Air New Zealand’s Brewing Troubles

Issue Overview

It’s so hard to say goodbye. The third quarter of 2023 is coming to an end, leaving mostly good memories for the global airline industry. It wasn’t all fun and games — not with ongoing supply-side headaches (i.e., more bad news for geared-turbofan engine customers) and another run-up in fuel costs (that’s bad news for everyone). But in general, most airlines in most markets enjoyed historically high levels of demand last quarter, underpinned by a voracious consumer appetite for travel.

In most markets, including North America, Europe, and much of East Asia, the third quarter includes the peak summer travel season. And it was likely a good one in general in terms of financial returns. We’ll start knowing for sure on Thursday, October 12. That’s the day Delta kicks off reporting season, having already telegraphed a third quarter operating margin of about 13%. That would be up from 11% last year.

But how does Delta’s seemingly smooth sailing — which largely mimics what’s happening at American, United, Southwest, and Alaska — reconcile with the carnage unfolding at Spirit and Frontier? In case you missed it, both ultra low-cost carrierss all but shouted that their house was on fire.

Across the ocean in Europe, Air France-KLM is buying a whole bunch of widebody airplanes, choosing Airbus over Boeing. But Boeing didn’t walk away empty handed, securing a big widebody order from Air Canada. Elsewhere, Qantas delivered a market update, explaining that demand is still fine but that just about everything else is turning sour (fuel prices up, customers in revolt, etc.). Air New Zealand gave a similarly mixed message (see feature story below).

In other news, Delta apparently thinks it went too far with new SkyMiles program changes. Viva Aerobus has a bunch of new cross-border routes from Monterrey. And the U.S. government, contrary to widespread fears, remains open.