Aviation Industry Updates: November 3, 2020

American Cuts 100,000 Flights in December | What Does This Mean for 2021?

KEY POINTS:

• American Airlines is cutting its December schedule by nearly 50%, removing more than 100,000 flights for the holiday season “in an effort to match the low demand resulting from coronavirus.”

• December is typically an important month for airlines, giving them a welcomed traffic boost between Thanksgiving and New Year’s after slow leisure demand in the “shoulder months” of September and October and before another slow period until spring break.

• While American’s biggest hubs at DFW International Airport and Charlotte were cut less, the carrier eliminated nearly all of its flights at JFK and LaGuardia airports in New York, along with steep cuts at hubs at Chicago O’Hare, Philadelphia and Los Angeles.

• The cuts in New York aren’t surprising considering that the state and neighboring New Jersey and Connecticut have one of the country’s most aggressive set of travel restrictions, requiring people from most of the country to quarantine for 14 days after arrival.

• American is leaving in a few more flights in the second half of December as it does expect slightly stronger travel demand around the Christmas holiday.

• “In December, our schedule will be approximately 50% smaller than the same time period last year, with the exception of the last two weeks of the month, which will be approximately 45% smaller than the same time period last year during the holiday peak."

• Transportation Security Administration passenger screening numbers show that airline traffic is still around 36% of what it was a year ago. More than a million passengers went through screening checkpoints on Oct. 18, the last day of fall break for millions of school-age children and their families in the southern part of the country.

Dallas News

SkyWest Strikes New American & United Deals | How Will Other Regionals Compete?

KEY POINTS:

• Regional carrier in the United States, SkyWest, has turned a profit for the third quarter of 2020.

• While the airline is not out of the woods yet, it has reached new agreements with American and United on regional flying.

• SkyWest Airlines bolstered its liquidity in the third quarter. The airline entered into a $573 million agreement with the US Department of Treasury for a five-year secured loan facility. This increased to $725 million in October amid other airlines pulling out of loan agreements with the Treasury Department.

• SkyWest entered into an agreement with American Airlines on October 29th to place 20 used CRJ700s under a multi-year flying contract. The airline will be using 20 of its own aircraft that are not currently under contract with a partner.

• American Airlines is working on upgauging its regional fleet, so the CRJ700s will be a great opportunity for plenty of regional destinations that traditionally see CRJ service.

• SkyWest has entered into an agreement to acquire 21 used CRJ550s. These premium 50-seater aircraft will not fly under SkyWest. While the airline will own the aircraft, it is leasing them out under a multi-year agreement for another regional airline that operates United’s regional brand called United Express.

• Four new E175 aircraft, which will be financed and operated by SkyWest, will be delivered in the fourth quarter that will fly for Delta under their regional arm, Delta Connection. One new CRJ900, financed by Delta but operated by SkyWest, will come to the airline in 2021.

• Heading into the fourth quarter, SkyWest should also be in a good position to turn a profit, or at least narrow losses. With the Thanksgiving and December holiday periods coming up, SkyWest will be doing plenty of more flying than the second or third quarter, which will help the airline’s bottom line.

Simply Flying

Southwest Union Tells Employees Warn Act Notices Could Be Coming

KEY POINTS:

• Southwest Airlines is asking union employees to take 10-percent pay cuts. The Dallas-based airline says these pay cuts are necessary to prevent furloughs and layoffs through 2021.

• Some of the largest unions which represent Southwest employees are telling members they are not interested in contract concessions, according to multiple communications between union leadership and members viewed by the Dallas Business Journal. One union recently told members WARN Act notices could be forthcoming.

• "Your negotiating team believes that the company will continue through the process of issuing notices of potential furloughs as required by the WARN Act, even if those notices are not followed by furloughs," TWU Local 556 told members after an Oct. 27 negotiation session with the company.

• Southwest's offer of 10 percent pay cuts in exchange for a commitment to no furloughs or layoffs through 2021 "rang hollow when it was immediately qualified with, 'barring unforeseen or uncontrollable circumstances,'" leadership from the Aircraft Mechanics Fraternal Association, which represents about 2,700 Southwest mechanics, told members earlier this month in a memo.

• The Southwest Airlines Pilots Association also expressed concern with the force majeure provision. "That language is wholly unnecessary as SWAPA pilots will work collaboratively on solutions that are favorable to both parties, just as we have always done at Southwest Airlines, should 'unforeseen or uncontrollable circumstances' arise," said SWAPA leadership, which represents about 10,000 Southwest pilots, in an Oct. 21 message to pilots.

• But as the calendar nears 2021, traffic is still not at levels high enough to support enough work for Southwest's roughly 60,000 employees.

• "Right now, in just very raw numbers, we're roughly 20 percent overstaffed," Kelly said in the company's third quarter earnings call Oct. 22.

Dallas Journal

American Returns to Shanghai | Is International Travel Picking Back Up?

KEY POINTS:

• The Oneworld alliance carrier will offer a weekly flight to Shanghai Pudong (PVG) from Dallas/Fort Worth (DFW) with a stop at Seoul Incheon (ICN), American spokesperson Nichelle Tait confirmed to TPG. The airline plans to fly a Boeing 787-9 on the route beginning Nov. 8

• American’s return to China comes even as travel between the two countries remains off limits for most. Beijing limits international arrivals to only its citizens. Delta Air Lines and United Airlines have both resumed limited flights citing strong cargo demand between China and the U.S.

• All three carriers continue to fly a fraction of their pre-COVID schedules. American plans to fly about half of what it flew a year ago in November and December, according to Cirium schedules.

• Following the resumption of Shanghai flights, American plans to return to Beijing in March. The carrier will serve the Chinese capital’s new Daxing (PKX) airport that is a hub for its partner China Southern Airlines.

The Points Guy

Weekly TSA Numbers | Prepping for Holidays or Staying At Home?

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