New York (AirGuideBusiness - Company Watch) Nov 18, 2012
Earlier this month, Boeing announced the delivery of its 7,370th 737, which flew off to new customer Lion Air of Indonesia on Nov. 5. Add to these 7,370 planes already delivered another 2,845 as-yet-undelivered 737s sitting in Boeing's backlog, and the 737 tops 10,000 units ordered quite handily. But that does pose a problem for Boeing. Boeing's most recent 10-Q filing with the SEC lays out the problem clearly. Boeing owes its customers 2,845 planes. It's currently producing the birds, however, at the rate of only 35 per month. That's up from 31.5 planes per month earlier this year, but even so, it means that Boeing's backlog on the 737 alone now runs to six years, nine months -- and that's if it sells not a single new 737. (In fact, though, sales of the new "MAX" variant are already through the roof, recently topping 900 units of this model alone.) On the one hand, that's a nice problem to have. There's not a lot of businesses out there that can guarantee you a rock solid revenue stream nearly seven years long. On the other hand, though, look at this from the perspective of the customer. Say you need a new plane now. Say you want to place an order with Boeing. How are you going to react to being told "get in line, we'll have it ready for you in... 2018"? Think you might give Airbus a call and see if they can turn around your order any faster than that? Think you might even give an upstart like Canada's Bombardier a chance to win your business, if they offer a sweet enough deal on a shiny new CSeries? You can actually see this happening, in fact, over in China, where Boeing's backlog on the popular 737 is likely contributing to the success of local plane builder Commercial Aircraft Corp, which just landed 50 new orders for its C919 regional jetliner. This week, domestic operators Hebei Aviation and Joy Air each signed up for 20 new C919s. Meanwhile, General Electric's GE Capital Aviation Services has doubled its initial order of 10 C919s. Boasting engines and avionics from recognized Western airplane parts suppliers like GE and Rockwell Collins, COMAC is even starting to attract interest from international buyers, including a sister airline of British Airways. So what's Boeing to do if it wants to keep its current customers happy, and not discourage potential new buyers? Simple: It must build planes faster. Already, the company has announced plans to ramp production up to 38 planes per month by early next year, followed by a jump to 42 planes per month in Q2 2014. The Boeing 737 Technical Site thinks they'll go even further, recently asserting that Boeing has a plan to open a new assembly line and increase production to 60 aircraft per month. That's nearly twice today's pace -- two entire passenger planes, fully outfitted, rolling off the assembly line every day. Incredible as that sounds, Boeing seemed to confirm the theory in a statement yesterday, noting that a new production line under construction in Renton, Wash., that will be building the 737 MAX will "eventually" be used "for future rate increases." According to the company: "We don't have any specific plans when that next rate increase will be, but we're pretty sure it's coming." For the record, investors seem to see a big opportunity coming, too. Wall Street analysts expect to see double-digit profit growth at Boeing over the next five years. But the Foolish question to ask here is: What if it doesn't come? What if the growth of the global air travel industry gets delayed? After all, it's not as if it's all that hard to cancel even a supposedly "firm" order in the airline business. Why, just a few months ago, Qantas wiggled out of an order for 35 Boeing Dreamliners, citing little more than a "change" in its "circumstances." And it's not only Qantas finding its need for new planes may be less urgent than it once thought. Last quarter, revenue at Delta Air Lines grew a bare 1% in comparison to the previous year. Sure, China's doing better than that. But rumbles of an economic slowdown can be heard even over there. If you take Chinese travel agency Ctrip.com as a rough proxy for the industry, for example, well, revenues were up 20% at Ctrip last quarter. That's a good number. Don't get me wrong. But does even a 20% growth in business in China justify predictions that Boeing will need to nearly double the rate at which it builds its planes to keep up with demand? Seems to me, the danger here is that Boeing cold be overbuilding to satisfy demand -- demand which may evaporate in the absence of a strong economic rebound. Nov 16, 2012
In-flight connectivity provider Gogo has launched ATG-4, its next-generation technology for wireless in-flight digital entertainment access, the company announced today. The service was debuted on Delta Air Lines, US Airways and Virgin America. The service is expected to allow more passengers to access the Internet with a more consistent browsing experience. Gogo offers in-flight broadband Internet service and streaming video to commercial and private airplane passengers. The company has installed the new ATG-4 technology on more than 25 domestic aircraft. Virgin America was the first airline to get on board, and plans to roll out the service on more aircraft in the months ahead. Gogo expects to launch ATG-4 service on American Airlines and United's p.s. fleet in 2013.
Gogo is "committed to bringing better communications technology to passengers at 30,000 feet," he added. Gogo's ATG-4 technology is capable of delivering a peak speed of 9.8 Mbps, triple the peak speed of 3.1 Mbps enabled by the previous air-to-ground network, according to a news release. The new technology includes directional antennas and dual modems on each aircraft and the deployment of EV-DO Rev. B Gogo expects a quick roll-out for the ATG-4 technology, with hundreds of aircraft installations planned before the end of 2013. The necessary two antennas, installation of a second modem and a software upgrade typically can be accomplished overnight. Gogo's more than 150 land-based cellular towers have already been modified for the new technology. Using Gogo's connectivity, passengers with Wi-Fi devices can get online on more than 1,600 commercial aircraft, including all domestic mainline Delta Air Lines and nearly all of Delta's regional jets; all AirTran Airways and Virgin America flights; and select Air Canada, Alaska Airlines, American Airlines, Frontier Airlines, United Airlines, and US Airways flights, according to the release. Nov 16, 2012
In an effort to attract and pamper travelers, U.S. airlines are hopping on the "premium economy" bandwagon, this feature says. Although this hybrid class allows some fliers to feel as if they are part of the "1 percent," travelers need to be aware of the differences in the plans offered by each airline. This feature attempts to clear up confusion by comparing the premium-economy benefits offered by American Airlines, Delta Air Lines, United Airlines and Virgin America. Nov 16, 2012
More than 10,000 Premier Traveler readers, a demanding breed who traverse the globe for a living, have selected a handful of airlines including Etihad, Virgin America, Virgin Atlantic and Delta as the Best of 2012. On November 8th, at a glittering awards gala at Sofitel LA, publisher Linda Vaughan shared center stage with actor Chad Michael Murray to kick off the magazine's annual charity auction benefiting RMDH-NY. Two young airlines in the Middle East took top prizes for flying long haul routes with panache. Qatar Airways, voted Best Airline to the Middle East and Best Overall Airline in the World, begins pampering passengers before boarding in Doha at a resort style Premium Terminal, where First and Business Class flyers can spa, sleep and dine white tablecloth style, even at breakfast. "We will always cater to the frequent traveler and will indulge them with unmatched luxury and comfort in flight," vows Qatar Airways CEO Akbar Al Baker. "The future looks bright for us and we will continue to grow at a bold pace." In 2013 Qatar adds nonstops to Doha from Chicago, the fourth US gateway after New York, Houston and Washington, DC, and will be the first Middle Eastern airline to join an Alliance. Gracious hospitality earns Etihad Airways the Best Airline in the Middle East crown: "Our onboard culinary professionals come from luxury restaurants and hotels," reveals Peter Baumgartner, Etihad Airways' Chief Commercial Officer, "enabling Etihad Airways to deliver five star dining in the air." Classically trained chefs prepare meals for Diamond First Class passengers and professional Food and Beverage managers will supervise culinary and wine service in both Premium cabins. Seamless end-to-end service is the goal at Etihad Airways where Premium passengers receive extras like complimentary chauffeur service on both ends of their journey and frequent flyer benefits valid on other airlines, with veteran crews flying one of the youngest fleets in the skies. Delta, the legacy carrier voted Best Airline for North American Travel, is not resting on its laurels. "Delta is currently investing billions on everything from booking to baggage claim," says Tim Mapes, SVP-Marketing. "For customers, this means more onboard comfort, world-class airport facilities, innovative technology and exceptional personal service." When our readers hear "Virgin" they know they're in for a treat. "At Virgin Atlantic," voted Airline with the Best Business Class Service in the World, "it's about constantly creating a unique flying experience," says Chris Rossi, Senior VP of North America. "In the last year, despite the tough economic climate, we've invested nearly $160 million in product. Onboard our new A330s, passengers now enjoy an Upper Class Suite with a longer and even more comfortable seat, a stylish bar, a new inflight entertainment system and mood lighting to enhance their experience day or night."...