General News

Crisis management has now morphed into post-pandemic recovery.

Fresh from announcing its intention to resume flights on 15 June, initially comprising mainly domestic flying in the UK and France, easyJet has become the latest airline to provide details of its fleet and cost structure plans.

In line with IATA projections, easyJet believes that the levels of market demand seen in 2019 are not likely to be reached again until 2023. Consequently, it expects its year-end 2021 fleet size to be around 300 aircraft, 51 aircraft lower than the anticipated fleet size for year-end 2021 which was reported to the market prior to COVID-19. The reduction in fleet size will be achieved through the deferral of 24 aircraft deliveries from financial years 2020, 2021, and 2022 and the re-delivery of leased aircraft.

In New Zealand, an email to staff and customers from Greg Foran, Air New Zealand’s Chief Executive Officer, confirmed that the airline had cut more than 95% of its flights. Preparing for a resumption of international tourism, Foran wrote, “it is clear the Air New Zealand which emerges from COVID-19 is a much smaller airline and could take years to get back to its former size. Therefore, we are planning to be a domestic airline with limited international services to keep supply lines open for the foreseeable future… We expect that even in a year’s time we will be at least 30% smaller than we are currently.”

Unfortunately, a reduction in fleet size invariably means a reduction in the workforce. EasyJet is consulting on the loss of 30% of staff, while Air New Zealand has begun the process of a large-scale reduction of its workforce.

Such cutbacks have come in association with funding initiatives. EasyJet has signed two loans totalling approximately £400 million, with both loans maturing in 2022. Air New Zealand has negotiated a loan with the NZ Government, which as Foran says, comes with interest and must be re-paid.

The Group has secured the financial support of shareholders, including the Cueto and Amaro families, and Qatar Airways, to provide up to US$900 million in debtor in-possession (DIP) financing.

Subject to the approval of the European Commission, the German government has approved a €9 billion stabilisation package from the Economic Stabilization Fund (WSF) for Lufthansa Group. Part of the package includes WSF taking up to a 20% stake in the Group, with the aim of divesting its interest by 31 December 2023 subject to certain conditions being met, as well as a three-year €3 billion credit facility with banks.

But airlines now find themselves with the Sword of Damocles dangling over their heads: running costs which are unsustainable in the face of a depressed tourism market and a collapse in passenger travel, necessitating financial aid which is all the time accruing interest and will have to be paid back, which itself is dependent on an upswing in passenger traffic.

Post-recovery, airlines will need to balance massive debts with their ability to compete with other airlines.

This week, the International Air Transport Association (IATA) once again reiterated its stance of requiring passengers to wear face coverings and non-surgical masks for crew.

Most airlines were quick to mandate masks for all crew and employees at airports and onboard aircraft, but a little slower in asking or requiring passengers to do the same.

While such action seems entirely appropriate as a health measure, it runs the risk of alienating a large passenger group – the deaf. In the UK alone, it is estimated there are approximately 11 million people who are deaf or have hearing difficulty, and this is set to rise to 15.6 million by 2035.

With the aviation industry taking great strides to improve accessibility for all, the wearing of face masks is going to be challenging for all deaf passengers.

As even the best lip-readers only catch less than half of the words said to them, a face mask will obscure natural facial expressions impeding communication and understanding. It is therefore important any advice given by airline and industry associations, include clear messages about how this will impact deaf travellers.

But there are some reaching out to the deaf community to make communication easier while staying safe.

In April, the Thai government unveiled a face mask designed specifically for the deaf. According to Anira Thinon, Deputy Director-General of the Department of Empowerment of Persons with Disabilities. The mask is designed with a transparent window in the middle, which is large enough to reveal lip movements.

In the US, Safe ‘N’ Clear manufactures the FDA-registered The Communicator surgical mask, which has a fog-resistant clear window in front of the mouth to allow the wearer and those who come in contact a chance to communicate clearly.

Until airline advice around face coverings takes into account the needs of deaf travellers, they’ll remain the object of the wrong type of lip service.

David L. Calhoun, President and CEO of Boeing, has painted a dire picture of the US aviation market, during an interview with US broadcaster NBC.

He agreed with the suggestion that a major US airline would go out of business as a result of the COVID-19 pandemic, pointing to September as a crucial time for something to happen.

Calhoun believes that air traffic levels will at best be at 50% by the end of the year, prompting adjustments to be made by airlines.

One airline that is making adjustments now is Avianca, which has filed for Chapter 11 bankruptcy. By doing so, it hopes to reorganise itself and preserve its 100-year-old heritage. What it isn’t preserving is its Peru operations which are being wound down.

Such measures are having a profound effect on the supply chain.

This week, both Astronics and Gogo announced Q1 results for 2020, with both showing increased losses largely attributable to the fall in passenger air traffic and continuing mass groundings of aircraft in both commercial and business aviation.

It’s interesting to note that Gogo’s President and CEO, Oakleigh Thorne, told analysts that the company was in talks with its satellite partners to renegotiate costs as it reduced the capacity it used to meet the IFC needs of its airline customers.

“We’ll obviously favour partners in the future who help us today,” he warned.

While such an attitude of ‘You scratch my back, I’ll scratch yours,’ may be enough to keep some companies and partnerships afloat during this pandemic storm, others may find it draws blood instead.

It was great to be involved in Flightplan at the end of April. As part of the day,  Inmarsat Aviation launched an interactive poll to gather views and predictions from across the industry on possible paths to recovery from COVID-19. Hundreds of responses have already been shared, but it’s not too late to have your say. To share your thoughts on where the future of aviation is headed, visit the live survey here.

As the UK pauses to mark the 75^th anniversary of Victory in Europe Day (VE Day), there are more signs of what the future of aviation may look like once lockdown measures are lifted across the continent.

A number of airlines have confirmed their intent to reshape and resize their operations.

In an email to its FlyingClub members, Virgin Atlantic’s CEO, Shai Weiss, confirmed that along with job losses, its fleet would consist solely of 36 two-engine aircraft, as all of its seven 747-400s and four A330-200 aircraft would retire as planned in early 2022.

He also announced that preparations to relaunch passenger services are well underway including additional cleanliness and health measures onboard as well as at the airport, to protect its people and customers in line with expert advice.

Over in Germany during its first-ever ‘virtual’ AGM, Lufthansa Chairman and CEO, Carsten Spohr, admitted that “We are fighting for the future of this company,” revealing that “at the moment, we are only flying about 3,000 passengers a day”.

“In terms of flight schedule, our company has gone back in time to where it started in 1955 – a decade after the Second World War and following a 10-year ban on flights.

“For 65 years – and through many crises – we built this company on the foundations of our forefathers, turning Lufthansa into the no. 1 in Europe and an airline that has been among the best in the world for many years,” he continued. “In less than 65 days, we have returned to the flight plan levels of 65 years ago. That is extremely bitter, devastating and painful.”

As part of a recovery phase, future, Lufthansa is planning a significantly smaller Lufthansa Group.

Spohr added: “We already decided on the first steps in this direction in April. All of the airlines in the Lufthansa Group will be downsized. Older, less environmentally friendly aircraft will be phased out of the fleet earlier than originally planned. The A340-600 fleet will be temporarily decommissioned, as well as six Airbus A380 and five Boeing 747-400. Ten Airbus A320 will be removed from Eurowings fleet.” [Lufthansa itself will reduce the size of its fleet by about 100 aircraft].

“The ongoing restructuring programmes at Austrian Airlines and Brussels Airlines will be intensified. Both airlines will also reduce the size of their fleet within this context. Germanwings flight operations will be terminated two years earlier than planned. In the future, we will be flying with a maximum of 10 airlines.”

While many airlines are leaving the middle seat empty to comply with social distancing measures, IATA has publicly rejected the initiative.

“IATA does not support mandating social distancing measures that would leave ‘middle seats’ empty,” it said in a press release.

Even if mandated, keeping the ‘middle seat’ open will not achieve the recommended separation for social distancing to be effective. Most authorities recommend 1m-2m while the average seat width is less than 50 cm.

“The cabin environment naturally makes transmission of viruses difficult for a variety of reasons. That helps explain why we have seen little occurrence of onboard transmission. In the immediate term, our aim is to make the cabin environment even safer with effective measures so that passengers and crew can return to travel with confidence. Screening, face coverings and masks are among the many layers of measures that we are recommending. Leaving the middle seat empty, however, is not,” said Alexandre de Juniac, IATA’s Director General and CEO.

Calls for social distancing measures on aircraft would fundamentally shift the economics of aviation by slashing the maximum load factor to 62%. That is well below the average industry breakeven load factor of 77%.

With fewer seats to sell, unit costs would rise sharply. Compared to 2019, air fares would need to go up dramatically – between 43% and 54% depending on the region – just to cover costs. “Airlines are fighting for their survival. Eliminating the middle seat will raise costs. If that can be offset with higher fares, the era of affordable travel will come to an end. On the other hand, if airlines can’t recoup the costs in higher fares, airlines will go bust. Neither is a good option when the world will need strong connectivity to help kick-start the recovery from COVID-19’s economic devastation,” said de Juniac.

It seems that medical advice and economics will make unhappy bedfellows for some time to come.

The financial results of both Airbus and Boeing show a market environment strongly impacted by the COVID-19 pandemic.

First out of the trap was Airbus, who announced a 56% fall in revenues for its commercial aircraft arm.

“We saw a solid start to the year both commercially and industrially, but we are quickly seeing the impact of the COVID-19 pandemic coming through in the numbers,” said Airbus CEO Guillaume Faury. “We are now in the midst of the gravest crisis the aerospace industry has ever known.”

With a strong focus on matching production to demand and cash containment, Airbus announced it would furlough 3,200 workers at its Broughton wing assembly plant in Wales.

In a company email, Faury admitted the company was bleeding cash at an unprecedented speed.

Over at Boeing, President and CEO David Calhoun announced a 10% reduction in its workforce by the end of the year. “We’ll have to make even deeper reductions in areas that are most exposed to the condition of our commercial customers, more than 15% across commercial airplanes and services businesses.”

Calhoun noted that commercial customers are curtailing discretionary spend such as modifications and upgrades and focusing on required maintenance. “We anticipate accelerated retirement of older airplanes, which will result in a newer fleet when air travel resumes to previous levels, which will prolong the period of decreased demand for our commercial services offerings.”

Calhoun continued: “The fundamentals that have driven air travel for the past five decades and doubled air traffic over the past two decades remain intact,” he said. “We believe this industry will recover, but it will take two to three years for travel to return to 2019 levels and it will be a few years beyond that for the industry to return to long-term growth trends. Our outlook is informed by decades of analysis and insights on customer behaviour including how the industry has reacted to prior market shocks. We incorporated assumptions related to a prolonged recession and potential consolidation within the industry in our assessment.”

Picking up on this, IATA’s Director General and CEO, Alexandre de Juniac, urged governments to work with the industry to avoid further long-term damage: “The industry is in free fall and we have not hit bottom. But there will come a time – soon, I hope – when authorities will be ready to begin easing restrictions on mobility and opening borders. It is imperative that governments work with industry now to prepare for that day. It is the only way to ensure that we have measures in place to keep passengers safe during travel and reassure governments that aviation will not be a vector in the spread of the disease. We must also avoid the confusion and complexity that followed 9.11. Global standards that are mutually accepted and operationally practicable will be mission-critical to achieving this. The only way to get there is by working together.”

And working together was the name of the game midweek as the global aviation industry came together for a unique all-day broadcast event to encourage collaboration during the most challenging and unpredictable time in its history. FlightPlan: Charting a Course into the Future, hosted by Inmarsat Aviation and the Airline Passenger Experience Association (APEX), saw more than 50 leading voices exchange views on the present and future of aviation. Over 3,000 viewers tuned in from almost 100 countries worldwide for a series of live debates, interviews and news analysis.

Inflight was proud to be a part of this event.

While the future of passenger experience is unknown, one company has put forward its vision for how airlines may cope with social distancing in economy class.

Personally, I do everything I can to avoid the middle seat, and now Italian cabin interiors designer Aviointeriors has proposed the Janus seat, in which the middle seat is reversed, giving a yin-yang configuration.

The company claims the new design will not reduce legroom and still offers passengers access to all the typical seatback features, such as tray table, IFE screen etc.

Many on social media have pointed out issues surrounding evacuation and certification as well as ridiculing the idea entirely. Remember, this is the same company that proposed the standing seat a few year’s ago.

To support social distancing measures further, Aviointeriors also unveiled Glassafe, a protective transparent shield which can be attached to a seat, isolating a passenger from their neighbours.

Again, the jury is out on this solution. Certification, cleaning, material strength and other issues have again been raised on social media as potential obstacles.

But the solutions are a starting point in our attempt to deal with a new reality for air travel, in particular, the passenger experience in economy class.

Next week, 29 April, I’ll be part of the one-day Inmarsat online broadcast FlightPlan, bringing together aviation experts, analysts and leaders to share information, insight and direction at a pivotal moment for our industry.

The event will be hosted by Joe Leader, CEO of APEX, and Dominic Walters, VP, Marketing Communications at Inmarsat Aviation. As part of the focus on sustainability in aviation, I’m speaking to Paul Stein, CTO Rolls-Royce about the long-term solutions to tackle aviation’s impact on the environment as well as getting the views of Ingo Wuggetzer, VP, Cabin Marketing, Airbus on the role of cabin technology and design in this sustainable agenda.

Throughout the day, myself and APEX’s Maryann Simson will be bringing you regional industry news and announcements, so sign up now! https://flightplan.wavecast.io/

And a happy note to end on. Our friends at Valour Consultancy, Inflight’s market intelligence provider, have been honoured with the prestigious Queen’s Award for Enterprise.

Valour’s award is given for outstanding achievement in the category of International Trade after increasing its overseas sales by an incredible 157% over the past three years.

Looking forward to celebrating your success in person soon!!

Although the aviation industry – airlines in particular – has been one of the hardest hit by the COVID-19 pandemic, the steps that companies across the globe are taking to alleviate the damage and lay the groundwork for recovery are truly admirable. From virtual trade shows to extensive webinar series, video interview shorts to online networking solutions: planes may be grounded but the industry is spreading its wings as it continues to battle the COVID-19 storm.

Earlier this month, Inmarsat Aviation announced FLIGHTPLAN, a one-day, online broadcast event bringing together aviation experts, analysts and leaders to share information, insight and direction at this pivotal moment for the industry. In collaboration with APEX, FLIGHTPLAN is “shaped by our industry, for our industry” and “will focus not only on the current crisis, but will also look to how we equip ourselves and innovate to improve resilience and accelerate recovery”.

Alongside one-day events, one-hour webinars such as the State of Play series produced by the World Aviation Festival are gaining in both popularity and leverage. WAF’s webinar series comprised three broadcasts, each with a different regional focus and each reporting on the health of the industry in that specific region. Given the quality of the speakers recruited and the fact that audience interaction is actively encouraged, webinars like these are a very effective way of keeping industry conversation, discussion and debate alive. They provide the opportunity to push through the sensationalism and fear propagated by the mass media in order to explore the situations and issues that don’t tend to make the headlines.

John Strickland of JLS Consulting, who led WAF’s Europe webinar, spoke about the “delicate balance” between an airline’s need to cut staff costs as much as possible, something that isn’t easy when it must both retain a workforce capable of maintaining a grounded fleet and preserve its pilots’ currency.

Inspired by the industry’s stoicism and willingness to innovate in the face of such a challenging situation, here at Inflight we are joining and launching a range of new initiatives. Inflight’s Editor, Alexander Preston, will be speaking as part of FLIGHTPLAN; The editorial team at HMG Aerospace [publisher of Inflight] will be producing a series of video interview shorts in which key aviation executives will answer a series of quick-fire questions; and its marketing team are boosting social media engagement with a daily Twitter question designed to get you thinking and celebrate the industry’s historic and continuing ability to think outside of the box. Did you know, for example, that in 1987 American Airlines saved $40,000 dollars by removing a single olive from each salad served in First Class?

As the COVID-19 pandemic pushes the virtual world ever closer to becoming the main way in which we interact in the real world, the aviation industry keeps pace. With social media channelling encouragement through unifying hashtags such as #WeAreAviation and #WeWillFlyAgain, Inflight and HMG Aerospace salute and strive, as always, to support the industry: staying apart, but staying connected.