Back to business

Sunday, June 21. We are well into June now and many airlines have significantly ramped up capacity again after the disastrous months of April and May. Capacity is still far below pre-Covid 19 levels but from June 1 and even more since June 15, there has been some serious flying again. Time to update our story.

EUROPE:

IAG:
All of International Airlines Group’s (IAG) airlines have increased capacity since June, but still at much-reduced levels. All except for one: LEVEL. The short-haul subsidiary LEVEL Europe has filed for insolvency on June 18 and has ceased operations with immediate effect while its long-haul services from Paris and Barcelona are still grounded.

British Airways is the busiest airline within the group, but behind the scenes, there is an ongoing dispute about the plan to cut 12.000 jobs and impose new contracts on those remaining. On June 15, the consultation period with unions ended without any agreement.
BA announced its plan to lay off 12.000 jobs on April 28 but has threatened to add another 19.000 if no deal is reached. It demands staff (most of them in furlough) to sign up to revised contracts that would allow the airline to suspend staff for six weeks a year without paying salaries, which in some cases would lead to a 60 percent pay cut.

Iberia plans to increase capacity to 40 routes in July and 56 in August, but low-cost sister Vueling is operating to a limited schedule. IAG cut capacity for April and May by 90 percent and plans to return to 55 capacity in Q3.
The Group has deferred all non-essential investments, imposed a hiring freeze, and will reduce capital spending to keep as much cash flow. It has deferred deliveries of 68 aircraft from both Boeing and Airbus.

IAG improved its liquidity position to EUR 9.5 billion. On March 30, it said British Airways extended a revolving credit facility of $1.38 billion for a year until June 2021. IAG expects approval from the Spanish government of a loan and aid package for Iberia and Vueling totaling EUR 1.1 billion.

Group CEO Willie Walsh had planned to retire after the Annual General Meeting on March 26, but will now stay on until the AGM in September. This allows his successor Luis Gallego to concentrate on Iberia for a few months more.

Lufthansa Group:
In June, Lufthansa has significantly expanded capacity again by operating 2.000 weekly services to 130 destinations. Most are European summer destinations, serving twenty of them from Frankfurt and 34 from Munich. The airline also offers 34 long-haul destinations again or 112 weekly by all group members.
This includes Austrian Airlines, which has resumed services from June 15 after a 90-day grounding. AUA will serve 37 destinations again. From July 1, long-haul services are offered to New York Newark, Chicago, Washington, and Bangkok.
Brussels Airlines too has restarted operations on June 15 and offers 59 destinations.
Eurowings has added forty destinations to its network and operates twenty aircraft. The low-cost airline will concentrate on Italy, Greece, Spain, and Croatia in July.

SWISS has increased its services to Italy again now that the country has opened up its borders from June 3. The airline operates some ten long-haul services too, with the first Zurich-Hong Kong on June 4. Edelweiss will fly 171 weekly services to 36 destinations. Air Dolomiti has restarted on June 5 with a number of intra-Italian routes.

Lufthansa Group intends to further ramp-up capacity by September, by then offering 90 percent of its short- to medium-haul services (1.800 weekly connections by Lufthansa alone) and 70 percent of long-haul services. Autumn-capacity at SWISS will be some 85 percent, Eurowings at 80 percent.

Behind the scenes, Lufthansa is still working on finalizing the EUR 9 billion stabilization package that was agreed on in principle in late May and approved by the Supervisory Board on June 1. The package is up for shareholder approval on June 25, but the Executive Board has warned this is not a foregone conclusion after the package met strong opposition of Lufthansa Group’s single biggest shareholder, Heinz-Hermann Thiele. If insufficient shareholders approve the package and Thiele continues his resistance, the Board might file for insolvency and restructure the airline in a different way.
Part of the restructuring is the reduction of potentially 22.000 jobs, double the number reported earlier. Negotiations with unions are ongoing and CEO Carsten Spohr has said on numerous occasions that redundancies could be limited if an agreement is reached on flexible or part-time contracts.

The stabilization package was announced on May 25 but the Supervisory Board delayed a final decision two days later as it wished to study the conditions set out by the European Commission for the EUR 9 billion aid program. These included the surrender of 36 slots at Frankfurt and Munich. A compromise was reached on May 29 that covers 24 slots or the equivalent of eight aircraft, after which the Supervisory Board somewhat reluctantly accepted the revised package. Shareholders and competition authorities will now have the final say. The agreement with the German government’s Economic Stabilization Fund will give the federal government a 20 percent stake in the Group.

In April, the Swiss parliament approved a proposal from the Federal Council to help SWISS and Edelweiss with a package of state-guaranteed loans worth CHF 1.27 billion or 85 percent of the total CHF 1.5 billion rescue package. The aid is exclusive to the Swiss airlines and can’t be transferred to the parent company Lufthansa.
On June 8, the Austrian government agreed on a EUR 150 million aid package for Austrian that also included 150 million in equity support from Lufthansa plus EUR 300 million in loans from commercial banks.

SAS will cut its staff by 5.000. (SAS)

Air France-KLM:
Air France has increased capacity in June to 20 percent, having operated at just 3-4 percent in April and May. Subject to the lifting of travel restrictions, AF plans to increase this to 35 percent in July and 40 percent in August.
The focus will be on routes and frequencies within Europe, French Overseas Departments, and domestic routes in France itself but destinations in North and South America, Africa, the Middle East, and Asia will be served as well. The network will be operated using 106 of its 224 aircraft.

KLM restarted service at low levels on May 4 and since then has increased capacity step by step, at first running a European network with the Cityhopper Embraer fleet and some 737s. Long-haul flights are operated by its 777s but later on the Airbus A330s will return to service too. Three 747-400M-Combi’s continue to ferry medical goods between Amsterdam and Asia.
KLM’s forecast is 5.000 European services in July and 10.000 in August compared to some 1.100 in April, while the long-haul network will grow to 1.900 in July and 2.100 flights in August compared to 612 in April.

KLM has still not completed its EUR 2-4 billion aid package announced by the government on April 24, the same day the French said it would grant EUR 7 billion in loan guarantees and direct aid, but only for the holding and Air France. The stumbling blocks at KLM include the terms and conditions to which state-guaranteed loans will be provided. Dutch parliament demands the package will be exclusive to KLM and may not benefit the Air France-KLM holding.
Another rift emerged mid-June when the French government said it wanted to forego on Air France having to make some 8.300 cockpit and cabin crew redundant while at the same time involuntary job losses at KLM will be inevitable.

Both Transavia Netherlands and Transavia France have resumed services, the former on June 4 and the latter on June 15.

airBaltic’s revised business plan is centered around a fleet of 50 A220-300s in 2023.(airBaltic) 

airBaltic:
airBaltic has resumed international traffic to the Baltic States from May 18 after the governments have relaxed restrictions. Destinations include Amsterdam, Frankfurt, Oslo, and Copenhagen. Until July 7, the airline will add nine popular summer destinations to its roster.

The airline has revised its long-term business plan and now expects to return to its pre-Covid strategy only in 2023. This year and 2021 will be years of only limited operations. It plans to operate a fleet of maximum 50 Airbus A220-300s by 2023. The remaining Boeing 737NGs and Dash 8-400s have been permanently retired.

The airline confirmed to Airinsight that the 2018-plan for 80 A220s has been shelved.
Som 700 employees have been made redundant but airBaltic hopes to hire them as soon as the situation improves.
The Latvian government granted a EUR 250 million investment in airBaltic, increasing its share from 80.05 to 91 percent.

LOT:
LOT Polish Airlines returned to business on June 1 as it restarted domestic operations to eight destinations. From July 1, LOT will offer international services again to European destinations only, including Germany, Norway, the Czech Republic, The Netherlands, Spain, Greece, Croatia, and Bulgaria. Long-haul services remain suspended until further notice.
The airline had been grounded since March 14 after the government imposed a ban on all air travel.

As the impact of the Covid-crisis became more apparent, LOT withdrew its plan to purchase Condor, the German subsidiary of Thomas Cook that continued operations after TC went bankrupt. LOT had planned to make Condor its leisure airline but has been unable to make this investment. By early June, LOT itself was in negotiations with the Polish government about additional state funding.

Condor:
Condor has been bailed out by the German federal and Hessen state government, the airline announced on April 27. It will receive EUR 294 million in loans and EUR 256 million for refinancing an earlier bridging loan that was provided after Thomas Cook went bankrupt in 2019. The governments pledge their support as they see Condor as an operationally healthy airline before Covid-19.

SAS:
SAS resumed operations in June, offering services to 25 destinations by using 30 aircraft. Another 10 aircraft will be re-activated in July to bring capacity back to 30 percent compared to last year. While Copenhagen remains its most important airport with three US-cities only served from here, Stockholm and Oslo also see a ramp-up of (international) services.

SAS recorded deep-red results for Q2 and seeks SEK 12.5 billion in recapitalization and refunding that might include a (partial) bailout by the Swedish and Danish governments. On June 15, the Swedish government proposed a SEK 5 billion aid package to parliament. More details are expected later in June.
The airline will reduce its workforce by 5.000. Affected would be 1.900 full-time positions in Sweden, 1.700 in Denmark, and 1.300 in Norway. On January 1, SAS had 10.445 full-time employees, so this restructuring means and almost 50 percent reduction.

Virgin Atlantic:
Virgin Atlantic announced 3.150 jobs cuts and a reduction in operating size on May 5 as the airline tries to survive (see separate story). It continues to seek GBP 500 million in government loans which so far has been rejected. Founder Sir Richard Branson reportedly has offered the airline for sale as is struggles to attract fresh equity. Branson said on April 20 that Virgin will not survive without state aid. Branson insists Virgin will repay the loan: “It will not be free money.” Earlier, Branson offered to provide GBP 250 million in liquidity to Virgin Atlantic.

Virgin will resume operations on July 20, offering services to New York, Orlando, Los Angeles, Shanghai, and Hong Kong. It had reduced capacity by 85 percent in April and May and operated a fair number of cargo-only flights.

Norwegian:
Norwegian will resume UK-services from July, offering London Gatwick to Oslo seven times a week, London Gatwick to Copenhagen six times, and Edinburgh to Olso and Copenhagen twice a week each. From April, Norwegian has only maintained a very limited schedule within Norway and Scandinavia using just eight aircraft. Another 12 will now join the active fleet to be used on 76 European routes that include key cities and popular summer destinations in Greece and Spain.

Norwegian said on May 28 that it has successfully completed its financial restructuring plan that was announced in April. It has converted NOK 12.7 billion of debt into equity and secured NOK 400 million in cash through a public offering. This was conditional to the full NOK 3.0 billion state aid package from the Norwegian government which has been paid since. The airline also improved its equity ratio to 17 percent, well over the targeted minimal of eight percent.
Norwegian has also reduced its lease payments by $250-285 million by securing sale and leasebacks for a number of aircraft.

In Q1, Norwegian posted a net loss before tax of NOK -3.281 billion compared to -19.77 billion last year. Revenues were NOK 6.505 billion compared to 7.991 billion. In Q2, the airline has cut its network by 95 percent and operates only a skeleton domestic network with seven aircraft in Norway. This situation could continue until early 2021.
Around  7.650 staff have been temporarily laid off, but Norwegian hopes to hire them back again as soon as the situation has improved. It filed for bankruptcy for two of its cockpit and cabin crew units in Sweden and Denmark on April 20, which affects some 4.700 staff.

Icelandair:
Icelandair is still busy securing support for its reorganization plan that includes slashing 2.000 jobs out of some 4.600 within the leisure group. With salaries the main cost, there is no other option than to reduce these expenditures. Remaining fulltime staff will have to accept a pay cut or work part-time.
The Group has hoped to secure backing by early June, but strong opposition from its cabin crew members and unions have delayed this. On May 15 it has reached a new collective bargaining agreement with its pilots that runs until October 2025, with a similar agreement with technicians until January 2026. Without an agreement with its cabin crew members, Icelandair will explore ‘alternative options’ for its restructuring plan.

Finnair:
Finnair will expand its network from July onwards to 30 percent capacity, re-opening long-haul routes to Asia again. This includes Beijing, Shanghai, and Hong Kong but also key-routes to Japan (Nagoya, Osaka, Tokyo Narita) plus Singapore and Bangkok. From August, Tokyo Haneda, Delhi, and New York will be added.
Finnair’s European network will concentrate on 27 destinations in July with five additional cities following in August. The airline had reduced its operations by 90 percent from April 1.

Finnair expects to lose some EUR 2 million a day in Q2 and has ready a number of scenarios on how to resume operations. The airline had EUR 833 million in cash available at the end of Q1 but could tap into additional funds by unlocking a EUR 600 million pension premium loan or offering its fleet for sale and leaseback.
Finnair plans to take delivery of new A350’s as planned for this and the next two years but as it will revise its strategy a decision on new short-haul aircraft is to be deferred.

easyjet:
easyjet has resumed limited operations from June 15, flying again from 22 airports that include ten major ones in the UK and Northern Ireland. In Europe, services are offered in France (Paris CdG, Nice, Toulouse, Bordeaux, Nantes, Lyon, Lille), Portugal (Lisbon, Porto), Spain (Barcelona), and Switzerland (Geneva).
From July 1, the Amsterdam base will be back in action too. The network should grow to 35 destinations in August. New biosecurity measures like face masks will be in place for all passengers.

The company will come out of the crisis a much smaller one as it plans to reduce its workforce by thirty percent. The airline has started consultation procedures. It continues to reduce costs on airport operations, maintenance, and marketing.
easyjet expects to operate a fleet of 302 aircraft at the end of FY21, 51 less than originally planned. The reduced fleet reflects fewer deliveries and returns to lessors. It expects to generate GBP 500-650 million in additional funding by sale and leasebacks of an unspecified number of aircraft.

The UK-based airline with subsidiaries in Austria, Switzerland, and Italy has GBP 3.3 billion in cash available, which according to its own scenarios should be sufficient. It successfully issued GBP 600 million of commercial paper through the Covid Corporate Credit Facility, as well as drawing $500 million on its revolving fund facility. It arranged two additional loans worth GBP 400 million by mid-April. Including recent initiatives, easyjet should produce another GBP 2.0 billion in cash.

On April 9, easyjet revealed it has renegotiated aircraft deliveries with Airbus for 24 A320neo-family aircraft. It finalized negotiations with Airbus on June 16 and reported that deliveries have been deferred from the initially agreed FY22 to FY25-27. Another eight deliveries were already deferred from FY20 to FY22. All aircraft were originally due between June this year and December 2021.
The airline may defer another two aircraft and has until December to decide. It also has the option not to take up seven neo’s scheduled for delivery between FY20-26. A deadline to decide on purchase options has been deferred by a year until November 2021 for seven aircraft and to November 2022 for six.

easyjet has also 24 aircraft due for lease renewal in the coming sixteen months until October 2021. This plus the deferrals give it the flexibility to adapt its fleet requirements.

Ryanair:
Ryanair planned to resume operations from July 1 but actually was airborne again on June 21 when Spain opened its borders to foreign tourists. It operated services from various of its bases.
Ryanair expects to operate at 40 percent capacity in July and at 60 percent in August. Its Fiscal Year 2021 could see total passenger numbers drop by 50 percent compared to FY20.
The group will reduce its workforce from July onwards by 3.000 cockpit and cabin crew and impose salary cuts or unpaid leave on others. The airline is in negotiations with unions about a restructuring plan that also includes closure of a number of bases until traffic picks up again. The measures include all its subsidiaries like Buzz in Poland, LaudaMotion, and Malta Air in Malta.

After Austrian union vida refused to give in on a 30 percent pay cut for its Laudamotion members, Ryanair closed its Vienna-base from May 29. Lauda-aircraft have been ferried to the UK since May 27. On June 4, vida, Wirtschaftskammer Osterreich and Laudmotion agreed on a collectiv contract after all, but days later Ryanair announced its Austrian subsidiary will shelve some 100 positions of staff who have failed to sign the contract. It also said Laudamotion will continue to operate as a wet-lease airline to Ryanair in Vienna and its German bases in Dusseldorf and Stuttgart. The position of Palma is unclear.

Ryanair has been operating at just one percent capacity in April and hopes to return to 50 percent in Q2, which at the airline runs from July-September. Final results for Q1 have to be processed but the airline expects a EUR -100 million net loss.

Part of the restructuring is resizing its fleet. Ryanair is in talks with Boeing to cut deliveries of the MAX 200 for the next two years as well as with lessors about reducing the Airbus-fleet of LaudaMotion.
Ryanair Group has some EUR 4 billion on liquidity, which it thinks is sufficient to cope with the situation until Q2. It hits out to other European airlines which are benefitting from a combined EUR 30 billion in state aid, which according to CEO Michael O’Leary is in breach with EU state aid rules and distorts the landscape.

Alitalia:
Alitalia will receive EUR 3.5 billion in state aid from the Italian government to keep the airline going despite its poor state. After Italy was the first country in Europe to be hit hard by Covid-19, the airline was forced to reduce its activities to just a selection of repatriation flights to bring Italians home.
Until late March it operated on a limited schedule which includes two daily services to New York and London. Under a government decree, the airline also operates at least one daily service to most domestic airports.

From July, Alitalia has planned 1.000 weekly flights on 52 routes to 37 destinations, 19 in Italy, and 18 in Europe and the US (New York, Boston). That is 60 percent more flights than in June. Alitalia will concentrate its ramp-up at Milan Malpensa and Rome Fiumicino.

WIZZ:
Wizz has been operating at just three percent capacity for most of April and May but has planned an aggressive ramp-up from July 1. From then, it will base five aircraft at Milan Malpensa and open up twenty routes, position three aircraft at Tirana (Albania) to operate fifteen routes, two aircraft at Larnaca (Cyprus) for 11 routes, and one aircraft in Lviv (Ukraine) for the operation of five new routes.
More new bases were announced from mid-June, like Bacau (Romania) with two aircraft from October, Saint Petersburg (Russia) from September with one aircraft, and the reopening of four bases in Central and Eastern Europe.

Wizz has implemented a raft of cost-cutting measures, including a spending cut, voluntary leave, and the management foregoing payment until late April. It has laid off 1.000 positions, 19 percent of its total workforce. The lease of 32 Airbus A320ceo’s will not be renewed from FY2023. By late March, Wizz had a EUR 1.5 billion cash buffer. Wizz said on April 14 it had lost EUR 70-80 million in revenues in its Q4-period, resulting in a lower full-year profit of EUR 270-280 million.

In a webinar on May 26, CEO Jozsef Varadi said he expects Wizz to recover from the crisis within a year. He is seeing strong demand with passengers who want to fly again.

Aeroflot:
With Russia announcing a ban on all air travel from March 26, Aeroflot has been operating mostly domestic services and a very limited international schedule. In June the airline will gradually resume operations, especially through its Pobeda domestic subsidiary which has been flying most of May again.
Aeroflot has implemented large-scale cost-saving measures, including cuts in management and slashing capacity. It has re-deployed a number of passenger wide-body aircraft to cargo-only flights.

American is one of many airlines using passenger aircraft for cargo-only services (American Airlines)

NORTH AMERICA:

US airlines have been granted $25 billion in payroll support from the Department of Treasury. This should help them to support salaries during the current Covid-19 period as traffic has crashed but costs are continuing. The US Department of Treasury released details of the distribution of the Payroll Support Program on April 14, with funds coming from the Corona Aid, Relief, and Economic Security (CARES) act.

American Airlines was the first to announce it will get $5.8 billion, of which 4.1 billion in a direct grant and the remaining 1.7 billion in loan guarantees. The airline expects to receive $4.75 billion in a separate loan with the Treasury.
United Airlines said on April 20 it expects $5.0 billion in aid under PSP, of which 1.5 billion will be a 10-year loan. It submitted an application for a $4.5 billion loan under the CARES act.

Delta will get $5.4 billion and has received already 2.7 billion of this. The airline is also eligible for $4.6 billion in loan guarantees but Delta will decide in September if it will need this or cover its liquidity requirements from other sources.
Southwest will receive $3.2 billion, of which 900 million in loan guarantees. Alaska, Frontier, Allegiant, JetBlue, Hawaiian, and Skywest will also benefit from PSP.
The Department of Transportation denied requests from JetBlue and Spirit to suspend services until further notice. Both airlines need to maintain their schedules to nine and 25 destinations respectively.

American Airlines:
American Airlines plans to increase capacity in July on its domestic network to 55 percent, up from just 20 percent in May. The airline has seen a significant increase in demand in May. In response, frequencies from its Dallas Fort Worth and Charlotte hubs to major cities in Florida and the Gulf Coast will be increased.

The international network is lagging behind at 20 percent capacity in July, but here too AA is ramping up again. From June 4, it resumed eight international routes from DFW to Amsterdam, Paris, and Frankfurt and from Miami to Antigua, Guayaquil, and Quito. From Chicago and New York JFK, flights have resumed to London Heathrow.
Services from Philadelphia and Charlotte have been delayed until August.

American will early retire its Embraer E190s, Boeing 757 and 767s, Airbus A330-300s, and Bombardier CRJ200s.

On June 21, AA announced the offering of a combined $1.5 billion in common stocks and convertible senior notes due 2025 to improve its liquidity position. The airline also secured a new $500 million loan facility due 2024.

United Airlines:
United too has increased capacity but still expects levels to be down in July by -75 percent compared to last year. This compares to -80/-90 percent in April and May.
The grounding of most of its fleet cost United some $100 million in revenues per day, it said on April 3. This should be reduced to $40 million in Q2 and $30 million in Q3 as it embarked on a cost-cutting program that also slashes $2.5 billion in Capex.

By the end of May, United said it had $9.6 billion in cash available. On June 17, the airline reported this will be bolstered to a total of $17 billion by September by securing a $5 billion loan on its loyalty program MileagePlus, plus $4.5 billion in loans from the CARES relief program covered by its slots, gates, and routes.
In April, Hong Hong-based lessor BOC Aviation reached an agreement with United on a sale and leaseback of 6 Boeing 787-9s and 16 MAX 9s.

Delta Airlines:
Delta restarted three international operations on June 4, offering Atlanta to London Heathrow again and New York JFK to Amsterdam and Tel Aviv. In May, the airline had announced a gradual increase of its schedule saying it would offer services again to all major destinations from June. This includes Amsterdam, although London, Paris, and Frankfurt will not have daily flights. Also ramped up are services to Mexico, Seoul, Shanghai, the Caribbean, and Central America as well as Canada.
From June 25, Delta will resume twice-weekly services from Seattle to Shanghai via Seoul Pudong and once a week to Seoul from Detroit and Seattle.

Delta has parked some 650 aircraft. It retired its final MD-88s and -90s on June 2 but also announced the early-retirement of some Boeing 757s, 767s, and all eighteen 777-200ERs before the end of the year. This despite the 777s have received an extensive cabin make-over of late. Deliveries of some new aircraft have been deferred.

Delta has bolstered its cash position to $15 billion, up from 14 billion previously announced. Cash burn has been reduced from $40 to 30 million per day, but in a letter to staff CEO Ed Bastian warned on June 19 that this situation is unsustainable that equates to $1 billion per month. Delta has cut CAPEX by $3 billion this year. Some 40.000 employees have accepted voluntary unpaid leave. Bastian will forgo his salary for six months, with officers taking a 50 percent pay cut and managing directors and directors 25.

Alaska Airlines:
Alaska Airlines has ramped-up services in June, having cut capacity by -80 percent in April and May when it parked 156 mainline aircraft. Like many US airlines, Alaska has blocked middle seats and introduces strict safety and hygiene measures that include the compulsory use of face masks.

Air Canada:
Air Canada has reduced its Q2-capacity by 85 to 90 percent and placed 15.200 employees on off duty status plus 1.300 managers on furlough. It expects to reduce capacity in July by -75 percent. In May, Air Canada announced its summer schedule that includes over 100 destinations in Canada, the US, and worldwide as it noticed a strong demand for travel again.

The airline has identified an additional $500 million in cost savings by deleting all non-necessary spendings, deferring investments, and retiring 79 older Boeing 767s, Airbus A319s, and Embraer E190s with Air Canada and Rouge. The Q1-update published on May 4 didn’t include any details on the deferral of deliveries of 17 Airbus A220s and six Boeing MAX 8s.
On June 2, Air Canada reported it had raised $1.6 billion through the issuing of shares to strengthen its working capital.

Westjet:
From July, Westjet will offer services to 45 destinations again, which include 39 in Canada, five in the US, and one in Mexico. This means the Canadian airline operates at 24 percent capacity compared to July last year. It suspended all its transborder US and Hawaiian plus international services from March 22.
It negotiated a restructuring plan with pilots union ALPA that saves 1.000 jobs out of 1.700.

Air Transat:
Canada’s Air Transat will resume services from July 23, offering flights to 20 destinations in the US, Europe, and Canada until October 31. The schedule could change for September and October, depending on demand. The plan was to resume operations from June 1 but this has been delayed twice.
Air Transat continued to operate a range of repatriation flights until April 1. As a consequence of the Covid-crisis, the airline has retired its Airbus A310s from service.

Emirates has parked 72 A380s at Dubai World Central.

MIDDLE EAST:

Turkish Airlines:
Turkish Airlines has resumed operations to 19 destinations from June, having suspended all international operations from March 27. Domestic operations were at 60 percent capacity but will increase as demands will go up.
On June 18, Turkish operated 400 flights and was the first to hit this number since any airline did on March 24. Turkish hopes to offer 99 destinations by September again.

Emirates:
Emirates has extended its international network from June 15 by adding sixteen major cities across the world to the passenger schedule. This follows on the government’s decision to allow transit services through DXB from June 10.
Added to the schedule are Bahrain, Manchester, Zurich, Vienna, Amsterdam, Copenhagen, Dublin, New York JFK, Seoul, Kuala Lumpur, Singapore, Jakarta, Taipei, Hong Kong, Perth, and Brisbane. From June 8, Emirates will serve three cities in Pakistan.
Emirates will increase its services to 40 destinations by July 15 as it adds amongst others Colombo, Istanbul, Auckland, Brussels, Barcelona, and Washington DC to schedule and up frequencies to existing destinations.
All services are operated by the airline’s Boeing 777s as the 115-strong Airbus A380-fleet remains grounded until further notice.

The airline was grounded on March 25 after a ruling by the government has forced all UAE-airlines to suspend operations for at least two weeks. Only cargo services were retained, which SkyCargo operates by using 11 full freighters and 85 777-300ERs from the passenger fleet. Interestingly, all cargo flights are operated out of DXB, although DWC is the regular airport for cargo services and has a vast infrastructure for this. Emirates started limited passenger service on April 5.

As the world’s biggest long-haul airline, Emirates is feeling the effect of the dramatic drop in traffic. “As a global network airline, we find ourselves in a situation where we cannot viably operate passenger services until countries re-open their borders, and travel confidence returns”, Emirates chairman Sheikh Ahmed said back in April.
President Sir Tim Clark said during a June 1-webinar that he personally thinks that the airline industry will recover once a vaccine has been found, hopefully in time before the summer 2021-schedule.

Emirates had grounded all its 115 Airbus A380s, of which 71 at Dubai World Central. It has retired the first A380 by early June.
The airline group (including ground handling company dnata) will seek strict cost reductions, has asked staff to take up unpaid leave and will reduce salaries by 25 to 50 percent. Tim Clark and dnata’s Gary Chapman will take a salary cut for three months.
Emirates confirmed on May 30 that making redundancies is inevitable as it will take much longer to exit this crisis. On June 9, reports said these include 600 pilots and some 7.000 cabin crew, most of them working on the A380 fleet.
During the webinar, Clark said that his airline is not in a position now to buy new aircraft now, hinting at deferral of outstanding orders with Airbus (50 A350-900s and 8 A380s) and Boeing (30 787-9s and 115 777X).

Flydubai:
Emirates’ little sister airline flydubai said on June 16 it is preparing to resume services but didn’t specify a date or capacity numbers. Like the other airlines in the UAE, flydubai suspended all flights from March 24. The airline was allowed to fly repatriation services and has done 23 by April 8. The airline also used its 737-800s for cargo-only flights, most of them in the Middle East.
Staff will have a three-month pay cut until July in order to curb expenses.

Etihad:
With the UAE government’s decision to allow transit flights via Abu Dhabi from June 10, Etihad announced it would offer links to twenty cities from this date. Etihad has been connecting Melbourne and Sydney via Abu Dhabi to London. It has added services to destinations such as Singapore, Seoul, Tokyo, Karachi, Manila, Jakarta, Kuala Lumpur plus Amsterdam, Barcelona, Brussels, Dublin, Frankfurt, Geneva, Madrid, Paris, and Zurich.

Etihad hopes to be back at some 40 percent capacity by July 16, CEO Tony Douglas told CNN. Like Emirates, Etihad resumed limited passenger flights from April 5 after a two-week grounding. Initially, these were limited to Melbourne, Seoul, Bangkok, Jakarta, Manila, and Amsterdam the only destination in Europe. By April 24, Etihad added more destinations to this network for the May schedule that include Frankfurt, Brussels, Barcelona, Chicago, Singapore, and Tokyo. In addition, the airline runs cargo-only flights.

The airline will make job cuts in all departments, Douglas said, without specifying numbers. Reuters reported on May 21 that Etihad might ground its ten A380s permanently and was seeking cancelation of its outstanding A350-1000 order. This hasn’t been confirmed.

Air Arabia:
Air Arabia had suspended all flights from March 24 but on April 15 announced a limited resumption of outbound passenger and cargo flights to destinations in the Middle East, India, Afghanistan, and Nepal.
While Air Arabia’s base at Sharjah is allowed to offer transit services from June 10, the airline has not communicated schedule updates yet.
The airline will reduce its workforce to cope with the revised business outlook, but hasn’t specified numbers. Air Arabia reportedly cut 57 jobs in May.

Royal Jordanian:
Royal Jordanian now expects to resume flying on July 4, having delayed its plans numerous times since May. The airline has been grounded since March 17 and hoped to be flying again on June 14.

Qatar Airways:
By early June, Qatar rebuilt its network to more than 40 destinations served by 170 weekly flights. Destinations include Singapore, Bangkok, Lahore, Peshawar, Islamabad, Karachi, Barcelona, and Vienna. New York, Berlin, Venice, Tunis, Dar es Salaam were served from mid-June, while Milan, Rome, and Dublin will see frequencies increased to daily.
The important US market will be served by 39 weekly flights by mid-July again.

Qatar closed the country for non-Qatari nationals for two weeks from March 18, while anyone entering the country must go in a 14-day quarantine period. This made Qatar Airways, even more, a transit-airline to and from Doha.

By mid-March, Qatar Airways aggressively increased capacity to London, Frankfurt, and Perth by adding an A380 to the schedule. The A380’s were replaced by smaller aircraft from early March. In an interview in mid-May, CEO Akbar Al Baker hinted at a prolonged or even permanent grounding of the A380-fleet. In an interview with FlghtGlobal on June 18, he said the A380 is expected to remain grounded until the summer 2021-schedule, with only seven of its ten aircraft to be returned to service.

Akbar Al Baker said to Reuters on March 29 that Qatar has sufficient liquidity to survive the crisis for a few more weeks, but will have to draw onto government aid if the situation continues longer. It traded seven Boeing 787-9s for $850 million in cash by mid-April.

Gulf Air:
Gulf Air returned to Pakistan on May 30, operating the first service to Karachi since March. The airline of Bahrain had suspended most services from March 18 but operated repatriation services for Bahraini nationals in mid-April. It plans to increase its services to Pakistan in the coming days.

Kuwait Airways/Jazeera Airways:
The national airline of Kuwait has suspended all services from March 13 until further notice after a decree issued by the government that locks down the country to foreign visitors.
As a result, low-cost airline Jazeera Airways also suspended all services but resumed them in June to the UK, Turkey, Pakistan, and Iran. Next is Qatar from June 24, Iraq from June 27, and the UAE, Egypt, India, and Georgia from June 30.

Saudia:
Saudia has resumed a significant number of domestic and international services since May after the airline was grounded for weeks from March 21.

El Al:
Israels El Al extended the suspension of flights until July 31. It had planned to operate a limited schedule in June, offering flights on selected dates to New York, Los Angeles, Paris, and London only. Following further assessment, this plan has been modified. Until then it has been operating repatriation services only since mid-March. Entry into the country is for nationals only.

Wizz Air Abu Dhabi:
Amidst a weak travel market, new low-cost airline Wizz Air Abu Dhabi announced its plan to launch first services on June 3. This has been postponed. The airline intends to operate to Rumania and Hungary first before adding Poland and Bulgaria from September 15, plus another destination in Rumania a day later.

Air New Zealand expects to reduce its capacity by 85 percent. (Air New Zealand) 

ASIA/PACIFIC:
The region has suffered since the outbreak of Covid-19 in China in January, with most Chinese and Asian airlines have drastically reduced capacity. As the virus seems to be more or less under control in China, air travel is slowly gathering pace again. However, strict immigration rules still apply or have been introduced by Australia and New Zealand in the wake of constant developments.

China:
The Civil Aviation Authority of China (CAAC) imposed restrictions on international passenger flights from March 29, limiting Chinese and international airlines to one flight per carrier per week. Cargo services were not included in this ruling, resulting in a huge increase in cargo services to Europe from April onwards.
A rise in corona cases in Beijing in early June has resulted in the closure of some airports and hence a reduction of operations again. Also, US President Trump announced a ban on Chinese airlines coming into the US following a similar and earlier announcement by the Chinese government as the US-China trade dispute continues.

ANA:
Japan’s All Nippon Airways continues to suspend most of its international routes for June, offering only selected flights during the month to London, Mexico, Chicago, Sydney, Jakarta, Hanoi. It hopes to add more services from July 1.

ANA reported a Yen 27.655 billion net income for FY19, down 75 percent from last year. The operating income was -63.2 percent to Yen 60.806 billion while revenues were -4.1 percent to Yen 1.974,2 billion. Especially Q4 was impacted by the Covid-19 crisis with revenues down on average by -4.2 percent.
All Nippon has suspended its FY20 guidance. It has borrowed Yen 100 billion to improve liquidity and has secured a new credit facility of Yen 350 billion, in addition to an existing facility of Yen 150 billion.

Japan Airlines:
Like ANA, Japan Airlines will gradually increase services again. Only from June 14, the airline has ramped-up its domestic services. The schedule shows almost 4.300 canceled services until June 13 but this will drop to 601 on the 14th. International services have been ramped-up since June 1 but the number of canceled daily flights is about the same at 607.

JAL reported an FY19 profit of Yen 53.4 billion on April 30 compared to 150.8 billion the previous year. Revenues were down to Yen 1.411 billion from 1.487. The impact of Covid-19 was felt in the last two months of the fiscal year when Japan went into a state of emergency and air travel was discouraged. Domestic traffic was -55 percent, international -70 percent, and revenues ended up at Yen -19.5 billion instead of +19.8 billion as was expected.

JAL bolstered its liquidity position by Yen 57.7 billion but still plans to continue its share repurchase program. The airline plans to reduce revenue and capacity-related costs by 40 percent and fixed costs by Yen 60 billion. Capex will be reduced by Yen 150 million.

Virgin Australia:
Virgin Australia filed for voluntary administration on April 21 after it failed to get a $1.4 billion in government aid it requested a couple of weeks earlier. The airline will continue operating under a limited schedule while administrators from Deloitte try to find investors.

Administrator Vaughan Strawbridge said on June 2 he has shortlisted Bain Capital and Cyrus Capital Partners as the two preferred bidders out of five. Cyrus has been involved with Virgin Atlantic and Stobart in the take-over of UK-regional Flybe before the airline declared bankruptcy early this year. US-based Bain invested in Trans Maldivian Airways back in 2017.

Virgin Australia has cut domestic capacity by 90 percent by suspending operations to 19 destinations until June 14. This leaves 17 routes open. Its subsidiary Tigerair Australia has suspended all domestic flights with immediate effect from March 25.|

Cathay Pacific:
The Hong Kong-airline has been operating at just 2.5 percent capacity in May, even below April’s 3.0 percent. Its March traffic dropped by 90 percent, in April pax numbers were down -64 percent. In May, RPKs were down -99.1 percent compared to last year. This confirms Cathay is still very much in deep trouble as the main airline lacks a domestic network and is dependent on the lifting of international travel restrictions.

Cathay sees no immediate improvement for the next months. CEO Ronald Lam said on June 12 his airline will re-evaluate its business model that will result in a recommendation for the optimum size and shape of the new Cathay. Expect some heavy reductions here.
On June 9, Cathay announced it had secured HK$ 39 billion for its recapitalization plan that includes the issuance of preference shares and warrants for a total of HK$21.5 billion, 11.7 billion in rights issues, and HK$7.8 billion in bridge loans.
As a result of the capitalization, the Swire Group will increase its share from 42.26 to 45 percent, Air China from 28.17 to 29.99 percent, Qatar Airways from 9.38 to 9.99 percent, and other shareholders from 14.11 to 15.02 percent. Aviation 2020 Limited will lose its 6.08 percent share.

IndiGo/GoAir/Air India:
Airlines in India have resumed domestic services from May 25 after the government relaxed restrictions. International services were set to follow from June 1, but the Indian government extended the ban until June 30.
Most Indian airlines like IndiGo, Go Air, and Air India had hoped to resume operations from May 4 in a phased manner but restrictions were extended again. India has been in a lockdown from April that has limited airlines to cargo-only flights.

Vietnam Airlines:
Hit by Covid-19 itself, Vietnam has imposed a ban on travel. Vietnam Airlines has suspended all international services and operates only limited repatriation flights. From March 21, routes within the ASEAN region will be discontinued and from March 23 to the UK and Japan, from March 24 to Germany and Australia

Air New Zealand:
Air New Zealand has resumed most domestic operations from May 18 after the country’s alert level was relaxed. Services to Taupo and Timaru will be reopened from June 8.  It has also run a domestic cargo network using its Boeing 787s. ANZ has seen a surge in demand for air tickets, although this still fairs poorly against pre-Covid levels.

ANZ will resume services to Shanghai from June 22 and to Tokyo Narita from June 25. Shanghai was suspended in February while Tokyo has not been served since March 10. Other international services remain suspended.

Qantas:
Qantas and Jetstar will increase their domestic schedules in June and July from 5 percent capacity to 15 percent. The two airlines will be offering 300 weekly return flights again. Once restrictions from various states will be relaxed, the capacity could go up to 40 percent. Benefitting from the ramp-up are Melbourne-Sydney and Canberra plus intra-state routes to all states.

Qantas’ International network is operating at just 1 percent. The airline hoped to be resuming services in August but has now delayed this until October.

With operations still significantly below the pre-crisis levels, Qantas continues to stand down most of its employees until further notice. The Group bolstered its liquidity position by securing another $550 million against three Boeing 787-9s. This is additional to the $1.05 billion credit facility announced on March 25 by providing seven 787-9s as a guarantee.
On May 4, Qantas had $3.5 billion in liquidity, including a $1 billion undrawn facility. Weekly cash burn is expected to be $40 million by the end of June.

Singapore Airlines:
Singapore Airlines and its subsidiary Silk Air will slightly increase the number of destinations in June and July, having operated at just 4 percent capacity since April. This now becomes 6 percent. Reinstated services include Adelaide, Melbourne, Brisbane, Christchurch, and Auckland, Hong Kong, Medan, Cebu, and Osaka, as well as Amsterdam, Copenhagen, and Barcelona. These are additional to the very limited schedule flown in May.
During April and May, SIA and Silk Air have grounded 138 of 147 aircraft, with Scoot 47 of 49.

On June 8, SIA reported it has raised $8.8 billion in fresh liquidity through a recent rights issue while raising $900 million in long term loans secured against some Airbus A350-900s and Boeing 787-10s. Another $500 million is available through new credit facilities arranged with banks which are additional to 1.7 billion in unused facilities. If necessary, SIA can raise another $6.2 billion in liquidity with mandatory bonds.
In March, the group announced it had offered shareholders new equity of S5.3 billion and issued convertible bonds worth $9.7 billion, while at the same time finalizing a $4 billion bridge loan with DBS Bank.

SIA’s major shareholder Temasek has supported the package and also has subscribed to the airline’s transformation plan, which includes the fleet renewal plan. This is good news to Boeing and Airbus, as it seems to guarantee the order for the MAX, 787s, 777X, and A350s, although in an investor’s filing on April 24 SIA said it is in the process of renegotiating terms and delivery dates.

Air Mauritius:
Air Mauritius filed for voluntary administration on April 22 as it has been severely impacted by travel restrictions. As the airline is highly dependent on tourism, is has seen no other option than to take this step. Air Mauritius was already in a restructuring program since early this year. It has extended the grounding until August 31.

SOUTH AMERICA:
Most countries in South and Latin America have closed their borders to travelers from the EU, UK, China, South Korea, Japan, Australia. Argentina announced on April 27 that it will forbid all commercial air travel until September 1.

Avianca:
Avianca Holdings has filed for voluntary administration with a New York-court and plans to restructure its debt and airlines under US Chapter 11-legislation, the company said on May 10. Under Chapter 11, Avianca will continue to operate wherever that is possible. However, it will wind down Avianca Peru.

Avianca has suspended all international and domestic flights in Colombia from early April as most South American countries imposed travel bans.
Avianca has followed the path of other airlines by offering staff voluntary leave of its 21. 000 staff, cost-cutting of all non-essential measures, and a hiring freeze.
Chapter 11 is the best option to protect the essential air travel and air transport services, its CEO Anko van der Werff said.

LATAM:
Like Avianca, LATAM has opted for voluntary Chapter 11 bankruptcy protection, it announced on May 26. With the support of its two family-shareholders and Qatar Airways, the airline intends to restructure and recapitalize.
LATAM has been hit hard by the travel restrictions imposed by most countries in South America. It has cut capacity on its international network by 95 percent and on domestic operations by 40 percent. It will continue to operate under Chapter 11.

LATAM Argentina was excluded from this restructuring plan and the airline reported on June 17 it has ceased operations with immediate effect, citing the effects of Covid-19 as the major reason.

GOL:
Brazil’s GOL hopes to operate at 20 percent capacity in June, having initially said it would reduce its domestic network for Q2 by -75 percent by maintaining a network of 50 daily services out of Sao Paolo. The international network will be down by -100 percent. The airline has parked 120 aircraft and expects to have returned 18 Boeing 737NGs to lessors by the end of the year, with another 30 eligible for FY21-22.
In view of the expected reduction in future demand for air travel, GOL has canceled 34 Boeing MAX 8s on order.
Cash costs for June excluding revenues are expected to be R$ 8 million a day. By late May, the airline had R$3.5 billion in liquidity available.

AFRICA:
South African Airways:
South African Airways is hoping to resurrect from the ashes, based on a Rand 26.7 billion restructuring plan that was published in mid-June. The plan includes a significant reduction in the overall size of SAA. This includes the loss of up to 3.700 out of 4.700 jobs during the first phase of restarting until January 2021. Staff numbers could grow from 1.000 to 2.900 once the airline succeeds in demonstrating growth.
The resized SAA will operate a fleet of just 26 aircraft, including seven for long-haul services.

SAA filed for voluntary administration after the government announced it was unable and unwilling to bail out the airline. Already troubled for years, SAA has been fighting for her existence in recent months but now Covid-19 could deal the airline a fatal blow. The two administrators have been working on a plan on June 8.

Ethiopian:
Ethiopian has resumed operations in June but only on a limited scale. It has concentrated on cargo-only flights since then, shipping medical supplies.

Kenya Airways:
Kenya Airways plans to resume operations from July 6 having suspended all international flights from March 25. This follows on a government directive to ban all incoming international passenger flights.
The schedule from July 6 includes Bamako and Bangui, from July 7 Mombassa, Djibouti, Harare, Rome, Geneva, and Khartoum, while from July 8 services are announced to Bangkok and New York amongst others. More services are due on July 10.

IATA/ICAO
On June 3, IATA reported a 94.3 percent drop in RPKs for April but registered a 30 percent increase in daily (domestic) flights in the last week of the month. While this is hailed as the first signal of an uptick in travel, 30 percent compared to almost no flying is still a very small step.
International travel was down -98.4 percent compared to April 2019, domestic by -86.9 percent. Domestic China was the only area where April-figures were better than March-figures but only marginally: -66.6 percent versus -68.7 percent in RPK growth.

IATA’s Chief Economist Brian Pearce said that after the ‘cruelest month’ of April there is some reason for optimism that the lowest point is behind us. An indication for this is bookings seen in May, but we have to wait another month to see confirmation. With most airlines still having run marginal operations in May, this could be another bad month.

On June 1, the International Civil Aviation Organization (ICAO) Council approved a comprehensive framework of temporary measures for a safe restoration of airline operations. ICAO and IATA called upon governments to adopt the ‘Takeoff’-roadmap so airlines can prepare to restart services.
Proposed measures include physical distancing where feasible or adequate risk-based measures, the wearing of face masks onboard aircraft, routine sanitation and disinfection, health screening and contact tracing, health declaration forms, and testing.

“This layering of measures should give travelers and crew the confidence they need to fly again. And we are committed to working with our partners to continuously improve these measures as medical science, technology, and the pandemic evolve,” IATA Director General Alexandre de Juniac said.