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Aviation Industry Updates: April 26, 2020


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


  • “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.

>> Click here to read the entire article by Tomi Kilgore of MarketWatch

Don’t Count on Airlines to Fully Recover for 3 Years: Delta CEO



  • “Air travel will not rebound to pre-pandemic levels for another three years, Delta Air Lines CEO Ed Bastian warned analysts during the company’s first quarter earnings call on Wednesday. “Demand for near-term air travel dropped to almost zero in a matter of weeks,” he said.”
  • “Safety will not be limited to flight safety, but [will expand] to personal safety,” Bastian said. “People will pay a premium on service excellence like never before.”
  • On aircraft disinfectant procedures and social distancing practices such as blocking middle seats Ed Bastian states: “It is too soon to determine if these measures will be permanent, he cautioned. “This recovery will take years. We will spend some time in the future to figure that out.”
  • “The pandemic has forced Delta to ground more than 650 aircraft of its roughly 850-aircraft fleet, and is accelerating the carrier’s fleet retirements. Some of those grounded aircraft, including the MD-80 fleet, will not return to service. The airline may permanently retire its MD-90 fleet and is considering removing some Boeing 757s and Boeing 767s and some regional jets from its roster. In addition, Delta is not taking delivery of new aircraft, except for those that have been fully financed and paid for already. With such a large chunk of its fleet currently grounded, the carrier doesn’t need any new aircraft.”
  • “Although not speaking specifically about Delta’s partners, Bastian said he expects to see some airlines cease operations altogether or declare bankruptcy. International travel will recover slowly, which will affect when or if Delta returns to its previous international strategy.”
  • “As part of the deal for taking the grants, Delta, like all airlines, cannot lay off or furlough staff through Sept. 30. Bastian made no prediction about future staffing, although he did say the airline will be “smaller.””
  • “Delta reported a $534 million net loss in the first quarter, down from a $730 million net profit in the first quarter of 2019. Operating revenue plunged 18 percent from 2019 to $8.6 billion.”

>> Click here to read the entire article by Madhu Unnikrishnan of Skift

Slow Recovery Needs Confidence Boosting Measures



  • “In some economies, the spread of COVID-19 has slowed to the point where governments are planning to lift the most severe elements of social distancing restrictions. But an immediate rebound from the catastrophic fall in passenger demand appears unlikely. People still want to travel. But they are telling us that they want clarity on the economic situation and will likely wait for at least a few months after any ‘all clear’ before returning to the skies.”
  • ““Passenger confidence will suffer a double whammy even after the pandemic is contained—hit by personal economic concerns in the face of a looming recession on top of lingering concerns about the safety of travel. Governments and industry must be quick and coordinated with confidence-boosting measures,” said Alexandre de Juniac, IATA’s Director General and CEO.”
  • “IATA estimates that some 25 million jobs in aviation and its related value-chains, including the tourism sector, are at risk in the current crisis.”
  • IATA’s survey suggests that passengers are cautiously optimistic about travel stating “60% anticipate a return to travel within one to two months of containment of the COVID-19 pandemic but 40% indicate that they could wait six months or more...69% indicated that they could delay a return to travel until their personal financial situation stabilizes.”
  • “This is an emergency. Airlines around the world are struggling to survive. Virgin Australia which entered voluntary administration demonstrates that this risk is not theoretical. Governments will need financially viable airlines to lead the economic recovery. Many of them won’t be around to do that if they have run out of cash. The number of governments recognizing that relief measures are needed is growing. But the crisis is also deepening.”
  • “Passenger revenues are expected to be $314 billion below 2019 (-55%) and airlines will burn through about $61 billion in liquidity in the second quarter alone as demand plummets by 80% or more.”

>> Click here to read the entire press release from IATA

Southwest Airlines Chief Urges Pay Cuts With Air Travel Almost at a Standstill



  • “Southwest Airlines chief executive Gary Kelly told employees he would prefer an across-the-board pay cut to more dire scenarios - such as the first involuntary furloughs in the company’s history.”
  • “While Southwest has cash reserves of about $3.2 billion (Dh11.74bn) in government payroll aid to survive the coming months, he encouraged workers to “fight like we have never fought before” to lower costs.”
  • In his message Gary Kelly stated, “If things don’t improve dramatically over the May-June-July time period, we’ll have to prepare ourselves for a dramatically smaller airline.” Adding, “I am not predicting that. But life can be very humbling and clearly this is a lesson that we are not in control of this coronavirus and how many people choose to fly.””
  • “If Southwest has to shrink, it will first seek volunteers to retire early, take extended time off or accept voluntary furloughs, Mr Kelly said. If the airline is still burning through cash at that point, it would try to push through reductions in benefits and then in pay before resorting to involuntary furloughs, he said.”

>> Click here to read the entire article at TheNational

Magma Global Travel Releases ‘Travel Post COVID-19’ Survey Results

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