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Aviation Industry News

Aviation Industry Updates: April 29, 2020

By Industry News

How is the CARES Act hurting airlines’ futures?

The stringent rules accompanying the CARES act grants are potentially strangling airlines’ futures.  Their ability to cut back on routes now could prove useful in the Fall but the denials from the DOT are painting a grim picture for both the current situation and future planning.  Forcing airlines to maintain routes that are not currently supporting a traveling public puts into question the sustainability of the airline when the funding is exhausted.  But not everyone is receiving the same treatment…

KEY POINTS:

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Aviation Industry Updates: April 26, 2020

By Industry News

Skywest to Receive $438 Million in Payroll Support Under the Cares Act

KEY POINTS:

  • “Skywest Inc. said Friday it has reached agreement with the U.S. Treasury Department to receive $438 million under the Payroll Support Program as part of the CARES Act.”
  • “$337 million will be in the form of a direct grant and $101 million will be in the form of a 10-year loan.”
  • “These funds will cover important payroll expenses as we work together with our people to provide critical air service during this difficult time, and prepare for when demand returns,” said Chief Executive Chip Childs.

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Aviation Industry Updates: April 20, 2020

By Industry News

Southwest Pilot Union Discusses “Massive Layoffs” if Bailouts Not Extended

KEY POINTS:

  • SWAPA released a detailed eight-page document outlining the state of Domestic Airlines related to the CARES Act, including funds received and health of the various pilot groups; furloughs, leaves, and bankruptcies. Additionally, SWAPA compares demand to other crisis events, Wall Street forecasts, major airline financial facts, and their predictions for the future of the industry.
  • “Overall, it is expected that business travel should recover faster than leisure travel, although incremental structural shifts amid the accelerated development of new communicator tools such as Zoom may prove to be an effective substitute for some traditional face-to-face meetings. Consumer confidence in flying will take time to recover fully, but medium-to-long term fundamentals for leisure travel still exist. Short-haul travel likely to be more favored in the near-term as many passengers could plan short and simple getaways after being housebound for an extended period of time.” Read More

Aviation Industry Updates: April 15, 2020

By Industry News

U.S. Airlines Reach Agreements for Federal Stimulus Aid

KEY POINTS:

  • The Cares Act protections are less of a grant and more of a loan with additional strings attached.
  • CARES Act funding for payroll only backs approximately 76% of payroll based on expenses from late 2019. This despite most airlines having experienced growth through COVID-19 halting air-travel.
  • Due to higher demand than expected, the award amounts are smaller than required for individual airlines. In the end, the awards were significantly scaled down.
  • While the purpose of this capital injection is to protect jobs, certain CEO’s have pivoted to discussing how these bailout funds will help their passengers vs focusing on how they will protect their employees.

CARES Act Stimulus Awards

*at time of publishing not all Airlines had released their stimulus package amounts; Raven will update as information becomes available

>> Click here to read the entire article written by Michael B. Baker of Business Travel News

Analysts Estimate Up To 1,000 Aircraft Could Be Retired In 2020

KEY POINTS:

  • Becker believes that US airlines will retire between 800 and 1,000 aircraft this year, leading to a much smaller aviation industry than was previously seen.
  • She predicts huge job losses in the sector too, signaling that many of the furloughs that we’re seeing now may well evolve into permanent layoffs. “We believe airlines will be 30% smaller at the end of his year than they were at the start of the year. Also, we expect there will be between 100K and 200K fewer employees at the end of the year than there were at the beginning of the year.” [Click here to read quotes from Delta and United that reinforce this analysis]
  • If Becker’s prediction is right, we could see many more aircraft from the fleets in the US disappearing by the end of 2020. “While many of these will be temporary storage, many of these aircraft will never resume service. We believe the airline industry will look very different when we get to the other side of this.”
  • As well as her take on the shape of the US fleet in the future, Becker has made one of the most damning predictions to date for the return of air travel demand. She told Seeking Alpha, “Demand is 5% of what it was in February, and we continue to believe it will take 3 to 5 years for domestic demand to return to 2019 levels and 4 to 6 years for international demand to get back to those levels.”

  • The author of the article summarizes: “While we may see an uptick in aviation activities before the end of the year, it’s going to be a long, long time before we see the type of demand that was typical of pre-coronavirus, if it ever comes back at all.

>> Click here to read the entire article written by Joanna Bailey of Simple Flying

Video Interview: Tom Nealon, President Southwest Airlines

Watch as Tom Nealon is interviewed by the Global Business Travel Association on how Southwest is performing in these unprecedented times. How does this compare to previous downturns like 9/11 and 2008? How does Southwest see the future? Plus much more from a top executive in the know.

“We don’t want to furlough employees, we don’t want to ground airplanes [and] we don’t want to close cities. All of that depends on passengers and air travel returning.”

Additional Resources

How Does the Coronavirus Compare to 9/11?

How to Survive Disruptive Change

Are Furloughs Coming?

What Should Pilots Do In These Uncertain Times?

Aviation Industry Updates: April 12, 2020

By Industry News

GoJet Threatens 75% Furlough | What Does This Mean For Other Regionals?

KEY POINTS:

  • Rick Leach, President and CEO of GoJet Airlines, published a memo to the pilots of GoJet Airlines on April 9th, updating them on the consequences surrounding the CARES Act.
  • With demand for GoJet’s new 50-seat CRJ-550 down by around 90%, the airline has seen reductions in flying from their partner United Airlines over 60%.
  • Mr. Leach states that while GoJet applied for assistance under the CARES Act the process is “lacking clarity” around their qualifying status; how much support is unknown and when they would actually receive funding.
  • Mr. Leach expresses fear that the Treasury department may not be appropriately considering the way regional airlines operate and that GoJet must begin preparing for the possibility of no funding. If this is true, GoJet isn’t the only regional in danger of collapse.

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Aviation Industry Updates: April 8, 2020

By Industry News

How Long Will Us Airlines’ Cash Last? It Depends on the Carrier

KEY POINTS:

  • The industry has enough cash to cover its bills for an average of 7.9 months, the report on April 5 finds.
  • The analysis finds that American Airlines only has enough cash to cover only about 4.8 months of expenses while regional SkyWest Airlines has cash to cover nearly a year.
  • “…why [are] many airlines, to the annoyance of numerous travelers, are issuing certificates for the value of cancelled trips rather than offering refunds. The goal is to hold onto as much as cash as possible.” Read More

Aviation Industry Updates: April 5, 2020

By Industry News

Skeleton Schedules | Voluntary Temperature Monitoring
Plus More – Briefings From Union and Airlines Leadership

KEY POINTS:

  • In a letter penned on April 2nd, Delta’s SVP of Flight Operations John Laughter writes, “with essentially no passenger revenue, and even with all of the cash savings measures we’ve already taken, our spending over the next three months is almost $5 billion. That’s roughly the equivalent of the entire federal assistance we expect to receive… This one-time cash infusion from the Federal Government helps us in Q2, but in Q3 and beyond we are on our own. Click here to read his full letter to Delta pilots.
  • Here’s the highlights from Scott Kirby’s United employee town hall briefing: United spends $1 billion a month on payroll. They expect to get a little north of $5 billion in grants. That gets the company through September/October. The goal in the October timeframe is to have a cash burn of zero (that does not mean profit). If demand is still down 50% then costs will have to obviously be reduced to compliment demand.
  • Concerned bailout money may be misused, ALPA and Teamsters penned a letter to Steve Mnuchin, Secretary of the Treasury, on April 3rd. Wanting to ensure federal funds are quickly released, get to employees wallets, and are subject to oversight, union leaders plead their case to have the Secretary step in quickly and clarify certain CARES Act language. Click here to read the full letter including all of their requests. Read More

Weekly Aviation Industry Updates: March 29th, 2020

By Industry News
Now is not the time for counterfeit sincerity or selling products and services. It is, however, the time for us to collectively figure out how to calm down, avoid hurting each other, and start getting ready to pick up the pieces when this is all over. On that note, how do we make safe decisions in the midst of chaos? How do we know we’re making the right decisions? What are 5 things you can start doing immediately to protect yourself, your family, and your livelihood?

This week, like last week, has brought increasingly disastrous news with a few glimmers of positivity. Here’s the latest:

**Information is constantly changing, and we will continue to update as we progress** Read More