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Wed, Jan 02, 2013

ANN 2012 Year-In-Review: Airlines

Bankruptcies, Problems With Dreamliners And A380s Balanced Against Record Orders And Strong Future Forecasts

Both Airbus and Boeing had problems with their flagship products ... the A380 and the Dreamliner, respectively, and Congress passes legislation that will require far more experience for airline pilots. Europe blinked when it came to implementation of its Emissions Trading Schedule, and Boeing racked up some record orders mostly for its re-engined 737 MAX. Meanwhile, both Boeing and Airbus predict strong sales over the next couple of decades. Here are some of the top stories from the airline industry from 2012.


NYSE Regulation announced at the end of last week that it determined that the common stock of AMR Corporation (the “Company”) – ticker symbol AMR – and the related listed securities below, should be suspended prior to the opening on Thursday, January 5, 2012.

Boeing said it wrapped up 2011 with 805 net commercial airplane orders, fueled by a late flurry of record-breaking deals. The company also delivered 477 airplanes, ending the year with a strong backlog of 3,771 unfilled commercial orders.

Boeing said it would relocate approximately 800 – 900 engineering and program support jobs from Wichita, Kan. and Puget Sound, WA., to Oklahoma City by the end of 2013. The B-52, C-32, C-40, E-4B and VC-25 programs will now be supported at Boeing Oklahoma City, which will have approximately 2,000 employees when the transition is complete.

The first composite center fuselage section for the Airbus A350 XWB program was delivered to the European planemaker by Spirit AeroSystems. The upper and forward lower shell (Section 15) composite fuselage panels were joined in Spirit's Saint-Nazaire, France, facility before being delivered to Airbus.

Boeing successfully achieved a production rate of 35 airplanes a month for the Next-Generation 737, with the delivery of the first airplane produced at the new rate to AWAS Aviation Services, Inc. Norwegian Air Shuttle will lease the airplane from AWAS.

After a six-month practical trial involving biosynthetic fuel, Lufthansa said that it had successfully operated 1,187 biofuel flights between Hamburg and Frankfurt. According to initial calculations, CO2 emissions were reduced by 1,621 tons.


As part of it bankruptcy reorganization strategy, AMR corp discussed the possibility of shedding its pension obligations to bring the company back to solvency.

American Airlines released a business plan which targets an annual financial improvement of more than $3 billion by 2017, including $2 billion in cost savings and $1 billion in revenue enhancements.

A second European airline folded up its tent. Hungary-based Malev Airline grounded all its planes, ending a reported 66 years of continuous service.

Boeing says that problems discovered in the aft fuselage of some of its new 787 Dreamliners are being corrected, and that the repairs will not affect the airplane's production schedule.

Political discourse frequently includes mention of the costs regulation imposes on business and their consumers. It's usually a vague concept, but Spirit Airlines ticked off Transportation Secretary Ray LaHood by itemizing the estimated cost of new consumer protection rules recently imposed by the department. It's even calling the $2/ticket surcharge the "Department of Transportation's unintended consequences" fee.

According to a forecast released by Airbus, air traffic in Spain will almost double by 2030. Spanish airlines’ will need some 400 new passenger aircraft over the next 20 years.

A day after China announced that its carriers would be forbidden to pay any charges under the European Union Emissions Trading Scheme (EU-ETS) without Beijing’s permission, the European Union said it could suspend parts of a new law requiring airlines to account for their greenhouse gas emissions ... but only if countries were to make clear progress this year toward establishing a global emissions control system.

Airbus CEO Tom Enders made a fairly blunt statement concerning cracks found in the wing rib feet of its flagship A380 superjumbo airliner. "We screwed that up," Enders said in a news conference just prior to the opening of the Singapore Air Show.

The Airbus A380 is already upside-down on its development costs. A German magazine reported the company may incur additional costs of $132 million to check and repair cracks found in wing rib feet on the fleet. Just repairing the planes already flying may cost over $92 million.

The  final phase of wind tunnel tests began on the 737 MAX program. "Wind tunnel testing is on the critical design path of the program," said Michael Teal, chief project engineer and deputy program manager, 737 MAX program.


Jonathan Gaffney, president and CEO of the National Aeronautic Association, presented Boeing with two certificates confirming the official status of the two world records earned by the 787 Dreamliner in late 2011.

Flight Attendants at United Airlines, represented by the Association of Flight Attendants-CWA (AFA), have ratified a contract covering the 15,000 pre-merger United Flight Attendants.

The Allied Pilots Association (APA), which represents the 10,000 pilots of American Airlines,filed an action for declaratory judgment with the bankruptcy court asking the judge to clarify how the Railway Labor Act and Section 1113 of the U.S. Bankruptcy Code interrelate.

It's not unusual for a new aircraft built with composite technology to have production fall behind schedule. But Boeing's 747-8 is a variation on the 747 theme that dates back more than 40 years, stretched to carry up to 467 passengers.

Things are bad, but apparently they're not bad all over. Boeing delivered the first passenger version of its enormous new 747-8 to an anonymous customer, who's taking it to a completion center to be decked out as a personal VIP transport.

The governments of the US and the European Union, in something of a surrogate war on behalf of Boeing and Airbus respectively, have both won findings in the World Trade Organization that some forms of government subsidy violate trade treaties. Now, a suggestion by Europe to negotiate an end to the battle has been called laughable by Boeing.

Southwest Airlines and its wholly owned subsidiary AirTran Airways announced that the carriers have received approval from the FAA for a Single Operating Certificate (SOC), marking a key milestone in the integration of the two airlines.

A decision by American Eagle to idle nine of its airplanes will result in the furlough of 50 pilots, the carrier said in a message to employees.

Continental Airlines is officially no more as a separate airline. The last flights under the companies separate computer system took place in March.

Commercial Aircraft Corp. of China (COMAC) and Boeing announced a collaboration agreement to partner in areas that will enable commercial aviation industry growth in China and potentially around the world.

Boeing inspected five of the first 55 Dreamliners to come off the line after reports that a flaw was  discovered in the composite airliner's fuselage.

Boeing officially began construction on its new enhanced Everett Delivery Center (EDC) with a groundbreaking ceremony attended by Boeing employees, customers and local dignitaries.


A high-profile gathering of over 100 Members of the European Parliament, policy-makers and industry representatives dubbed "Airbus Day 2012" was held in Brussels recently to discuss key issues for the European aerospace industry.

In what may have seemed like a bad April Fools prank, Pinnacle Airlines announced Sunday the company and its subsidiaries have filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York (the “Court”).

JetBlue Airways released a statement by Connye Osbon, wife of Captain Clayton Osbon, on behalf of the Osbon family.

Flight attendants at US Airways  represented by the Association of Flight Attendants (AFA), voted to not ratify a proposed five-year collective bargaining agreement.

The Boeing 747-8 is approved for operations at 200 airports around the world – less than six months after entering service. To date, 63 airports around the world are supporting revenue flights from 14 in-service 747-8 Freighters operated by five carriers.

Final assembly of the first A350 XWB got underway at the brand new final assembly line in Toulouse. This latest step in the A350 XWB’s progress was achieved as Airbus began joining the 64 foot long center fuselage with the 69 foot long front fuselage. 

A rule published in the Federal Register in March removes a regulatory provision under FAA medical certification standards intended, in part, to require that individuals granted the Special Issuance of a Medical Certificate (Authorization) have their letter of Authorization in their physical possession or readily accessible on the aircraft while exercising pilot privileges.

The last passenger flight by a Boeing 747 for Singapore Airlines was a commemorative farewell trip carrying more than 350 passengers from Hong Kong to Singapore.

The union representing pilots flying for Pinnacle Airlines said the very survival of the regional carrier depended on a fair contract that will allow the airline to attract and retain qualified pilots.


The first Dreamliner to be assembled in South Carolina rolled out of final assembly to great fanfare from the crowd of nearly 7,000 Boeing employees and invited guests.

A new winglet design concept for the 737 MAX was unveiled by Boeing. The planemaker said the new Advanced Technology winglet will provide MAX customers with up to an additional 1.5 percent fuel-burn improvement, depending on range, on top of the 10-12 percent improvement already offered on the new-engine variant.

Industry trade organization Airlines for America (A4A) urged the FAA to significantly revise its proposed requirements for pilot certification and provide a system that builds on the industry's strong safety record, is recommended by safety experts and that recognizes the quality of a pilot's training and experience, rather than relying solely on a specific quantity of flight hours.

We know it comes with a lot of responsibility, but the position of airline CEO also comes with a healthy, and apparently growing, compensation package.

The first test flight for the Pratt & Whitney PurePower PW1200G engine family was conducted in May. The PW1217G engine designed for the Mitsubishi Regional Jet (MRJ) aircraft flew on a specially designed stub wing aboard Pratt & Whitney's Boeing 747SP flying test bed at the company's Mirabel Aerospace Center, in Mirabel, Quebec, Canada.

American Airlines, a wholly-owned subsidiary of AMR Corporation, announced that the third phase of its organization redesign was underway.

Before Boeing dreamed up the Dreamliner, it was working on a supersonic airliner it called the Sonic Cruiser ... even to the point of beginning construction on a prototype in 2007.

Boeing’s new 747-8 was found to still be just a tad overweight ... by several tons ... but that would not cause any restriction on its use by Lufthansa.

Boeing said it plans to increase airliner production as airlines place major orders to replace older jets, but that efficiencies on its factory floors will allow it to slow the pace of hiring replacement workers.


Boeing marked the 20th delivery of its new 747-8. The airplane, a 747-8 Freighter, was delivered to Atlas Air Worldwide Holdings, Inc. Atlas Air will operate it on behalf of Panalpina, the Swiss-based freight operator.

Fabrice Bregier, who has served as Airbus Chief Operating Officer, was named by the board of directors as the new president and CEO of Airbus. The 50-year-old Bregier succeeds Tom Enders, who has now taken over as EADS CEO.

The civil aviation authority of Nigeria confirmed that all 153 people aboard the Dana Air flight, a Boeing MD83, to Lagos were lost when the plane went down in a densely populated neighborhood near the airport.

FedEx said it will permanently retire 18 Airbus A310-200 aircraft and 26 related engines, as well as six Boeing MD10-10 aircraft and 17 related engines, from service. The freight hauler said in a news release that the majority of these aircraft are currently parked and not in revenue service.

The NTSB met to develop a set of safety recommendations stemming from a 2010 runway excursion which occurred in Wyoming.

The Obama administration raised its opposition to the European law targeting aircraft emissions, and is applying greater pressure on Brussels and the UN to resolve global concerns.

During a hearing before the Senate Commerce Committee, the airline industry trade group Airlines for America (A4A) called on the U.S. government to take immediate action to halt the application of the European Union Emissions Trading Scheme (EU ETS), which it says seeks to unlawfully tax U.S. airlines and establishes a dangerous precedent that could be used to tax the products and services of other U.S. industries.

The head of the International Air Transport Association says the airline industry needs help from government to bring down the cost of biofuels, which could help in reducing pollution.

Alberta, Canada airline partnership WestJet inked a deal with Bombardier which includes a conditional order for 20 Q400 NextGen turboprops following the letter of intent to purchase the aircraft that was announced by WestJet on May 1, 2012.


Airbus CEO Tom Enders said that media reports that the European planemaker will build a manufacturing plant in Alabama were premature, and that "no final decision" has been made about whether to establish a final assembly facility on the U.S. Gulf Coast has been made. Shortly thereafter, Airbus said it would establish a manufacturing facility in the United States to assemble and deliver A320 Family aircraft.

The pilots of Delta Air Lines, represented by the Air Line Pilots Association, Int’l (ALPA), ratified an amended collective bargaining agreement (CBA).

According to the Boeing 2012 Current Market Outlook (CMO) released Monday, the planemaker projected a $4.5 trillion market for 34,000 new airplanes over the next 20 years as the current world fleet doubles in size.

The French aviation accident investigating agency BEA released its final report in the accident of Air France Flight 447, which went down in the Atlantic Ocean June 1st, 2009, resulting in the fatal injury of all 228 people on board.

The NTSB has adopted its report concerning the December 29, 2010 incident in Jackson Hole, WY, in which an American Airlines Boeing 757 ran off the departure end of the runway and came to a stop in deep snow after landing.

Boeing and Air Lease Corporation announced a firm order for 60 737 MAX 8 and 15 737 MAX 9 airplanes, with reconfirmation rights for 25 additional 737 MAXs. The order, with a list-price value of $7.2 billion, represented the first 737 MAX order by a leasing company.

Boeing Commercial Airplanes President and CEO Ray Conner laid out his goals during the opening day of the Farnborough International Airshow, saying the company is hitting its stride on performance and making significant progress on new airplane programs. 

GE Capital Aviation Services (GECAS), the commercial aircraft leasing and financing arm of General Electric, agreed to purchase 75 737 MAX 8s and 25 Next-Generation 737-800s.

Southwest confirmed that it, together with its subsidiary, AirTran Airways, had reached an agreement with Delta Air Lines and Boeing Capital to lease or sublease all 88 of AirTran's Boeing 717 aircraft to Delta.


The U.S. Senate Commerce Committee unanimously approved bipartisan legislation sponsored by Senators Claire McCaskill (D-MO) and John Thune (R-SD) which would protect American consumers and jobs from a European Union tax on the U.S. airline industry. 

The NTSB opened an investigation into an engine failure that occurred on a Boeing 787 Dreamliner during a taxi test in Charleston, South Carolina.

The FAA investigated a miscommunication between Warrenton Center, ATC at DCA, and the pilots of three US Airways jets that resulted in a near-collision just south of the city.

Boeing announced some serious new orders for its growing order book. Boeing confirmed that SilkAir announced a commitment to order 31 737 MAX 8s and 23 Next-Generation 737-800s -- a deal that when finalized, will be worth $4.9 billion at list prices.

The pilots of United and Continental Airlines, after more than two years of negotiating with the company for a joint collective bargaining agreement, and with the assistance of the National Mediation Board (NMB), reached an agreement-in-principle (AIP) with United Continental Holdings, Inc., on major economic issues.

The NTSB's investigation of the July 28, 2012 contained engine failure that occurred on a Boeing 787 Dreamliner during a pre-delivery taxi test in Charleston, South Carolina was ongoing.

The Association of Flight Attendants-CWA (AFA) reached a tentative agreement with US Airways for a contract covering all US Airways mainline flight attendants.

After 61 percent of the Allied Pilots Association members voted against a tentative contract agreement with American Airlines, the union's president, Capt. Tony Bates, tendered his resignation at the request of the union's board.


Visiting German Chancellor Angela Merkel and Chinese Premier Wen Jiabao presided over a grand gathering of some 1,000 people in Tianjin to celebrate the completion of the 100th A320 Family aircraft assembled at the Airbus A320 Family Final Assembly Line China (FALC).

The latest Global Market Forecast (GMF) from Airbus identified a need for some 28,200 passenger (of 100 seats or more) and freighter aircraft between 2012 and 2031 worth nearly $4 trillion, reconfirming an upward trend in the pace of new aircraft deliveries.

Airbus said it will only sell airplanes it builds in China to Chinese clients, but that does not mean that they will never end up flying for other nations' airlines.

The NTSB issued a recommendation to the FAA that large airplanes be equipped with an anti-ground collision aid, such as an on-board external-mounted camera system, to provide pilots a clear view of the plane’s wingtips while taxiing to ensure clearance from other aircraft, vehicles and obstacles.

In its commercial airline forecast, Boeing projected that China will need 5,260 new commercial airplanes valued at $670 billion over the next 20 years, and that worldwide demand will be for 34,000 new commercial airplanes worth $4.5 trillion.

Boeing's Next-Generation 737-900ER (Extended Range) surpassed 500 orders. The milestone was reached when a customer converted its 737-700s to 737-900ERs.

Against a backdrop of negotiations with its engineers' union, Boeing chief engineer Mike Delaney said that the company has resources nationwide, and may look beyond the Puget Sound region for development work on new airliners. He cites costs as the primary driver.

Flight attendants at American Eagle, represented by the Association of Flight Attendants-CWA (AFA), approved a tentative agreement with management.


Top management at AMR Corp, the parent company of American Airlines, has apparently threatened legal action against the Allied Pilots Association (APA) while agreeing to return to the bargaining table in their ongoing labor dispute.

In a move that union negotiators said shows that the leadership at Boeing is out of touch with its workforce - engineers and technical workers voted overwhelmingly to reject the aerospace giant’s contract offers.

FAA and American Airlines officials inspected two AA Boeing 757s that had rows of passenger seats come loose from the floor during flight over the past several days. The airline said it has grounded its other six 757s as a "precaution."

GOL Linhas Aereas Inteligentes made a deal with Boeing for the purchase of 60 737 MAX airplanes. GOL plans to use the 737 MAX to increase operational efficiency and reduce costs. The order is valued at approximately $6 billion at published list prices.

A third American Airlines 757 was found to have loose seats during a flight, causing the airline to pull additional aircraft from service. In all, the airline says 47 airplanes were temporarily grounded while their seat attachments were checked.

Boeing and GE Capital Aviation Services (GECAS) finalized a firm order for 85 737s, which includes 75 737 MAX 8s and 10 Next-Generation 737-800s.

Another American Airlines jet was forced to return to its departure airport shortly after takeoff, but this time it was the landing gear that caused the problem, not the seats.

Boeing marked a historic milestone with delivery of the first 787 Dreamliner built at its North Charleston, SC, facility to Air India.

Boeing said it had doubled the number of Dreamliners is has delivered to customers when compared to the previous quarter, but all is not rosy with the company's new airliner.

The war of words between the U.S. and the EU over subsidies for airplane manufacturers escalated again as the European Union accused the U.S. of violating confidentiality protocols by admitting it had received funding information about the A350XWB.


The FAA said that Israel complies with international safety standards set by the International Civil Aviation Organization (ICAO), based on the results of an October FAA review of Israel’s civil aviation authority.

Aeroflot, the Russian national carrier, took delivery of another A330-300, which will become the 100th Airbus aircraft to enter service with the airline.

United Airlines successfully completed the FAA certification process for its 787 Dreamliner, and began flying the Dreamliner for passenger service.

The FAA issued a Special Airworthiness Information Bulletin (SAIB) advising owners and operators of all transport category aircraft with Weber Aircraft LLC seats models 4001, 4004, 5150, 5200, 6002, 6200, 7001, 7501, 7502, 8000 and 8001 installed, that the rear track fittings, part number 840620-401/-403, can potentially be installed incorrectly.

Employees of The Boeing Company who worked in Palmdale, CA, and at Edwards Air Force Base, CA, were due back pay and benefits that could total in the millions, according to an arbitrator.

Bombardier had hoped that its new CSeries single-aisle airliner would fly before the end of 2012, but unspecified delays in the program had company officials saying that the airplane likely won't leave the ground for the first time before June of 2013.

Following regulatory changes by the U.S. Treasury and the IRS, American Airlines was given approval to freeze its pilots' pension plan. The move avoids a termination of the so-called "A-Plan" proposed by AA in February.


EASA certified the "Sharklet" wingtip devices on airbus A320s with CFM engines. This certification, received from the European airworthiness authorities (EASA), was expected to be followed "very soon" by FAA certification, Airbus said.

Airbus successfully completed the main structural assembly and system connection of A350 XWB ‘MSN-001’ – the first flight-test aircraft.

The FAA issued an Airworthiness Directive for Boeing's new Dreamliner after receiving reports of fuel leaks on two different in-service airplanes, and the subsequent discovery of several improperly assembled engine fuel feed manifold couplings on in-service and production airplanes.

The chairman of the FCC sent a letter to the Acting Administrator of the FAA asking that the agency reconsider its ban on the use of some portable electronic devices during takeoff and landing.

Three organizations wrote a letter to acting FAA administrator Michael Huerta urging the agency to grant flight hour credit to current pilots based on their airline training and experience as they draft new regulations to raise certification standards for newly hired airline pilots.

Delta Air Lines and Virgin Atlantic Airways Ltd. reached an agreement for a new joint venture that the companies say will create an expanded trans-Atlantic network and enhance competition between the U.K. and North America.

Mitsubishi Aircraft Corporation and SkyWest, Inc., the holding company for two regional carriers that conducts the world's largest combined regional airline operations, announced that they have executed a definitive agreement for the purchase of 100 MRJ90 aircraft and up to an additional 100 option aircraft.

The pilots of United and Continental, represented by the Air Line Pilots Association, Int'l, approved a joint collective bargaining agreement with United Continental Holdings, Inc.

The U.S. Bankruptcy Court in Manhattan, NY, approved a new collective bargaining agreement reached between American Airlines and its pilots' union. A few days later, the court placed its stamp of approval on three labor contracts between American Eagle airline and its primary collective bargaining units, the last such agreements that needed approval before AMR Corp could emerge from bankruptcy.



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