This week, as we race towards the end of the year, saw several interesting sub-stories.
WOW teetered on the brink of collapse, but was saved by Indigo, but In Britain, where everything takes forever, Flybe had a massive falling out with one of its primary maintenance suppliers, MAEL (Monarch Engineering), the only vestige of the Greybull owned Monarch Group. They’re a specialist maintenance provider with a large operation at Birmingham and supplied Flybe with maintenance services on a significant proportion of their aircraft.
That is until, for reasons Monarch Engineering won’t say – which nearly always means in business speak they haven’t been paid, they refused to take any more work from Flybe, who in turn cancelled the contract.
Why does this matter? Flybe has only recently put itself up for sale and the process, well it’s not going well because there’s been no movement on the subject and radio silence on the talks with prospective partners. Now that’s not unusual if there are active discussions. What it most likely indicates is Flybe has few cards and very little leverage – prospective buyers are driving a hard bargain, one Flybe may find hard to live with, but it probably hasn’t got much choice. If word gets out someone has walked away, its chances of finding another partner are seriously weakened.
The US market has also seen some interesting sub-stories. Multiple customer service issues have cropped up at almost every airline, and Southwest has had to raise its ticket prices, largely because it’s so far refused to engage in charging for extras as the other airlines do.
Alaska announced it will decide in February whether or not it would continue to operate as a two-type airline fleet. It inherited the Virgin America A320 series aircraft with the deal, and is clearly uncomfortable with operating two types of aircraft. I suggest the decision was one made a long time ago, Airbus will be dumped and a long-term plan to buy more Boeing 737’s to replace them will be on the cards. I mean was their really any doubt?
Allegiant said goodby to the last of its MD series aircraft and is now all-Airbus, and on the subject of Airbus, they finally handed over an A380 to Emirates that had been stuck in a state of full delivery completion, but with no engines.
The airline is in a row with Rolls Royce, the later feeling somewhat aggrieved at the deal it struck with Emirates to supply and maintain engines for the latest round of A380’s. Rolls Royce wants out of the deal in its current format which it claims is unsustainable. Emirates seem to have one interpretation of the contract and Rolls Royce another. A deal was struck to free up this aircraft, but the follow-on in build still don’t have engines and it’s causing airbus a schedule and cashflow issue as it holds up deliveries of A380’s.
Indeed it’s getting so heated, that it may be the straw that brakes Emirates back over the A380 – they’re already having doubts, and the engine row is possibly a step over the line. If that happens the A380 line will close in the early 2020’s, rather than 2029.