United is Printing Money
United Airlines’ Q4 profit and outlook for 2023 exceeded Wall Street expectations, proving the carrier is becoming an expert at printing money.
United showed a whopping Q4 profit of $843 million on $12.4 billion in gross revenue, a 31% increase in profit compared to Q4 2019 – the last full quarter prior to the pandemic. Gross revenue was up nearly 14% from 2019 despite 9% less flying, leading to a profit despite a 21% increase in costs. The average fuel cost for United in Q4 was $3.54 per gallon, discounted $0.20 thanks to the airline’s supermarket rewards card earning it a price break.
The carrier expects to increase flying by as much as 20% in Q1 this year compared to Q1 2022. It has a key goal to reach an agreement with its pilots in 2023, which can’t happen until the union elects a new leader, and that’s expected to be done by the end of this month.
For the full year, United’s profit totaled $737 million with an operating margin of 5.2%. It ends the year with $18.2 billion in liquidity including hundreds of unopened CDs of Rhapsody in Blue that it plans to sell on eBay.
Delta Pilots Likely to Receive 30% Raise
Delta Air Lines and its pilots’ union agreed on a preliminary new contract, giving pilots a 30% pay bump over the four year lifespan of the deal. If ratified by the entire pilots’ union, it would guarantee Delta another four years of labor peace, ending the admittedly extremely remote possibility of a devastating strike in the coming months.
Delta’s pilots authorized a strike in October if the union and airline could not come to an agreement, but they did. The agreement would give pilots $7.2 billion in value over the four year deal, about 25% of which is in quality-of-life improvements which include hazard pay for flying into Newark and Delta opening a new pilot base on Maui.
The current agreed-upon deal features an 18% raise the day it’s formally signed and ratified, a 5% raise next year, and two 4% raises in the following two years. It also incudes a one-time bonus payment equal to 4% of 2020 and 2021 salary plus 14% of 2022 salary. The deal also guarantees Delta’s pilot pay will exceed those at both American and United by at least 1%, a relevant clause as both those airlines are currently in discussions with their respective unions and will probably agree to the exact same thing.
Southwest Budgets a Billion to Buoy IT System
As Southwest continues to dig out from its operational debacle from last month, CEO Bob Jordan told Rapid Rewards members that the airline is budgeting more than $1 billion to upgrade its IT systems to help prevent another episode like it experienced in December.
Southwest reported to the SEC (this one, not this one), that it canceled nearly 17,000 flights between December 22 and December 31 leading directly to $425 million in lost revenue. And that’s before accounting for reimbursement to passengers for other expenses incurred, the 25,000 Rapid Rewards points it sent out to affected passengers, the compensation sent to front-fine workers of 25,000 “SWAG” points, and the tens of thousands of postcards it’s mailing to customers asking, “Do u still luv me?”
The airline is also potentially on the hook for a fine from the federal government due to its rough week. The DOT has been fining carriers for abysmal on-time repayment of refunds but might just give Southwest mercy this time since it’s been well over a week and DOT still hasn’t issued refunds anyone from the NOTAM outage.
Lufthansa Prepares to Take the Leap
Lufthansa is set to formally submit an offer to acquire a stake in ITA, the beleaguered Italian airline that is constantly restructuring, rebranding, or being put up for sale.
Of Lufthansa’s two main competitors on the transaction, Air France-KLM says it won’t contest the bid. The second competitor to Lufthansa – common sense – declined to comment. The airline first wanted to only dip its toe in the water, purchasing a minority stake, but now appears prepared to take a majority piece of ITA, with options to purchase the entire thing. It’s believed Lufthansa agreed to these terms after a long meeting with the Italian government that included several bottles of grappa.
Air France-KLM was initially selected by the Italian government last summer, but an exclusive 30-day negotiating period led to the potential deal falling through. Lufthansa CEO Carsten Spohr described Italy as the carrier’s most important market outside of Germany and the United States – and plans to use the purchase of ITA to develop a southern European hub to complement its stronghold in the north.
Delta to Upgrade Lounges in New York and Los Angeles
Delta released more details on its plan to open new Delta One-only lounges at its Los Angeles and New York/JFK hubs in 2024. These would be Delta’s first premium-class only lounge offering since converting its BusinessElite lounges in Atlanta and JFK to regular Sky Clubs more than a decade ago.
The Delta One lounges will only be eligible to passengers flying in the Delta One cabin, providing a more intimate lounge experience, and offering cover from the never-ending long lines to enter Sky Clubs. The lounge at JFK will be about 36,000 square feet, will be located in Concourse B in Terminal 4, and is expected to feature the world’s largest Biscoff cookie.
In Los Angeles, Delta’s new lounge will be just 10,000 square feet and will be connected to the fancy new Sky Club in Terminal 3. The smaller size in LA is unlikely to be an issue, as Delta has far fewer routes and frequencies of flights offering Delta One compared to JFK.
The airline is also opening an exclusive Delta One check-in area later this year at LAX, in its efforts to offer a premium experience to woo high-value travelers in Southern California or Hollywood execs who fancy themselves as a high-value traveler and book Delta One for the clout.
- Air India wants a lot of airplanes.
- Air Serbia and Qatar are dating, and we imagine Etihad is sad.
- Airlink was named the most punctual airline in South Africa, but the carrier’s representatives unfortunately were late to the ceremony honoring their achievement and did not get to accept their trophy.
- American is giving its flight attendants chili. Seriously. This reportedly had nothing to do with the “retirement” of Chief Customer Officer Alison Taylor.
- ANA will resume Tokyo/Narita – Perth flying with 3x weekly service next winter.
- British Airways is bringing its “Flying with Confidence” program to Australia to help nervous fliers adjust to being in the sky. Most of the course is showing the skittish passengers all the other airlines that offer better service, more comfortable seats, and a superior operation. Once they discover there are options beyond BA, the trepidation usually dissipates almost immediately.
- Cathay Pacific flight attendants are not happy.
- China Eastern raised a bunch of cash.
- Delta has a hankering for kiwi, announcing it will begin daily service from Los Angeles to Auckland on October 28. It’ll be Delta’s first foray into New Zealand, and make it the only U.S. carrier to fly to New Zealand from Los Angeles. It’s also increasing Atlanta – Tel Aviv to a daily frequency on April 16, and a third daily flight between New York/JFK to Paris beginning May 25. It’s also back in the basketball business in Salt Lake City.
- easyJet is resuming service from London/Southend this summer.
- Emirates is resuming daily, nonstop service to Hong Kong on March 29. It resumed 2x weekly to Shanghai yesterday, will increase Shanghai to 4x weekly on February 2, and go daily on March 1.
- Etihad is adding new service to Copenhagen and Düsseldorf.
- Flyr will begin operating chartr flights this summr.
- Greater Bay Airlines is eyeing the addition of as many as 22 aircraft. Spend one hour at a major airport and you could eye far more than just 22 airplanes.
- Iberia will close its deal with Air Europa by the end of this year, unless it doesn’t.
- Korean czeched its route map and decided to resume flying to Prague on March 27, marking its first flights to the city since the onset of the pandemic.
- Mango‘s sale has gone sour.
- Philippine Airlines crew were seen crying after being caught smuggling onions into the Philippines.
- Ryanair said it had a great start to the year.
- Spirit is offloading 29 of its 31 A319 aircraft to Gryphon Aviation Leasing, priced at $152 million to $201 million per aircraft. The leasing company also agreed to pay Sprit’s $399 “aircraft release fee” which it requires from anyone purchasing one of its airplanes. The last two A319s are leased and will go away in 2025.
- Sunwing will no longer just wing it out of Regina, as it elected to cancel the remainder of its winter flights due to what it’s calling “extenuating circumstances.” A source who asked to remain anonymous because they were not permitted to speak on the matter told Cranky the cancellations are due to a shortage of quality poutine at the airport.
- United opened an expanded flight attendant training center in Houston which can handle as many as 600 flight attendants per month.
- Virgin Atlantic was fined by the DOT for overflying Iraq on flights with a Delta flight number via the codeshare between the two carriers.
- Virgin Australia is possibly preparing for an IPO. It’s also possible it’s not.
- WestJet is upholding one of Canada’s greatest traditions — making it as difficult as possible for customers to get refunds for canceled flights.
I was in denial that my uncle was stealing from his job as a road worker.
But when I got to his house for dinner, all the signs were there.