more flights to Vancouver and Honolulu.

The airline will fly almost 60,000 extra seats between Auckland and Honolulu between April and October next year.

The 75 per cent increase in seat count will see the airline operate an additional 94 return services with up to nine flights a week during the July school holiday period.

The services will be operated by a mixture of Boeing 787-9 and Boeing 777-200 aircraft.

AirNZ is also increasing capacity on its Vancouver-Auckland operation by 20 per cent from January to July next year.

The airline will move from seven to eight weekly services during the first half of the January peak period and from five weekly services to daily flights during February.

It will increase to five services a week in March and April (up from four) and four weekly services during May to mid-June (up from three).

Air New Zealand chief revenue officer Cam Wallace said Hawaii was a favourite destination of New Zealanders wanting to escape winter.

“Air New Zealand has increased its services to Honolulu to offer customers even more flexibility as well as a greater number of premium seats during the peak periods by deploying our Boeing 777-200,” he said.

Wallace said the Vancouver increases recognised Canada as a winter destination for Kiwis but also aimed to give Canadians better access to New Zealand through the shoulder season.

ID checks mooted for Australian domestic travel

Australians may face ID checks and full body scans at domestic airports in the aftermath of an alleged plot to attack an Etihad plane.

The Australian newspaper reported that the federal government was looking a domestic security clampdown that would also see restrictions on liquids taken on to domestic flights and allow only passengers with a boarding pass through security.

The report came as two Sydney men were charged with acting in preparation for or planning a terrorist act.

Police allege the men planned to use an explosive device hidden in a mean grinder to attack an aircraft but failed to make it past check-in.

Parts for an improvised explosive device were allegedly sent from Turkey by a senior Islamic State member.

The police allege a 49-year old man took the device to Sydney’s international airport with the intention of putting on an Etihad flight to Abu Dhabi by putting it in the luggage of an unwitting passenger related to one of the men.

But the bag failed to make it past check-in, partly because it was too heavy.

A second plot allegedly involved a plan to use an improvised chemical dispersion device to release toxic hydrogen sulphide gas in a crowded space.

A number of experts and a pilots’ union this week called for tighter security on Australian domestic flights, including ID checks, as well as tougher screening for airport ground workers.

However, airlines are likely to raise concerns about the cost of the additional measures and their impact on efficiency.

 

 

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