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CaliguyNYC
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 1:54 pm

I don't think the JV with AF/KL is approved yet (meaning live). It was just announced. I feel like DL/AF/KL all wait until the JV is actually live to really push the relationship to the next level. Does any know the status? Also there is no JV between 9W and DL. I would imagine IF DL starts USA-BOM nonstop, they will start it with a JV in place with Jet (or join the AF/KL/9W JV).
 
dtw2hyd
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 2:16 pm

CaliguyNYC wrote:
...
Btw if Jet is in so bad a shape, how are they launching BOM-MAN? Does anyone know if Jet's EU-India flights (other than LHR) are profitable?


Because it is not in such a bad shape as it claimed to be here by pundits. They have been rationalizing routes diligently, not throwing darts on the map and start dumping capacity.

After "Die AI Die" season it is "Ok AI is not dying, Die 9W Die", Mumbai slots are very valuable.
 
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unrave
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 2:41 pm

CaliguyNYC wrote:
Btw if Jet is in so bad a shape, how are they launching BOM-MAN? Does anyone know if Jet's EU-India flights (other than LHR) are profitable?

One swallow doesn't make a summer. Launching one route doesn't speak anything about profitability. Perhaps Jet was to better utilise its domestic A330.
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binayak
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 2:50 pm

dtw2hyd wrote:

Because it is not in such a bad shape as it claimed to be here by pundits. They have been rationalizing routes diligently, not throwing darts on the map and start dumping capacity.

After "Die AI Die" season it is "Ok AI is not dying, Die 9W Die", Mumbai slots are very valuable.


Not to mention they're even trying to better their hard and soft products to compete with the likes of Vistara and get back their FFs . Refurbishment of wide bodies have been in their plans for more than a year. Those are the reasons why 9W needs cash along with paying the debt as mentioned by unrave.
Still some competitors ' PR want people to believe that without cash 9W will close tomorrow and in future flying 9W will be next to hell.
And about Mumbai slots, I sometimes fear there'll be any politics related to slot allocation once navi Mumbai airport gets ready. I hope my fears turn out to be wrong.
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binayak
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 3:01 pm

unrave wrote:
Perhaps Jet was to better utilise its domestic A330.


Yes. That's the primary reason to go for more int'l expansion without adding any wide bodies. With the WB fleet 9W has they can go for expansion to more skyteam hubs specially business destinations like NRT, PVG, SYD.
Well I wanted to know how is that fifth freedom AMS YYZ doing? I feel that can be cut and another frequency for BLR LHR can be launched with the same timing as their early morning BOM LHR flight.
The best preparation for tomorrow is doing your best today
 
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unrave
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 3:02 pm

binayak wrote:

Not to mention they're even trying to better their hard and soft products to compete with the likes of Vistara and get back their FFs . Refurbishment of wide bodies have been in their plans for more than a year. Those are the reasons why 9W needs cash along with paying the debt as mentioned by unrave.


What they have really done well is in reducing non fuel CASK. In FY15 it was 3.37. In three years that has come down to 3.12 - a remarkable achievement. Even their debt went down by 3000 crore. If only oil had stayed under 60...
India: World's fastest growing major economy. World's fastest growing aviation market.
 
dtw2hyd
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 3:14 pm

binayak wrote:
Refurbishment of wide bodies have been in their plans for more than a year. Those are the reasons why 9W needs cash along with paying the debt.


Every airline on earth has debt and constant need for working capital. But PR peeps only talk about debt as if there is no revenue.

Just because there is a gap in revenue and expenditure business won't close doors and give keys to competitors to loot.

A company with BB rating has to pay 20+% interest on working capital, that is a shame on India's banks, and protected regime government created.

Off-topic, Sanjiv Kapoor tried 2+ years to get $200 Million equity/loan for SpiceJet, no one gave a dollar. Returned several planes to lessors. Now the same company is well run, cash rich and placing orders for $Billions worth of planes. One has to really dumb to believe in such a rapid turnaround.
 
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unrave
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 3:24 pm

Fun fact: In one year Jet's interest coverage ratio has dropped from a healthy 1.7x to a worrying 0.1x. They need cash, urgently.
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unrave
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 3:43 pm

dtw2hyd wrote:

A company with BB rating has to pay 20+% interest on working capital, that is a shame on India's banks, and protected regime government created.


Ha ha. It was not a bank borrowing. It was not a working capital borrowing. Wrong on both counts.
India: World's fastest growing major economy. World's fastest growing aviation market.
 
binayak
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 3:47 pm

dtw2hyd wrote:
Off-topic, Sanjiv Kapoor tried 2+ years to get $200 Million equity/loan for SpiceJet, no one gave a dollar. Returned several planes to lessors. Now the same company is well run, cash rich and placing orders for $Billions worth of planes. One has to really dumb to believe in such a rapid turnaround.


"Ab ki baar dear leader sarkar " effect?
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binayak
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 3:57 pm

unrave wrote:
What they have really done well is in reducing non fuel CASK. In FY15 it was 3.37. In three years that has come down to 3.12 - a remarkable achievement. Even their debt went down by 3000 crore. If only oil had stayed under 60...


And guess what the aim is to bring it to 2.74 by FY20. How are the non fuel cask of current LCCs. I'm asking because from my observation they are the ones with whom it will be compared.
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unrave
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 4:03 pm

SG - 2.56
6E - 1.93
(year ending Mar18)
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lightsaber
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 4:04 pm

binayak wrote:
dtw2hyd wrote:
It is funny pundits claiming AI demise is the silver bullet for all issues Indian aviation is facings. There is zero evidence to support that fantasy theory.

AI has a 12% market share, at best all other airlines will pick up 2% each. Worst case 6E will dump capacity, lower prices more aggressively and pick up 80% domestic market share

If AI goes out of business
ME3 will send gift baskets to MoCA and pick-up majority of international bilaterals,
Local carriers will send gift baskets to MoCA and get all slots for free at DEL, BOM and even $75 Million each LHR slots.
The Indian government has to beg 6E to start EAS routes or dole out lot more subsidies.
IAF managed VVIP fleet will cost a pretty penny to taxpayers.

6E is the one distorting Indian market with capacity dumping and price lowering, the only issue no one is folding.


Completely agree with you.
Perhaps this post must be read by everyone who wants 6E to have the entire Indian aviation.

The fare war indicates surplus capacity.

With Indigo slightly reducing debt (despite so much Euro/dollar denominated), flush with cash... They should expand.

GoAir and SpiceJet should expand too.

People would like to see an orderly shutdown or fast reform (as in within 6 months, no more). Otherwise, with Indian aviation expanding 20%+ per year a 3 quarter phased shutdown is more than sufficient.

Dumping= selling below cost. Not only is 6E making a small profit, they are acquiring assets... So the only airlines that are dumping are 6E, Vistara, and 9W...

9W needs reform and cash fast.

We find out more Friday.

There won't be one airline. What there will be is a brutal 18+ months ahead. Airlines are like trucking companies, they are capital intensive businesses that require quality and cost control and quite a bit of managing customer expectations.

Lightsaber
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dtw2hyd
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 4:23 pm

lightsaber wrote:
Dumping= selling below cost. Not only is 6E making a small profit, they are acquiring assets... So the only airlines that are dumping are 6E, Vistara, and 9W...

Lightsaber


Traditionally private carriers in India sold advance booking tickets at a discount, and jack up 0-15 day ticket prices. AI alone in the past was keeping 0-15 day price gouging in check.

Now, when 6E wants to price gouge 0-15 day bookings, everyone else with capacity discipline is putting a cap with reasonable fares, AI alone cannot do it because it is not competing on all routes with just 12% domestic market share.

I don't see anyone blinking in near future, the only fix is for 6E to stop dumping capacity. Otherwise, 6E will go down with a bad taste.

6E exactly replicating EK model, EK failed to shut down competition through capacity dumping and price lowering practice so will 6E.
 
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unrave
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 4:29 pm

There are two types of economics: real world economics and NRI economics, with the latter having nothing to do with the former whatsoever.
India: World's fastest growing major economy. World's fastest growing aviation market.
 
Antarius
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 4:57 pm

CaliguyNYC wrote:
Fares in India have to rise a bit. While I like Indigo, I think their massive capacity dump is also a bit destructive. To a degree every airline needs an area that they can make a profit. I am glad that AI and Jet built separate hubs in DEL & BOM respectively. Domestic tickets are just too cheap given oil prices. Part of me wishes the GOI would have a min fare on domestic flights (doesn't have to be high just stop the bloodbath). But the other part of me hates govt interference. India is complicated.

Btw if Jet is in so bad a shape, how are they launching BOM-MAN? Does anyone know if Jet's EU-India flights (other than LHR) are profitable?


Why does every airline need an area to make a profit? If airline x can serve the market cheaply while making money, that benefits consumers plenty, without needing others.

The first wave died out and other than a.net, no one even remembers them. The modi lufts, skyline NEPC and the likes. Same with Kingfisher and Deccan air. A few more will likely fail as the industry evolves.

The government has made such a collosal mess of AI, it would be wise for them to stay far away from any form of price regulation. Ever
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lightsaber
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 5:08 pm

dtw2hyd wrote:
lightsaber wrote:
Dumping= selling below cost. Not only is 6E making a small profit, they are acquiring assets... So the only airlines that are dumping are 6E, Vistara, and 9W...

Lightsaber


Traditionally private carriers in India sold advance booking tickets at a discount, and jack up 0-15 day ticket prices. AI alone in the past was keeping 0-15 day price gouging in check.

Now, when 6E wants to price gouge 0-15 day bookings, everyone else with capacity discipline is putting a cap with reasonable fares, AI alone cannot do it because it is not competing on all routes with just 12% domestic market share.

I don't see anyone blinking in near future, the only fix is for 6E to stop dumping capacity. Otherwise, 6E will go down with a bad taste.

6E exactly replicating EK model, EK failed to shut down competition through capacity dumping and price lowering practice so will 6E.

Again, if at a profit, this isn't dumping. Ido not think Indigo believes they can shut down anyone. It isn't just them not raising last minute fares.

I believe SpiceJet switched business models to a extreamely high load factor with little last minute fare increase. It has worked well for them. Indigo reacted.

This is the prisoner's delima. Everyone is better off if everyone behaves together, but the first to break ranks (SpiceJet, not 6E) benefits.

SpiceJet did this to improve one quarter's earnings in 2017. But they did so as a business model change that is working. Indigo at first reacted, but is now changing their business model to the new reality as is GoAir.

It is time for Jet to adapt to the new reality.

There is now capacity discipline without cost discipline. Since it seems SpiceJet and GoAir have the best cost discipline, they set the tune everyone dances to.

I personally like service and space and will pay for it when appropriately priced (e.g., my last flights). What the full service carriers must do is find a product with a large revenue premium. For Y? Not going to happen. That is a race to the bottom which means brutal cost control.

Where is the Y+?
Where is the rationalization in quantity of J seats? Sorry, but the load factors I've seen are too low to justify the quantity of J offered.

Like JetBlue, 9W is offering a coach product that costs more to deliver than people will pay. Reduce the pitch to Indigo/GoAir's in Y. Like DL, go to BoB for all Y (including Y+). Fix the fee model. Upsell people to Y+ and J.

Sell out Y for last minute so customers must buy Y+ or J. Certainly fix the low J load factors. Indigo has nothing to do with that as they are not in the J market.

Being FSC carrier doesn't mean do not adapt.

It doesn't help with 6E being able to market more dependable service. That attracts higher RASK.

9W is pursuing the high RASK (premium) market. A very demanding market. A market that must be earned.

Business people used to prefer 9W, I hope they can recover.

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Antarius
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 5:21 pm

lightsaber wrote:
Again, if at a profit, this isn't dumping.


Winner winner.

I also do not understand why last minute fares being market dependent is considered a bad thing. Pretty much everywhere else that has a functioning aviation infrastructure behaves this way.

lightsaber wrote:
9W is pursuing the high RASK (premium) market. A very demanding market. A market that must be earned.


Are they though? They used to at one point with full meals and IFE etc. even in Y. Now they are basically a higher cost version of an LCC. Same seat pitch as 6E. I used to take 9W from EWR to BRU etc. 5 years ago and was impressed with the aircraft, service. Flew on a a330 end of last year from SIN-DEL and it was falling apart.

IMO, 9W's issue is they act in some ways like a FSC, charge FSC prices but deliver LCC level services in some ways. A parallel is Air Berlin. Could never figure out what they were.. LCC/FSC/hybrid. They kept changing it too.
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dtw2hyd
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 7:23 pm

lightsaber wrote:
Again, if at a profit, this isn't dumping.
...
It isn't just them not raising last minute fares.

Lightsaber


Profits can be cooked. Those who cookbooks most likely dump capacity and lower prices So the existence of profit doesn't imply an absence of capacity dumping.

I am 100% sure you haven't listened to the Q&A portion of the call.
 
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lightsaber
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 8:43 pm

dtw2hyd wrote:
lightsaber wrote:
Again, if at a profit, this isn't dumping.
...
It isn't just them not raising last minute fares.

Lightsaber


Profits can be cooked. Those who cookbooks most likely dump capacity and lower prices So the existence of profit doesn't imply an absence of capacity dumping.

I am 100% sure you haven't listened to the Q&A portion of the call.

I just listened to the entire 56 minutes and 44 seconds of Indigos call:

https://www.goindigo.in/content/dam/goi ... 1-FY19.mp3

I found nothing out of line with the written portion.
I found nothing to justify your assertions.

"Indigo is best positioned to withstand these cost pressures because we have the lowest cost structure and strongest balance sheet"
"Cautiously optimistic" (in reference to PW1100G engines)
"#1 OTP in April, May, and June. 99.85% dispatch reliability"
"Started selling tickets for five new destinations."
"Open up new destinations internations... Capability to reach China, Middle East, and South East Asia" (Implying end of year international expansion, this should really worry Jet Airways.)
"Load factors up, yields are down"
"Do not believe the current revenue is sustainable" (referring to market, not Indigo. Let us not take out of contest).
Increase in maintenance due to engines (CEOs). Around 8:30 in call. At 10:15 in call noted foreign exchange drop impacted engine maintenance costs.
"Costs excluding fuel would have gone down 1.2%" (referring to change in Rupee and surge of engine maintaince)
"Purchasing aircraft with free cash" (increasing assets)
Dividend of 6 Rupees per share (needs board approval).

Q&A starts at 13:00 in the call.
"Huge jump in shop visits" (by USB analyst asking about maintenance accounting).
"Supplementary rent liability pays for maintenance". "2nd shop visit, typically more expensive, supplementary rent insufficient to cover 2nd shop visit"

2nd Q&A, "low shop visits a year ago". "shows up starkly in Q1 because Q1 had lower shop visits a year ago. Because of delays in NEO deliveries, leases have been extended. As these planes are returned, maintenance costs will go back in line with a younger fleet."

I didn't catch the exact words, but Forex issues mostly aircraft and maintenance issues (mostly dollar denominated).
"Fair amount of capacity international. International fuel dollar denominated."

JP morgan: "Reason for reduction in free cash primarily driven by ATR purchases and Capex and maintenance expenses on own aircraft." Also noted quarter low profits (seasonal).
"When does Inidigo see the benefit of the pickup in (NEO) deliveries?"
"Indicated we will purchase A320s in cash" talked about pre-paying for A320 leases.
"We saw a temporary stoppage of deliveries (of NEOs) and now deliveries have resumed, and we see a full recovery of deliveries and all back will be cleared now".

"We see further burden from the dollar" (statement from analyst, this would apply to all Indian airlines).
for capacity planning "We look at it as a long term strategy, demand is growing at 20% per year. While we are sitting here with fares and yields that aren't sustainable in the long run. We are in a position to sustain better than anyone else, we think the long run strategy we are pursuing is the right strategy."
"Markets are maturing, but we are finding far more demand than anyone though. Load factors are very strong. Demand is there at the current price."
"In the zero to 15 day booking window, when we look at sales outside the 15 day window, yield is up, in the 15 day window, business travelers who aren't so price sensitive, we're just not seeing in the competitive environment higher yields." "The problem we're seeing right now in the markets is that the advanced purchase rules have been competed away."
"No choice but to be competitive. The fare structure isn't sustainable, but it will get better."

"Fuel CASK went up higher than underlying price. The reason of the increases is a function of how the domestic oil companies priced their fuel." "Once fuel prices go up, negotiated discounts go down as a fraction of fuel prices." About 31 minutes into the call.

Question: "Are we expecting some sort of capacity rationalization."
"Let me talk first about the fare situation and competitive capacity. We say the current fare situation. Revenue has to cover the (missed something) costs. In the longer term, it is in fact supply and demand. There will have to be adjustments in supply or we'll have to wait long enough for demand to fill in the gap."

"NEOs on average fly the same as CEOs"

A: "40% of bookings in that window (15 day window)"
A: "Roughly 40% an ancillary revenue is cargo revenue"

"RASK includes all revenue" (answering question on cargo) noted CARSK passenger only.

Noted passenger numbers to be distributed on 20th by DGCA report.

FOREX added to financial statements. "Majority of expense mark to market on rent liabilities." "Started putting dollar deposits against liabilities. Not expecting liabilities to increase and expect to reduce liabilities with dollar assets."

Question "We keep reading on pilot shortage. Will it push up costs."
Long discussion on cadet program, to copilots, addition of new cadet schools, generate enough Captains on your own as 20% of copilots can be upgraded every year. Very confident on full sustainability on pilots. Majority of pilot needs through internal programs, but some expat pilots (for Captains).

Q: "Is pressure on pricing broad based or specific."
A: "Yield pressure primarily in close in books, which is primarily business traffic. Markets which are primarily business traffic are seeing more pressure."

"Revenue management group as good as anyone in industry. Some areas with upside potential. I feel we are underperforming (cargo) ... and I expect to see improvements."

"Airlines spending a lot of money circulating around airports (ATC delays)".

"Timing issue in adding employees and capacity coming in." Talked about bench strength and having more people than needed for current aircraft.

So, what were you looking at Q&A? What made you assert it would change anything I previously posted?
What I'm heard is that by Indigo extending leases, they are doing more 2nd shop visits. If the NEO issue is fixed (I'm a Pratt fan, so we'll take away the benefit of doubt), this will allow Indigo to rotate out CEO from fleet. They also had much higher fuel bills by lack of NEOs (as actual fuel cost increase is greater than the published, due to negotiated discounts being a fixed price per litre).

If the Pratt NEO problem has gone away... Jet should be really concerned. They emphasized a few times in the call that they would start using the range of the NEO. (more competition).

My take from the Q&A?
1. Said what I've said before. Indigo (and Spicejet and I believe GoAir) are in position to sustain this growth... forever!
2. Other airlines cannot sustain in this low yield yield environment.
3. Indigo is under pressure in this revenue environment, but it isn't them driving the lack of yield withing 15 days. They are as much a victim as Jet. Indigo has 40% of bookings in the business (15 day) window. More pain for airlines that need a higher fraction in the 15-day window (I would assume this includes Jet).
4. Costs will drop at the end of the year as NEO deliveries resume for Indigo. The fact NEOs are flying the same as CEOs tells me Indigo is trying to fly the NEOs more, but wasn't able to (many NEO groundings in the last quarter).
5. All airlines were hit by higher fuel price increases than the published fuel price increase due to how the domestic price increased.
6. Indigo already took their long term FOREX losses!!! They marked to market. (Implies cash flow so good they can hold dollar cash flow for future liabilities instead of converting to rupees).
7. It is a tough environment, but Indigo plans to keep growing at over 20%. ZERO evidence of dumping.
8. As 'bench strength' is employed on new aircraft (already hired, trained, and waiting for NEOs to be delivered) employ costs on a ASK basis will go down.

My concluding thought:
I don't think Spicejet is going to stop. Jet Airways had better adapt. Indigo will remain competitive. Fares are down (primarily business fares).
It looks like those airlines that relied on business fare premiums and do not have a low cost structure, will suffer.

I'm quite impressed by the Q&A from Indigo. I will listen more. Definitely better times ahead for Indigo.
I will listen to Jet's. I don't see them having the issues of delayed aircraft deliveries, staff hired and trained for aircraft not delivered, and will they take the entire FOREX hit in one quarter as Indigo did?

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dtw2hyd
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 9:43 pm

So let us pick a random route ABC-XYZ with, 6E 8 dailies, AI and GoAir have 1 daily each.

Lets say average price structure looks somewhat like this excluding taxes and fees.
15+ days - $50 RT
8-15 days - $75 RT
0-7 = days - $100 RT

So to fill 8 dailies 6E is forced to sell 15+ day bookings below $50, while AI and Go Air can keep it at $50, they don't have many seats to fill so just wait it out.
In 0-15 day bookings when 6E is hoping to make up the loss in 15+ day bookings, AI and Go Air will sell at $75-$100 forcing 6E to keep fares lower.

So airlines with minimum capacity are ruling the market, not the one with overcapacity.

Per Gregory Taylor, they have no option other than to keep expanding network and increasing the frequencies.

IMHO the fix is for 6E to stop dumping capacity.
 
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unrave
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 10:12 pm

Losing money hand over fist = Ruling the market #NRIEconomics
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lightsaber
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 10:24 pm

dtw2hyd wrote:
So let us pick a random route ABC-XYZ with, 6E 8 dailies, AI and GoAir have 1 daily each.

Lets say average price structure looks somewhat like this excluding taxes and fees.
15+ days - $50 RT
8-15 days - $75 RT
0-7 = days - $100 RT

So to fill 8 dailies 6E is forced to sell 15+ day bookings below $50, while AI and Go Air can keep it at $50, they don't have many seats to fill so just wait it out.
In 0-15 day bookings when 6E is hoping to make up the loss in 15+ day bookings, AI and Go Air will sell at $75-$100 forcing 6E to keep fares lower.

So airlines with minimum capacity are ruling the market, not the one with overcapacity.

Per Gregory Taylor, they have no option other than to keep expanding network and increasing the frequencies.

IMHO the fix is for 6E to stop dumping capacity.

Except Indigo reported in their conference call higher yield on 15+ day bookings. So they haven't lost 15+ day bookings, they (like most airlines) rely on business travel to pickup the costs.

Per the call, Indigo is reacting to other airlines dropping their < 15 day pricing.



As I posted above, it was very enlightening on how the NEO delays are costing Indigo. Lower costs ahead once that problem is (finally) solved

And you misquote Gregory, he said "We are in a position to sustain better than anyone else, we think the long run strategy we are pursuing is the right strategy."
Indigo most certainly has a choice, they could stop extending CEO leases. That was done during the prior quarter. Gregory was very clear that competitors were driving the price war. or
"The problem we're seeing right now in the markets is that the advanced purchase rules have been competed away."

I've never heard of a price war where direct competition wasn't impacted. Does anyone have a link to any exception (other than when a company is avoided for financial or perceived safety reasons)? Competition has driven down fares and Indigo matched. Let us hear the other conference calls to see how participants performed. What we know is both AI and Jet are very short on cash.

Lightsaber
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dtw2hyd
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 10:40 pm

lightsaber wrote:
Per the call, Indigo is reacting to other airlines dropping their < 15 day pricing.


In other words, 6E is not able to charge planned fares for 0-15 day bookings.

lightsaber wrote:
What we know is both AI and Jet are very short on cash.

Lightsaber


Sure they don't have cash, but they are not burning cash like 6E. Their fares are probably within original revenue plan parameters.
They have to wait it out for lights to go out on 6E.
 
Antarius
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 10:43 pm

dtw2hyd wrote:
Sure they don't have cash, but they are not burning cash like 6E. Their fares are probably within original revenue plan parameters.
They have to wait it out for lights to go out on 6E.


Isn't this the same strategy you said with EK?

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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 10:51 pm

dtw2hyd wrote:
Sure they don't have cash, but they are not burning cash like 6E.


This is almost getting trollish now. Do you even know to read numbers? It is not too difficult to see which airlines are burning cash and which airlines aren't.
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 11:01 pm

dtw2hyd wrote:
lightsaber wrote:
Per the call, Indigo is reacting to other airlines dropping their < 15 day pricing.


In other words, 6E is not able to charge planned fares for 0-15 day bookings.

lightsaber wrote:
What we know is both AI and Jet are very short on cash.

Lightsaber


Sure they don't have cash, but they are not burning cash like 6E. Their fares are probably within original revenue plan parameters.
They have to wait it out for lights to go out on 6E.

Huh? Please re-listen to the conference call. 6E isn't burning cash. They committed dollars to pre-pay leases to lessen the rupee decline and buying ATRs cash while preparing to start buying A320s cash.

I'm going to mark the post that Jet's revenue was within parameters... We'll discuss 8/10. There is no precedent.

Anyone else having Deja vu FR threads of a decade ago?

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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 11:20 pm

Bond investors are the more logical investors. They only have downside risk (a bond can only be worth face value on the maturity date).

Jet Airway was downgraded to junk in May:

https://m.economictimes.com/markets/sto ... 362812.cms

My take is it will be very hard for Jet to raise funds, other than a stick sale (private buy?).

The fact the are reporting on a Friday after markets close concerns me.

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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 11:59 pm

lightsaber wrote:
Huh? Please re-listen to the conference call. 6E isn't burning cash. They committed dollars to pre-pay leases to lessen the rupee decline and buying ATRs cash while preparing to start buying A320s cash.

Lightsaber


Probably I need to clarify. 6E is like a runaway train. There is no way it can stop capacity addition as long as NEOs and CEOs are coming, and all it needs is one competitor on each route to ruin their yields. If you recall your other favorite airline was in a similar situation until Mueller rationalized fleet to two types and slowed down deliveries.

BTW, 6E paid cash for just 3x ATRs. Rahul Bhatia clearly told there is no plan to pay cash for NEOs.
 
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Re: Jet Airways: reports cash running out

Thu Aug 09, 2018 12:27 am

dtw2hyd wrote:
lightsaber wrote:
Huh? Please re-listen to the conference call. 6E isn't burning cash. They committed dollars to pre-pay leases to lessen the rupee decline and buying ATRs cash while preparing to start buying A320s cash.

Lightsaber


Probably I need to clarify. 6E is like a runaway train. There is no way it can stop capacity addition as long as NEOs and CEOs are coming, and all it needs is one competitor on each route to ruin their yields. If you recall your other favorite airline was in a similar situation until Mueller rationalized fleet to two types and slowed down deliveries.

BTW, 6E paid cash for just 3x ATRs. Rahul Bhatia clearly told there is no plan to pay cash for NEOs.

Mueller went to JetBlue? Delta?
Those are my favorite airlines. :)

If you are pointing out DXB is full and Mueller upgauged the fleet in turn simplifying which helped them survive a regional downturn... Yes. That helped. So did having a runway down during this fare war. But EK is a tangent to Jet's issues.

Indigo's main issue is preparing for NEOs and having to extend CEO leases instead and having hired staff for more aircraft then on property ,(the bench). Now that (should be) over... They will do fine. There is no reason I could find from their perspective to slow growth. A business slows their growth for their reasons, not because the competition isn't ready.

But you might be into something on unwarranted expansion. Jet expanded about 10% last year (passengers and frequency). They could have overdone it...

Jet has a problem in that every year revenue per available seat kilometer is dropping (please see their annual report page 7, bottom right corner). So your assertion they have revenue potential is disproven in one chart.

We will find out on 8/10 if that expansion was profitable or not. We will also find out the answer to the topic of this thread. Is Jet running out of cash?

There annual report only listed enough cash for six average months at Jet's last year losses. If those losses accelerated... Oh dear... Well, we find out in two days...

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Re: Jet Airways: reports cash running out

Thu Aug 09, 2018 2:33 pm

binayak wrote:
unrave wrote:
Perhaps Jet was to better utilise its domestic A330.


Yes. That's the primary reason to go for more int'l expansion without adding any wide bodies. With the WB fleet 9W has they can go for expansion to more skyteam hubs specially business destinations like NRT, PVG, SYD.
Well I wanted to know how is that fifth freedom AMS YYZ doing? I feel that can be cut and another frequency for BLR LHR can be launched with the same timing as their early morning BOM LHR flight.


All that is good except Jet Airways A330's configurations carry even less pax than Air France, not one of the nimbler European airlines.

Yet another problem for Dubey to solve.
 
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Re: Jet Airways: reports cash running out

Thu Aug 09, 2018 2:36 pm

binayak wrote:
dtw2hyd wrote:
Off-topic, Sanjiv Kapoor tried 2+ years to get $200 Million equity/loan for SpiceJet, no one gave a dollar. Returned several planes to lessors. Now the same company is well run, cash rich and placing orders for $Billions worth of planes. One has to really dumb to believe in such a rapid turnaround.


"Ab ki baar dear leader sarkar " effect?


Do you have a comparison of the aircraft/route discipline Spice Jet has compared with your favorite airline?

In fact, someone made the following statements not too long ago:
a) They were too small to buy Air India
b) We are looking at buying Air India, but a few months later 'discovering' they were running out of cash.

Any ideas who the 2 gentlemen are?
 
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Re: Jet Airways: reports cash running out

Thu Aug 09, 2018 2:54 pm

vadodara wrote:
Do you have a comparison of the aircraft/route discipline Spice Jet has compared with your favorite airline?

In fact, someone made the following statements not too long ago:
a) They were too small to buy Air India
b) We are looking at buying Air India, but a few months later 'discovering' they were running out of cash.

Any ideas who the 2 gentlemen are?

NRIs do not believe Indian financial statements. The only reason SG has turned their operations around is because they have cooked the books.
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Re: Jet Airways: reports cash running out

Thu Aug 09, 2018 2:59 pm

unrave wrote:
binayak wrote:

Not to mention they're even trying to better their hard and soft products to compete with the likes of Vistara and get back their FFs . Refurbishment of wide bodies have been in their plans for more than a year. Those are the reasons why 9W needs cash along with paying the debt as mentioned by unrave.


.

Anyone who thinks they'll win India with product is going to find themselves out of business quickly.

dtw2hyd wrote:
lightsaber wrote:
Dumping= selling below cost. Not only is 6E making a small profit, they are acquiring assets... So the only airlines that are dumping are 6E, Vistara, and 9W...

Lightsaber


Traditionally private carriers in India sold advance booking tickets at a discount, and jack up 0-15 day ticket prices. AI alone in the past was keeping 0-15 day price gouging in check.

Now, when 6E wants to price gouge 0-15 day bookings, everyone else with capacity discipline is putting a cap with reasonable fares, AI alone cannot do it because it is not competing on all routes with just 12% domestic market share.

I don't see anyone blinking in near future, the only fix is for 6E to stop dumping capacity. Otherwise, 6E will go down with a bad taste.

6E exactly replicating EK model, EK failed to shut down competition through capacity dumping and price lowering practice so will 6E.

Say what? They're the only consistently profitable Indian carrier.
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Re: Jet Airways: reports cash running out

Thu Aug 09, 2018 3:15 pm

Interesting article detailing dropping yeild on India for all airlines:

https://m.economictimes.com/markets/sto ... 334863.cms

My take:. Jet is able to garner a revenue premium, but that premium is eroding.

Loss last quarter 1,040 crore, it is expected to be worse this quarter.

What matters is the cash burn rate. I want to be clear on my opinion:
1. Jet needs to burn less than 3,000 crore of cash in the prior quarter. If that is the case, they have plenty of time to recover. If not... There is a real problem.
2. I will be looking at debt marked to market. This is one of 4 things that reduced Indigo's earnings last quarter. I approve of taking the medicine as the problem happens. If Jet fudges earnings... Well, I'm expecting the Ruppee to lose about 1.25% of value by the end of September.

Oh, I've looked at SpiceJet's numbers, they are rolling forward a huge amount of losses and paying that down. The cash flow has been working for them. I believe they started the price war as a strategy and can maintain it indefinitely. But let us see their quarterly numbers. When do they report?

What matters is the competitive landscape has shifted for Jet. There losses are expected to be higher. But how high?

The reality is Jet is the canary in the coal mine for full service carriers (FSCs). I believe they are doing the best among the Indian FSCs.

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Re: Jet Airways: reports cash running out

Thu Aug 09, 2018 3:28 pm

lightsaber wrote:
Oh, I've looked at SpiceJet's numbers, they are rolling forward a huge amount of losses and paying that down. The cash flow has been working for them. I believe they started the price war as a strategy and can maintain it indefinitely. But let us see their quarterly numbers. When do they report?


They will most likely have completely paid their losses down by this quarter. Results due on 11th
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Re: Jet Airways: reports cash running out

Thu Aug 09, 2018 3:42 pm

MaverickM11 wrote:
Anyone who thinks they'll win India with product is going to find themselves out of business quickly.


If I may rephrase:
"There is an excess of premium product in a developing market. While premium demand shows signs of growth in India, the combined offerings of Jet, AI, and Vistara have driven down premium yeilds to the point that J class seats are not paying for their real estate. A strategy shift is required to improve premium yeild which forces all three premium carriers to reduce their coach product costs down the the ULCC yeild. This is very analogous to the basic economy now sold by the US3 with more fees and reduced service to incentivise passengers up into a comfort coach or a domestic J seat. Continuing on the current strategy of the Indian FSCs is a cash flow drain."

:)

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Re: Jet Airways: reports cash running out

Thu Aug 09, 2018 3:54 pm

9W and AI cannot completely remove business class because they are in an alliance/partnership with other FSCs.

I think Vistara is in a position to go the al-a-carte model. Even a home-grown software should be able to manage their small network.
 
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Re: Jet Airways: reports cash running out

Thu Aug 09, 2018 4:10 pm

vadodara wrote:

Do you have a comparison of the aircraft/route discipline Spice Jet has compared with your favorite airline?

In fact, someone made the following statements not too long ago:
a) They were too small to buy Air India
b) We are looking at buying Air India, but a few months later 'discovering' they were running out of cash.

Any ideas who the 2 gentlemen are?


Yes I do.
First of all buying AI was about to be a joint purchase by 9W and its partners. SG was alone in that game. So let's leave that topic.

And about comparison
Jet airways has been consistently reducing non fuel cask and has the lowest among Indian FSCs and also one of the highest 737 utilization in the world.
Spicejet's non fuel cask is considerably more than its near competitor 6E .(numbers posted by unrave).
The problem is people tend to compare factors like aircraft utilization, cost control etc of LCCs with FSCs

//Off topic, 9W ,unlike SG ,never asked its FAs to undress for a security checking.
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Re: Jet Airways: reports cash running out

Thu Aug 09, 2018 4:56 pm

More news. Now few sources even say that 9W might fire 500 ground personnel. However this has been denied by the airline.
https://www.financialexpress.com/indust ... ssion=true

About reducing number of crew in wide bodies, that will be more possible once F goes away.
The article is one of the well written ones unlike the other puff pieces. Just the salaries of FAs mentioned are incorrect.

Jet airways has also deferred Q1 results. Results date not known. Well I'm more eager to know whether the cost cutting measures they'd started are going in the right direction or not.
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Re: Jet Airways: reports cash running out

Thu Aug 09, 2018 5:15 pm

Deferment of results is never good news
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Re: Jet Airways: reports cash running out

Thu Aug 09, 2018 5:17 pm

binayak wrote:
Jet airways has also deferred Q1 results. Results date not known. Well I'm more eager to know whether the cost cutting measures they'd started are going in the right direction or not.

I was unable to find an announcement that the earnings call was postponed. Do you have a link?

That would be very bad PR considering the cash crunch concerns in the press... It implies their cost reduction if off track.

I hope the hold the call as scheduled.

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Re: Jet Airways: reports cash running out

Thu Aug 09, 2018 5:19 pm

lightsaber wrote:
I was unable to find an announcement that the earnings call was postponed. Do you have a link?

That would be very bad PR considering the cash crunch concerns in the press... It implies their cost reduction if off track.

I hope the hold the call as scheduled.

Lightsaber

https://economictimes.indiatimes.com/ma ... 344157.cms
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Re: Jet Airways: reports cash running out

Thu Aug 09, 2018 5:28 pm

binayak wrote:
vadodara wrote:

And about comparison
Jet airways has been consistently reducing non fuel cask and has the lowest among Indian FSCs and also one of the highest 737 utilization in the world.
Spicejet's non fuel cask is considerably more than its near competitor 6E .(numbers posted by unrave).
The problem is people tend to compare factors like aircraft utilization, cost control etc of LCCs with FSCs

//Off topic, 9W ,unlike SG ,never asked its FAs to undress for a security checking.


But isnt that the point. Majority of Indians will choose a product that is economic. Most, not all, growth is coming from people who are flying instead of taking a 36 hr train journey. Not exactly Business class.

So yes, parameters like aircraft utilization, cost's etc matter because your ability to get only finite amount of cash from the top line. Jet's strategy to cater to corrupt politicians/govt. class, err 'full-service' airline, has inherently limited upside.
 
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Re: Jet Airways: reports cash running out

Thu Aug 09, 2018 5:30 pm

unrave wrote:
lightsaber wrote:
Oh, I've looked at SpiceJet's numbers, they are rolling forward a huge amount of losses and paying that down. The cash flow has been working for them. I believe they started the price war as a strategy and can maintain it indefinitely. But let us see their quarterly numbers. When do they report?


They will most likely have completely paid their losses down by this quarter. Results due on 11th


Seems like it. They have also been fairly measured in their expansion as well. A 2 aircraft-type fleet may serve them well for the near future.
 
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Re: Jet Airways: reports cash running out

Thu Aug 09, 2018 5:34 pm

unrave wrote:
lightsaber wrote:
I was unable to find an announcement that the earnings call was postponed. Do you have a link?

That would be very bad PR considering the cash crunch concerns in the press... It implies their cost reduction if off track.

I hope the hold the call as scheduled.

Lightsaber

https://economictimes.indiatimes.com/ma ... 344157.cms

The auditing committee didn't recommend results!?! Oh dear...

I cannot be optimistic about the auditor failing a quarterly report. For if what they insisted on was minor, the quarterly report is updated. I've never heard of executives turning down better results... Differing (to maximize bonus), but not rejecting.

Huh... Let the speculation begin!

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Re: Jet Airways: reports cash running out

Thu Aug 09, 2018 5:58 pm

vadodara wrote:

But isnt that the point. Majority of Indians will choose a product that is economic. Most, not all, growth is coming from people who are flying instead of taking a 36 hr train journey. Not exactly Business class.

So yes, parameters like aircraft utilization, cost's etc matter because your ability to get only finite amount of cash from the top line. Jet's strategy to cater to corrupt politicians/govt. class, err 'full-service' airline, has inherently limited upside.


Yes you are right.
Just one thing. Growth for LCCs are from the people shifting from trains to planes. Growth for FSCs are from the ones shifting from LCCs to FSCs I e people valuing service, FFP etc to fares. 9W has taken measures to attract that traffic by policies like "your jp miles won't expire " . This way a person flying 9W just four times a year will also benefit from jp miles.
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Re: Jet Airways: reports cash running out

Thu Aug 09, 2018 6:25 pm

It would be good if Jet Airways figured out how to survive. I just hope it (and Goyal) recognizes that it is in its best interest to be run in a professional manner.
 
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Re: Jet Airways: reports cash running out

Thu Aug 09, 2018 9:37 pm

Report that FY2018 loss due to JetFuel and weakening Rupee, avoiding discussing last quarter 1QFY19
https://www.moneycontrol.com/news/busin ... 26051.html

If you want to see how the FY18 ending in 31 March went:
https://www.jetairways.com/doc/Investor ... 017-18.pdf

I find it interesting that the press conference, at the last day of a stockholders meeting, for the prior quarter is off. That must have been awkward...
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Re: Jet Airways: reports cash running out

Fri Aug 10, 2018 12:35 am

Wait a second...

Do I interpret this correct that the trading window being closed until 48 hours after the release of the quarterly report?

https://www.bloombergquint.com/business ... esults.amp

Please tell me I read that wrong, for no one who trades sticks likes a stick that cannot be traded...

Late add:. That, if true, is a scary addition. It implies the auditing committee for Jet did their job and found issue with something of importance. Not a good time for India's full service carriers...
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