Breeze Airways #2 Best US Airline | MAX Vision Live at HK Express | Boeing Announces 2Q Deliveries & Farnborough Preview | Airbus 2Q Deliveries | Morgan Stanley | Other News

Breeze Airways

Breeze Airways, the Seriously Nice™ new U.S. low-fare airline founded by aviation entrepreneur David Neeleman, has been ranked second of the 10 best U.S. domestic airlines in 2021, according to Travel + Leisure readers.

Every year Travel + Leisure hosts its World’s Best Awards survey that is distributed amongst its readers. The survey asks readers to share their insights from their travels, voicing thoughts on resorts, hotels, cruise ships, cities, and more.

In the airlines category, readers ranked their top choices based on cabin comfort, in-flight service, food, customer service, and value. T+L readers noted Breeze’s affordability, spacious legroom, nice flight crew, and easy online booking system.

“We started service around Memorial Day last year, only operating for seven months of 2021,” said David Neeleman, Breeze Airways Chairman and CEO. “To be named among the likes of Hawaiian, JetBlue, Delta, and Alaska on a list of the top U.S. domestic airlines in 2021 is a huge honor and a testament to the hard work our Team Members are putting in daily. Together, we’re building a Seriously Nice™ airline, by making travel for our Guests easy, affordable, and flexible. This recognition shows we’re on the right track…and we’re just getting started!”

The list, which is usually comprised of five airlines, was expanded to 10 this year due to the growing number of U.S. domestic airline carriers. Breeze was No. 2, coming in just behind Hawaiian Airlines. Following Breeze was JetBlue at No. 3, Alaska Airlines at No. 4, and Delta Airlines at No. 5.

MAX Vision

Levarti, part of TA Connections, a FLEETCOR Company, announced today that its MAX Vision Disruption Management software is now live at HK Express. HK Express, the Hong Kong-based low-cost carrier, launched Levarti’s MAX Vision software recently to improve passenger communication, support an enhanced passenger experience and reduce the time and cost of managing flight disruptions. With an emphasis on user-friendly design, Levarti’s self-service portal now allows HK Express passengers to virtually self-manage any disruption event from their own devices, saving passengers valuable time whilst still providing them with great rebooking options.

MAX Vision’s software facilitates HK Express to manage all disruption needs from a single platform. Seamlessly integrated into HK Express’s PSS and flight operations systems, MAX Vision software provides end-to-end logistics management, supports smarter, faster decision making and improved service for passengers.

“In a period of constant operational change for the airline industry due COVID, it’s so important to have the right tools in place,” said Anthony Murray, Levarti CEO. “And our MAX Vision suite supports the HK Express goals of improved communication and enhanced service to passengers even during a flight disruption.”

“At HK Express, we are dedicated to bring in innovations to deliver a quality, affordable and seamless experience to our customers. Our partnership with Levarti will bring additional values to our customers and us,” said Mandy Ng, CEO of HK Express. “Incorporating Levarti’s technology will elevate our customer experience while ensuring we continue to deliver smooth journeys with our value for money offers.”

“Levarti is honored to be a part of HK Express’ digital ecosystem enabling passengers to self-serve their journey changes in addition to supporting HK Express’ drive to improve their passenger experience,” said Murray. “Eliminating unnecessary costs without cutting corners to offer the best services is one of the vital missions of an LCC, and Levarti’s role in managing disruptions effectively and at a much lower cost supports this purpose. Dealing with disruption events can be an expensive proposition for airlines, and they may incur tangible and intangible costs. Our MAX software helps HK Express mitigate both types of cost exposures so they can continue to offer affordable choice and deliver an outstanding and flexible service to travelers.”

Boeing

The Boeing Company announced major program deliveries across its commercial and defense operations for the second quarter of 2022.

The company will provide detailed second quarter financial results on July 27. Major program deliveries during the second quarter were as follows:

And More Boeing News:

Boeing will fly the newest and largest members of its 737 MAX and 777X airplane families at the Farnborough International Airshow this month and present new tools in the push toward more sustainable and autonomous flight.

The 737-10, making its international debut, will join the 777-9 in the daily flying and static display. The airplanes, each one the most fuel-efficient in its class, will fly to the show on a blend of sustainable aviation fuel, which Boeing sees as a major lever for further reducing carbon emissions. The company also will unveil a modeling tool that will provide actionable insights on strategies the aviation industry can use to reach net zero emissions by 2050.

Another decarbonization strategy is electric propulsion and Boeing’s joint venture Wisk Aero will make the European debut of its all-electric vertical-takeoff-landing (eVTOL) air taxi. The “Cora” development vehicle is pilotless, helping to advance autonomous capabilities in aviation. Boeing will highlight other autonomous capabilities at the show, including its MQ-25 uncrewed aerial refueler and Airpower Teaming System (ATS).

“In the four years since the last Farnborough Airshow, the world has seen the critical social and economic role that aerospace and defense plays. We are excited to reconnect with our colleagues at Farnborough as we address together the need for a more sustainable future and take concrete steps to enable innovation and clean technology,” said Sir Michael Arthur, president of Boeing International. “We look forward to sharing the progress we are making.”

Below are some of Boeing’s highlights scheduled for the airshow starting on July 18, 2022.

Commercial Airplanes
The 737-10 will be on the show grounds July 18-21. The largest member of the 737 MAX family will provide operators with more capacity, greater fuel efficiency and the best per-seat economics of any single-aisle airplane. The 737 MAX family, which has received more than 3,300 net orders, leverages advanced aerodynamic design and highly-efficient engines to reduce fuel use and emissions 20% and the noise footprint 50% compared to airplanes they replace.

The 777-9, which is the world’s largest and most efficient twin-engine jet, will be at the airshow July 18-20. Based on the most successful twin-aisle airplane – the 777 – and advanced technologies from the 787 Dreamliner family, the 777-9 will deliver 10% better fuel use, emissions and operating costs than the competition. The 777X family has more than 340 orders from leading operators around the world.

Defense, Space & Security
Boeing’s exhibit will highlight its highly capable military helicopters, including the CH-47 Chinook and AH-64 Apache, and mobility and surveillance aircraft such as the P-8A Poseidon, E-7 Wedgetail and KC-46A Pegasus.

Boeing also will display some of its newest, most digitally-advanced programs, including the T-7A Red Hawk trainer and ATS. In addition, the U.S. Department of Defense corral is expected to display the FA-18E/F, F-15E, P-8A, AH-64E and CH-47F.

Global Services
Boeing will highlight its customer-centric services business that is focused on keeping the world’s fleet flying safely, efficiently and sustainably by pairing OEM expertise with data-driven innovation. This includes showcasing parts, modifications, digital, sustainment, and training solutions offerings, as well as an expansive global supply chain, maintenance and logistics network.

Sustainability
Boeing will present its vision for a sustainable aerospace future that is grounded in collaboration, technical research, data and extensive testing of technologies including sustainable aviation fuel, hydrogen and electric power.

Autonomy
Boeing will highlight autonomous platforms such as MQ-25, ATS, and Wisk Aero’s Cora.

The company is building on decades of engineering experience to accelerate autonomous capabilities, which can enable sustainable and accessible modes of transportation as the world confronts a growing population and aging infrastructure. Boeing has made significant investments in California-based Wisk Aero, a leading Advanced Air Mobility company and developer of the first all-electric, self-flying air taxi in the U.S. Wisk’s configuration is an important differentiator within the eVTOL market as the independence of its lift and thrust rotors is expected to support simplicity and certification of the go-to-market vehicle.

Other
Boeing will release its 2022 Commercial Market Outlook (CMO) on July 17. The annual forecast builds on 60 years of analysis and insights into airline strategies, passenger demand and economic data, and is among the most accurate forecasts in aviation.

Throughout the airshow, Boeing leaders will discuss market opportunities, eVTOL, sustainability and other topics at media briefings. See boeing.com/Farnborough and follow @Boeing on Twitter for information about these and other activities. Sign up in Boeing’s Newsroom to receive company announcements and advisories.

The Boeing exhibit – Exhibit # A-U01, U23 – will feature an immersive theater display and the company’s aerospace and defense capabilities across the lifecycle.

Airbus 2Q Deliveries

The net year to date delivery number of 295 reflects a reduction of 2 deliveries recorded in December 2021 (2 A350-900 AEROFLOT) for which a transfer was not possible due to international sanctions.

Morgan Stanley

Airlines: 2Q22 Preview: From Sweet Spot to Goldilocks?
2Q22 could be the best earnings season for the Airlines in years (decades?) despite $4 jet fuel, which speaks volumes for the power of the demand recovery. However, the stocks are already pricing in an “inevitable” Fall recession. We think risk reward might be better than the market thinks.

2Q22 a tale of peak demand vs. peak inflation but demand wins? The mid quarter updates from virtually all the Airlines at conferences in June reinforced that the demand and yield strength that picked up after Presidents Day only strengthened, which helped offset jet fuel and CASMxF inflation. Several airlines are set to deliver double-digit EBIT margins in 2Q despite $4 jet fuel and double digit CASMxF inflation, which would have been unthinkable even 6 months ago. The engine of growth has been driven by demand and yields (running ~25% above 2019 levels) rising unabated (at least until our most recent mgmt conversations a few weeks ago). However, our consumer surveys are showing some cracks (see here, here, and here) and fears of a recession have robbed the stocks of performance (US airline stocks were ~flat from 4/1 through 5/4 and down ~24% from 5/4 through 6/30). We are sympathetic to the concerns and absolutely do not expect yields to be +25% forever. However, we believe the market pricing in a collapse in demand/pricing AND elevated jet fuel may be too bearish. We see a 2H/2023 scenario where demand is strong but not record breaking (aided by a relatively resilient high end consumer + pent up corporate/international demand), yields drop to “only” 10-15% above 2019 levels, capacity eases somewhat as pilots graduate from training schools and demand pressures ease and jet fuel offers some relief (maybe $4 goes to $3 as demand declines?). This could be a transition from our Sweet Spot thesis (demand/pricing being very hot and capacity being very cold/tight which created a sweet spot for margins, even if execution risk was high) to more of a Goldilocks thesis (where nothing is too hot or too cold and everything is just right, lowering execution risk). We believe the Airlines can still comfortably top consensus 2023 estimates (and definitely what is priced into the stocks today) in this scenario. We are leaving forward estimates relatively unchanged today as we believe there is enough dry powder in jet fuel’s decline to more than offset an expected decline in volumes/yield in the coming quarters. However, we will continue to closely monitor leading indicators for both datasets. All airlines have given us detailed guidance updates in early June which significantly de-risks the quarter in terms of numbers and means the focus again will be on the rising tide (and whether it has started to fall).

Below are some of the key themes that we are looking for during 2Q earnings season:

1. Forward booking curve / signs of demand destruction. We believe the hump of Airlines reports in late July should be late enough to provide an early read into the forward booking curve beyond Labor Day to confirm whether the seasonal drop in volumes is normal/seasonal/mild (bull case) or a collapse (bear case). Airlines opened their Fall bookings in early June and early reads have looked promising though they were too early to be definitive. We should have a definitive view during earnings.
2. Signs of pricing easing. Bears have been waiting for signs of a second derivative turn in pricing and we may get that with mgmt. teams unlikely to underwrite 25% Y/3 yield growth through 2H. Part of this is normal seasonality, part is lack of macro visibility. However, this outlook downgrade may as well be a “buy the news” event if rates are still up Y/3 (given the concerns priced into the stocks) through 2H. We also expect corporate and international to pick up in the Fall which should be a tailwind to price/mix.
3. Corporate update. The industry is counting on the last big leg up on corporate to come after Labor Day which should take the corporate recovery back to 2019 levels (from ~70-75% recovered today). This is supported by our latest Corporate travel survey (see here) which sees corporate travel spend rising into 2H22/2023. We believe a mild macro slowdown may actually be beneficial to corporate travel as companies hustle more to win business but a deeper recession could see budget cutbacks. We should get an update on the Fall corporate outlook on the 2Q calls. We will also be looking for an update on contract renewals which should reset some corporate contracts that may be grandfathered from pre-pandemic levels and renewed at much higher pricing.
4. Jet fuel offers cost relief? While nearly impossible to accurately forecast, recession fears have pulled oil below $100/barrel and jet fuel below $4/gal (today jet fuel is at ~$3.29/gal which is ~22% lower in some cases than when airlines last updated their 2Q guidance in early June). If this sustains or the decline continues, jet fuel could be a tailwind to 3Q guidance.
5. CASMxF update / service issues. Despite all the noise, the biggest headline of 2Q was likely the aggressive pull down of schedules into the summer as airlines struggled to keep service levels afloat. Cancellations were elevated at some point in the quarter for virtually every airline (though ALGT, which already guided down on this, and AAL are likely most at risk) and every airline slashed their flying schedules for 2H2Q22. We do not expect other airlines to warn/miss on this in 2Q but the market will be focused on whether this continues into the Fall, which will impact CASMxF guidance for the year. Again, we think a Goldilocks scenario should bring demand and supply more into balance.
6. Idiosyncratic updates. We are still in an environment where the market/macro dominates investor sentiment and earnings power but idiosyncratic catalysts also matter, including updates on LUV’s corporate traction, ALK’s revenue initiatives, Sunseeker update at ALGT and more.

Other News

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