Airline Weekly - July 13, 2015
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Airline Weekly - July 13, 2015

Cebu Who? Many people have never heard of it. But Cebu Pacific is quietly becoming a profit champ

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Cover Story

Cebu Who? Many people have never heard of it. But Cebu Pacific is quietly becoming a profit champ

Also Inside this Issue:

Fasten your seatbelts. Second quarter earnings season begins now, starting with U.S. carriers poised to report another round of record earnings. Profits will be up y/y, reaching extremely high levels. But the overwhelming driver is dramatically cheaper fuel. Revenues, alas, are falling sharply too—just not nearly as much as fuel costs.

For Delta, it was anything but a quiet week of preparing its Q2 accounts for release on Wednesday. As the auditors worked, pilots—optimistic Delta will continue profiting and wanting their share of those profits—loudly rejected the tentative contract proposal before them, putting conditional B737 and E190 orders in limbo. And back at Atlanta headquarters, the network and alliance generals led a deepening of Delta’s links to Gol.

Big changes are underway at Delta’s partner Air France/KLM, a financial laggard that’s now strained by cracks in what was one of its strongest pieces of armor: longhaul routes to emerging markets like Asia, Africa and Latin America. The KLM side is now preforming even worse than the French side, prompting a round of Dutch pilot concessions. French pilots are under pressure to follow suit.

Contrast the plight of Air France/KLM with the might of BA/Iberia/Vueling, which stands on the cusp of adding Aer Lingus to the family. Ryanair is poised to sell its 30% stake in the Irish carrier to focus instead on organic offensives like a plunge into the Israeli market.

Ryanair’s far less successful rival Norwegian, meanwhile, is building its longhaul capabilities from London Gatwick. Next stop: Boston.

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