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…

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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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• “U.S. Department of the Treasury concluded Payroll Support Program agreements with Allegiant Air, American Airlines, Delta Air Lines, Southwest Airlines, Spirit Airlines, and United Airlines.”

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• 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

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• 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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• 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

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• 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

KEY POINTS:

• Check NOTAMS as each airport’s condition will be different

• Pilots should be alert for ILS inaccuracies due to potential ground interference

• Report any navigation issues immediately so maintenance can check system health

• Be careful while taxiing, whole airports are now a hot spots Read More

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