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Aviation Industry News

Aviation Industry Updates: March 2, 2021

By Industry News

Delta Bringing All Pilots Back To Active Flying Status | New Bid Assignments Posting March 5

KEY POINTS:

  • The Atlanta-based carrier is gearing up for recovery and plans for all affected pilots to have an active status by October of this year.
  • Delta SVP and COO John Laughter shared that his company is seeing hopeful trends as the vaccine rollout continues. Nonetheless, his team remains cautiously optimistic about the future of travel demand and the industry’s recovery.
  • “Looking ahead, we’re preparing to potentially build back to 2019 levels of flying by summer 2023. With that projection in mind, we will post an Advanced Entitlement on March 5th that will begin the process to return all remaining affected pilots to active flying status by October. Bob Schmelzer will provide full details about the AE in a memo soon. This decision is a significant step to position Delta for the network recovery and supports projected customer demand,” Laughter said in the memo.
  • This move is to help the airline prepare for growth in future flying, as it looks to anticipated customer demand in 2022 and 2023.
  • Delta’s teams have to build in time to train pilots on the aircraft needed to fly the planned increased flight schedule – this process takes several months.
  • In December 2020, Delta pilots ratified an agreement to protect all pilots from furlough. The pilots returning to active flying are those who were designated into a No-Fly status (while still employed with Delta).

Simple Flying

Survey Says: 38% of Americans Vote Giving Up Sex For Traveling Again

KEY POINTS:

  • Desperate vacationers said they would willingly give up love, sex or money in exchange for a trip, according to a recent survey by travel search site Trivago.
  • To that end, nearly half, or 48%, would give up their job, 38% would give up sex for a year, one-quarter would fork over all of their savings and 1 in 5 said they would dump their partner if it meant they could take a trip in the near future.
  • Undoubtedly, the last 11 months have taken a toll. In 2020, an overwhelming majority of Americans shortened, postponed or canceled their planned time off.
  • At the same time, the average workday lengthened by nearly an hour, according to a working paper published by the National Bureau of Economic Research.
  • Now, more than half of U.S. consumers said they will take a vacation later this year, but that also largely depends on vaccinations.
  • But that doesn’t mean Americans are set to jet off to an exotic locale. Most said their idea of a “dream vacation” was now the opportunity to spend time with friends and family.

CNBC

Vaccine Distribution | Will This Affect International Travel?

KEY POINTS:

  • The rollout of vaccines against the coronavirus (Covid-19) has started in developed countries, but mass immunization will take time.
  • Production represents the main hurdle, as many developed countries have pre-ordered more doses than they need.
  • The costs associated with mass immunization programs will be significant, especially for less-developed countries that have limited fiscal resources.
  • Vaccine diplomacy will play a role in determining which countries get access to a vaccine in the coming months.
  • Russia and China will use the rollout of their own coronavirus shots to advance their interests.
  • With priority groups vaccinated in rich economies by end-March, The EIU expects global economic prospects to brighten from mid-2021.
  • For most middle-income countries, including China and India, the vaccination timeline will stretch to late 2022.
  • In poorer economies, widespread vaccination coverage will not be achieved before 2023, if at all.

Economist Intelligence Unit

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United Orders More Boeing 737 Max’s | Shrewd Move or Overconfidence?

KEY POINTS:

  • United Airlines said on Monday that it was adding 25 planes to its order for Boeing’s 737 Max jet, bringing its total to 180 in the coming years, and that it had sped up the delivery timeline as it seeks to position itself for the expected recovery in travel.
  • “These new aircraft are going to allow us to be more competitive,” said Andrew Nocella, United’s chief commercial officer. “It’s the right aircraft at the right time.”
  • United plans to use the jet throughout North America and in Hawaii, replacing smaller planes as demand returns, Mr. Nocella said. And the plane will help United restart its strategy of strengthening connections at hub airports in the middle of the country, in Houston, Chicago and Denver, he said.
  • The Max has a list price of more than $120 million, but often sells for less, particularly in large orders. Industry analysts say airlines have leverage to bring that price down further as the travel slowdown eased pressure to build up fleets.
  • Unlike its competitors, United did not remove planes en masse from its fleet throughout the pandemic, part of a strategy aimed at making sure it had maximum flexibility as travel recovered, Mr. Nocella said. With another round of federal payroll aid for the industry seeming likely, United will also be able to retain much of its work force through September.
  • Mr. Nocella said United hoped to reach an “inflection point” late in the year, after which the recovery in travel would accelerate rapidly.

New York Times

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Aviation Industry Updates: February 16, 2021

By Industry News

U.S. House Approves $14 Billion Proposal | Are Airlines Drunk On Stimulus?

KEY POINTS:

  • A U.S. House committee on Thursday approved a proposal to give airlines another $14 billion in payroll assistance as part of a broader COVID-19 relief package that is working its way through Congress.
  • It would be the third round of support for the pandemic-hit industry. American Airlines and United Airlines have warned of some 27,000 furloughs without an extension of the current package that expires on April 1.
  • The funds will be included in the $1.9 trillion COVID-19 relief bill proposed by President Joe Biden, whose initial plan did not include new money for airlines.
  • American Airlines said in a statement after the committee vote that the payroll support program, which covers employee wages and bans job cuts, “has been a lifeline for our team members.”
  • The Air Line Pilots Association, the largest pilot union in the world, said the funds “would help prevent the additional financial devastation that would result from the aviation industry being forced to furlough tens of thousands of workers.”

Reuters

Spirit Airlines | Hiring Pilots For Growth

KEY POINTS:

  • Spirit plans to resume new pilot and flight attendant training courses next month for the first time since early in the pandemic.
  • “We’ll be a big hirer again,” CEO Ted Christie said Thursday. “Growth in the airline industry is going to be at the leisure end, and we’re the primary server of that guest.”
  • “Our training footprint can only handle so much, so it has to be phased,” Christie said of the company’s hiring plans.
  • Spirit, like others, is now hoping that the rollout of vaccines will help spur a revival in air travel. The airline expects to get back to 2019 capacity levels by midyear, it said.
  • Spirit and other airlines saw weaker-than-expected demand as Covid cases rose late last year and at the start of 2021, as well as a slow start to vaccine distribution. New travel restrictions such as Covid test requirements for international, U.S.-bound flights also hurt bookings.
  • When asked whether he supports additional aid even though the airline is hiring, Christie said: “Our industry needs to be fair in all cases, so there can’t be selective aid. To the extent that the government does decide to either extend the existing program or modify it, then I think it is to be expected that all airlines would be a beneficiary there.”
  • Scott Harrelson, Spirit’s CFO, was quoted on the Spirit Earnings Call listen here as saying: “Well, we haven’t talked about capacity for 2022 yet. I mean, you could use, sort of fleet growth as a proxy for that. We have our fleet numbers out there. We have – we’ve grown the airline, 16 aircraft last year, will grow at 16 this year, and 17 in 2022. So you can sort of do the proxy for capacity. But we haven’t given a number yet.”

CNBC

American Weighs Return To Debt Markets | Will This Effect Bankruptcy?

KEY POINTS:

  • American Airlines Group Inc. is weighing a return to the debt market as soon as March to help pay back loans from the U.S. government that have helped keep the company afloat through the pandemic.
  • Goldman Sachs Group Inc., which last year helped United Airlines Holdings Inc. use its frequent-flier program to backstop new debt, is sounding out potential credit investors in a debt deal for American, according to people familiar with the matter. American, which backed a $7.5 billion U.S. Treasury loan with its frequent-flier program, is considering doing the same with its new debt, said the people, who asked not to be named because the matter is private. Terms are still fluid and could change, they said.
  • The airline, which borrowed under both the government’s payroll support program and a rescue lending package for carriers, is still deciding which of its government debt will be paid off in the refinancing, some of the people said.
  • American got another boost recently after its stock was swept up in a rally among heavily shorted equities being targeted by an army of traders on Reddit’s Wall Street Bets forum — jumping as much as 31% during a trading session last month. Amid the trading frenzy, the airline announced plans to sell up to $1.1 billion of shares.
  • American’s AAdvantage loyalty program has an assessed value of $18 billion to $30 billion, American said in May, when it was negotiating with the Treasury Department to use at least part of the asset as collateral for the loans.

Bloomberg

Bastian Blasts Biden | Calls Negative Test Requirement “A Horrible Idea”

KEY POINTS:

  • Rumors began circulating last week that the White House might begin requiring a negative test for travelers looking to fly domestically within the U.S.
  • Shortly after these rumors began circulating, Delta CEO Ed Bastian was on CNN discussing why this would be a horrible idea.
  • The White House said on Friday it was not planning to require people to take COVID-19 tests before domestic airline flights after the prospect of new rules raised serious concerns among U.S. airlines, unions and some lawmakers.
  • Late on Friday, a spokeswoman for the Centers for Disease Control and Prevention said, “at this time, CDC is not recommending required point of departure testing for domestic travel.” She added the CDC “will continue to review public health options for containing and mitigating spread of COVID-19 in the travel space.”
  • CDC said last month the agency was “actively looking” at expanding mandatory COVID-19 testing to U.S. domestic flights.
  • Psaki spoke after the chief executives of major U.S. airlines, including American Airlines, Southwest Airlines and United Airlines, met virtually with White House COVID-19 response coordinator Jeff Zients.
  • Southwest Airlines warned such a requirement could put jobs at risk and a major aviation union said it could lead to airline bankruptcies.
  • One idea that has been under serious consideration is for the CDC to issue recommendations advising against travel to specific areas of the United States with high COVID-19 case loads, although those travel recommendations would not be binding, officials said.
  • The CDC currently has a broad recommendation discouraging all nonessential air travel.

Reuters

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Aviation Industry Updates: February 2, 2021

By Industry News

Spirit Changes Business Model | It’s Just Basic Math

KEY POINTS:

  • As the scope of the pandemic became clear last year, the ‘aha’ moment came to the executive team at Spirit Airlines when they realized they could no longer focus on maximizing unit revenue.
  • Now, it had to focus on maximizing earnings before interest, taxes, depreciation and amortization (EBITDA), a very different challenge, given the industry’s high fixed costs and the steep drop in travel it faced in 2020.

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Aviation Industry Updates: January 19, 2021

By Industry News

American + JetBlue Alliance | Time For SCOPE 2.0?

KEY POINTS:

  • The outgoing administration has approved a joint venture between American Airlines and JetBlue that could drastically reduce competition at busy airports in cities such as New York, Boston and Washington, D.C. — drawing objections from rival carriers, antitrust experts and members of Congress.

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