JAL loses $1 billion in second quarter

You thought Delta's second quarter loss of $257 million was bad? Or even American's $390 million loss during the same time? Even perennial money-loser Alitalia's financial performance pales in comparison to Japan Airlines' whopping $1 billion loss between the months of April to June, which is larger than the amount it lost for all of 2008 (only $35 million). As a result, the airline has announced that it will reduce flying or switch to smaller planes on 25 international routes, although I'd think that more cuts will have to follow in short order.

Can JAL sustain these heavy losses? The airline got a $1 billion bailout from the Japanese government in June, although it asked for twice that amount. The government will probably end up ponying up more cash to keep JAL afloat. It's true that JAL was hit pretty hard by swine flu fears earlier this year, not to mention the ongoing worldwide recession. Even Singapore Airlines, usually a rock of financial stability, has warned that it could post its first full-year loss since 1972, the year it was founded. But JAL is in much worse shape than its arch-rival ANA, which lost almost $300 million during the second quarter. While everyone's hurting right now, JAL clearly has some problems of its own that it needs to clear up quickly. Traffic (especially business traffic) isn't going to rebound anytime soon, and while JAL has made some progress at cutting costs, it's going to have to do much more if it wants to stick around.

photo by St Stev from Flickr, licensed under the Creative Commons

Airbus slows A380 output

photo by NguyenDai

Airbus unsurprisingly announced that it would lower the amount of A380 aircraft it produced this year to 14, down from 18. Originally, the company had planned to increase production this year compared with last (and still is expected to deliver 20 next year), but the weakened economy and recent scare over swine flu has had an impact on travel demand, causing airlines to defer/delay some aircraft deliveries. IATA has estimated that air traffic, which started declining back in September, fell by 11% in March. (The figures for April will be released soon.)

It's only the latest bump in the A380 program, which has not only seen cost overruns (development spending is now at $18 billion, up from the originally planned figure of $12 billion) but also substantial delays. Singapore Airlines, Qantas and Air France are expected to be among the airlines that take delivery of A380s this year. And Airbus is also scaling back production of other models, too - a move that competitors Boeing and Embraer have also followed.

Singapore announces first A380 commercial flight

Singapore Airlines has announced the day of the first commercial flight of the A380. The flight, SQ 380, will be on October 25, from Singapore to Sydney. ""Everyone at Singapore Airlines is keenly anticipating the delivery of this new plane, and our people are working hard on final preparation for its entry into service," said Singapore CEO Chew Choon Seng. "The first flight promises to be one of the most exciting occasions in aviation history."

All of the proceeds from ticket sales for the flight will go to charity. (Apparently, ExxonMobil is also donating fuel for the trip. ) If you're interested in purchasing a seat on either the first flight (or the first return flight the next day), you'll be able to bid for one on eBay starting August 25.

Paris Air Show: Day 5

The Paris Air Show drew to a close today (at least in terms of plane orders) with a few more for Airbus: 20 A350s for Singapore Airlines and 20 A320 family planes for Riyadh-based National Air Services. In a press release, Airbus mentioned its gains with much fanfare. “This Airshow has confirmed that Airbus is very much back on the market, continuing to satisfy customers with the right products. Especially the A380 and A350 XWB have been the highlight of the show, receiving tremendous customer endorsement. They will lead the way in the future in terms of aircraft technology, passenger comfort and environment friendliness. Also, the A330/A340 Family continues to be very much in demand, as is our single-aisle Family,” said Airbus President and CEO Louis Gallois. ”This should give us further incentive to pursue our efforts to turn the company around in order to be able to deliver on our promises”.

China Eastern can still join oneworld

China Eastern Airlines still has the green light to enter the oneworld alliance despite the fact that Singapore Airlines, a prominent member of rival alliance Star, recently bought a stake in the Shanghai-based carrier. oneworld's managing partner, John McCulloch, said, "China is an unusual market for this sort of activity. We are proceeding as before... I don't think it is going to complicate things." However, it's important to note that oneworld is making an exception to the rule here - usually, this sort of thing wouldn't be permitted. "But in China," said McCulloch, "we don't see it as a complication." The Chinese market is a crucial one, so oneworld is understandably willing to make an exception.

McCulloch also mentioned the example of Cathay Pacific, a oneworld member that has a share of Air China, which will be a Star Alliance partner. Cathay subsidiary Dragonair is expected to join oneworld as an affiliate member, and Hainan Airlines is also in talks with the alliance about joining.

Air China, China Eastern, and China Southern are the 'big three' Chinese carriers, and each of them are now (or will be) part of an alliance: Star, oneworld, and SkyTeam, respectively.