Friday, May 15. In recent days, airlines have been announcing a gradual return to flying again. The picture is diffuse, with some offering limited services from the second half of May and others extending their suspensions. So we update our story again.
British Airways, part of International Airlines Group (IAG), will cut 12.000 jobs as it prepares for a slow recovery to better days, it announced on April 28. BA had suspended jobs of 30.000 cabin crew, ground staff, engineers, and office jobs in April and May. They will be paid 80 percent of their salaries thanks to a government retention scheme. The airline earlier reached a deal with its 4.000 pilots to take four weeks of unpaid leave in April and May, but the latest reduction plan has been met by strong opposition from pilot union BALPA.
IAG has reached an agreement about an identical package that includes some 1`7.000 employees with Iberia, Vueling, and LEVEL. Plans for these airlines have to be disclosed. IAG will cut capacity for April and May by 90 percent. 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 said on May 14 that it will further increase its operations to 1.800 weekly operations top 106 destinations in Europe and 20 long-haul from June. This includes Lufthansa, Eurowings, and SWISS, while Austrian continues to be grounded until June 7 despite a recent softening in Covid-restrictions in Austria.
To operate the schedule, the three airlines will have 80 additional aircraft available or 160 in total. Long-haul destinations served from Frankfurt, Munich, and Zurich again include Toronto, New York-Newark, Chicago, Dubai, Riyadh, Bahrain, Johannesburg, Mumbai, Tel Aviv, Sao Paolo, and Bangkok. Eurowings will restart operations at Dusseldorf, Cologne, Hamburg, and Stuttgart.
As of May 15, Lufthansa Group has not communicated any updates on the government aid package. Lufthansa is in talks about a EUR 9 or 10 billion package that would give the federal government a 25.1 percent stake in the Group. That this is a sensitive issue was clear from CEO Carsten Spohr’s statement, when he said: “We do need government support, we do not need government management.”
The airline and cockpit crew union Cockpit have agreed on a 45 percent pay cut until June 2022 which helps Lufthansa to reduce its costs.
The Swiss Federal Council is prepared 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. The package is subject to parliament approval. The Austrian and Belgian governments have yet to decide on any state aid for Austrian and Brussels Airlines. While the Group has EUR 4.4 billion in liquidity available, the business outlook, multibillion liabilities, repayments of liabilities, and ticket refunds will drain its cash position quickly in the coming weeks.
While being one of the strongest airline groups in the world, Lufthansa Group says it thinks it won’t be able to cover its capital requirements on the market. This makes state aid inevitable to secure its solvency in the near future. In Q1, Lufthansa Group lost EUR 1.2 billion with revenues down -18 percent to 6.4 billion.
A topic of much debate within the German coalition is the level of influence the government will get in Lufthansa. The social-democratic SPD says aid is conditional to the government getting a position on the Group’s board, but other partners CDU/CSU do oppose this proposal.
One scenario that seems to be under consideration is filing for administration, so the Group can restructure without too much government intervention.
Belgian subsidiary Brussels Airlines expects to resume operations on June 15. This will be a smaller airline post-Covid, it announced on May 12. It will reduce its 54-strong fleet by 30 percent and staff by 25 percent. It has called on Lufthansa and the Belgian government to support the airline during this restructuring that is urgently needed to safeguard the future of the airline, CEO Dieter Vranckx said.
Air France and KLM have expanded their basic schedule from May 4, running a European network with the smallest aircraft in the fleet and long-haul flights to a limited number of destinations. Both also continue to operate cargo-only flights on passenger aircraft.
On April 24, Air France-KLM has been granted a state aid package to provide much-needed liquidity. The French government will provide EUR 7 billion in loan guarantees and direct aid, but only for the holding and Air France. The Dutch government will help KLM with a EUR 2 to 4 billion package that is still under negotiations with banks.
The aid follows on a political row over the bonus for both Group CEO Benjamin Smith and KLM CEO Pieter Elbers. Weeks earlier, Smith had said he would forego on 20 percent of his salary during the current situation. However, it was disclosed later that Smith would be eligible for a 122 percent bonus partly conditional on him succeeding in attracting government aid. This caused a row with amongst others the Dutch government, which made it clear it would not provide any state aid if board members still would receive bonuses. Under pressure, Smith refrained from his bonus, just as Elbers had done on his a few days earlier.
Most of Air France’s fleet is parked as is KLM’s, which early-retired its seven Boeing 747-400s from passenger service March 29. From April 14, KLM has brought two 747-Combi’s out of retirement and uses them for up to two months extra on dedicated cargo flights on an air bridge between Amsterdam and China. The Combi’s are especially suitable for large-sized medical supplies and equipment from Philips.
Also grounded for six weeks are KLM’s A330s and doubts circulate if they will re-enter service or are to be retired early like the 747s.
Both low-cost subsidiary Transavia Netherlands and Transavia France have suspended all flights until June 3.
airBaltic’s revised business plan is centered around a fleet of 50 A220-300s in 2023.(airBaltic)
airBaltic will resume international traffic to the Baltic States from May 18 after the governments have relaxed restrictions. Destinations include Amsterdam, Frankfurt, Oslo, and Copenhagen.
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 airline confirms to Airinsight that the 2018-plan for 80 A220s has been shelved.
Also confirmed: 700 employees will be made redundant, but airBaltic hopes to hire them as soon as the situation improves. The plan confirms all its Dash 8-turboprops and remaining Boeing 737s will be retired.
The Latvian government granted a EUR 250 million investment in airBaltic, increasing its share from 80.05 to 91 percent.
LOT Polish Airlines will continue to suspend all its operations until May 31. The Polish government decided on March 14 to block all international traffic. With the current unstable situation ongoing, an extension of the grounding was announced on May 1.
LOT has withdrawn 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 in the current situation has no appetite for this investment.
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 announced on April 28 that it is in discussion with unions to reduce its workforce by some 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.
SAS thinks it will take some years before traffic will have returned to the pre-Covid level, so the airline has to reduce in size. This Summer, there will be only limited activity.
SAS suspended all international routes from March 16 and only runs a limited domestic schedule in Norway and Sweden. The airline recorded a 59.7 percent drop in passengers in March, with RPKs down 62 percent.
The airline secured a SEK 3.3 billion revolving credit facility, it said on May 5, while negotiating with the Norwegian government about access to NOK 1.7 billion in state-aided funding.
French airline La Compagnie will suspend all service between March 18 and April 12. The airline offers a business class product on its transatlantic network and has been hit by the Trump-imposed ban.
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 has 85 percent in April and May. Its schedule has been affected by 80 percent. After the US-ban became effective in March, Virgin immediately said the service to New York Newark would be permanently terminated.
Staff has been asked to take up eight weeks of leave during the coming three months, with costs spread over the next six months to reduce costs. The package also includes the offer of a 6-12 months sabbatical and a one-time voluntary severance package. Cockpit and cabin crew unions have agreed to this.
Norwegian urgently needs access to the full NOK 3 billion state aid package and conclude major restructuring agreements with 24 lessors and bondholders before mid-May. If not, the airline will almost certainly have to file for bankruptcy, it said on April 27 (see separate story). If successful, lessors would get a 51.3 percent share of the airline. Norwegian plans to focus on its Nordic and European network in the future, with long-haul services reduced to only New York JFK and Los Angeles.
The airline has cut its network by 95 percent and operates only a skeleton domestic network with seven aircraft in Norway. Around 7.650 staff has been temporarily laid off, but Norwegian hopes to hire them back again as soon as the situation has improved. It files for bankruptcy for two of its cockpit and cabin crew units in Sweden and Denmark on April 20, which affects some 4.700 staff.
On May 4, shareholders approved the debt restructuring plan.
Icelandair announced on April 28 it too will make serious cuts, 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 airline said 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.
Finnair has reduced its operations by 90 percent from April 1 until further notice but hopes that recovery of traffic will resume in July. The airline operates on just twenty routes, including domestic destinations within Finland and European destinations to Amsterdam, Berlin, Brussels, Frankfurt, London, Munich, Paris, Stockholm, and Zurich.
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 said on April 16 it is prepared for a prolonged period of grounding, even if this lasts up to nine months (see separate story). 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.
easyjet has grounded its entire fleet until further notice. Furlough has been organized for staff, which will be paid 80 percent until June. easyjet has 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.
On April 9, easyjet revealed it has renegotiated aircraft deliveries with Airbus for 24 A320neo-family aircraft. Deferrals include ten aircraft in FY2020, twelve in FY2021 (which means it will take no deliveries at all in this fiscal year), plus two in FY2022. The airline has the option to defer five more in FY22.
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 plans to resume operations from July but in only a limited size. It 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 in Austria, and Malta Air in Malta.
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 has reduced 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. Milan Linate has been closed since March 16.
Alitalia is one of many airlines that operate cargo flights to bring medical supplies from China, using Novosibirsk in Russia as a stop-over for changing crews.
Wizz has prolonged its operations from Ukraine, Poland, and Rumania until May 9 or 14 as it continues to operate at just three percent capacity. It planned to restart services from its Timisoara-basis on May 1 but restrictions have been extended.
Wizz Air recommenced restricted services from London Luton and Vienna on May 1. On July 1, it will open a new base in Lviv.
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.
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.
American is one of many airlines using passenger aircraft for cargo-only services (American Airlines)
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 revised its summer forecast and expects to operate its international network at 60 percent lower capacity during the summer peak. This includes -80 percent to the Pacific, -65 percent on transatlantic routes, and -48 percent to Latin America. AA has suspended 25 seasonal services until summer 2021. Auckland-Los Angeles is expected to be resumed in October.
On March 27, American said Domestic capacity would be down 60-70 percent in April and 70-80 in May year-on-year, while International is down 80-90 percent.
American will early retire its Embraer E190s, Boeing 757 and 767s, Airbus A330-300s, and Bombardier CRJ200s.
United is losing $100 million in revenues a day since the impact of Covid-19 is evident, the airline said on April 3. It expects to reduce this to $40-45 million in Q2 as it has embarked on a cost-cutting program that also slashes $2.5 billion in Capex.
It has reduced capacity in April by 80 percent but expects even larger cuts in May. United is counting on a prolonged effect as it forecasts revenues to be 30 percent down in Q4 2020 compared to last year.
From March 25, United has suspended the last transatlantic service to London as well as to the Pacific, with the exception of San Francisco-Tahiti and -Sydney that will operate three days longer. Canada will be suspended from April 1.
This leaves only a reduced schedule to Mexico from March 24, as all other routes to South and Latin America will be halted.
Hong Hong-based lessor BOC Aviation said on April 20 is has reached an agreement with United on a sale and leaseback of 6 Boeing 787-9s and 16 MAX 9s. United has $9.6 billion in cash available and has been granted $5.0 billion under the Payroll Support Program.
Before the Trump-ban announced on March 11, Delta said it would cut capacity on trans-Atlantic routes by 15 to 20 percent, within the US by 10 to 15 percent and to Asia-Pacific by 65 percent. Currently, Delta operates at -70 percent systemwide and -80 percent on the international network until May or even June.
Delta has parked some 650 aircraft, retire MD-88s and -90s plus some Boeing 757s and 767s early, and defer deliveries of new ones. Delta said on May 14 that it will early-retire its 18-strong fleet of 777-200ERs too before the end of the year, despite these aircraft having received an extensive cabin make-over of late.
Delta will cut CAPEX by $3 billion this year. Some 37.000 employees have accepted voluntary unpaid leave. CEO Ed Bastian will forgo his salary for six months, with officers taking a 50 percent pay cut and managing directors and directors 25.
Alaska Airlines has cut capacity by -80 percent in April and May and expects further extensive reductions in June. It has parked 156 mainline aircraft.
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.
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.
The Canadian airline has announced the suspension of all its transborder US and Hawaiian plus all international services from March 22. It negotiated a restructuring with pilot union ALPA that saves 1.000 jobs out of 1.700 that were laid off in April.
Canada’s Air Transat will suspend its services until May 31 following the government’s travel ban. It continued to operate a range of repatriation flights until April 1. As a consequence, the airline has retired its Airbus A310s from service.
Emirates has parked 72 A380s at Dubai World Central.
Turkish Airlines plans to resume operations to 19 destinations from June, having suspended all international operations from March 27. Initially, it operated a reduces passenger schedule but mostly cargo-only flights. Domestic services operated at reduced frequencies until April 8 until they were suspended, but these will be restarted too at 60 percent capacity. Turkish hopes to offer 99 destinations by September again.
Emirates will resume more passenger services from May 21 to nine destinations, including London, Frankfurt, Paris, Madrid, Milan, Chicago, Toronto, Sydney, and Melbourne. Passengers will only be accepted if they comply with entry requirements of their destination countries.
Services will be operated by the airline’s Boeing 777s as the 115-strong Airbus A380-fleet remains grounded until July.
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 both its full freighters and part of the 777 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. “We continue to watch the situation closely, and as soon as things allow, we will reinstate our services.”
Emirates had grounded all its 115 Airbus A380s, of which 72 at Dubai World Central.
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. President Sir Tim Clark and dnata’s Gary Chapman will take a salary cut for three months.
Asked if Emirates had decided on any fleet deferrals or cancellations, a spokesperson tells Airinsight: “We are not disclosing future fleet plans with the media at this time.”
Emirates’ little sister airline flydubai joined the other airlines in the UAE and has 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.
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.
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.
Royal Jordanian has suspended all flights from March 17 until May 25.
Qatar plans to expand its passenger network to 52 daily flights by the end of May and to 80 by the end of June, it said on May 6. From May 20, it will restart three-weekly flights to Brisbane.
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.
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, the airline of Bahrain, has suspended various routes from March 18, in addition to previously announced suspensions to Saudi Arabia, Kuwait, Pakistan, Morocco, Lebanon, and Jordan. Bahrain itself has imposed strict immigration rules for non-Bahraini nationals. The airline resumed flying by operating repatriation services for Bahraini nationals in mid-April.
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 has also suspended all services. The airline offered its fleet to the government for repatriation flights to bring Kuwaiti home. Jazeera also operates cargo-only services.
Saudia has suspended all domestic services from March 21. This follows on the suspension of all international flights since March 15, initially for two weeks too until March 29. Earlier in March, the Saudi government-imposed travel restrictions for nationals to a number of Middle East countries.
Israels El Al has been operating repatriation services only since mid-March and continues to do so for the rest of May. 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 has announced its plan to launch first services on June 3. 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)
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.
The Civil Aviation Authority of China (CAAC) has imposed a restriction on international passenger flights from March 29, limiting Chinese and international airlines to one flight per carrier per week. Cargo services are not included in this ruling and may use passenger aircraft for cargo-only services.
This way, China tries to prevent the coronavirus to enter the country again through international traffic as has already happened.
As a consequence, China Southern has opted to operate its A380 from Guangzhou to Amsterdam on April 3, 10, and 17.
Domestic air travel in China is resuming more each day as travel restrictions have been reduced or even lifted completely.
Japan’s All Nippon Airways announced reductions on March 25, saying another 656 flights to 19 destinations will be cut until April 24. By late March, the airline has suspended some 2.800 international and almost 2.700 domestic flights.
Affected flights include San Francisco and Chicago, but also the airlines’ prominent A380-services to Hawaii. Also affected: Bangkok and its European network except for a reduced schedule to London and Frankfurt.
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 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 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 within the next two or three months.
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.|
The Hong Kong-airline has been operating at just three percent capacity in April and May. Its March traffic dropped by 90 percent, in April pax numbers were down -64 percent. On one day in March, it flew just 302 passengers compared to an average of 100.000 a day in normal circumstances. This improved only slightly to 500 a day in April.
Cathay had already reduced capacity for April and May to just 4 percent, back then leaving an international network that included just one destination in Europe (London), one in the US (Los Angeles), plus Canada (Vancouver). Cathay Dragon’s network is reduced to services to Beijing, Shanghai, and Kuala Lumpur.
The airline is doing anything to preserve cash. It will lay off almost 500 cabin crew based in the US, UK, and Australia, Reuters reported on April 16. To generate cash, Cathay sold six Boeing 777-300ERs in March in a sale and leaseback for $704 million. It also has expanded its cargo activities by offering capacity onboard passenger aircraft on a dedicated schedule.
Most Indian airlines like IndiGo, Go Air, and Air India have resumed operations from May 4 in a phased manner, at first only offering domestic services. International flights will follow later and are bookable from June 1 with Air India.
India has been in a three-week lockdown for most of April that affected all airlines that restricted operations to cargo-only flights.
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 will resume 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.
International operations will remain very limited until May 31 as capacity is still down -95 percent. The remaining schedule Sydney, Melbourne, and Brisbane, three destinations in the Pacific, and long-haul services to Los Angeles, Shanghai, and Hong Kong.
Qantas is operating its Domestic schedule at 5 percent capacity and International at just 1 percent. The airline expects this to continue until August but hopes of a relaxation of restrictions that will open up Domestic traffic a little sooner, it said on May 5. Qantas and Jetstar have been able to operate a limited Domestic schedule of 105 to 164 flights a week thanks to government funding for essential routes.
As most restrictions continue, Qantas will stand down some 25.000 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 and its subsidiary airlines have cut capacity by 96 percent until late April and will extend this until late June. SIA and Silk Air have grounded 138 of 147 aircraft, with Scoot 47 of 49. This leaves only 4 percent capacity for domestic services.
SIA secured additional funding on March 27. It has 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.
Like other airlines, SIA is seeking cost savings by opening new credit facilities. Singapore is negotiating with airframers about deferral of upcoming aircraft deliveries. Management and directors have received a pay cut and are asked to take up voluntary leave. The Group has advised unions about drastic measures it has to take in order to survive.
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 is hopeful it will return to service at a later date.
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 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.
For April, LATAM has cut capacity on its international network by 95 percent and on domestic operations by 40 percent. It will maintain this level for May, offering only three weekly services between Sao Paolo and Santiago to Miami.
LATAM increased its cargo schedule to Europe by 40 percent and by 15 percent to Miami.
Brazil’s GOL has reduced its domestic network for Q2 by -75 percent, 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.
In view of the expected reduction in future demand for air travel, GOL has canceled 34 Boeing MAX 8s on order.
South African Airways:
South African 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 airline had suspended all international operations until May 31 and all domestic services until April 16, following the national lockdown for three weeks imposed by the government. Despite the urgent situation, SAA says it will continue to operate repatriation flights in May and beyond.
CEO Zuks Ramasia announced her resignation of the stricken airline from April 14.
The 4.800 staff have until May 1 to accept retrenchment packages after last weekend it was decided no application for liquidation would be made.
Ethiopian has suspended flights to 30 countries. It has concentrated on cargo-only flights since then, shipping medical supplies.
Kenya Airways has suspended all international flights from March 25. This follows on a government directive to ban all incoming international passenger flights. Previously, the airline planned to reduce capacity by 70 percent. Cargo flights will continue.
In March, IATA recorded an average drop in air travel in RPKs of 52.9 percent, the largest decline in history. International traffic was down 55.8 percent.
The International Civil Aviation Organization (ICAO) expects there will be some 1.5 fewer air travelers this year resulting in $273 million in lost revenues.
In April, IATA said it expected airlines to lose 55 percent of their revenues this year compared to 2019, or $ 314 billion. The association of airlines revised its previous guidance which was expecting a drop in revenues of $252 billion.
The forecast is based on severe domestic restrictions that will last for three months and international restrictions that will last even longer than three months. Also, Covid-19 has a deeper impact on air travel in Africa and Latin America compared to the previous guidance of March 24.