Avianca Holdings files for bankruptcy

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According to simplefying.com Avianca Holdings, the parent company of Avianca has filed for Chapter 11 bankruptcy in the United States. The proceedings are intended to protect the airline from creditors and allow the company to reorganise which, it is hoped will save much of Avianca’s business structure as possible.

Chapter 11 will allow the airline time to pay its debt back, while still keeping the company intact. The impact of COVID-19 has had a major impact on the airline’s operations resulting in hundreds of flights being cancelled. The airline intends to restructure through a court-supervised process. The plan for Avianca is to continue to provide air transport while this process takes place. As one of the largest airlines in Latin America, the loss of the operator would have a major impact on the South American continent.

Avianca has stated that it plans to maintain essential services to South America and North America.  The airline will continue to seek financing assistance from the Colombian government.

Wizz Air makes a move on Gatwick

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While some airlines like Virgin Atlantic and British Airways have revealed that they are pulling out of Gatwick, Wizz Air has announced it’s planning to increase operations from the airport.

The LCC, which has placed orders for a significant number of new aircraft , with 268 Airbus A320s due over the next few years including 20 long-range A321XLR models. As a result of this the carrier is keen to establish new routes and regards Gatwick as part of this process, as the airport provides international facilities but at a lower cost.

Wizz tried to purchase slots at Gatwick via the sale of Thomas Cook, but lost in a bidding war for these.

Although CEO Jozsef Varadi has declined to comment on how big the airline’s operation will be at Gatwick, it could be double the size of current operations at Luton. One option may see several A321XLR types operate from the airport for long-haul flights to the Middle East.

Boeing prepares to resume 737 MAX production?

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Boeing has asked its largest supplier of 737 MAX parts, Spirit AeroSystems to restart manufacturing in anticipation of the aircraft manufacturer resuming production on its regional airliner. But Boeing has already stated in earlier press releases that the output of the MAX will be significantly lower than what was envisioned pre-pandemic.

According to simpleflying.com reports surfaced in March, that Boeing was intending to restart its MAX assembly line in May, although this has been open to interpretation given the current climate. But is now appears that this prediction was correct with work set to start at the Renton, Washington facility.

Spirit is keen to get back into production, as the company derives more than 50% of its revenue from the MAX. According to Boeing’s latest figures it expects to produce up to 31 aircraft per month through to mid-2021.

Editor’s Comment: Lag times and looking to the future

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It’s now a familiar story as yet another airline has announced that it is delaying the delivery of its Boeing 737 MAX aircraft. United Airlines is to halve the number of MAXs it wants over the next two years. The move is not unexpected for the US carrier. On 3 May, during its first-quarter earnings call, United Airlines’ Chief Financial Officer, Gerry Laderman, said the full-service carrier is planning to emerge from the coronavirus crisis as a much different airline. It’s an all too familiar phrase that has been echoed around the world by other senior airline executives.

United will now receive just 40 737 MAX aircraft from Boeing by the end of 2021, which effectively means the airline is delaying half its order. The airline also confirmed that this is dependent on when FAA regulators approve re-certification. United said it could take 16 aircraft this year and 24 aircraft in 2021.

Boeing has been taking numerous hits on its aircraft orders as airlines can’t hold onto their older aircraft forever and know there is a lag time between ordering new types and delivery dates. Planned goals are being put on hold when the future is uncertain and there’s no quick fix coming along anytime soon.

Like many airlines, CEOs are looking to their government for advice on what they must do in order to meet the new quarantine rules for when international travel resumes under a practical, yet workable plan.

Big changes and cuts ahead for Boeing

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The US aircraft manufacturer Boeing is to shed 10% of its 160,000 workforce by the end of this year and greatly reduce the production of its aircraft range into 2022, in what the company describes as an entirely new market created by COVID-19.

At the company’s first-quarter earnings call on Wednesday, Boeing CEO David Calhoun detailed the adjustments to production runs that would be coming into effect. Plans for the 737 MAX, which he estimated will resume in the third quarter, will accelerate even slower than originally planned following the jet’s 18-month grounding. In a revised upbeat earlier plan to increase MAX production from 57 a month to 63, Boeing now sees this rate peaking at only 31 per month well into 2022, and will only rise if the market demand is there in the future.

A letter sent to the company’s employees last week, Calhoun called the pandemic “a body blow” to the business, created by a reduction in passenger volumes of more than 95% compared to last year’s figures and an expected $314 billion fall in airline revenue in 2020. He surmised that a recovery from the COVID-19 crisis to 2019 levels would take up to three years and that it would take “a few years beyond that” for the industry to return to long-term profitability.

“As a result, airlines are delaying purchases for new jets, putting the brakes on delivery schedules, and deferring elective maintenance,” said Calhoun. “We’re also seeing a dramatic impact on our commercial services business, as grounded airline fleets decrease the demand for our offerings. This is all putting pressure on our cash flow.”

According to AINonline, Boeing saw this year’s first-quarter cash flow turn negative in the amount of $4.3 billion compared with positive cash flow for the same period in 2019 of $2.8 billion. Now holding some $15 billion in cash and $5 billion in short-term debt, the company recently allowed the deadline for a $4.2 billion purchase of Embraer’s commercial aircraft business to lapse. Although Boeing blamed the collapse of the negotiations on the Brazilian airframer’s failure to meet certain conditions in the master transaction agreement.

“We are intensely focused on ensuring liquidity through the immediate crisis,” said Calhoun. “We believe that government support will be critical to ensuring our industry’s access to liquidity. We continue to evaluate options in the capital markets as well as funding options from the US Government via the US Treasury and various federal reserve programs.”

Boeing’s duel efforts to “resize and reshape” its business will include reducing the workforce by some 16,000 with voluntary layoffs and involuntary layoffs “as necessary.” The cuts will disproportionately affect the commercial aircraft and services business, amounting to about a 15% reduction in the workforce within these departments.

“We will be a smaller company for a while,” said Calhoun. “We’ve worked hard to maintain the stability of our workforce…But the sharp reduction in demand for our airplanes that we see for the next several years won’t support the size of the workforce we have today.”

$1 billion rescue deal for Norwegian Air approved

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A $1 billion rescue plan has been approved by Norwegian Air Shuttle lessors in an effort to save the Scandinavian LCC amid the COVID-19 crisis.

A report in The Guardian, states an agreement was reached over the weekend after the airline failed to get approval from its fourth NAS07 bondholders. The airline, which has numerous debts is now in discussions with shareholders as it hopes to convert $1.2 billion in debt into equity to comply with the Norwegian government’s criteria for assistance.

The airline is fighting to stay afloat after bondholders rejected a debt-to-equity exchange at a meeting on 30 April. The talks are set to continue to discuss plans to save the airline during the crisis.

Norwegian will run out of cash by the middle of May unless creditors and shareholders can agree on a comprehensive restructuring plan. The government has promised money if the airline can reduce its debt to equity ratio.

 

 

Wizz Air to launch low-cost flights to Abu Dhabi

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Wizz Air, the largest low-cost airline in Central and Eastern Europe has announced five new routes from Abu Dhabi International Airport (AUH). The routes will connect the capital of United Arab Emirates with Budapest and Bucharest from June 2020 and with Cluj-Napoca, Katowice and Sofia from September 2020, subject to aviation activities being resumed in the respective countries. Wizz Air becomes the first European LCC to launch flights to Abu Dhabi.

This announcement confirms the agreement in March formalising the establishment of Wizz Air Abu Dhabi as a local airline based in Abu Dhabi in partnership between ADQ and Wizz Air. It is Wizz Air’s first airline established outside of Europe and is expected to begin operations later this year.

It’s intended that Wizz Air will focus on establishing routes to markets in which Wizz Air has existing, high growth operations, namely Central and Eastern and Western Europe, as well as the Indian subcontinent, Middle East and Africa, over the long run.

 Shareef Al Hashmi, Chief Executive Officer of Abu Dhabi Airports, stated: “Wizz Air’s new routes to Budapest, Bucharest, Cluj-Napoca, Katowice and Sofia highlights our commitment to connecting Abu Dhabi with the most sought after global destinations. These new routes positively reflect the industry’s resilience and its capability to continue pushing forward with bold plans that will stimulate consumer demand and the sustained recovery of the aviation market. As our newest landing partner, we welcome Wizz Air and its first routes with open arms as we get set to facilitate the carrier’s exciting Abu Dhabi expansion plans. Visitors from Hungary, Romania, Poland and Bulgaria can look forward to enjoying our modern terminal facilities with a unique brand of Arabian hospitality before seamlessly heading out to experience the UAE’s thriving capital city, Abu Dhabi.”

József Váradi, CEO of Wizz Air Holdings said: “The announcement underpins our long term dedication to bringing low fares combined with a high-quality onboard experience to ever more customers in Abu Dhabi. I am delighted that our operations at Abu Dhabi International Airport will begin in June, subject to lifting the travel bans, connecting the capital of the United Arab Emirates with five major cities of Central and Eastern Europe as Budapest, Bucharest, Cluj-Napoca, Katowice and Sofia. We are convinced that our passengers will appreciate the convenient flight schedules, the easy online booking system and the wide range of tailor-made travel options Wizz Air offers. Wizz Air’s mission feeds into Abu Dhabi’s diversified economic strategy as we continue to stimulate traffic by creating demand for the benefit of growing Abu Dhabi’s touristic and economic diversity. We look forward to welcoming passengers on board our young, green and ultra-efficient fleet, while we pay extra attention to the health and well-being of our passengers and crew.”

Editor’s Comment: A little patience for protection

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The green-shoots of recovery for the airline industry may seem a long way off under the current circumstances, but for some operators plans are already in place for post-pandemic operations and flight schedules. Although all will be under a new blanket of restrictions.

It’s clear that your next flight may not be what you’re used to if AirAsia’s new compulsory safety rules are to be adopted by other global operators. According to the airline, the new mandatory passenger safety measures will include wearing of safety masks, which passengers have to provide themselves, and following social distancing practices when boarding and exiting the aircraft. A report in the Malaysian newspaper Malay Mail, revealed these new measures will also apply when passengers are checking in and retrieving their baggage within the terminal.

When asked about the new practices, AirAsia’s Chief Safety Officer, Captain Ling Liong Tien, stated that the new rules will be strictly enforced. He added that passengers will only be allowed one small bag for the cabin, in order to improve social distancing when getting on and off the aircraft. The Air Asia official hopes that this will stop passengers coming into contact with each other when having to deal with their hand luggage.

But AirAsia will also be introducing an additional measure, mandatory temperature checks at its passenger boarding gates and for its cabin staff at the start and end of their shifts.

“Of course, social distancing will need to be observed, so there will be floor markers in high traffic areas, including check-in counters and kiosks.

“Another safety precaution will be alternate check-in counters to ensure sufficient distance, and we are also working to have contactless check-in processes as well,” said Captain Tien.

With AirAsia’s domestic flights ready to start on the 1 May, and its new procedures given approval by the government, might we see similar airport procedures adopted across Europe and the US? It would be easy to criticise these methods simply as adding further confusion and delays at the gate, but I feel the entire world has become more informed about virus transmission during the COVID-19 pandemic and airlines are simply trying to do their best for their passengers, airport workers and crew, so perhaps a little more patience will offer us that bit more protection.

Only 22 A220s to be used for airBaltic’s new plan

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Latvian carrier airBaltic has approved a new business plan called Destination 2025 CLEAN, which is intended to allow the airline to operate in a post-COVID-19 environment.

The updated five-year strategy includes several key points. One of them is fleet reduction. After global flight restrictions are lifted, airBaltic plans to operate just 22 Airbus A220-300 aircraft. This means that the airline will leave its Q400s and 737-300s on the ground.

“The new plan takes into account the reduced capacity for the years 2020 and 2021, while at the same time foresees a return to growth with up to 50 Airbus A220-300 aircraft by the end of 2023,” the airline said in a statement.

The airline aims to become a one-aircraft-type airline flying only Airbus A220 aircraft.

According to Martin Gauss, CEO of airBaltic, the situation is difficult, requiring “serious and clear decisions for positive business development”. Looking forward to 2025, the carrier estimates to see increases in passenger growth and revenue.

Abu Dhabi’s new LCC receives Air Operating Certificate

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Air Arabia Abu Dhabi, a new LCC of the capital city of the United Arab Emirates, has been awarded its Air Operating Certificate (AOC) to begin commercial operations.

Air Arabia Abu Dhabi is a joint venture established by Etihad Airways and Air Arabia as a new independent airline that will operate from Abu Dhabi International Airport.

“Air Arabia will continue to work closely with the General Civil Aviation Authority (GCAA) to finalise the launch date as market conditions improve and the skies are open again,” said Air Arabia in a statement.

The airline’s positive attitude demonstrates the importance of commercial aviation within the UAE and the industries that support it in the nation.

The rise in low-cost carriers in the region will also see Wizz Air Abu Dhabi take to the air, despite the global halt in air operations. Wizz Air is still planning to launch operations in the region shortly after the control measures are lifted.