Monthly Archives: April 2020

American announces the retirement of five aircraft types!

American Airlines has made this announcement:

Last month, American Airlines announced plans to accelerate the retirement of some older, less fuel-efficient aircraft from its fleet sooner than originally planned. As flying schedules and aircraft needs are fine-tuned during this period of record low demand, American will take the unique step of retiring a total of five aircraft types.

Type Retired: March 27, 2020 (flight AA 9615 LGA-PIT with N946UW)

Above Copyright Photo: American Airlines Embraer ERJ 190-100 IGW N946UW (msn 19000072) CLT (Jay Selman). Image: 403270.

Type Retirement: March 30, 2020 (flight AA 9441 LIM-MIA with N347AN)

Above Copyright Photo: American Airlines Boeing 767-323 ER WL N347AN (msn 33086) MIA (Ken Petersen). Image: 949517.

American has officially retired the Embraer E190 and Boeing 767-300 fleets, which were originally scheduled to retire by the end of 2020.

Type Retired: March 26, 2020 (for now) (flight AA 1797 DFW-LAS with N191AN)

Above Copyright Photo: American Airlines Boeing 757-223 WL N191AN (msn 32385) MIA (Ken Petersen). Image: 949641.

Type Retired: April 8, 2020 (flight AA 9607 SAL-ELP with N272AY)

Above Copyright Photo: American Airlines Airbus A330-323 N272AY (msn 333) LHR (SPA). Image: 930259.

The airline has also accelerated the retirement of its Boeing 757-200s and Airbus A330-300s. Additionally, American is retiring 19 Bombardier CRJ200 aircraft operated by PSA Airlines.

Type Retired: March 30, 2020 (Flight OH 5305 DCA-CAK with N244PS)

Above Copyright Photo: American Eagle (2nd)-PSA Airlines (2nd) Bombardier CRJ200 (CL-600-2B19) N244PS (msn 7912) CLT (Jay Selman). Image: 402940.

These changes remove operating complexity and will bring forward cost savings and efficiencies associated with operating fewer aircraft types. It will also help American focus on flying more advanced aircraft as we continue receiving new deliveries of the Airbus A321neo and the Boeing 737 MAX and 787 family. American’s narrowbody fleet also becomes more simplified with just two cockpit types – the Airbus A320 and the Boeing 737 families. This benefits American’s operational performance through training efficiency and streamlined maintenance.

American continues to evaluate its schedule and remains committed to caring for customers on life’s journey. These changes will help American continue to provide a reliable travel experience around the world, even during these uncertain times.

Here’s a snapshot of the aircraft exiting American’s fleet:

 

Airbus A330-300

Airbus A330-300 — Blue Sky News/Pittsburgh International Airport

Airbus A330-300

  • Joined the US Airways fleet in 2000 prior to joining American’s fleet in 2013.
  • Nine A330-300s in the fleet as of Jan. 1, 2020.
  • Flew mainly trans-Atlantic routes, with some domestic service.

 

Boeing 757-200

Boeing 757-200

Boeing 757-200

  • Joined the America West fleet in 1987 and American in 1989.
  • 34 757-200s in the fleet as of Jan. 1, 2020.
  • Flew mostly mainland domestic and Hawaii routes, with some trans-Atlantic and Latin America service.

 

Boeing 767-300ER

Boeing 767-300ER

Boeing 767-300ER

  • Joined American in 1988.
  • 17 767-300ERs in the fleet as of Jan. 1, 2020.
  • Flew mainly trans-Atlantic routes, with some domestic, Hawaii and Latin America service.

 

Boeing 767-300ER

Embraer E190 — Blue Sky News/Pittsburgh International Airport

Embraer E190

  • Joined the US Airways fleet in 2006 prior to joining American’s fleet in 2013.
  • 20 E190s in the fleet as of Jan. 1, 2020.
  • Flew domestic routes, with extensive support for American Airlines Shuttle.

 

Boeing 767-300ER

A Bombardier CRJ-200 aircraft operated by PSA Airlines.

Bombardier CRJ200

  • Joined the PSA Airlines fleet in 2003.
  • 19 CRJ200s in the fleet as of Jan. 1, 2020.
  • Flew domestic routes on the East Coast, with service primarily from American’s hubs in Charlotte, North Carolina; Washington, D.C.; and Philadelphia.

American loses $2.2 billion in the first quarter

American Airlines Group Inc. today reported its first-quarter 2020 financial results, including:

  • First-quarter net loss of $2.2 billion, or ($5.26) per share. Excluding net special items1, first-quarter net loss of $1.1 billion, or ($2.65) per share.
  • Ended first quarter with $6.8 billion of available liquidity and expects to end second quarter with approximately $11 billion of liquidity.

“Never before has our airline, or our industry, faced such a significant challenge,” said American Airlines Chairman and CEO Doug Parker. “True to fashion, the American Airlines team has done a phenomenal job taking care of our customers and each other during such difficult and often heartbreaking times. We are incredibly proud of their selflessness and dedication to others.

“We have moved quickly and aggressively to reduce our costs and bolster our liquidity,” Parker continued. “We are particularly grateful for the $5.8 billion in financial assistance American will receive through the Payroll Support Program, and we appreciate the bipartisan congressional and U.S. Department of the Treasury and Department of Transportation support to protect airline jobs and ensure a strong and competitive U.S. airline industry.

“We have a lot of difficult work ahead of us. And while there is still uncertainty in what’s to come, we are confident that through the dedication of the American Airlines team and our swift actions, we will get through this for our team, our customers and our shareholders.”

COVID-19 response

In response to the precipitous drop-off in demand, American has acted quickly to take care of its team members, customers and communities; reduce costs; and improve its liquidity position.

Taking care of team members, customers and communities

Caring for team members, customers and the communities American serves remains at the heart of the airline’s actions in the first quarter.

To ensure the safety of team members and customers, American:

  • Enhanced its cleaning procedures through expanded fogging and the use of an EPA-approved disinfectant in high-touch areas.
  • Purchased face masks for frontline team members and made them required for flight attendants starting May 1.
  • Began distributing sanitizing wipes or gels and face masks to customers. This will expand to all flights as supplies and operational conditions allow.
  • Temporarily relaxed its seating policies and adjusted airport procedures to encourage social distancing.
  • Reduced onboard food and beverage service to limit contact.

To provide customers additional peace of mind, American:

  • Extended waivers for travel occurring through the end of September 2020, enabling customers to change plans and travel through December 2021, and waived change fees for customers who purchase new tickets by May 31, 2020, for future travel.
  • Introduced flexible travel waivers and name changes for corporate customers.
  • Made it easier for top-tier customers to earn AAdvantage® elite status this year.
  • Extended 2020 AAdvantage status into early 2022 for all members.
  • Extended all paid Admirals Club memberships by six months.

To support the communities it serves, American:

  • Launched the company’s first cargo-only flights since 1984 to transport critical goods between the U.S. and Europe, Asia and Latin America. American is currently able to transport more than 6.5 million pounds of critical goods weekly on its cargo-only flights.
  • Donated more than 100 tons of food to food banks in the company’s hub cities.
  • Raised, with customer participation, approximately $3 million for the American Red Cross to support workers on the front lines of the COVID-19 pandemic.
  • Donated thousands of supply kits to patients and health care workers and care packages to U.S. military members in quarantine.

Rightsizing the airline and its cost structure

American estimates a reduction of more than $12 billion in its 2020 operating and capital expenditures, achieved through lower fuel expense and a series of actions. The company:

  • Reduced system capacity by approximately 80% in both April and May, and 70% in June, including schedule changes announced today.
  • Accelerated the retirement of four aircraft types, consisting of 20 Embraer E190s, 34 Boeing 757s, 17 Boeing 767s and nine Airbus A330-300s, along with a number of older regional aircraft. These changes remove operating complexity and bring forward cost savings and efficiencies associated with operating fewer aircraft types.
  • Suspended all nonessential hiring, paused noncontractual pay increases, reduced executive and board compensation, and implemented voluntary leave and early retirement programs to reduce labor costs. In total, nearly 39,000 team members have opted for an early retirement, a reduced work schedule or a partially paid leave.
  • Deferred marketing expenditures and reduced contractor, event and training expenses.
  • Consolidated its footprint at its airport facilities.

Maximizing liquidity

To bolster liquidity, the company:

  • Ended the first quarter with $6.8 billion of available liquidity, including approximately $2 billion raised during the quarter.
  • Obtained the right to access $10.6 billion in financial assistance through the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
  • Recently had its unencumbered assets appraised and believes the value of those assets is in excess of $10 billion, excluding the value of the AAdvantage program. The company expects to pledge a portion of its assets as collateral for future financings, including the approximately $4.75 billion secured loan American has applied for under the CARES Act.
  • Suspended its capital return program, including share repurchases and the payment of future dividends, in accordance with the CARES Act.
  • Does not have any large non-aircraft debt maturities for more than 24 months, outside of the recently arranged $1 billion, 364-day delayed draw term loan facility.

American’s average estimated second-quarter 2020 cash burn rate is expected to be approximately $70 million per day. As the company’s cost initiatives gain traction, its estimated daily cash burn rate is expected to decline over time to approximately $50 million per day for the month of June. Based on its current forecast, the company expects to have approximately $11 billion of liquidity at the end of the second quarter.

Conference call and webcast details

The company will conduct a live audio webcast of its earnings call today at 7:30 a.m. CDT, which will be available to the public on a listen-only basis at aa.com/investorrelations. An archive of the webcast will be available on the website through May 31.

Notes

See the accompanying notes in the Financial Tables section of this press release for further explanation, including a reconciliation of all GAAP to non-GAAP financial information.

  • 1 In the first quarter of 2020, the company recognized $1.4 billion in net special items before the effect of income taxes. The 2020 first quarter mainline operating special items, net principally included $744 million of fleet impairment charges, which consisted of a $676 million non-cash write-down of aircraft and spare parts and $68 million in write-offs of right-of-use assets and lease return costs associated with the company’s mainline fleet, principally Boeing 757, Boeing 767, Airbus A330-300, and Embraer E190 aircraft, which are being retired earlier than previously planned as a result of the decline in demand for travel due to COVID-19. The company also recognized $218 million of one-time labor contract expenses resulting from the ratification of a new contract with its maintenance and fleet service team members, including signing bonuses and adjustments to vacation accruals resulting from pay rate increases, and $205 million of salary and medical costs associated with certain team members who opted in to a voluntary early retirement program.

First quarter 2020 regional operating special items, net included an $88 million non-cash write-down of regional aircraft, principally certain Embraer E140 and Bombardier CRJ200 aircraft, which are being retired earlier than previously planned as a result of the decline in demand for travel due to COVID-19.

In addition, the company recognized $217 million in nonoperating net special items in the first quarter of 2020, which principally included mark-to-market net unrealized losses associated with certain equity investments and treasury rate lock derivative instruments.

Lufthansa Group introduces a mandatory mouth-nose cover

Lufthansa Group has made this announcement:

Airlines recommend to carry a mouth-nose cover throughout the entire journey

From Monday, May 4, 2020, the airlines of the Lufthansa Group are asking all passengers to wear a mouth-nose cover on board their flights. In addition, the company recommends that passengers wear them throughout the entire journey, i.e. also before or after the flight at the airport, whenever the required minimum distance cannot be guaranteed without restriction. Despite numerous adjustments to service procedures, it is not always possible to maintain the required distance on a flight. Therefore, this measure serves as additional protection for all passengers. All flight attendants on Lufthansa Group flights in direct contact with customers will also wear a corresponding mask.

The Lufthansa Group is thus complying with the official regulations of numerous European countries in which the wearing of a mouth and nose cover is now mandatory in public places.

All passengers are requested to bring their own mouth and nose cover. A reusable fabric mask is recommended, but all other types of coverings such as simple disposable masks or scarves are also possible. The airlines will inform their passengers in advance by SMS or e-mail and on their websites about the new regulation.

The obligation to wear the mask will preliminarily apply until August 31, 2020.

The current regulation of Lufthansa Group Airlines to keep the neighbouring seat free in Economy and Premium Economy Class will no longer apply, as wearing the mouth-nose cover provides adequate health protection.  Due to the current low occupancy rate, seats will nevertheless be allocated as widely as possible throughout the cabin.

In principle, infection on board remains very unlikely. Since the outbreak of the pandemic, no concrete cases of transmission on Lufthansa Group flights have become known. All Lufthansa Group aircraft are equipped with the highest quality air filters, which guarantee air quality similar to that in an operating theatre. In addition, the air circulates vertically instead of being distributed throughout the cabin.

Wizz Air announces a new base in Lviv

Wizz Air has announced a new base in Lviv opening on July 1, 2020, which will be the second and the newest Wizz base in Ukraine. The airline will base one Airbus A320 aircraft at Danylo Halytskyi International Airport. Along with the establishment of the new base, Wizz Air will start seven new services to Billund in Denmark, Tallinn in Estonia,  Lisbon in Portugal,  Hamburg in  Germany and Szczecin in Poland from Lviv as well as Tallinn and Berlin from Kharkiv.

As passenger and crew safety has always been Wizz Air’s top priority, the airline has recently announced several additional measures to support physical distancing during boarding and enhanced cleanliness on board. The measures are easy to follow and ensure the most sanitary conditions. The airline asks passengers to handle  bookings online where possible, including online check-in, baggage drop-off as well as opting in for contactless payment during onboard purchases. Wearing masks onboard is obligatory for crew and passengers, thus all are reminded to travel in masks. The aircraft is thoroughly cleaned several times a day and is disinfected overnight, the crew will also handout sanitizing pads to passengers at boarding as well as will observe seat distancing for passengers on flights where the load factor allows. Wizz Air is also launching a special information campaign to inform passengers about current development in the context of COVID-19 and provide useful tips for a safe journey. To summarize the new protocol, Wizz Air has released an explanatory video focusing on the main measures introduced.

WIZZ AIR’S NEWEST ROUTES FROM UKRAINE

Route Operating Days Starts Fares from*
Lviv – Billund Wednesday, Sunday 1 July 2020 EUR 19.99 / UAH 579
Lviv – Lisbon Wednesday, Sunday 1 July 2020 EUR 39.99 / UAH 1149
Lviv – Tallinn Tuesday, Thursday, Saturday 2 July 2020 EUR 19.99 / UAH 579
Lviv – Hamburg Monday, Friday 3 July 2020 EUR 24.99 / UAH 719
Lviv – Szczecin Monday, Friday 3 July 2020 EUR 14.99 / UAH 429
Kharkiv – Tallinn Tuesday, Thursday, Saturday 2 July 2020 EUR 24.99 / UAH 719
Kharkiv – Berlin Schönefeld Monday, Friday 3 July 2020 EUR 34.99 / UAH 1009

 

 

* One-way price, including taxes, administration and other non-optional charges. One carry-on bag (max: 40x30x20cm) is included. Trolley bag and each piece of checked-in baggage is subject to additional fees.  

Virgin Atlantic to deliver more than 43 million items of PPE and medical supplies to the UK

Virgin Atlantic is set to deliver more than 43 million items of personal protective equipment (PPE) to the UK.

Cargo being loaded

The cargo-only flights have been chartered by the Department of Health and Social Care and the NHS throughout May, June and July.

Virgin Atlantic was the first British airline to resume flights to China on April 3rd following special dispensation from the CAA and assistance from the British Embassy in China. Since then Virgin Atlantic has operated nine 26-hour round trips between London Heathrow and Shanghai. The flights are manned by seven pilots and four cabin crew who rotate duties and rest time.

Each flight contains on average 16 tonnes of essential items needed to help fight the Covid-19 pandemic in the UK. The flights use both the cargo hold as well as passenger seats and overhead lockers to carry on average 1,400 boxes of essential equipment.

‘With the country in lockdown, planes are touching down with perhaps their most precious passengers yet.’

From today daily flights will be arriving from China with crucial PPE. @SwainITV was given exclusive access to one of those planes.

Embedded video

Since the first charter on April 3rd, which was supported by Virgin Unite and Virgin Group, more than 150 tonnes of medical supplies and PPE have been transported, including:

  • 66 ventilators,
  • More than two million face masks,
  • 600,000 face shields and visors,
  • one million disposable gloves,
  • 38,000 items for eye protection,
  • 125,000 protective coveralls and isolation gowns
  • more than 25,000 battery operated or manual ventilators
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Dominic Kennedy, Managing Director, Virgin Atlantic Cargo, said: “We are so incredibly grateful for all the work our healthcare professionals are doing during this challenging time and we’re pleased we can play our part by bringing crucial medical supplies and PPE in to the UK for the NHS teams working on the front line.

“Despite a decrease in passengers travelling, demand to transport cargo remains strong, and our teams are working hard keeping global supply chains running and transporting essential supplies around the world. We’re looking forward to continuing to partner with the Department for Health and the NHS, working with them on daily flights from Shanghai to London throughout May, June and July transporting over 1,500 tonnes of supplies that the teams here in the UK urgently need to care for patients.”

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Heathrow CEO John Holland-Kaye said: “We’re proud to be working closely with Virgin Atlantic to keep the UK’s vital supply lines open during this challenging time. This outbreak has drastically changed our sector and we’re all playing our part by prioritising freight operations which have seen an exponential increase, with cargo only movements up by over 950 per cent in the past week. This focus means that critical medical supplies are getting into this country, ready for use by our frontline NHS workers.

“After overcoming COVID-19, aviation will be key to kickstarting the UK’s economic recovery. This is why we’re calling for standardised health screening procedures that will help to ensure the safety and peace of mind of our passengers and colleagues as the country looks towards a new normal.”

The emergence of COVID-19 has led to Virgin Atlantic operating cargo-only flights, a first for the airline since its launch in 1984. Special exemptions from the imposed travel restrictions for pilots and cabin crew – whose health and wellbeing remains our top priority – mean that cargo operations can continue, ensuring the airline can continue to support vital supply chains across the globe.

Virgin Atlantic’s first-ever cargo-only flight, VS698 from London Heathrow for New York JFK, took place on March 22, 2020.

The flights are operated in partnership with the UK Government and Virgin Atlantic. The British Embassy is working with the Department of Health and Social Care to procure medical equipment from China and deliver it to NHS hospitals all over the UK.

KLM introduces Cargo-in-Cabin: carrying cargo on passenger seats

Today (April 30), KLM’s first passenger carrier departed, carrying cargo not only in its belly, but on the passenger seats and in the baggage bins of the aircraft cabin. KLM operated a B777-300 flight from Shanghai to Amsterdam, for the first time introducing the new cargo carrying concept. The load consisted mainly of urgent medical supplies, including hundreds of thousands of face masks and protective gowns to be used in combatting coronavirus. The new cargo carrying concept makes additional space available to ship personal protective equipment (PPE) such as this.

Around 500 packages of equipment can be carried in the cabin on each flight. If the trial proves successful, Beijing and Hong Kong will join Shanghai on the list of destinations for this new service. KLM will be deploying three Boeing 777s to operate Cargo-in-Cabin flights. The B747-400 combi flights currently re-entering service on these routes will soon be reconfigured to be similarly deployed. The packages will be bound to the passenger seats and stowed in the baggage bins.

Cargo-in-Cabin in practice

KLM’s new, albeit temporary cargo carrying concept was developed by a multidisciplinary team within a three-week timeframe. Executive Vice President Air France-KLM Cargo Adriaan den Heijer: “Developing and implementing this concept is a particularly complex necessity. Safety plays a pivotal role. Each and every package must be bound securely to the seat to ensure it remains in place throughout the flight. But practical matters have to be taken into account too, such as swiftly and safely loading the cabin cargo without damaging the interior. This process is especially labour intensive; current expectations are that this will take at least four hours.” To ensure that everything goes off smoothly, all such flights will be accompanied by a Cargo-in-Cabin Coordinator from KLM Cargo to maintain onsite loading supervision and monitor compliance with the new procedures.

Added space

“Cargo-in-Cabin significantly increases capacity. What we can now accommodate in the cabin equates to around six large pallets in the belly or 40% of the total cargo capacity,” explains Den Heijer, adding: “We can use the added space to our advantage, carrying more urgent medical supplies. Cargo-in-Cabin caters perfectly to the growing demand for such equipment.”

JetSuite files for Chapter 11 bankruptcy reorganization

Superior Air Charter dba JetSuite Air (JetSuite) has voluntarily filed for relief under chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware on April 28, 2020.

Chief Restructuring Officer Ted Gavin, CTP of Gavin/Solmonese LLC said “JetSuite has always done its best to honor its commitments to customers throughout its exemplary history, and JetSuite leadership has spent and will continue to spend enormous time and effort pursuing strategic and financial alternatives to restart operations.

Unfortunately, the global circumstances brought on by the Covid-19 pandemic have caused JetSuite’s revenues to drop to near zero, and the carnage across the economy and in the aviation industry in particular is well reported and has no clear end in sight, so we have made the regrettable but necessary decision to file for chapter 11 bankruptcy protection.”

JetSuite has safely operated over 111,000 flights since 2009. It will seek bankruptcy protection to reorganize, preserve and maximize the value of its assets, and potentially resume operations.

Note: On April 15, 2020, the company announced it was grounding the entire JetSuite fleet due to decreased demand because of the COVID-19 Coronavirus pandemic.

Previously on April 5, 2016 JetSuite announced a new subsidiary called JetSuiteX, since then renamed JSX.

JSX began by offering scheduled flights as a Part 135 on-demand charter operator with DOT Commuter Authority between Concord Buchanan Field Airport (CA), Bob Hope (Burbank) Airport (CA), Norman Y. Mineta San Jose International Airport (CA) , Las Vegas McCarran International Airport (NV), Bozeman Yellowstone International Airport (MT) and starting October 17, 2016, McClellan–Palomar Airport.

JSX aircraft photo gallery:

 

Alaska Air Cargo begins testing passenger aircraft to fly critical cargo

Alaska Air Cargo announced it will fly passenger jets as cargo-only flights to carry essential goods like mail, medical equipment, e-commerce packages and food throughout its domestic network. Filling the passenger cabin with cargo will backfill the loss in capacity across the continental United States and Hawaii after passenger flights were reduced.

“We’re determined to help protect the resiliency of our nation’s supply chain by connecting critical cargo to the communities we serve during this public health crisis,” said Torque Zubeck, managing director of Alaska Air Cargo.  “Our teams have been working tirelessly since March to identify the safest and most effective processes to increase our cargo capacity as quickly as possible.”

Alaska Air Cargo tests loading freight into the passenger cabin of an Alaska Airlines 737-900 in Seattle. Alaska will be utilizing passenger jets as freighter only aircraft to maximize critical cargo shipments of essential goods.

In addition to Air Cargo’s dedicated three freighters, six Boeing 737-900 aircraft will be utilized as cargo-only aircraft.  Boxes, mail and other items will be placed on and under seats, in overhead bins and in closets – to offer 13,500 more pounds of cargo than what a passenger-only flight could carry. In total, each flight will carry up to 30,000 pounds, which includes belly capacity.

If approved by the FAA, the passenger-only aircraft would begin flying throughout the United States in May.

Alaska Air Cargo Facts 

  • Cargo freighters: 3 Boeing 737-700s
  • Passenger-to-cargo planes: 6 Boeing 737-900s
  • Cargo flown annually: 200 million+ pounds
  • Seafood flown: 30 million+ pounds per year
  • Destinations in Alaska we serve: 19 stations, only three connect by road
  • Around 60% of our cargo business touches the state of Alaska in some way
  • Total destinations served in 2019: 100+
  • Freighter-only flights flown in 2019: 5,487

From Alaska Airlines blog:

Since making the difficult decision to reduce our flying due to the coronavirus, we’ve been looking at other ways to utilize passenger aircraft to carry essential goods to people and businesses who need it most.

On any given day before the coronavirus dramatically changed travel, we carried about 400,000 pounds of cargo per day in the “bellies” of passenger aircraft – where luggage is stored. By utilizing passenger aircraft as freighters we’ll be able to backfill some of 45% loss in capacity across Lower 48 and Hawaii where passenger flights have been reduced by 80%.

“We’re determined to make sure our nation’s supply chain stays robust and resilient, connecting critical cargo quickly to the communities we serve,” said Torque Zubeck, managing director of Alaska Air Cargo. “Our teams have been working hard to identify the safest and most effective processes to increase our cargo capacity as quickly as possible.”

Trying to pull off a passenger-to-freighter operation is no easy task. A team of 40 people have been working on the effort since March. If approved by the FAA, we could begin flying passenger aircraft dedicated to cargo within the United States as early as May.

We aim to utilize the passenger cabin on five Boeing 737-900 aircraft – placing cargo boxes, mail and other items on and under seats, in overhead bins and in closets – creating room for an additional 13,500 pounds of cargo than a traditional passenger flight. In total, each flight will carry up to 30,000 pounds, including belly capacity.

“Our cargo customers depend on us as much as we do them to fuel our supply chain with life-saving medical treatments, medical supplies and perishable foods that have a short shelf life,” said Rick Bendix, cargo marketing and business development program manager. “With the decrease in cargo capacity, this innovative approach allows to meet the demand of cargo customers whether “mom and pop” businesses or large freight forwarders who are working tirelessly to keep the critical goods moving.”

This week, a team of employees tested loading an aircraft, securing the shipments and mapping a safe and viable process for leveraging passenger cabin space to ship critical cargo. Protecting the areas of the passenger cabin where cargo will be stowed was incorporated in the test to ensure the passenger aircraft can easily return to carrying our guests when needed.

According to Anthony Johnson, Alaska Airlines senior engineer, the overhead bins are designed for stowage of carry-on luggage and are durable. However, we need to protect the seats by removing the life vests from under the seats and covering the leather with a protective fabric.

Our roots set us up for success

We’ve been delivering cargo to the state of Alaska for 88 years since our founding as McGee Airways. For some pilots, such as First Officer Bill Jacobson, flying the freighters is especially rewarding because he gets to see the impact cargo has on Alaska communities.

Alaska Airlines First Officer Bill Jacobson @alaska737

“Cargo is hugely important in the state of Alaska. We’re really the lifeline to many communities and bring things necessary to everyday life, like groceries, medicine and machine parts, just to name a few,” Jacobson said. “You usually meet the plane at one of our cargo buildings. When we’re walking through the cargo facilities, I’m often in awe of the variety of goods we’re hauling all over the state.”

These remote communities aren’t always connected by roads to the outside. When the grocery store is out of fresh produce or milk in remote communities in the state of Alaska, residents look to Alaska Airlines to deliver the supplies.

Alaska Air Cargo tests loading freight into the passenger cabin of an Alaska Airlines 737-900 in Seattle. Alaska will be utilizing passenger jets as freighter only aircraft to maximize critical cargo shipments of essential goods.

“Our cargo customers depend on us as much as we do them to fuel our supply chain with life-saving medical treatments, medical supplies and perishable foods that have a short shelf life,” said Rick Bendix, cargo marketing and business development program manager. “With the additional aircraft, we’ll be able to move these goods, as well as e-commerce orders, quickly and efficiently across the country keeping supply chains flowing and supporting our logistics and freight forwarding customers.”

737-700 freighters are cargo-only aircraft that can carry up to 40,000 pounds of cargo. Photo taken by FO Bill Jacobson.

Boeing reports a first quarter loss of $1.3 billion, CEO issues a letter to employees

Boeing made this announcement:

The Boeing Company reported first quarter revenue of $16.9 billion, GAAP loss per share of ($1.11) and core loss per share (non-GAAP)* of ($1.70), primarily reflecting the impacts of COVID-19 and the 737 MAX grounding (Table 1). Boeing recorded operating cash flow of ($4.3) billion.

“The COVID-19 pandemic is affecting every aspect of our business, including airline customer demand, production continuity and supply chain stability,” said Boeing President and CEO David Calhoun. “Our primary focus is the health and safety of our people and communities while we take tough but necessary action to navigate this unprecedented health crisis and adapt for a changed marketplace.”

As the pandemic continues to reduce airline passenger traffic, Boeing sees significant impact on the demand for new commercial airplanes and services, with airlines delaying purchases for new jets, slowing delivery schedules and deferring elective maintenance. To align the business for the new market reality, Boeing is taking several actions that include reducing commercial airplane production rates. The company also announced a leadership and organizational restructuring to streamline roles and responsibilities, and plans to reduce overall staffing levels with a voluntary layoff program and additional workforce actions as necessary.

Boeing has also taken action to manage near-term liquidity, as it has drawn on a term loan facility; reduced operating costs and discretionary spending; extended the existing pause on share repurchases and suspended dividends until further notice; reduced or deferred research and development and capital expenditures; and eliminated CEO and Chairman pay for the year. Access to additional liquidity will be critical for Boeing and the aerospace manufacturing sector to bridge to recovery, and the company is actively exploring all of the available options. Boeing believes it will be able to obtain sufficient liquidity to fund its operations.

“While COVID-19 is adding unprecedented pressure to our business, we remain confident in our long term future,” said Calhoun.  “We continue to support our defense customers in their critical national security missions. We are progressing toward the safe return to service of the 737 MAX, and we are driving safety, quality and operational excellence into all that we do every day. Air travel has always been resilient, our portfolio of products and technology is well positioned, and we are confident we will emerge from the crisis and thrive again as a leader of our industry.”

  • Financial results significantly impacted by COVID-19 and the 737 MAX grounding
  • Revenue of $16.9 billion, GAAP loss per share of ($1.11) and core (non-GAAP)* loss per share of ($1.70)
  • Operating cash flow of ($4.3) billion; cash and marketable securities of $15.5 billion
  • Total backlog of $439 billion, including over 5,000 commercial airplanes

Table 1. Summary Financial Results

First Quarter

(Dollars in Millions, except per share data)

2020

2019

Change

Revenues

$16,908

$22,917

(26)%

GAAP

(Loss)/Earnings From Operations

($1,353)

$2,350

NM

Operating Margin

(8.0)%

10.3%

NM

Net (Loss)/Earnings

(641)

$2,149

NM

(Loss)/Earnings Per Share

($1.11)

$3.75

NM

Operating Cash Flow

($4,302)

$2,788

NM

Non-GAAP*

Core Operating (Loss)/Earnings

($1,700)

$1,986

NM

Core Operating Margin

(10.1)%

8.7%

NM

Core (Loss)/Earnings Per Share

($1.70)

$3.16

NM

Commercial Airplanes first-quarter revenue was $6.2 billion reflecting lower deliveries driven by the 737 MAX grounding as well as impacts of COVID-19 (Table 4). First-quarter operating margin decreased to (33.3) percent due to lower delivery volume, $797 million of abnormal production costs from the temporary suspension of 737 MAX production, a $336 million charge related to 737 Next Generation frame fitting component (pickle fork) repair costs, lower 787 margins primarily due to COVID-19, and $137 million of abnormal production costs from the temporary suspension of Puget Sound operations in response to COVID-19.

COVID-19 has adversely impacted the 737 program due to a slower than previously planned production rate ramp-up driven by commercial airline industry uncertainty. To reflect COVID-19 impacts on the demand environment, 737 MAX aircraft production will resume at low rates in 2020 as timing and conditions of return to service are better understood and gradually increase to 31 per month during 2021, with further gradual increases to correspond with market demand. The estimated abnormal production costs from the temporary suspension of 737 MAX production have increased by approximately $1 billion due to updated production rate assumptions, bringing the estimated total to approximately $5 billion. There was no material change to estimated potential concessions and other considerations to customers related to the 737 MAX grounding.

Commercial Airplanes has updated its production rate assumptions to reflect impacts from COVID-19 on its operations and demand outlook, and will continue to assess them on an ongoing basis. The 787 production rate will be reduced from 14 per month to 10 per month in 2020, and gradually reduced to 7 per month by 2022. The 777/777X combined production rate will be reduced to 3 per month in 2021. At this time, production rate assumptions have not changed on the 767 and 747 programs.

Commercial Airplanes delivered 50 airplanes during the quarter, including 29 787s. Commercial Airplanes captured an order for 12 787 aircraft for All Nippon Airways, and produced the 1000th 787 at Boeing South Carolina. Commercial Airplanes backlog included over 5,000 airplanes valued at $352 billion.

Boeing President and CEO Dave Calhoun issued the following letter to employees today addressing aerospace market realities:

Team:

The global pandemic has changed the way we live and work. It is changing our industry. We are facing utterly unexpected challenges. But across the world you are demonstrating the resilience, commitment and generosity to one another, our customers and our communities that Boeing people are known for. I deeply appreciate all that you do.

And if COVID-19 has affected you directly — your health, your well-being, your loved ones or your colleagues — you have my sympathy and support.

The pandemic is also delivering a body blow to our business — affecting airline customer demand, production continuity and supply chain stability. The demand for commercial airline travel has fallen off a cliff, with U.S. passenger volumes down more than 95% compared to last year. Globally, commercial airline revenue is expected to drop by $314 billion this year.

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

All of this puts near-term pressure on our cash flow. We’re taking steps to keep liquidity flowing through our business and supply chain. We’re reducing operating costs and discretionary spending, suspending dividend payments, extending our existing pause on stock buybacks, reducing or deferring R&D and capital expenditures, and accelerating some progress payment receipts with help from our defense customers. Our chairman and I are also foregoing our salaries for the year. And as you know, we’re exploring potential government funding options and advocating for access to credit for the entire aerospace manufacturing supply chain.

The aviation industry will take years to return to the levels of traffic we saw just a few months ago. We have to prepare for that. In today’s first-quarter earnings disclosure, we will be announcing a number of steps we’re taking to meet that new reality. Specifically, we will have to reduce commercial airplane production rates:

  • We expect to resume 737 MAX production at low rates in 2020, gradually increasing to 31 planes per month during 2021, with gradual increases to correspond to market demand.
  • We plan to reduce the 787 production rate to 10 per month in 2020 and to 7 per month by 2022, continuing to evaluate the rate after that.
  • We also plan to reduce the combined 777 / 777X production rate to 3 per month in 2021 and take a measured approach to the 777X rate ramp.
  • The 767 and 747 production rates will remain unchanged.

We have done a tremendous job of increasing our production rates and services offerings in recent years. But the sharp reduction in demand for our products and services over the next several years simply won’t support the higher levels of output.

We have worked hard to maintain the stability of our workforce, avoiding layoffs even through the grounding of the 737 MAX.

But these new reductions in our production rates and the continued impact of COVID-19 on our business will force us to reduce the size of our workforce. I’m sorry that I have to deliver this news, but I wanted you to hear it from me first — and I recorded a video message so you could hear it from me directly.

We have begun taking action to lower our number of employees by roughly 10% through a combination of voluntary layoffs (VLO), natural turnover and involuntary layoffs as necessary.

That is 10% in total for the enterprise. 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 our commercial airplanes and services businesses, as well as our corporate functions.

At the same time, the ongoing stability of our defense, space and related services businesses will help us limit the overall depth of the cut. And in the end, because there are so many unpredictable drivers for this crisis, we’ll have to monitor continuously what’s happening in our markets, and we will make adjustments whenever needed to ensure we’re matching the size of our business to the changing demand in the market.

I know this news is a blow during an already challenging time. I regret the impact this will have on many of you. I sincerely wish there were some other way.

Please know that we will do everything we can to minimize that impact, and as we take these steps, we will be as fair and transparent as possible — and absolutely honest and respectful.

The VLO program provides eligible team members with an opportunity to depart the company with a pay and benefits package. We also will provide support for those affected by involuntary layoffs, including severance pay, COBRA health care coverage and career transition services.

We are also making changes to start restructuring from the top so we’re ready for the new market reality — shrinking the size of my team by consolidating roles, simplifying processes and focusing accountabilities.

Please know this: Our industry and our company will get through this. Air travel has always been resilient over the long term, and our portfolio of products, services and technology is well-positioned for the recovery that will come.

And even as we deal with this crisis, we are pushing forward with our 2020 priorities:

  • We are progressing toward the safe return to service of the 737 MAX in close coordination with the U.S. Federal Aviation Administration and global regulators.
  • We’re making progress on our development programs, including the 777X, 737 MAX 10 and CST-100 Starliner.
  • We continue to support our defense customers with progress across our future franchise programs, including MQ-25, T-7A Red Hawk, MH-139A Grey Wolf and our extra large unmanned undersea vehicle.
  • Our Government Services business is growing as we earn new and follow-on business with our global defense customers, who look to us to support their fleet performance and mission readiness.
  • We continue our work on the KC-46A tanker. The outcome of this month’s agreement with the U.S. Air Force on the tanker’s Remote Vision System means KC-46 will become the standard by which all future refueling aircraft are measured.

I’d also like to address the latest news about Embraer: We announced Saturday that we have terminated the agreement we had to establish a strategic partnership between our two companies. We worked diligently for two years to finalize the transaction — one that would have included commercial and defense joint ventures. But ultimately we could not come to a resolution around critical unsatisfied conditions for the deal under our Master Transaction Agreement (MTA). It is deeply disappointing, but we had reached a point where continued negotiation was no longer helpful, so we exercised the rights set out in the MTA to terminate the agreement.

Looking ahead, we will continue to concentrate on what is most important across Boeing. We will continue to invest in the future. We will continue to focus on our values, and to drive safety, quality, integrity and operational excellence in everything we do.

I am confident that we will get through this difficult period because I am confident in all of you. And I am proud to be one of you.

Please stay safe, stay strong, and continue to take care of yourselves and one another. Thank you for everything.

Dave

Brussels Airlines further extends the temporary suspension of its flights

Brussels Airlines has made this announcement:

  • The ongoing travel restrictions around the world and the continued low to no demand resulting hereof, obliges Belgium’s home carrier to extend the temporary suspension of its operations by another two weeks. As a consequence, flight operations will not restart before June 1st
  • Customers have the time until August 31, 2020 to rebook their tickets to a new departure date and/or other destination. Travel can be postponed until April 30, 2021. More information can be found on http://www.brusselsairlines.com
  • The Belgian carrier keeps capacity standby for possible additional repatriation flights and the transport of humanitarian freight
  • To restart its operations, Brussels Airlines works on a reduced but stable flight offer that will gradually be increased following the evolution of the demand
  • Temporary technical unemployment for all 4.200 Brussels Airlines employees will be extended in line with the temporary suspension of its flight operations.
The worldwide Coronavirus crisis and the ongoing travel restrictions imposed by many countries around the world, oblige Brussels Airlines to further postpone the restart of its operations, which was planned for May 15th. The airline has now decided to extend the temporary suspension of its flights until May 31st . Customers who have provided their phone number or e-mail address during the booking process will be automatically informed about changes in the flight programme. Furthermore, an extensive goodwill policy for customers is in place, offering passengers the opportunity to postpone their travel plans until latest 30 April 2021. In line with the extension of the flight suspension and a gradual restart of its operations, Brussels Airlines will prolong the temporary technical unemployment for the entire company.

Brussels Airlines today decided to extend the temporary suspension of all its flights. Until May 31, 2020 the airline will focus on possible additional repatriation flights and the transport of cargo.

“Based on currently available figures, the aviation industry expects only a gradual recovery of the demand for air travel. For that reason, we also plan a phased build-up of our network and flight offer. The world of travel after the Coronavirus crisis will look different from before. We are preparing ourselves to make sure that we are ready for this new reality. When the world is ready to fly again, we will be too.”

Dieter Vranckx, CEO Brussels Airlines

Brussels Airlines aircraft photo gallery: