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Southwest Airlines will add two flights to its Sea-Tac schedule this spring, the airline said today.

One of the those flights will connect Denver and Sea-Tac and another will cover the route from Sea-Tac to St. Louis. The new flights will begin in May.

Southwest is aggressively expanding in both cities to take advantage what it perceives as weakness among the incumbent airlines there.

In Denver, a bankrupt Frontier Airlines recently was acquired by Republic Airlines. In St. Louis, the dominant carrier, American, continues to shave down its flight schedule.

American once had a major hub at St. Louis which it acquired when it bought TWA. The carrier has steadily diminished St. Louis' importance while bolstering its existing hubs in Chicago and Dallas.

SeaTac's Alaska Air Group, despite reduced passenger traffic and lower fares, today announced profits with special items of $87.6 million in the third quarter.

That compares with a loss of $86.5 million in the same quarter in 2008.

This year's third quarter, traditionally the busiest quarter for the airline, was "one of the best quarters we've had in a very long time," Alaska Chairman Bill Ayer told analysts and reporters in a conference call.

Without the effects of special items such as fuel hedges, the company made $83 million in the quarter or $2.33 a share. Analysts polled by Zacks Research had predicted profits of $2.26 a share.

The company's turnaround was fueled literally by a huge difference in fuel prices between this year's third quarter and last's. During last year's third quarter, oil prices hit $147 a barrel. During this year's prices were half of that or less.

The airline holding company, parent of Alaska Airlines and Horizon Air, also reworked its schedule to cut capacity in weaker markets such as California, Arizona and Nevada and to expand to new markets such a additional islands in Hawaii, Houston and Austin. The airline begins flying from Sea-Tac to Atlanta Friday.

"Our work to reduce capacity to better match demand, redeploy aircraft to into promising new markets and achieve record operational reliability contributed to our best quarterly financial performance in many years," said Ayer.

While improving its profits, both Alaska and Horizon achieved better on-time performance. Alaska was the top on-time performer among major domestic airlines every month this year from April through September, and Horizon was near the top among smaller carriers.

New fees for checked baggage also contributed to the company's profit margin. Since the July 7 imposition of those fees, the airlines have received $23 million in new revenues without a noticeable diminishment in passenger market share to the only major airline that doesn't impose checked baggage fees, Southwest.

Alaska's profits came during a quarter when many of its large and small competitors were reporting losses or, at best, small profits.

Delta Air Lines, the world's largest carrier, reported third quarter losses of $161 million this week. American Airlines' parent, AMR, said its losses for the July through September period were $395 million.

Phoenix's US Airways lost $80 million in the same period. Continental Airlines reported a narrower loss, $18 million, in the third quarter. United Airlines was in the red $57 million for the quarter.

Southwest Airlines said it lost $16 million in the quarter including one-time charges.

On the positive side, JetBlue Airways said it made $15 million in the quarter. AirTran Holdings of Orlando reported a net profit of $10.4 million.

Oslo's Norwegian Air Shuttle today confirmed an order for six more Boeing 737-800 aircraft.

The low-cost European carrier has ordered 48 737s from Boeing with this order. The airline is also leasing 22 of the single-aisle Renton-built planes from leasing firms.

Founded in 2002, the airline is expanding its network in Europe with the 186-seat planes.

Norwegian's 737s will be among the first to feature Boeing's new "Sky Interior." That interior features soft blue overhead lighting, modified sidewalls and window surrounds and overhead bins.

Boeing needs to bring more of its engineering work back inside Boeing, the company's chief executive said today after announcing a $1.6 billion loss for the third quarter.

Jim McNerney said the company went too far in attempting to develop the revolutionary 787 Dreamliner while also installing a new design and production scheme that relied heavily on outside suppliers.

Much of the company-wide quarterly loss was driven by $2.5 billion in new costs associated with design and production problems on the Dreamliner. The company also took $1 billion in additional losses on the development and production of a second new project, a next generation 747.

"The industry got a little overheated," said McNerney addressing the root of the 787 and 747 problems. "Baselines set up were very aggressive."

Attempting to build a new plane with pioneering composite technology while simultaneously pushing major design and construction responsibility out to partners was "a bridge too far," he said.

"We need to bring more of the engineering, especially as the systems level, back into Boeing," he told reporters and analysts in a conference call.

The Dreamliner is now nearly 2 1/2 years late in flying for the first time, and the 747-8's first flight schedule recently slipped into the first quarter of 2010.

Boeing's losses for the quarter amounted to $2.23 a share. The 787 and 747 charges alone amounted to a $3.59 a share. Good performance in other parts of the company blunted those Dreamliner and 747 losses.

"The fundamental operating engine of the company is running well," McNerney noted.

While some airlines have deferred or canceled orders in the first nine months of the year, the commercial airplanes side of the company still has a backlog of orders -- $254 billion -- that represent more than seven years of production, he said.

The company has no plans to reduce the production pace of its bread-and-butter 737 at its Renton plant, he said, despite some deferrals by some customers.

Boeing will continue laying off workers to adjust to changing demands in other sectors, particularly in defense where the government is tightening up programs and in the service sector where airlines are cutting back on expenses, the Boeing CEO said.

Boeing will announce whether a second 787 Dreamliner assembly line will be built in Everett or in South Carolina within the next two weeks.

Boeing Chief Executive Officer Jim McNerney told analysts and reporters today the announcement from him and Boeing Commercial Airplanes chief Jim Albaugh will happen within a fortnight.

Talks continue with the International Association of Machinists about how the union and the company can ensure labor peace in Puget Sound, he said.

Labor disruptions remain a major issue in the decision about where to locate the second assembly line for the tardy but revolutionary composite airliner.

Washington has been campaigning hard for Everett noting that workers in this area have more aerospace experience, are better educated and have the advantage of operating the only existing final assembly line.

But bettors are putting money on Charleston, S.C., if only because having a second site in a state that is not union-friendly would give Boeing a psychological advantages in a potential strike situation in Puget Sound.

Machinists last year shut down Boeing assembly lines for two months while they struck Boeing over new contract proposals.

Asked why Boeing, which has been burned in its attempt to outsource much of the engineering and subassembly work on the Dreamliner, would build a second assembly line on the opposite coast, McNerney noted that Boeing already has major operations in Charleston and that diversity of operations sites would buffer the effects of labor disruptions.

“Our balance sheet would be a lot stronger today had we not had a strike last year, our customers would be a lot happier today had we not had a strike last year and the 787 program would be in better shape,” McNerney said.

“I don’t blame this totally on the union, but the mix hasn’t worked well yet,” he said. “So we’ve either got to satisfy ourselves that the mix is different or we’ve got to diversify our labor base.”

Boeing has already sought building permits in Charleston for construction of a new assembly plant there, but the company says those applications are no indication of its final decision.

Boeing owns a former Vought Aerospace plant in Charleston that builds fuselage sections for the Dreamliner. It also owns half of another plant that joins those sections with fuselage parts built in Italy. Boeing bought those plants from Vought when the Texas-based company was overwhelmed with production problems.

Delta Air Lines announced new flights from Sea-Tac Airport to Asia and Europe today adding destinations Beijing in China and Osaka in Japan and bolstering its repertoire of flights to Amsterdam.

The flights from Sea-Tac to Beijing and Osaka will begin next summer. Three additional weekly flights to Amsterdam are slated to start June 1. The airline, which merged with Northwest Airlines last year, already offers seven weekly flights to Amsterdam, hub for its European partner, Air France-KLM.

The Beijing flights begin June 4. The airline will challenge China's Hainan Airlines, which already flies that route. Osaka flights are due to start June 7. Northwest Airlines once flew that route but abandoned it.

Delta already flies from Sea-Tac to Tokyo daily. The airline earlier this year dropped flights from Sea-Tac to London to free up an aircraft for other overseas routes from other airports.

Delta will use its code-sharing arrangements with SeaTac's Alaska Airlines to feed the international flights and to get international passengers to other domestic destinations that Delta doesn't serve.

Sea-Tac in recent years has both gained and lost international service. Last summer, longtime Sea-Tac tenant SAS halted service from the Puget Sound area to Copenhagen as part of a systemwide cutback. Delta also ended its London service, although British Airways continued its service to the English capital.

Air France added non-stop service from Sea-Tac to Paris in 2007. Aeromexico began serving Mexico City and San Jose del Cabo from Sea-Tac in 2008. Lufthansa started service to Frankfurt and Hainan to Beijing last year. Icelandair began flying from Sea-Tac to Reykjavik last summer.

Boeing delivered its 12th 777-300ER to Hong Kong's Cathay Pacific Airways this week. The plane is the first painted in a special paint scheme highlighting Cathay's membership in the OneWorld airline alliance.

The OneWorld alliance is a group of 11 major airlines and 21 affiliate airlines worldwide that coordinate schedules and share flights and marketing.

Cathay has a fleet of 29 777s, 12 of them 777-300s, five 777-200s and 12 777-300ERs. The 777-300ER is the extended range version of the standard 777.

Mokulele Airlines, a inter-island carrier in Hawaii once owned by Tacoma entreprenuer Bill Boyer, has encountered some turbulence in its merger with another Hawaiian carrier.

News reports from the islands say Mokulele passengers had to wait up to two hours beyond their scheduled flight times to get to their destinations on the merger's first day last week.

Mokulele is merging with go! Airlines to become go!Mokulele. Republic Airlines, the Indianapolis-based carrier that acquired a majority of Mokulele from Boyer earlier this year, and Mesa Airlines, another regional carrier based in Arizona, agreed to join the two Hawaiian carriers earlier this month. Mesa owned go!.

The two airlines had but a day to merge their reservations lists and to reschedule passengers, thus the delays. Republic redeployed three Embraer jets that had been flying for Mokulele also causing scheduling issues.

Those jets are expected to fly for Republic subsidiary Frontier Airlines.

Boyer, once an Alaska Airlines baggage handler, made his fortune inventing a portable movie player for use on airlines and other modes of transportation. Boyer contracted with movie studios to load their movies on the player's hard drive for playing in flight. Boyer sold that enterprise and reinvested in the Hawaiian carrier.

Union workers at Boeing's helicopter plant near Philadelphia have ratified a new contract that will give them annual raises totaling 15 percent along with $7,000 in lump sum payments over five years.

Member of the United Aerospace Workers Union are set to receive a 3 percent raise in the contract's first year, a two percent raise in the second year, 3 percent raises in the third and fourth years and a 4 percent raise in the fifth year of the contract. Those same workers will receive a lump sum payment of $3,500 the first year and payments of $1,500 in the fourth year and $2,000 in year five.

The union represents 1,789 workers in the company's Ridley Park, Pa. helicopter plant. The agreement was reached Oct. 14, and workers voted on it last week.

The plant with more than 5,400 employees produces the CH-47 Chinook twin-rotor helicopter and the V-22 Osprey tilt-rotor aircraft.

Moody's Investor Services has downgraded the Boeing Co.'s investment outlook rating from "stable" to "negative" based in part on its continuing problems getting its 787 Dreamliner off the ground.

The ratings service said the order erosion for the revolutionary plane is concerning as well as the company's repeated delays in putting the first test plane into the air.

Boeing has delayed the Dreamliner's first flight five times, the latest in late June when it said the aircraft's wing-body joint had shown potential weakness in static tests.

The company also recently postponed the first flight of its next-generation of the venerable 747 until the first quarter of next year because of a number of unfinished tasks on the first aircraft.

The Boeing Co. will showcase the latest model in its line of business jets, a plane that can be converted quickly from a passenger carrier to a freighter, next week at the National Business Aviation Association convention.

The aircraft, a modified Boeing 737 passenger jet, is equipped with a 140-inch-wide door to allow the aircraft to transport relief supplies, tools, parts and machinery in its freighter role.

The plane can be converted from a passenger configuration to a freighter in less than eight hours, Boeing said.

Boeing says the convertible aircraft can transport VIPS and troops one day and disaster supplies or critically-need machinery the next.

The plane will be on display at Orlando Executive Airport during the association's convention.