News From FlightPath3D | Boeing & Southwest Strike A Deal for 100 B737 MAX Aircraft | Morgan Stanley Airline Industry Report | Other News

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FLIGHTPATH3D

FlightPath3D announced that during Q1/2021, their install base has surpassed 3,000 aircraft and that they’re looking forward to continued and accelerated growth throughout 2021. Duncan Jackson, FlightPath3D President, says, “We’re seeing absolute signs of recovery in flights and see good growth going forward through 2021. We’re optimistic about the market and expect to surpass 4,000 aircraft within a year.” There is a sustained increase in air travel and aircraft returning to service. Geographic markets, domestic and international services, commercial and business sectors are all recovering, albeit at a different pace. Jackson adds, We are seeing some of our customers in Asia and Oceania flying close to their 2019 passenger numbers for domestic flights. In addition, our North American airline customers seem to be on the verge of a rapid increase in travel demand. Boris Veksler, FlightPath3D CEO “We’re pleased to see 737 MAX deployments once again as they make their way back into revenue service. Our optimism is further amplified by the news around forward bookings from our airline customers and the growth we’re experiencing in the business aviation sector.” In light of the pending rebound in travel demand, with people beginning to plan trips in numbers not seen for more than a year, FlightPath3D has been busy creating new applications that help passengers find flights, routes, and destinations based on personal profiles and experience desires. Veksler says, “We’re excited to help airlines with their recovery with new apps to facilitate passenger interests to be matched to destinations, and flights or activities matched with traveler motivations. Our engineers are levering data science and large data sets to solve this.”

For additional information, please visit the FlightPath3D website or email them at crew@flightpath3d.com


BOEING

Boeing and Southwest Airlines announced the carrier will continue to build its business around the 737 MAX family with a new order for 100 airplanes and 155 options across two models. The deal comes after a multi-year fleet evaluation by Southwest and means that Boeing and its suppliers could build more than 600 new 737 MAX jets for the airline through 2031. Southwest had been exploring options to modernize the largest component of its fleet: the 737-700 that serves the airline’s needs for a 140-150 seat airplane. With the new agreement, the airline reaffirmed the 737-7 as its preferred replacement and growth airplane. The jet will complement the 737-8, which serves Southwest’s needs for a 175-seat model. Both 737 MAX family members will reduce fuel use and carbon emissions by at least 14% compared to the airplanes they replace, helping to improve operating costs and environmental performance. Southwest said the solution allows it to maintain the operational efficiencies of an all-Boeing 737 fleet to support its low-cost, point-to-point route network. “Southwest Airlines has been operating the Boeing 737 series for nearly 50 years, and the aircraft has made significant contributions to our unparalleled success. Today’s commitment to the 737 MAX solidifies our continued appreciation for the aircraft and confirms our plans to offer the Boeing 737 series of aircraft to our Employees and Customers for years to come,” said Gary Kelly, Southwest’s chairman and CEO. “We are proud to continue our tradition of being the world’s largest operator of an all-Boeing fleet.” “In addition to supporting our efforts to operate sustainably and efficiently, the 737 MAX offers Employees and Customers travel comforts such as a quieter cabin, larger overhead bin spaces, seating with adjustable headrests, and more galley space for onboard service,” said Mike Van de Ven, Southwest’s chief operating officer.

The new purchase agreement takes Southwest’s order book to 200 737-7s and 180 737-8s, more than 30 of which have already been delivered. Southwest will also have 270 options for either of the two models, taking the carrier’s direct-buy commitment to more than 600 airplanes. The airline also plans additional 737 MAX jets through third-party lessors. “Southwest Airlines has long been a leader and bellwether for the airline industry and this order is a big vote of confidence for commercial air travel. As vaccine distribution continues to pick-up, people are returning to the skies and fueling hopes for a full recovery and renewed growth across our industry,” said Stan Deal, president and CEO of Boeing Commercial Airplanes. “We are deeply honored by Southwest’s continuing trust in Boeing and the 737. Their fleet decision today brings more stability for our biggest commercial program and will ensure that our entire 737 family will be building new airplanes for Southwest for years to come.”

As part of the agreement, Southwest will also expand its use of Boeing’s digital solutions to support its 737 MAX fleet, including Airplane Health Management, Maintenance Performance Toolbox and digital navigation charting tools. Boeing will also provide system software upgrades and new wireless communications-enabling equipment to support Southwest’s operations.

About the 737 MAX Family
Designed and built in Renton, Washington, the 737 MAX family delivers efficiency, flexibility and reliability for the single-aisle airplane market. The 737-7 can fly 3,850 nautical miles, the longest range in the MAX family and 1,000 nautical miles farther than its predecessor. This derivative seats a maximum of 172 passengers, compared to the 737-8’s 210 maximum seats. The 737-8 can fly 3,550 nautical miles. This additional capability allows airlines to offer new and more direct routes for passengers. Every 737 MAX features the new Boeing Sky Interior, highlighted by modern sculpted sidewalls and window reveals, LED lighting that enhances the sense of spaciousness and larger pivoting overhead storage bins. Other technical specifications can be found here.


MORGON STANLEY REPORT (MS)

Airlines: Corporate Travel Survey 2021: Slow Recovery

Travel managers see a slower recovery for travel versus prior surveys, with a return to pre-Covid levels after 2023. Travel budgets are expected, on average, to be 15% below 2019 by 2022. The shift to virtual continues to increase, with one quarter of 2022 travel volumes expected to shift to virtual. MS conducted an online survey of ~200 corporate travel managers between March 3-15, who represent cUS$7B of typical annual travel spend. This survey is the third wave since the Covid pandemic started, which the company finds interesting to track changes in trends as we return to normal. Overall, recovery expectations have been deteriorating, likely due to extended travel restrictions, with a return to pre-Covid levels of business travel just likely post 2023.

Travel budgets still expected to be below 2019 levels by 2022.

MS thinks the increase in travel restrictions globally has had a negative effect on the return of business travel. In their prior survey (October 2020), respondents expected travel budgets in 2021 to fall on average 54% vs 2019; for 2H21, the expectation is for budgets to be down 44.7% vs 2H19, showing a slight improvement against 1H21. For 2022, respondents now expect a reduction of 15.5% on travel budgets vs 2019. While this implies a strong recovery expected in 2022 vs 2019, at this point respondents are not yet expecting a return to normal levels by next year: 67% of respondents expect 2022 travel budgets to still be below 2019 levels. Yields are expected to go down in 2021 (-2.6% vs 2019), likely due to subdued demand, with some recovery expected in 2022 (yields up 2% vs 2019).

Shift to virtual should reduce travel volumes by over ¼ by 2022.

The trend of some shift of travel volumes into virtual keeps increasing: on average, respondents expect that 27% of meetings will shift into virtual by 2022, an increase from 22% in October 2020 and 19% in July 2020. Only 7% of respondents expect minimal impact (<10%) on travel volume by virtual meetings in 2021, and 15% in 2022.

Mass vaccination continues to be the key catalyst for the return to travel. Widespread availability and administration of vaccination is the biggest catalyst to increase business travel in H2 2021, at 79%, followed by business requirement at 58%. This is largely unchanged versus the past surveys and could be a trigger for a faster recovery, if global programs are successful.

Conclusions for Europe: The results of the survey confirm the slow recovery in business travel. MS thinks the expected reduction in passenger volume of c40% for 2021 is in line with the market view for 2021 capacity, though MS sees some downside risk to this figure, given the continued delay in corporate travel and the replacement of travel by virtual meetings, unless mass vaccination programs progress faster than anticipated. All in all, weaker demand and 27% convergence of travel into virtual events should negatively affect legacy carriers (Lufthansa, IAG and Air France-KLM, in that order) more than low cost carriers (easyJet, Ryanair and Wizz). MS continues to prefer Ryanair and Wizz (OW), over Lufthansa and AF-KLM.

Conclusions for US Airlines: From a US perspective, the survey results are a reminder that despite the widespread optimism (that MS shares) on the pace and trajectory of re-opening related pent up demand, there remains uncertainty and choppiness around the recovery. It is also a reminder that much remains up in the air, especially with respect to corporate/international travel and timing of vaccination. MS notes that the airlines recently shared some of their own surveys/views around a corporate travel recovery, which echoed some of these findings – perhaps with a more bullish tone even. MS continues to remain bullish on the pace of recovery and expects a return to 2019 levels of traffic by late 2021/early 2022, though MS expects US Domestic Leisure/VFR travel to return first and International and Corporate to return “last” by early 2022. This drives our preference for LCC and ULCC carriers over Legacy carriers, which are more exposed to International /Corporate travel and on average have had more cap structure damage during the pandemic. LUV, JBLU, ALGT and DAL are our top picks in the space.


OTHER NEWS

  • BuzzFeed has this great trick: 3. “On an airplane, if my seat-mate is hogging the armrest or being too chatty, I grab the barf bag. Works every time.” People Are Sharing Effective Psychological Tricks They Use In Everyday Life, And I’m Blown Away By Some!
  • And speaking of the virus (we assume), if you have AstraZeneca questions, read this: How good is the AstraZeneca vaccine – and is it really safe? 5 questions answered
  • Electric & Hybrid Aerospace Technology virtual conference looks very good so check it out – Conference Programme | Electric & Hybrid Aerospace Technology Virtual ‘Live’
  • If you travel a lot (after the pandemic) and you wear glasses, you will no doubt notice that your glasses are smudged all the time. Here is a great solution for easy, NO CLOTH wiping! It’s a little plastic cleaner that fits in your pocket and works better than anything else we have ever used – PEEPS! Yep, that is the name of the product … and no … they didn’t pay us, it is just a great product and we thought we would share it with you

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