Skift Airline Weekly Lounge

Not so surprisingly, easyJet wrapped up a strong earnings season in Europe with some strong numbers of its own. We looked at what’s working for easyJet but also why it can’t quite top rivals Ryanair or Wizz Air. Then it’s pretty much all downhill from there. Most airlines can top Air Berlin right now. Thai Airways is struggling with overcapacity and political unrest. Though things have improved significantly, Kenya Airways is still struggling with terrorism, Ebola and the fact that it’s tough to be in an emerging market right now. And LATAM and Gol are coping in the face of Brazil’s cratering economy. And lastly, desperate to end on a lighter note, we turn to Thanksgiving in America and touch on the realities (and myths!) of holiday air traffic.

More than anything, Spirit Airlines’ business model is built on low fares, which it uses to stimulate demand and fill its planes. But what happens when fuel prices drop, enabling airlines like JetBlue to drop fares too? In a wide-ranging interview, we asked Spirit’s CEO Ben Baldanza about such “fare compression.” We also asked him about the possibility of Spirit chasing corporate traffic (like Ryanair). How will A320-NEOs change Spirit’s network? Other topics included Spirit’s pilot contract and the notion that Spirit is “stealing traffic” from other airlines. Lastly, we learned why it’s “crazy” to call Spirit a “no-frills” airline and why Baldanza loves the Tonka-truck yellow livery. This is our first CEO interview in The Airline Weekly Lounge. It went so well that we plan to make this a regular feature.

Whew! The busiest week of earnings season has us hustling. We kick off our around-the-world sprint with IAG, the airline group that is British Airways, Iberia, Vueling and more recently Aer Lingus. While IAG led Europe’s Big Three in profits, Lufthansa nonetheless posted its own all-time record, and Air France/KLM was no slouch. Still benefiting from its restructuring, Japan Airlines had fantastic profits, while All Nippon Airways had merely a fine quarter. We also check in on China’s Big Three, Icelandair, Aeromexico and Jet Airways. Plus, why is Spirit Airlines not all that concerned about its profit margin? That’s a lot of airlines in a single podcast.

Well that didn’t last long. American Airlines, the biggest carrier in the world, set a new quarterly profit record, with a $1.9b net profit in the third quarter. Of course, there are some technicalities at play here, but it broke Delta’s two-week old record. Maybe even more astonishing was United’s $1.7b figure. Has United finally narrowed the performance gap between itself and Delta and American? Meanwhile all of these airlines look like a bunch of pikers compared to Alaska Airlines. Southwest did just fine, but not as well as Volaris (by operating profit margin anyway). Plus we check in on Tigerair, Vietnam Airlines and Norwegian.

How did Delta achieve its record-breaking quarter? We touch on some of the root causes, including Delta’s push for cheap aircraft and near-perfect operations. Also, we discuss Delta’s plan for flat or zero capacity growth in the fourth quarter. And will Delta hold on to its shiny new earnings record for longer than two weeks? Meanwhile, contrary to a lot of other airlines, JetBlue is seeing an increase in unit revenues. And American Airlines pulled off its reservation system migration with aplomb. And lastly, we revisit the industry 30 years ago from the seat of a certain DeLorean.

Lufthansa is facing competition from Ryanair, Wizz Air, easyJet, Air Berlin, Vueling, Turkish Airlines, Emirates and probably your brother. Competition is not a new thing, but the severity is growing. Meanwhile, Air New Zealand resides in a small country in a location that’s not exactly the stuff of dreams to a network planner. But still it makes plenty of profits. How does it do so well? American Airlines is migrating US Airways onto AA’s reservation system—no small feat. Plus we talk about capacity increases by WestJet and Air Canada in Calgary, and Spirit and Frontier in Atlanta, and capacity decreases in Brazil by LATAM and Gol. And of course, we discuss the Jennifer Aniston ad.

In airline years, Southwest is certainly old enough to be put out to pasture. Instead, the massive airline is making money like never before. Could some of its contrarian moves, like no bag fees, actually be working? Or is it something else? Oil prices are driving low fares around the world, and that is driving traffic figures despite even some sluggish economies. One airline seeing remarkable traffic numbers is Volaris in Mexico. Meanwhile, Russia’s Aeroflot saw a surprise turn of events as the plug was pulled on its absorption of troubled Transaero.

Posting a $54m profit in its second quarter, Frontier Airlines has joined the ranks of America’s most profitable airlines. Frontier and America’s other ultra-low-cost carrier, Spirit, are both highly profitable and have big growth ambitions. As long as oil prices remain low, they should go far. Meanwhile, Norwegian is taking a stab at the low-cost longhaul game in the transatlantic market. Is this for real this time, or is Norwegian simply riding a tailwind of cheap fuel and a robust U.S. economy? Meanwhile, European carriers are bullish about their current quarter and the next one. And with the economy continuing to slide in Brazil, what does it mean for Azul’s longhaul ambitions.

Ethiopian Airlines is growing aggressively—and apparently profitably—while other African carriers are struggling. The airline’s centralized location seems to give it a big advantage over other African carriers. Meanwhile, Ethiopian doesn’t face a lot of competition within Africa. Have its fortunate location and smart business moves made it the biggest carrier in Africa? In India, where there are way too many seats flying around to easily do business, Indigo is nonetheless making money—perhaps even more than Ethiopian. We also discuss the U.S. Export-Import Bank and, of the world’s 100 biggest airports, which are the fastest-growing and slowest-growing (if not shrinking) … and why?

Can United Airlines’ new CEO overcome the carrier’s inherent challenges? United is big, powerful and, at the moment, very profitable. But it’s also underperforming Delta and American. When United and Continental merged, it was supposed to be “checkmate.” And so far it has been—but for the wrong team. Does it matter that the new CEO is not an airline guy? He’s not the first CEO with a railroad background, but still, all the other U.S. carriers have industry veterans at the helm. Plus, in this week’s Airline Weekly Lounge, we look at “hybrid” airlines, we digest our quarterly earnings scorecard and we discuss why Delta and American are—surprisingly—ending their interline agreement.

Canada may be a cold place, but right now its two major airlines are cruising along with comfortable profit margins. Still, what we’re seeing from WestJet and Air Canada is a far cry from what U.S. carriers are experiencing. Why is there such a disparity of results within North America? Also, we head to the Korean peninsula to talk about Asiana and Korean Air, both of which endured a number of challenges in their second quarter, including a MERS virus outbreak and a weakening cargo industry. And if that weren’t enough tumult, China is now devaluing its currency. Plus, we touch on Finnair, Jet Airways and Air Berlin.

The creditors of bankrupt Skymark Airlines chose All Nippon Airways (ANA) as its equity partner going forward. This of course leaves Delta—again!—without a dance partner in Asia. With that news, we take the opportunity to consider the condition of Japan’s long-time duopoly. What does this mean for Japan Airlines (JAL) and Delta’s Asia business? Virgin Australia is having a tough time while Philippine Airlines is having the time of its life. And in the Western world, Frontier Airlines is putting Humpty Dumpty back together again—profitably this time. We’ll explain in this week’s edition of The Airline Weekly Lounge.

With most European airlines having now reported second-quarter earnings, the picture is filling in. But it’s a mosaic—not a portrait. Some carriers did well. Some did lousy. One thing we learned from Ryanair and Wizz Air is that it’s good to be an ultra-low-cost carrier in Europe right now. As for the legacy carriers, it’s not all bad—especially if your home economy is in the UK and you’re somewhat sheltered from the euro. Case in point: IAG, parent company of British Airways, Iberia and Vueling, which had a decent quarter. The Lufthansa Group plodded. Air France/KLM struggled. And Icelandair seems to be enjoying life in its own little corner of the canvas.

American Airlines doesn’t hedge its jet fuel, and now it’s enjoying the fruits of that somewhat contrarian strategy. Is AA onto something here? Is fuel hedging a smart play? Will other airlines mimic AA and reject hedging altogether? Those are some of the questions I ask Seth Kaplan in our second episode of The Airline Weekly Lounge. Also, while AA was on the right side of the fuel hedge bet, Air France/KLM was on the wrong side. The company was also on the wrong side of the euro-dollar bet and those two forces combined to further punish the already-limping airline pair. Back in America, Spirit Airlines had a great quarter by its own standards—but mediocre by its standards. Part of its difficulty was due to a softening revenue picture. Is such heated competition in the U.S. a surprise so soon after consolidation and with high oil prices such a recent memory? Lastly, we discuss WestJet, the subject of this week’s Airline Weekly’s cover story. The Canadian airline is clearly not afraid to changes its business

Our inaugural episode of the Airline Weekly Lounge went live today. Within it, Seth Kaplan and I discuss this golden age for U.S. aviation. Can profits get any better? Along those lines, Delta reported earnings last week. They were exemplary, of course, even despite wrong-way fuel hedges. And Norwegian released its second quarter report as well. Norwegian is, of course, most interesting because of its experimentation with long-cost long-haul flying. It’s always interesting to hear how that’s going. And as we discussed in this week’s cover story of Airline Weekly, Emirates is facing real headwinds. In the Lounge podcast, we discuss Emirates’s situation a little more deeply. And, I asked Seth whether Turkish Airlines’s break-neck growth rate is sustainable. Our first podcast—it’s sure to be a collector’s item. So, do check it out.