Flight Safety Information August 13, 2018 - No. 164 In This Issue Incident: Nordic Regional E190 at Helsinki on Aug 12th 2018, lightning strike Incident: Iberia A346 at Quito on Aug 11th 2018, balked landing and tyre damage Incident: Virgin Atlantic A333 over Atlantic on Aug 10th 2018, smoke on board Alaska Airlines flight from SF to New Orleans diverted to Los Angeles due to 'strong odor' EVAS - Cockpit Smoke Protection Pacific Aerospace 750XL Fatal Accident (Indonesia) Flight recorders and wreckage recovered of 2017 Learjet crash off Venezuela FBI leads investigation into Horizon Air stolen aircraft incident NTSB: Investigation into Denali crash moving forward despite lack of wreckage exam Tajikistan: Helicopter carrying 13 mountaineers crashes LIBIK Fire Suppression Kits for the Cabin and Flight Deck. The risk of risk aversion at the Federal Aviation Administration The FAA and Sleep Apnea Malaysia Airlines needs more pilots, CEO says. India's Jet Airways, a major Boeing customer, hits financial turbulence 2018 DFW ISASI Chapter Dinner ISASI 2018 2018 CHC SAFETY & QUALITY SUMMIT October 2nd - 4th, 2018 AViCON 2018: One Month to Go! PROVIDING ASSURANCE IN YOUR SYSTEMS Incident: Nordic Regional E190 at Helsinki on Aug 12th 2018, lightning strike A Nordic Regional Airlines Embraer ERJ-190 on behalf of Finnair, registration OH-LKL performing flight AY-315 from Helsinki to Vaasa (Finland) with 47 people on board, was climbing out of Helsinki when the aircraft received a lightning strike. The crew stopped the climb at FL180 and returned to Helsinki for a safe landing about 30 minutes after departure. The occurrence aircraft is still on the ground in Helsinki about 8 hours after landing back. The flight was cancelled, the passengers were rebooked onto the next flight. http://avherald.com/h?article=4bc462b0&opt=0 Back to Top Incident: Iberia A346 at Quito on Aug 11th 2018, balked landing and tyre damage An Iberia Airbus A340-600, registration EC-LEU performing flight IB-6453 from Madrid,SP (Spain) to Quito (Ecuador), touched down on Quito's runway 18 when the crew initiated a go around. The aircraft entered a hold for about 20 minutes, positioned for another approach to runway 18 and landed about 30 minutes after the go around. One of the main tyres was found blown after landing. Sources in Latin America claim the tyre was blown during the first approach prompting the crew to reject the landing. The return flight was cancelled. The occurrence aircraft is still on the ground in Quito about 23 hours after landing. Tyre damage (Photo: Nicolas Larenas): http://avherald.com/h?article=4bc45278&opt=0 Back to Top Incident: Virgin Atlantic A333 over Atlantic on Aug 10th 2018, smoke on board A Virgin Atlantic Airbus A330-300, registration G-VLUV performing flight VS-50A from Orlando,FL (USA) to London Gatwick,EN (UK) with 194 passengers and 13 crew, was enroute at FL370 over the Atlantic Ocean about 200nm west of Shannon (Ireland) when the crew declared emergency reporting smoke on board. The aircraft descended to FL080 and diverted to Shannon. On approach the crew reported there was no smoke on the flight deck anymore. The aircraft landed safely on runway 06 about 35 minutes later, vacated the runway and taxied to the apron with emergency services in trail. 12 passengers were checked at the airport. http://avherald.com/h?article=4bc2c460&opt=0 Back to Top Alaska Airlines flight from SF to New Orleans diverted to Los Angeles due to 'strong odor' Alaska Airlines planes. A flight leaving San Francisco International Airport for New Orleans was diverted to Los Angeles Sunday afternoon. Photo: Jim Glab A flight leaving San Francisco International Airport for New Orleans was diverted to Los Angeles Sunday afternoon. An Alaska Airlines flight from San Francisco International Airport to New Orleans was diverted to Los Angeles International Airport on Sunday afternoon due to a "strong odor" in the cabin. Alaska Airlines told SFGATE that a "strong odor was detected onboard during the flight in the aft cabin," and that "the plane is being inspected by technicians to pinpoint the cause." The plane landed safely in Los Angeles around noon, and no emergency was declared by the crew. A spokesperson for LAX said there were 136 people on the flight. Alaska Airlines said the passengers are being rebooked on continuing flights. The cause of the odor has yet to be determined. https://www.sfgate.com/travel/article/Alaska-Airlines-SFO-to-LAX-diverted-strong-odor-13150501.php Back to Top Back to Top Pacific Aerospace 750XL Fatal Accident (Indonesia) Date: 11-AUG-2018 Time: ~05:20 UTC Type: Pacific Aerospace 750XL Owner/operator: Dimonim Air Registration: PK-HVQ C/n / msn: 144 ? Fatalities: Fatalities: 8 / Occupants: 9 Other fatalities: 0 Aircraft damage: Written off (damaged beyond repair) Location: near Oksibil Airport (OKL/WAJO), Papua - Indonesia Phase: En route Nature: Domestic Scheduled Passenger Departure airport: Tanahmerah Airport (TMH/WAKT) Destination airport: Oksibil airport (OKL/WAJO) Narrative: A PAC 750XL of Dimonim Air is reported missing on a flight between Tanahmerah Airport and Oksibil Airport, Papua, Indonesia. The flight should have a duration of 42 minutes but failed to arrive at Oksibil. Search operations are being conducted. Some people in a village reported they heard loud sounds and an explosion. There were two pilots and seven passengers aboard. The wreckage of the plane was located near Oksibil Airport. Eight occupants died in the crash, a boy was the only survivor. The aircraft made the first contact with Oksibil Tower at 05.11 UTC, then the ATC communicated to them the weather report . At 05.17 UTC PK-HVQ reported an overhead position at 7,000 feet. After the overhead position, communication between Oksibil Tower officers and the plane was immediately cut off. Oksibil Tower officials also were unable to communicate outside the Oksibil area using cellphones due to signal conditions. https://aviation-safety.net/wikibase/wiki.php?id=214373 Back to Top Flight recorders and wreckage recovered of 2017 Learjet crash off Venezuela Authorities in Venezuela reported that flight recorders were recovered from the seabed, almost a year after the crash of a Learjet 25. A Learjet 25 corporate jet impacted the waters off the coast of Naiguatá, Venezuela on 19 August 2017. All five on board were killed. It lasted until August 2018 before parts of the wreckage were recovered from the seabed. Authorities also reported that both flight recorders were recovered. The ASN Safety Database has just four known cases in which it took over a year before flight recorders were recovered. The longest known period is over 11 years, when the Flight Data Recorder of Itavia flight 870 was retrieved from the seabed of the Tyrrhenian Sea in 1991. Autoridades localizaron restos de la avioneta donde falleció hijo de Pérez Abad https://news.aviation-safety.net/2018/08/12/flight-recorders-and-wreckage-recovered-of-2017-learjet-crash-off-venezuela/ Back to Top FBI leads investigation into Horizon Air stolen aircraft incident Horizon Air CEO Gary Beck (left), Alaska Group CEO Brad Tilden (center) and FBI special agent Jay Tabb during a press conference Aug. 11. The US Federal Bureau of Investigation (FBI) is leading the inquiry into how a Horizon Air ground service agent-apparently with no flying experience-was able to steal one of the carrier's turboprops, take off from a major airport and fly for more than an hour before crashing. The incident began around 7.30pm Pacific Aug 10, when a Bombardier Q400 made an unauthorized takeoff from Seattle's SeaTac International airport. Operations at SeaTac were temporarily shut down and two Air National Guard F-15Cs from the 142nd Fighter Wing in Portland, Oregon, were scrambled to intercept the Q400. They stayed close to the stolen Q400 but did not shoot. The ground service agent, who had been employed by Seattle-based regional carrier Horizon for about three and a half years, was in communication with SeaTac air traffic control for much of the incident, telling them he did not want to hurt anyone. In a press conference Aug. 11, the day after the incident, Alaska Air Group chairman and CEO Brad Tilden said it was too early to say what additional security procedures might be implemented "to make this very safe industry even safer," but Alaska would be a leader on the issue. Horizon is part of the Alaska Group. Tilden was joined in the press conference by Horizon Air CEO Gary Beck, SeaTac Airport director of operations Mike Ehl and FBI Washington state special agent Jay Tabb. Tilden said the investigation will be led by the FBI, working with FAA, the US National Transportation Safety Board and the airlines. Tilden did not identify the employee, but media has widely reported that he was 29-year-old Richard Russell and his family issued a statement expressing their shock and grief and describing him as a "faithful husband, loving son and good friend." The employee was on duty that evening, Tilden said, and was believed to be in uniform. The 76-seat Q400 was parked in an area known as the cargo 1 line. While the employee had security clearance and was fully credentialed to be in that area, there was no reason for him to go to the aircraft when he did because the aircraft was not scheduled to fly that evening. The aircraft was parked nose-east on the cargo 1 line, meaning it had to be maneuvered before it could be taxied out. Russell was part of the airline's tow team and he used a push-back tractor to rotate the aircraft 180 degrees before starting the aircraft's engine and taxiing it out to the airfield. How he knew how to start and fly the aircraft is also unknown. Russell did not have a pilot's license and Horizon's Beck described the operation of a series of switches and levers needed to start the Q400's engines as complicated. "We don't know how he was able to do that; we don't know how he learned to do that," he said. After steering the aircraft out, Russell was in contact almost immediately with ground controllers at SeaTac. He took off at 7.32pm and stayed in communication with ATC on the same frequency until contact was lost about an hour later. In one of his last communications, he said the aircraft was low on fuel. The aircraft, N449QX, crashed on the remote wooded Ketron Island just off the Washington coast. In the US, airliners are not "locked" the way a car is, and commercial airport security is a multi-level process that includes vetting those who have access to secured areas. Alaska airline and SeaTac airport require employees with such access to undergo a 10-year criminal background check that is reviewed every two years. Alaska and Horizon also have an employee assistance program to help with mental health issues and which is open year-round, 24/7. The FAA ground stop around SeaTac during the incident led to 75 flights being delayed, nine being diverted and five canceled. The ground stop was lifted at 8.40pm local time and normal operations were fully resumed by 1am the following morning. http://atwonline.com/safety/fbi-leads-investigation-horizon-air-stolen-aircraft-incident Back to Top NTSB: Investigation into Denali crash moving forward despite lack of wreckage exam ANCHORAGE, Alaska (KTUU) - Among all of the questions still swirling about the deadly plane crashed in Denali National Park that claimed the lives of five on Saturday, there remains the big one of how the investigation into the crash is going to proceed without access to the wreckage. One might think that without the plane or passengers or pilot inside, the investigation would be halted or at least severely hindered. That, according to the National Transportation Safety Board, is not necessarily the case here. New photos from the National Park Service provide some insight into the final results of the tragic crash, but a library of pictures is what the NTSB - which conducts independent investigations of all civil aviation crashes in the United States - says will be imperative to figuring out how it happened. "What we're going to be able to use are a number - I mean, hundreds of photographs that the Park Service took at the scene in lieu of a wreckage exam or actually hands-on," said NTSB Alaska Region Chief Clint Johnson. The NPS photographs, meteorology reports and statements from rescue crew members are part of the cache of evidence that will help investigators work out the exact timeline of the crash. However, while the investigation has already begun, experts have a long way to go before a final report is released. "We are very much in the preliminary stages," Johnson said. "We are not drawing any conclusions; we're definitely not going to speculate. What I would ask is just give us time to do our investigation." Johnson noted that work on the preliminary report is underway, but likely will not be published for another week or so. http://www.ktuu.com/content/news/NTSB-says-investigation-into-Denali-crash-will-move-forward-despite-lack-of--490614111.html Back to Top Tajikistan: Helicopter carrying 13 mountaineers crashes Initial statement provided no details on condition of passengers. Authorities in Tajikistan said an Mi-8 helicopter carrying at least 16 people was forced to make a crash landing on August 12 as it approached the country's tallest mountain. Officials were not able to immediately provide any information about the fate of the passengers - 13 mountaineers and three crew members. Another two helicopters carrying rescue and medical personnel were dispatched to the site of the accident. The group of mountaineers was heading to a base camp ahead of a climbing expedition to Ismoil Somoni Peak, which rises to almost 7,500 meters (24,600 feet) above sea level. Initial official statements about the crash, which is said to have happened around 4:30 p.m., provided no details about the nationality of the mountaineers. The accident will come as yet another devastating blow for Tajikistan, whose government had designated this an official year for the promotion of tourism. Late last month, four foreign cyclists were murdered in a hit-and-run attack that was later claimed by the Islamic State group. Early anecdotal reports suggested many travelers had changed their plans to travel to Tajikistan in the wake of the killings. The Mi-8 involved in the crash is one of the most widely produced aircraft of its type in the world. The Soviet-designed helicopters have often been involved in fatal accidents, in Tajikistan and elsewhere. In October 2010, an Mi-8 belonging to Tajikistan's national air force crashed while being used in a security operation in the mountainous east. According to varying reports, anywhere up to 28 people, including many special forces troops, were killed in that incident. More recently, a military Mi-8 craft was forced on July 9 to perform a high-altitude crash landing during a rescue mission in neighboring Kyrgyzstan. The accident was caused by windy conditions. There were no fatalities. https://eurasianet.org/s/tajikistan-helicopter-carrying-13-mountaineers-crashes Back to Top Back to Top The risk of risk aversion at the Federal Aviation Administration We are on the cusp of the next revolution in aviation, and the next generation of technologies is poised to radically reshape America's airspace. This future, however, is not guaranteed. Our airspace was once an open platform where innovators could develop world-changing technology by engaging in what my colleague Adam Thierer calls "permissionless innovation." Today, it is very much a closed platform subject to a bureaucracy that often fails to consider what society gains when we let bold innovators take reasonable chances. Flying cars, drones, and supersonic jets make headlines, but in reality the future of flight is determined almost exclusively by the Federal Aviation Administration (FAA)'s willingness to accept change. This should be both concerning and cause for hope. While a culture of fear seems to permeate the FAA, Congress can reorient the agency to embrace the future and all of the benefits it has to offer. A report released earlier this year from the National Academies of Sciences, Engineering and Medicine concluded that "'Fear of making a mistake' drives a risk culture at the FAA that is too often overly conservative, particularly with regard to [drone] technologies, which do not pose a direct threat to human life." How did things get this way? The FAA is primarily a safety agency, giving it an incentive to lose focus on the broader picture. As Justice Stephen Breyer has explained, an agency like the FAA can suffer from tunnel vision: focusing so zealously on a single goal (i.e., safety) that it loses sight of how its regulations fit in the larger cost-benefit context. More importantly, the National Academies' report notes that "FAA risk avoidance behavior is often rewarded, even when it is excessively risk averse, and rewarded behavior is repeated behavior." It has every reason to see the world through tunnel vision. This behavior has not been limited to drones. A number of other aspects of civil aviation innovation have faced the FAA's risk-averse approach. The FAA banned supersonic flight in 1973 and has yet to reevaluate its position in the 45 years since. The FAA shut down flight-sharing platforms in 2014, and it shows no sign of reconsidering this decision. There is a bright side to this, however. Unlike many other industries, in which the regulatory thicket spans a number of agencies and levels of government, almost every aspect of aviation is exclusively regulated by the FAA. That means fixing it is simply a matter of reorienting the agency. Policymakers are taking steps toward doing just that, and Congress has the opportunity to reclaim our airspace for permissionless innovation. Both the Lee-Gardner Amendment and the Aviation Empowerment Act would take the proactive step of requiring the FAA to accept the reality that both supersonic flight and flight-sharing are part of the our future. Ignoring the future doesn't stop it. The FAA's failure to embrace this reality is why Switzerland, Japan, France, Germany, and the United Kingdom are all beginning to outpace the United States in the coming aviation revolution. Only by reestablishing the importance of experimentation and innovation can the home of the Wright Brothers and the Apollo program once again catch up with the rest of the world. Christopher Koopman is senior director of strategy and research with the Center for Growth and Opportunity at Utah State University and a senior affiliated scholar with the Mercatus Center at George Mason University. http://thehill.com/opinion/technology/401260-the-risk-of-risk-aversion-at-the-federal-aviation-administration Back to Top The FAA and Sleep Apnea Due to several incidents likely related to fatigue and interrupted sleep in both aviation and the trucking industry, the NTSB and DOT called on the FAA to consider screening for sleep apnea. After a thorough decision pathway analysis and beta test of the FAA's plan to comply, guidance to aviation medical examiners (AMEs) in regard to sleep apnea screening was issued early in 2015. As one of only a handful of AMEs who participated in the beta test, I had the opportunity to work directly with FAA physicians in an attempt to make the system somewhat palatable for pilots. While safety is the primary role of the FAA, it is my goal to bring some reason into the system in my daily interface between the FAA and pilots. If we can avoid having pilots grounded for significant periods of time, they will be a bit more honest and forthcoming from the outset. The FAA understood that point and has been collegial in that aspect in the development of the actual protocol and applicable special issuance process. Yes, pilots with sleep apnea requiring treatment will need a special issuance to keep flying, but there should be no significant period of grounding involved. Sleep apnea comes in two forms: obstructive and central. The term "apnea" simply means "without respiration." Treating sleep apnea is truly one of the best things we do in medicine; it's a condition where treatment not only lowers risk factors for many serious conditions, but the patient usually feels better right off the bat. On the contrary, prescribing a statin for cholesterol-and to reduce heart attack and stroke risks-doesn't make a patient feel better along the way. In fact, drug side effects might be rather annoying. In short, treating sleep apnea is a win-win situation. And while pilots likely are not pleased about yet another cumbersome FAA medical certification process, this newer protocol for sleep apnea keeps nearly 100 percent of pilots flying, even during the evaluation period. Avoiding lengthy grounding periods was something I lobbied strongly for in my interactions with the FAA during the beta test. In obstructive sleep apnea (OSA), anatomical obstructions in the respiratory pathway cause all sorts of problems, from irregular breathing to long periods without breathing at all. These are typically followed by a loud gasp as the respiratory drive forces the body to begin breathing at all costs. Risk factors for OSA include obesity, large tonsils, and abnormal size and shapes to the tongue, jaw, and palate, among others. Loud and irregular snoring is often, but not always, part of OSA symptoms. While obesity is a very strong risk factor, OSA also occurs in people with a normal body habitus. In my practice, I actually have more pilots with OSA who are slim than obese. So, what's the big deal? Do we really need to treat sleep apnea, or is this simply more government regulation? Untreated sleep apnea is clearly contributory in many serious medical conditions. In fact, it increases risks for cardiac disturbances (including irregular heart rhythms such as atrial fibrillation), hypertension, heart attack, stroke, diabetes, headaches, memory loss and other cognitive impairments, attention and problem-solving deficiencies, fatigue and daytime drowsiness (I know pilots who fly "all-nighters" are chuckling right now), and sometimes causes people to be simply irritable and unhappy. Psychiatric problems such as depression can also be exacerbated by sleep apnea. And, for men, these risks significantly exacerbate erectile dysfunction. Treating OSA usually consists of a continuous positive airway pressure device (CPAP), the nasal mask used during sleep. While earlier versions of these devices were uncomfortable and loud, over time they continue to become more portable, quieter, and less annoying to the patient-and less annoying to the patient's spouse. In addition, surgery can be curative in some cases. A small subset of pilots is well treated with a simple, although not inexpensive, oral appliance. Speaking of the spouse, the majority of patients being treated for sleep apnea report that their spouse is not only less concerned about the patient's health and long-term prognosis, but the near resolution of snoring (along with the quietness of the newer CPAP machines) means that he/she might actually sleep in the same room as the patient once again. Yet another win for sleep apnea treatment. Central sleep apnea (CSA) is a bit different. The results are similar, with disrupted breathing and potential long-term health risks, but the apneic episodes in this case aren't caused by anatomical variants. In CSA, the brain itself is the culprit. This makes it a more difficult "fix," with a more challenging prognosis. However, over time the FAA has found that pilots with CSA tend to do pretty well with treatment, and so certification is also possible for these pilots. Sometimes there is a mix of OSA and CSA in the same person. These folks might use CPAP and often simultaneously a small flow of regular oxygen. There are various means to achieve stability, and fortunately most of these pilots return to the cockpit in spite of their slightly increased risks over garden-variety OSA. There has been concern among pilots that a marginally high body mass index (BMI) would prompt the FAA to mandate formal sleep apnea screening. Fortunately, that is not the case. Typically, the FAA allows the AME to weigh the BMI (and consider if the pilot is very muscular, for example) along with any other risk factors being considered and then recommend whether or not the pilot undergo formal screening. There are several methods for formal screening, including the "gold standard" of the observed sleep study (you know, in the sterile, cold, noise, and lack of privacy in a formal medical setting). I'm a lousy sleeper at best, and I can promise any medical provider that my chances of getting any sleep in such a setting would be virtually zero. Fortunately, there are now more convenient methodologies to screen for sleep apnea, including user-friendly home testing. As for BMI, there is no hiding from the fact that those with a very high BMI have a greatly increased risk for sleep apnea. In fact, the morbidly obese person has a 75 percent to 90 percent chance that they have clinically significant sleep apnea. There is, therefore, a verifiable reason to include BMI as part of this protocol. What happens if the person (obese or not) is diagnosed with sleep apnea? First and foremost, get it treated. As I state in all of my talks to pilot groups, it's easier to keep you flying if you are still alive. Once treated, the patient will state, almost without exception, "Wow, this might be a pain, but I feel better than I have in many years!" They usually don't mind if their spouse lets them sleep in the same room once again, too. What about the FAA and career implications for the pilot? In my next blog, I'll discuss the workings of how the AME screens for sleep apnea and assists in the special issuance process. Again, barring some dramatic co-morbid medical condition discovered during the evaluation (that would be grounding in and of itself), most pilots treated for sleep apnea continue to fly without interruption. In most cases, the special issuance is routinely granted. There will be annual follow-up requirements, but these are reasonably simple to comply with. Dr. Sancetta is a former DC-10 captain with 11,000 flight hours. He has worked as a Senior AME since 1993 and is appointed as AME Consultant to the Federal Air Surgeon. https://www.ainonline.com/aviation-news/blogs/ainsight-faa-and-sleep-apnea Back to Top Malaysia Airlines needs more pilots, CEO says Chief Executive Officer Captain Izham Ismail said the national carrier is targeting to normalise its operations by early 2019 and has already recruited 62 new pilots. - Picture by Zuraneeza Zulkifli Malaysia Airlines Bhd (MAB) needs an additional 150 pilots to stabilise its systems from the current 927 pilots operating its fleet. Chief Executive Officer Captain Izham Ismail said the national carrier is targeting to normalise its operations by early 2019 and has already recruited 62 new pilots. "But retirement, attrition, pilots finding better opportunities, all of these continue, hence, (MAB) requires replacements and recruitment of new pilots," he told reporters on the sidelines of the MAB cabin crew graduation ceremony here Friday. In fact, the national carrier, which is still going through an organisational turnaround, and driving very high available seat per kilometres, has already been hit by a shortage of pilots in mid-second quarter of this year, he said. Izham said for the next 10 years, the industry requires a very huge influx of pilots, estimated at 255,000 in Asia Pacific from now until 2035. He said the industry needed to be vigilant of the number of pilots required to keep in steps with aviation growth in Asia Pacific, with 40 per cent of aeroplanes produced expected to be delivered to the region. Airline bosses need to be 10 years ahead or else they will be caught with pilot shortages, he said. Besides MAB, other global airlines such as Qantas, Qatar, Cathay Pacific are also facing pilot shortages, he said, adding that Delta Airlines recently announced that it needed 8,000 new pilots. He said for the last three weeks, MAB had put about 250 pilots through various phases of training, and they included new joiners who underwent conversion trainings, and cadets who were sent to flying schools. MAB on Friday celebrated the graduation of 111 cabin crew and pilots at a ceremony at the MAB Academy in Kelana Jaya. All graduates had undergone intensive training in their respective fields, including 91 cabin crews who undertook 82 days of service and safety training, while 20 cadet pilots completed 300 days of various training programmes and examinations to earn their licence. Among them were MAB's first female pilots, namely Captain Pearl Wendy Mak, Second Officer Wen Chien Wang and Cadet Foo Hooi Wen. "I am very proud that for the first time in Malaysia Airlines, we have three amazing, strong and resilient women graduating as pilots. It is my hope that in future the airline would include more female captains flying our aircraft and making the country proud," he added. https://www.malaymail.com/s/1661635/malaysia-airlines-needs-more-pilots-ceo-says Back to Top India's Jet Airways, a major Boeing customer, hits financial turbulence The initial delivery of a 737 MAX to Jet Airways came in June, making it the first airline in India to fly the newest version of the single-aisle plane. (PRNewsfoto/Boeing) Jet Airways was once at the forefront of India's rapidly growing market for air travel, but a challenge from budget carriers and surging fuel prices are backing the airline into a corner. The stock ended at its lowest level since June 2015 as the carrier's finances deteriorated. Jet Airways, a substantial Boeing customer, was once at the forefront of India's rapidly growing market for air travel, but a challenge from budget carriers and surging fuel prices are backing the airline into a corner. Shares of the carrier, part-owned by Etihad Airways PJSC, plunged 8.5 percent Friday in Mumbai after the company postponed announcing its first-quarter earnings. That's less than a week after denying a report it needs drastic measures to cut costs and bolster its finances. The stock ended at its lowest level since June 2015 as the carrier's finances deteriorated and the default risk on its debt obligations increased. Budget airlines such as IndiGo, GoAir and SpiceJet expanded exponentially in the past decade, giving first-time flyers a new opportunity and middle-class families an alternative to full-service carriers that offered lounges and free meals on board. India, the world's fastest-growing major aviation market, is also one of the toughest in which to survive, with premium carrier Kingfisher Airlines collapsing and legacy Air India needing repeated state bailouts as ultra-low fares fail to cover their costs. "Jet Airways is facing challenges on all fronts," Bloomberg Intelligence's Singapore-based analyst Rahul Kapoor said. "The rise in oil prices is having a double whammy on their earnings. They already have a sparse balance sheet compared with other Indian carriers." In June, the airline agreed to buy 150 of Boeing's 737 Max aircraft, which according to data from aircraft valuation firm Avitas are worth about $7.8 billion after standard discounts. Along with a 2013 order for 75 MAXs, that takes its backlog for the narrowbody jet to 225 airplanes, worth an Avitas-estimated $11.7 billion. A dozen years ago, Jet placed a separate order for 10 Dreamliner 787s. Although that order remains technically on the books, it's doubtful if the airline will take these as it reviews its network. It has 121 planes in its fleet, according to its website. India is one of the toughest markets, where airlines are forced to sell tickets at base prices of as low as 1 rupee (2 cents) to attract the fastest growing middle class in the world. Kingfisher Airlines, started by Indian tycoon Vijay Mallya in 2005, was one of the nation's leading carriers until it was grounded in 2012 amid mounting debt. Indian airlines are among the biggest customers for the single-aisle planes made by both Airbus and Boeing. Mumbai-based Jet Airways had total debt of $1.4 billion, and cash and equivalents barely 3 percent of that, for the year ended March 31, 2018, according to Bloomberg-compiled data. The firm's total debt ballooned to 55.4 times earnings before interest and tax as of March 31, compared with 4.9 times the previous year, the data showed. In a brief statement late Thursday night, the company - with a market value of $464 million - said the audit committee didn't recommend the results for the board's approval, "pending closure of certain matters." The company slipped into a loss in the year ended March following two years of profit. The BSE issued a statement Friday seeking full disclosure from the carrier to meet compliance rules. The company's management and auditors needed more time to finalize its accounts, and the board "readily agreed" to it, Jet said in a statement Friday. The finalized accounts will be presented to the company's audit committee at a later stage, it said without providing a timeframe. The probability of the airline failing to repay its obligations in the next 12 months is near the highest since October 2015, according to a Bloomberg Default Risk model, which tracks metrics including share price, debt and cash flow. SpiceJet's risk is the most elevated since last February, and the gauge is little changed for IndiGo, the nation's biggest airline. Deputy Chief Executive Officer Amit Agarwal said Jet Airways has regularly met its commitments on loans and is constantly evaluating opportunities to refinance or increase the tenure. The carrier needs as much as $500 million in cash immediately and must refinance $400 million of debt, backed by a guarantor, said Kapil Kaul, South Asia CEO for CAPA Centre for Aviation, adding no one should expect instant results. "They can do that by possibly doing sale and lease-back of their widebodies and getting costs down, especially in the domestic market," he said. "If they can recapitalize and restructure, then may be in a couple of years, they can be sustainable." Jet Airways stock has tumbled 67 percent this year, making it the worst performing airline stock in Asia Pacific amid investor concerns over its outlook. India's benchmark Sensex index has gained 11 percent. "We need to recover the money and value we have lost," Jet Airways Chairman Naresh Goyal said at the airline's annual general meeting Thursday. "I feel guilty, I feel embarrassed that we have not been able to perform, especially with shareholders who stood with us." Abu Dhabi-based Etihad, which owns 24 percent of Jet Airways, said it continues to work constructively with its Indian partner. Jet Airways's rivals are faring no better either. The entire sector has been hit by rising fuel prices, depreciation of the rupee and debt to fund aircraft purchases and rapid growth. IndiGo, operated by InterGlobe Aviation Ltd., posted a 97 percent drop in net profit, its worst-ever quarterly performance. SpiceJet will be reporting earnings next week. Jet Airways said last week that it's implementing several measures to cut costs and increase revenue, in areas including sales and distribution, payroll and maintenance. The company at the time denied an Economic Times report it had already started firing people and had told some workers to take as much as a 25 percent cut in pay. "The stock will remain under severe pressure till there's some concrete plan on the table to revive the loss-making airline," said Devansh Lakhani, a director at Mumbai-based Lakhani Financial Services Ltd. https://www.seattletimes.com/business/boeing-aerospace/indias-jet-airways-a-major-boeing-customer-hits-financial-turbulence/ Back to Top Back to Top ISASI 2018 Intercontinental Hotel, Festival City, Dubai. 30 October to 1 November, 2018 "The Future of Aircraft Accident Investigation" ISASI is pleased to announce that the preliminary Technical Program for ISASI 2018 is now posted. It is, of course, subject to change between now and the end of October. All up to date information, including registration forms for the seminar and a reservation link for the hotel can be found at http://isasiannualseminar.com/ We look forward to seeing all of you in Dubai. Curt Lewis