NewsWhats happening
Pilots accept lower pay to prevent over 1,700 furloughs as pandemic roils airline industry
Delta Air Lines Inc. pilots agreed to accept reduced pay in exchange for job security until 2022, as the industry continues to grapple with reduced travel demand due to the coronavirus pandemic.
Delta and the union that represents its pilots said Wednesday that the cost-cutting agreement would prevent the more than 1,700 pilot furloughs the carrier had originally planned. Under the agreement, pilots who would have been furloughed will receive pay for 30 hours a month, though they won’t have to fly. Delta would also be able to reduce pilots’ minimum guaranteed work hours by as much as 5%, which results in lower pay, and the company agreed not to carry out furloughs until Jan. 1, 2022.
“Pilots, as long-term stakeholders in our company, have stepped up to the plate once again to help Delta weather this crisis,” said First Officer Chris Riggins, a spokesman for the union that represents Delta’s pilots.
Airlines have had to shrink to match a diminished outlook for travel demand. The global airline industry is forecast to lose $38.7 billion next year even if Covid-19 vaccines and testing help reopen more borders, the International Air Transport Association said earlier this week.
Excerpt from WSJ
Read the full article
The U.S. on Wednesday approved Boeing Co.’s 737 MAX jets for passenger flights again after dual crashes took 346 lives, issuing a set of long-anticipated safety directives and notices to airlines globally that will help resolve the plane maker’s biggest pre-pandemic crisis.
The Federal Aviation Administration’s official order to release the MAX, grounded since March 2019, came as the Chicago aerospace giant grapples with a host of new problems in the midst of the continuing health crisis.
The FAA’s mandate allows Boeing to resume delivering the jets to airlines and lets them carry passengers, pending completion of certain mandatory fixes and additional pilot training requirements spelled out in related documents also released by the agency. U.S. carriers said Wednesday that they would broadly reintroduce the MAX into their schedules starting early next year, while FAA chief Steve Dickson said he expected approvals from some foreign regulators within days.
But the pandemic has sapped demand for air travel, prompting airlines and aircraft-leasing firms to cancel about 10% of Boeing’s outstanding MAX orders this year. Boeing has said it believes hundreds more of its remaining 4,102 orders could be in jeopardy because of the financial health of some customers.
Excerpt from WSJ
Read the full article
Even after the 737 MAX gets cleared for takeoff, the plane maker will have a hard time delivering it to customers
It seemed difficult to imagine a worse year for Boeing BA 2.80% than 2019—until 2020 came along. What should worry investors now is that the long-awaited 2021 return to grace is slipping away.
On Wednesday, the Chicago-based plane maker reported a $466 million loss for the third quarter. Revenues came in 29% lower due to the Covid-19 crisis, even though the prior-year period was itself badly hit by the grounding of Boeing’s 737 MAX jet in March 2019. However atrocious, the results were better than analysts were expecting: Boeing stock fell about 3% in afternoon trading, in line with the broader equity market’s poor performance Wednesday.
Like other companies in the aerospace industry, Boeing is taking steps to cut costs to face years of depressed travel demand. It is closing the original 787 Dreamliner assembly line in the Seattle area; the model will only be made in the lower-cost South Carolina plant from mid-2021. And Chief Executive David Calhoun wrote to employees Wednesday that a further 11,000 jobs will be cut by the end of 2021. He also plans to get rid of 30% of office space, echoing what peers such as Raytheon have said.
Excerpt from WSJ
Read the full article
World’s largest plane maker has moved back its narrow body ramp up plans by three months
Airbus stemmed an outflow of cash in the third quarter as it learned to navigate an industry reeling from the pandemic, but also said the aviation market’s recovery would start later than initially forecast.
The world’s largest plane maker posted a positive free cash flow of €600 million, equivalent to $705 million, as it started delivering more planes. Amid a sudden drop in traveler demand, airlines have moved to delay, defer or cancel orders for new jets. Airbus and rival Boeing Co. have reduced production levels to adjust.
However, Airbus was making more planes than it could deliver, hitting cash flow, as airlines typically pay most of the cost of a new jet upon delivery. Airbus still has finished planes awaiting delivery, but the company was able to reduce the number by around 10 aircraft to 135.
Airbus burned through €4.4 billion in each of the first two quarters of the year. It set a target for free cash flow to be at least break even in the fourth quarter, its first guidance since the start of the pandemic.
Excerpt from WSJ
Read the full article
The European plane maker will increase production rates of the short-haul workhorse next year, throwing a lifeline to a battered industry
When it started flying in 1987, Airbus’ A320 seemed like a moonshot project from an upstart plane maker, with little chance of challenging the supremacy of the Boeing BA 2.97% 737 on short-haul flights. Skip to 2020, and it is one of the few products keeping the aviation industry afloat.
This week, Airbus reported positive cash flows for the third quarter as plane deliveries resumed. The European company shipped 145 commercial aircraft, compared with 28 for its U.S. rival Boeing. While the Airbus number was still down 20% from a year earlier, it is an impressive figure in a pandemic. Global air traffic remains stuck at half of 2019 levels, giving airlines little reason to take on planes.
The workhorse A320 family stands behind Airbus’ resilience. At this pace, it could amount to 63% of combined deliveries from both plane makers this year, compared with 39% in 2018—before the grounding of Boeing’s troubled 737 MAX. Airbus Chief Executive Guillaume Faury confirmed reports that A320 production rates will start to ramp up from 40 to 47 a month in the second half of next year.
Excerpt from WSJ
Read the full article
Airlines give away seats as they try to stop the cash burn and make travelers feel comfortable flying again
Airlines are resorting to a new tactic in navigating the pandemic-inspired collapse in travel: They are giving seats away.
Alaska Air Group Inc. ALK +2.77% ran 48-hour sales in August and September, offering an entire three-seat row for the price of a single ticket. Europe’s biggest airline, budget carrier Ryanair Holdings RYAAY +3.09% PLC, offered 2-for-1 specials for flights through mid-December. Southeast Asia’s AirAsia brand earlier this year sold “unlimited passes,” allowing customers in some markets to travel as much as they wanted for a few months.
The deals can drum up demand and get travelers comfortable with flying again. They are also keeping at least some cash coming in the door, as airlines keep much of their fleets parked. Alaska Airlines usually runs 10 to 12 big promotions a year; it has recently been offering three a month.
Alaska Airlines was already keeping the middle seat open for social distancing. Its buy-one-get-one-free offer allows a pair of passengers traveling together to get their own row for the price of a single seat. On days when the Seattle Seahawks play at home, the airline, which is based in that city, offers discounts of as much as 40% depending on how many touchdowns quarterback Russell Wilson makes. Overall during the third quarter, Alaska Airlines said ticket prices were down 17%.
Excerpt from WSJ
Read the full article
Boeing and Airbus are winding down production of the 747 and A380, planes that ended up being too big for their own good
It’s time to eulogize the passing of the 747 and A380, engineering marvels that defied gravity, tantalized travelers with luxurious cabin space and opened intercontinental travel to the masses by making cheap fares plentiful.
The pandemic sped up their demise, which seemed inevitable regardless. There’s little doubt air travel will see weaker demand for several years, which is a killer for enormous airplanes that require strong demand to fill seats. The losses will be mourned by many travelers, and will be particularly hard on airplane aficionados for whom these incredible machines represented jet nirvana.
But from the beginning, both jumbo jets were too big for most markets, and the only way airlines could fill them was by offering very cheap fares. And while travelers profit from cheap fares, airlines don’t.
Boeing announced at the end of July that it would discontinue 747 production in 2022 when it finishes building the last 15 freighters on order. The last passenger version of the 747 was delivered in 2017, though two planes built for an airline but never delivered will become Air Force One presidential transport.
Almost all 747s at passenger airlines are grounded, according to Cirium, an aviation data and analytics company. Several big airlines that fly the older 747-400 say those planes are done. The newer 747-8, flown by three airlines, likely will return to service. There are just 35 of those.
PAST GLORY FOR THE `QUEEN OF THE SKIES’
Airlines have grounded most 747s during the pandemic, and most won’t ever fly passengers again. Here’s a breakdown.
Airlines recently saying their 747s won’t return: British Airways, Qantas, KLM and Virgin Atlantic
Airlines that previously retired passenger 747s: United, Delta, Cathay Pacific and Singapore
Airlines with the newer 747-8: Lufthansa, Korean Air and Air China
Airbus announced in February that it will end production of its superjumbo A380 in 2021, again after the last remaining dozen or so airplanes on order are delivered. You might say airlines announced the end of the A380 long ago because big orders just never materialized, except at Emirates. “The A380 is not only an outstanding engineering and industrial achievement. Passengers all over the world love to fly on this great aircraft. Hence today’s announcement is painful for us,’’ Airbus said when announcing the end of production. “A380s will still roam the skies for many years to come.”
Excerpt from WSJ
Read the full article
Previous MAX program manager and chief engineer in closed-door congressional interviews stand by Boeing’s design of the plane
Two high-ranking executives who oversaw Boeing Co. development of the 737 MAX told House investigators the company’s design process wasn’t flawed despite two fatal crashes, a contrast to other company leaders’ concessions of past engineering errors.
The Chicago plane maker is approaching the final steps of getting its beleaguered MAX fleet returned to service. Lawmakers, safety experts and global regulators have previously identified technical and management lapses in the airplane’s development.
Transcripts of closed-door interviews in May with Keith Leverkuhn and Michael Teal, who directly managed MAX development through the aircraft’s 2017 debut, are part of a final congressional report slated to be released this coming week detailing a series of company and government missteps during and after certification of the MAX.
Their stance shows that nearly two years after the first fatal crash, there are differing views inside Boeing and a continuing debate across parts of the industry about the significance of pilot mistakes versus Boeing design flaws as factors in the MAX crashes.
Excerpt from WSJ
Read the full article