In today’s issue: 777X gets a small boost, Syria gets new service from Europe, and Viva added too much capacity

^{In The Headlines}

🔵The 777X got a boost as China Airlines placed an order with a firm commitment for ten 777-9 passenger jets and four 777-8 freighters with an option for an additional 9 aircraft. Additionally, as part of a trade deal announced yesterday between the US and the UK, IAG exercised its options for six 777-9s as part of a much larger aircraft order. Meanwhile, over in Everett, Boeing added a 4th aircraft back into its 777X test fleet.

🔵Denver could soon see direct service to Dubai, according to the CEO of Denver’s airport, who says that will likely be the next international destination for the airport. As the always insightful JonNYC points out, if that comes to fruition, we could potentially see Lufthansa downgauge their Denver service from an A380 as presumably a considerable amount of traffic on that A380 is connecting onto the Middle East, Africa, and Asia.

The CEO also mentioned that the airport is forecasting 120 million passengers annually by 2045, up from 82.3 million in 2024. At present, the busiest airport in the world by passenger volume is Atlanta, which saw 108 million passengers in 2024.

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^{Earnings Analysis}

🔵 In Mexico, low-cost carrier Viva saw a sharp decline in operating revenue and operating profit in Q1 ‘25 compared to the same time period in the previous year, as revenue dropped by 21% and the airline posted a negative operating margin:

This was likely caused by the airline’s capacity growing by 8.6% in Q1 ’25 compared to the prior year, while its TRASM fell by 27%, a sign that it may have added too much capacity:

The airline may not have anticipated the economic headwinds that arose during the first few months of the second Trump term, or perhaps they did to some extent, but since capacity planning is done many months in advance, they couldn’t adjust in time. The sharp decline in revenue and profits came even as unit costs improved YoY:

A few additional notes:

• Easter fell in Q2 this year, instead of Q1 as it did last year. While this timing shift might partially explain the drop off in total revenue, it doesn’t explain the drop off in unit revenue as the airline knew the exact date of Easter well in advance.

• Though the airline didn’t specifically mention the ongoing tensions with the US, they did call out “a softer macroeconomic backdrop” in Q1 ‘25 compared to the year prior.

• During the first quarter, the airline had an average of 26 A320neo family aircraft grounded as a result of issues relating to Pratt & Whitney GTF engines. However, that was partially offset by the net size of their fleet increasing by 10 aircraft during Q1, which is likely what allowed them to grow capacity YoY by 8.6%, as mentioned above. The addition of the new jets brought the average age of their fleet to 6.9 years old.

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^{Loose Ends}

🔵Syria will see its first European carrier since the ouster of Bashar al-Assad as the Romanian carrier Dan Air is planning to launch four routes to Damascus from Germany, Romania, and Sweden starting mid-June. The airline will operate six-weekly A320 flights from Bucharest, with additional twice-weekly rotations from Stockholm, Frankfurt, and Berlin.

🔵BermudAir got permission to launch flights from Bermuda to around 23 destinations in the Eastern portion of the US, though which specific cities they decide to launch service to remains to be seen. The airline currently operates two E175s with a further two expected to join the fleet in Q2 ‘25. Given that, I wouldn’t expect the airline to serve most of these markets for a while. That said, if they only fly some of these routes in the realm of 1–2 times per week, they could, in theory, launch service to more than a few of these destinations.

🎧️ THINGS I’M LISTENING TO

🔵The Airline Weekly Lounge discusses the challenges and optimism in the airline industry, including Lufthansa and Air France's outlook despite negative Q1 results, the impact of dropping oil prices, and the ongoing uncertainty for carriers like JetBlue, Frontier, and Mexican LCCs.

📺️ THINGS I’M Watching

🔵Flight Formula gives an excellent breakdown of the economics of an A321XLR. Even hardcore AvGeeks will likely learn something.

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