Skift Take

The aviation industry was mostly quiet during the holiday period, but a few companies made news — and not for the best of reasons.

When an airline — or any corporation — makes a big announcement over the holiday season, there’s often a good reason for the timing. The company may be figuring that no one is paying attention.

This year, several airlines and manufacturers took advantage of the holiday period to release news. None of it was ground-breaking, but it tended to receive less coverage than it might have in any other month, which might have been what the companies wanted.

If you were enjoying the holiday, you may have missed these stories:

Delta Air Lines cancels its Boeing 787 order

For insiders, this was not a surprise.

Delta had inherited an order for 18 Boeing 787-8s when it acquired Northwest Airlines in 2008. But Delta executives never seriously spoke about taking the aircraft, and it always seemed like a matter of time before Delta canceled the order Northwest placed in 2005.

In recent years, Delta has preferred Airbus widebody aircraft, and it still has 25 A330neos and 25 A350s on order. The A330neo is a more fuel-efficient version of the twin-aisle A330s already in Delta’s fleet, while the A350 is a new technology aircraft similar to the 787, though with more seats in most configurations.

Interestingly, though the announcement came on December 27, Delta had long ago worked with Boeing to cancel the order, according to Bloomberg. The news service reported that Boeing had agreed to let Delta change the contract when it ordered 120 smaller Boeing 737-900 jets.

Alitalia announces a restructuring plan — again

Can a business succeed if it loses a half a million euros a day?

The answer is likely “no,” which is why Alitalia announced on December 22 that it would restructure its finances one more time. This news came only two years after the last time Italy’s flag carrier promised it would remake itself by expanding long-haul flying and catering to more affluent customers. That effort was led by Etihad Aviation Group, which had recently purchased 49 percent of the airline. It still holds that share, but the company seems increasingly disinterested in its European investments. 

Since the last restructuring plan didn’t work, Cramer Ball, Alitalia’s newish CEO, has another one. The company offered limited details, saying mostly that it would rework its network, cut costs, let go some staff, and re-evaluate its ties with other airlines.

“We have achieved great progress in the last two years but the commercial aviation market is brutally unforgiving so we need to go further with our program of change,” Ball said in a statement. “We need a business that is the right size, the right shape and with the right productivity and cost base.”

Brett Snyder, who analyzes the airline business on his blog, Cranky Flier, wrote that he is skeptical the airline will get the acceptance it needs from its employee unions or the Italian government. But Alitalia likely has no choice but to try.

“This plan is more of a ‘plug the leak’ kind of plan than a visionary go-forward type of plan,” Snyder wrote. “Alitalia is in a cash crunch, and it needs to show some sort of progress to attract money for another bail-out. It needs to do that quickly.”

The Mitsubishi Regional Jet faces another delay

For the first time in more than 50 years, a Japanese company is building a new passenger jet. But all is not going well for Mitsubishi Aircraft Corp., as it builds a larger regional jet to compete with planes sold by Brazil’s Embraer and Canada’s Bombardier.

When the project started, Mitsubishi promised to have its first jets ready for launch customer ANA by 2013. Since then, however, the project has been repeatedly delayed because of technical issues, and the MRJ90 is now not scheduled to hit market until at least mid-2018.

There are indications delivery will be further delayed. Late last month, Mitsubishi Heavy Industries President Shunichi Miyanaga told Japanese media that the company was having difficulty passing safety tests for the aircraft. Assuming Mitsubishi must delay delivery again, this would be the fifth change in delivery date, according to the Japan Times.

Three U.S. airlines have ordered the MRJ90, but two will have difficulty taking the aircraft. SkyWest Airlines, which operates feeder service for Alaska, United, Delta and American, has orders for 100 jets. Meanwhile, TransStates Holdings, which flies as United Express, American Eagle and Delta Connection, has ordered 50. The third U.S. airline planning to take the MRJ90 is Eastern Air Lines, a Miami-based charter carrier.

The problem for SkyWest and TransStates are the contracts that their large airline partners have with their pilots. For the foreseeable future, American, Delta and United do not allow their regional airlines to operate feeder planes as large as the MRJ90. Major airline pilot contracts ban regional carriers from flying planes with maximum takeoff weight greater than 86,000 pounds, and the MRJ is slightly heavier. If these pilot contracts do not change, SkyWest and TransStates could cancel or alter their orders.

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Tags: alitalia, Boeing, Boeing 787, delta air lines

Photo credit: Two years ago, as part of a restructuring, Alitalia refreshed its brand. But the airline is still in dire shape. 158564

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