Airline Weekly Lounge

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 model. We look at WestJet’s endeavors and more in this week’s episode.

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.