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Boeing, hit with $6.6 mn FAA fine, faces much bigger 787 repair bill: Report

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Boeing Co will pay a $6.6 million to U.S. regulators as part of a settlement over quality and safety-oversight lapses going back years, a setback that comes as Boeing wrestles with repairs to flawed 787 Dreamliner jets that could dwarf the cost of the federal penalty.

 

 

Boeing is beginning painstaking repairs and forensic inspections to fix structural integrity flaws embedded deep inside at least 88 parked 787s built over the last year or so, a third industry source said.

 

 

 

 

 

 

The inspections and retrofits could take weeks or even up to a month per plane and are likely to cost hundreds of millions – if not billions – of dollars, depending to a large degree on the number of planes and defects involved, the person said.

 

 

The Federal Aviation Administration said Boeing had agreed to pay $6.6 million in penalties after the aviation regulator said it failed to comply with a 2015 safety agreement.

 

 

The penalties include $5.4 million for not complying with the agreement in which Boeing pledged to change its internal processes to improve and prioritize regulatory compliance and $1.21 million to settle two pending FAA enforcement cases.

 

 

“Boeing failed to meet all of its obligations under the settlement agreement, and the FAA is holding Boeing accountable by imposing additional penalties,” FAA Administrator Steve Dickson said in a statement. Boeing, which paid $12 million in 2015 as part of the settlement, did not immediately comment.

 

 

 

 

Boeing engineers are working to determine the scope of inspections, including whether jets can be used as-is without a threat to safety, two people said. Boeing has not told airlines how many jets are impacted, another person said.

 

 

The FAA has been investigating instances of oversight lapses, debris left inside finished aircraft, and managers putting pressure on employees handling safety checks for the FAA, people familiar with the proceedings said.

 

 

For example, in August 2020, Boeing told to the FAA about the flaw involving structural wrinkling in the interior fuselage skin where carbon-composite barrels that form the plane’s lightweight body are melded together.

 

 

But the defect went unnoticed for months or longer because computerized safeguards that crunch data looking for quality flaws had not been programmed to look for the gaps, a third industry source said.

 

 

DELIVERY TARGET

The 787 production problems have halted deliveries of the jet since the end of October, locking up a source of desperately needed cash for Boeing.

 

 

The fuel-efficient 787 has been a huge success with airlines, which have ordered 1,882 of the advanced twin-aisle jet worth nearly $150 billion (74.7 billion pounds) at list prices.

 

 

But the advanced production process and sprawling global supply chain caused problems over the years.

 

 

As of February, Boeing had fixed the 787 production process causing the wrinkling defect, according to two people familiar with the matter.

However, planes rolled off the assembly line with the flaw for more than a year, at least, continuing even after the flaw was discovered in August 2020.

 

 

“It’s difficult to see a definitive fix that is agreeable by the aviation authorities and all going forward,” Boeing customer Air Lease Corp’s CEO John Plueger told analysts on an earnings call Feb 22. “I don’t think that we’re there yet.”

 

 

Boeing has been working on the fuselage problem, and two additional potentially hazardous defects that arose since 2019, as it charted plans to consolidate final assembly of the 787 in South Carolina starting next month, at a sharply reduced rate of 5 787s per month.

 

 

One senior supply chain source said they will have to cut rate again.

Boeing said last month it expects to resume handing over a small number of 787s to customers later this quarter.

It has an ambitious internal plan to deliver 100 of the jets this year, one person said. Analysts say deliveries are not expected to recover to 2019 levels until at least 2024.

 

 

 

 

 

 

‘OPEN-HEART SURGERY’

But before any jet is delivered, it must go through invasive inspections and costly repairs.

First, technicians must pull out the passenger seats, open up the floor paneling and use specialty tools to measure whether defects invisible to the naked eye are present, according to three people with direct knowledge of the process.

 

 

 

The repair work – already underway at Boeing factories in Everett, Washington and North Charleston, South Carolina – is even harder.

In the bowels of the jet, technicians have to re

 

 

move multiple specialty fasteners on both sides of the inner fuselage skin, then install newly produced “shims” that fill out gaps and remove the structural dimpling. Workers then replace all the fasteners, re-paint, and re-install the interior, they said.

“It’s like open heart surgery,” one of the people said. “They’ll be retrofitting the fleet for potentially several years.”

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Source: https://www.amevoice.com/Aviation-News/boeing-hit-with-6-6-mn-faa-fine-faces-much-bigger-787-repair-bill-report/

Aviation

Wow: Virgin Australia Sells 71,000 Domestic Tickets In 24 Hours

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Virgin Australia experienced one of its busiest days of domestic ticket sales in 20 years just after the Australian government’s A$1.2 billion (US$920 million) stimulus package went into effect. The enthusiasm was sparked by half-price flights offered on subsidized routes, which included flights to the Gold Coast from the cities of Melbourne and Sydney, among others.

Like other Australian carriers, Virgin Australia’s flight operations have been severely limited over the past year. Photo: Getty Images

71,000 tickets sold in 24 hours

Within the span of a full day, Virgin Australia sold enough tickets to completely fill over 400 of its Boeing 737-800s (which have 176 seats each). The hottest tickets were for subsidized routes, for which the airline halved its standard prices.

Swept up in the momentum and also experiencing large jumps in ticket purchases were other ‘full-price’ routes, which included Melbourne-Perth, Perth-Sydney, and Melbourne-Sydney.

“The overwhelming response from Australians demonstrates loud and clear that they are ready to get back in the air and travel and are a positive sign for the aviation and tourism sectors as they look to recover from the impacts of COVID-19,” -Virgin Australia statement via 7News.com.au

While Virgin Australia had the record-breaking day, The Islander reports that the country’s other airlines saw spikes in web searches during the same period. Searches for “Qantas”, “Jetstar,” and “Virgin” sharply increased from around midnight Thursday and spiking again at 06:00 Australian Eastern Daylight Time.

Both Qantas and Virgin Australia will benefit from the Australian government’s stimulus package. Photo: Simon_sees via Flickr 

The Australian government’s stimulus package

Announced in early March, the government support package includes A$200 million (US$152.6 million) for Qantas and Virgin Australia. Reuters notes that this funding will support the airlines from April to October, with the intent to help maintain mothballed aircraft as well as bring planes out of storage and support wages for international flying staff.

Another major part of the scheme, and the main reason for this story, is the government subsidization of 13 routes. Subsidization has meant that eligible airlines can offer half-price tickets. The impetus for the deal was to support airlines while encouraging domestic tourism at a time when international tourism has been hard hit. According to The Guardian, the routes are as follows:

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  • Sydney: flights to the Gold Coast, Cairns, Proserpine, Hamilton Island, Maroochydore, Uluru, Alice Springs, Launceston, Broome, and Avalon.
  • Melbourne: flights to the Gold Coast, Cairns, Maroochydore, Alice Springs, Uluru, Launceston, Devonport, Burnie, Broome, and Merimbula.
  • Adelaide: flights to the Gold Coast, Maroochydore, Alice Springs, and Kangaroo Island.
  • Brisbane: flights to Alice Springs, Uluru, and Launceston.
  • Darwin: flights to Cairns and Broome.
  • Perth: flights to Alice Springs.
  • Avalon: flights to the Gold Coast

The half-price fares were made available on April 1st and will continue to be offered until the end of July.

Having recently divested itself of its widebody Boeing 777s and Airbus A330s, Virgin Australia’s fleet is now completely comprised of Boeing 737s. Photo: Aero_Icarus via Flickr 

Hope for the best, plan for the worst

One key concern when it comes to domestic flight bookings is the ever-present risk of interstate border closures in the event of an outbreak during this global health crisis. While it’s hard to resist a good deal, it’s also wise to consider the possibility of such unwelcomed restrictions. Having flight bookings with flexible re-booking and cancelation policies will help greatly if such restrictions arise.

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Were you a lucky Australian resident who managed to secure a half-priced flight? Or did you try and miss out? Share your experience with us in the comments.

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Source: https://simpleflying.com/virgin-australia-domestic-tickets-boom/

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US Congressmen Call On DOT To Deny Norse Atlantic Airways Permits

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The Chair of the US House Committee on Transportation and Infrastructure, Peter DeFazio, and Chair of the Subcommittee on Aviation, Rick Larsen, have called on the US Department of Transportation (DOT) to deny permits for Norse Atlantic Airways to fly to the United States, citing concerns about the airline.

Boeing 787 Dreamliner Takes First Test Flight
Norse Atlantic wants to fly to the US with Boeing 787s, but it has ruffled some feathers. Photo: Getty Images

Members of Congress on Norse Atlantic Airways

Rep. DeFazio, a Democrat from Oregon, and Rep. Larsen, a Democrat from Washington State, have called on the DOT to deny Norse Atlantic Airways Operating permits on account that it is flouting labor protections.

Drawing on earlier language indicating opposition to the airline, Reps. DeFazio and Larsen have argued that, by organizing itself in a country outside of Norway, where there are strong labor laws, the airline is seeking to flout those laws.

Norwegian selling two 787s to Neos Air
Norwegian also used subsidiaries in other countries, which is a concern highlighted in the letter. Photo: Getty Images

Drawing strong comparisons with Norwegian

The two Congressmen believe the airline is doing this because one of its executives was a former executive at Norwegian, which used Irish and UK subsidiaries to operate long-haul low-cost flights between the US and Europe.

In the letter, the Congressman stated the following:

“Their long-haul low-cost business model was predicated on the use of pilots and flight attendants employed under short-term contracts and assigned to the Norwegian subsidiaries via third-party crew sourcing firms. In short, Norwegian exploited labor while enjoying the liberalized benefits of the U.S.-E.U.-Iceland-Norway open skies agreement and competing unfairly with airlines that do not subvert fair labor standards.”

Norwegian 787
Norwegian recently announced it would be ending long-haul operations. Photo: Vincenzo Pace | Simple Flying

Using Norwegian as a warning

The letter also urged the DOT to consider that Norwegian failed in its transatlantic operations. Between 2016 and 2019, the letter states that Norwegian incurred debt of nearly $7 billion.

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Norwegian is currently under bankruptcy proceedings in Europe and has decided to shut down its long-haul routes and focus on its flights within Europe.

Norwegian made a huge splash when it started transatlantic operations in 2016 between the US and Europe. Using a fleet of mostly Boeing 787 aircraft, the airline brought large numbers of customers across the pond.

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Norse Atlantic Airways has already indicated it will operate a similar model, using Boeing 787 aircraft it has signed leases for.

Boeing 787 Dreamliner
The Dreamliner is an efficient long-haul aircraft. Photo: Getty Images

US airlines breathed a sigh of relief

When Norwegian came into the transatlantic market, it followed its initial routes with plenty of growth. That growth put pressure on US airlines.

Now, without Norwegian in the market, airlines are breathing a sigh of relief. Without that low-cost competition in the market, airlines like United are bullish on their international exposure. Without Norwegian in the market, there is also room for plenty of existing airlines to move toward higher-yield transatlantic operations.

Norwegian 787
Norse will need to do what Norwegian could not: make long-haul operations profitable. Photo: Vincenzo Pace | Simple Flying

The return of transatlantic demand will depend greatly on the removal of travel restrictions between the US and Europe. Most airlines are focused on cargo with low passenger loads on flights to Europe currently. Only essential travel is permitted between the two areas.

Norse Atlantic is a startup to watch. It has the opportunity to massively grow to the size of Norwegian’s long-haul operations before it shut down, but doing so may come at a high cost and low profitability. It will have to make the long-haul low-cost model work to be successful.

For now, it is a waiting game to see how the DOT will respond to Norse Atlantic. US Congressmen are coming down on the side of the US airline industry, but the DOT may end up granting Norse Atlantic operating permission.

Do you think Norse Atlantic Airways should be allowed to operate between the US and Europe? Let us know in the comments!

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Source: https://simpleflying.com/us-congressman-norse-atlantic-permits/

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Frontier Launches IPO – How Can The Airline Benefit?

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American ultra-low-cost carrier (ULCC) Frontier Airlines has officially gone public. Pricing out at the lower end of its target share price, the airline is still expecting to raise over $200 million from the endeavor. Here is a look at how that could benefit the airline.

Frontier Airbus A320
Frontier Airlines is set to benefit from its IPO. Photo: Frontier Airlines

Frontier’s initial public offering pricing

Frontier Airlines announced its initial public offering of 30 million shares at a price of $19 per share. This was toward the lower end of the initial pricing for Frontier’s shares. The share consists of 15 million shares of commons tock offered by Frontier and 15 million shares of common stock to be sold by certain of Frontier’s existing stockholders.

Less the underwriting discount, commissions, and estimated offering expenses, Frontier will net proceeds of approximately $266 million. The sale of stock by the existing stakeholders will not raise Frontier cash. Overall, the net proceeds to both Frontier and the private stakeholders is expected to be over $500 million.

Frontier IPO
Frontier is now trading on the stock market. Photo: Frontier Airlines

The airline is being traded on the Nasdaq Global Select Market under the ticker “ULCC.” Since going public, the airline’s stock price has hovered between $18 and $19 a share.

The net proceeds

The amount that Frontier expects to receive is around $266 million. This is a respectable amount similar to the funding another airline IPO, Sun Country, received.

With $266 million, the airline can do plenty of things. Frontier ended 2020 with long-term debt of over $300 million. The airline can choose to pay down some of its high-cost debt with these proceeds. Or else, the money can be used to fuel expansion. The airline sees plenty of growth opportunities and has a sizable aircraft order book which costs money, and this funding can go a long way.

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Frontier A320
There is a lot Frontier can do with this money. Photo: Frontier Airlines

The current state at Frontier

Frontier Airlines is one of the carriers leading the way with capacity increases through the year. The airline’s top stations are Denver, Orlando, and Las Vegas. These are major leisure travel hotspots, but some of them also provide opportunities for Frontier to sell connecting flights.

Frontier serves over 300 nonstop routes touching around 110 airports. Using a low-frequency model, the airline targets mostly point-to-point leisure travelers.

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Frontier also sees plenty of room for growth. In the airline’s initial filing for an IPO, the carrier highlighted it had an opportunity to serve 518 additional domestic routes between airports within its existing network not currently served by a ULCC. This is a fascinating number, but it also raises the question of Frontier’s expansion.

Frontier AIrcraft
Frontier is a ULCC that generally operates on a low-frequency, point-to-point model. Photo: Getty Images

In the past, Frontier has not been very hesitant in terms of adding new cities and then cutting them if those flights do not provide the anticipated financial benefits. Moving forward, Frontier will face shareholders and stockholders that may temper some of those ambitions, but the carrier is still expected to add new routes. This is especially true as signs continue to point toward a summer surge, and the CDC outlines guidelines for vaccinated Americans to travel.

The airline is already making moves to become a more modern, fuel-efficient carrier with an eye on costs. The aging and comparatively expensive Airbus A319s will exit the fleet this year as the airline welcomes newer Airbus A320neo family aircraft. Those new jets will also feature lighter-weight seats that will save on fuel, which in turn saves on Frontier’s costs.

Frontier A320neo
Frontier has started taking delivery of aircraft with new seats inside. Photo: Frontier Airlines

Ultimately, Frontier has set itself up to do well in the future. The net proceeds from this IPO will go a long way in getting Frontier the cash influx it needs to survive the next few months and prepare to handle the increase in passengers expected over the summer. As the US airline industry starts to turn the page on the crisis, Frontier is expected to be one carrier that benefits early on from its mostly domestic and short-haul international leisure-oriented model.

Do you think Frontier made the right decision by launching an IPO? Let us know in the comments!

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Source: https://simpleflying.com/frontier-ipo-launched/

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Cheap ticket deal breaks Virgin’s all-time record, despite lockdown

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Virgin Australia 737-8FE(WL) Brisbane Airport VH-YIB
‘Trinity Beach’ arriving into Brisbane Airport as ‘VA957’ in some windy and overcast conditions. 1/10th sec pan for those who are interested.

Virgin sold more domestic tickets on the launch day of the government’s half-price ticket scheme than on any 24-hour period in its history.

The result came despite fears Brisbane’s recent snap lockdown, which ended on Thursday, would put people off interstate travel.

Domestic aviation has been pinning its recovery hopes on the federal government’s plan to supplement 800,000 half-price airfares for passengers to 15 destinations including the Gold Coast, Alice Springs and Kangaroo Island. It follows the end of JobKeeper last week.

Virgin said in a statement it sold 71,000 supplemented seats in the 24-hour period from 12:01am on 1 April. The top five routes were:

  • Melbourne to Gold Coast
  • Gold Coast to Sydney
  • Maroochydore to Melbourne
  • Cairns to Sydney
  • Adelaide to Melbourne

Destinations not in the scheme also received a “significant boost”, in particular, Melbourne to Perth, Perth to Sydney and Melbourne to Sydney.

“The overwhelming response from Australians demonstrates loud and clear that they are ready to get back in the air and travel and are a positive sign for the aviation and tourism sectors as they look to recover from the impacts of COVID-19,” said the business in a statement.

“As a sign of renewed confidence and pent-up travel demand for travel, more than 85 per cent of the new bookings have been booked for travel from May onwards.”

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Skyscanner also said direct interest in booking on Thursday were 25 per cent higher than the week prior, while web searches for “Qantas”, “Jetstar” and “Virgin” also leapt six-fold.

Greater Brisbane lifted its snap lockdown on Thursday at noon, following the state recording just one new case of community transmission.

Queensland Premier Annastacia Palaszczuk did though announce a slight increase in restrictions, which will require residents to wear masks indoors and a limit of indoor gatherings to 30.

The good news came shortly before NSW announced no new local infections across the state, too.

The half-price ticket scheme saw Virgin announcing fares from just $55 between Melbourne-Launceston and Jetstar offering tickets from just $32 between Adelaide and Avalon.

The updated list of destinations now includes Cairns, Townsville, Whitsunday Coast/Hamilton Island, Sunshine Coast, Darwin, Alice Springs, Hobart, Launceston, Devonport, Broome, Avalon, Merimbula, Adelaide, Kangaroo Island and the Gold Coast.

The fares are on sale until the end of July for travel until the end of September, with discounts applied automatically.

Both airline groups have also topped up the 15 locations with sales to other destinations and also extended fare flexibility in light of recent uncertainty.

The package of measures to support aviation in Australia also includes a new wage subsidy for those working in international aviation; cheap loans to small business coming off JobKeeper; and a six-month extension of the ‘RANS’ and ‘DANS’ supplemented routes initiative.

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Source: https://australianaviation.com.au/2021/04/cheap-ticket-deal-breaks-virgins-all-time-record-despite-lockdown/

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