Monthly Archives: July 2020

Allegiant reports a $93.1 million net loss in the second quarter

Allegiant Travel Company reported the following financial results for the second quarter 2020, as well as comparisons to the prior year:

“The second quarter proved to be the most turbulent quarter in the history of the industry,” stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company. “As the virus spread throughout the country in March and April, the industry saw an unprecedented plummet in demand, followed by significant capacity cuts, upwards of 80 to 90 percent. As cases subsided, demand began trickling back in, only to begin recessing again with the uptick in cases beginning late June. It appears demand will continue to ebb and flow along with fluctuations in reported cases for the foreseeable future. We have built a unique way to operate our company as compared to the rest of the industry, which will continue to sustain us throughout the duration of these uncertain times.

“We are experts when it comes to managing capacity to meet demand. Our model was built around flexing capacity up and down to meet differing seasonal demand levels. This quarter proved to be the ultimate test of the model, and I believe our second quarter results highlight its inherent strength. Throughout the quarter, we maintained a very broad network and selling presence, cutting capacity when it made sense, but also capturing demand when it returned. We completed the quarter with roughly 50 percent reductions in capacity, maintaining the broadest schedule of any domestic carrier. Load factors were just over 50 percent, a significant step in the right direction from April lows. During the second quarter, Allegiant passengers accounted for more than five percent of all TSA screenings conducted. That is astonishing given our market share. These results are a testament to our ability to not only manage capacity, but also our ability to manage cost, further highlighting we are best equipped to react to these fluctuations in market conditions.

“Although we were able to manage through the chaos of the quarter, arguably better than most, this environment is unsustainable long-term. It continues to be of utmost importance to strengthen liquidity positions. We completed the quarter with an average daily cash burn of $900 thousand, a 57 percent reduction from our initial forecasts. June bookings were a significant contributor to this reduction, with several days in June exceeding prior year booking levels. In fact, June bookings resulted in cash breakeven for the month of June. We continued to remain disciplined in regard to cost savings and successfully cut more than 38 percent of operating expenses from the quarter. These efforts coupled with funds received related to the CARES Act as well as executed financing arrangements enabled us to grow our liquidity position by nearly $200 million to end the quarter with total liquidity of $663.1 million. Unfortunately, the strength seen in June has since weakened as case numbers have risen. I am comfortable the strides made in building liquidity throughout the quarter will act as a safety net as we continue to manage the ever-changing demand environment.

“In conclusion, I would like to thank our 4,000 team members for their continued hard work. These are difficult times, yet our employees continue to go the extra mile to prioritize the health and safety of our passengers by performing additional cleaning procedures on board our aircraft, encouraging social distancing practices, and exemplifying the principles of our Going the Distance for Health and Safety program. Although I believe the effects of this pandemic will linger well into 2021 and possibly beyond, I firmly believe Allegiant’s flexible model and financial strength will not only sustain us during these uncertain times, but will ultimately uniquely position us to recover quickly upon a normalized return of demand.”

Covid-19 Responses – Update

Maintain a comprehensive cleaning program for all aircraft that includes a regular schedule of standard and deep-clean procedures that exceed both CDC and Airbus guidance
Utilize VOC (volatile organic compound) filters on board every aircraft, which remove additional organic compounds and ensure that cabin air is changed on average, every three minutes, exceeding HEPA standards
Continue to encourage social distancing at check-in, while waiting at gates, and throughout the boarding process as well as offer complimentary health and safety kits to each passenger upon boarding the aircraft
Treat hard surfaces in all office areas, including airport station offices, maintenance facilities, headquarters/administrative offices, with antimicrobial disinfectant/protectant, and utilize wall-mounted and handheld thermometers for employee and crew member temperature checks
Partner with Quest Diagnostics to provide at-home self-collection COVID-19 test kits to employees in the event local testing is not immediately available
Effective July 2, require customers and crew members to wear face coverings through all phases of travel, including at the ticket counter, in the gate area, and during flight
Offer opt-in option in the booking path for customers to receive notification that their flight has reached 65 percent capacity with option to re-book on another flight with no fee or receive a refund
Continue to waive change and cancellation fees for all customers for future travel as well as extend expiry on credit vouchers to two years
- $80.7 million in cash refunds have been provided year to date
Reduced management and support teams by 220 positions, a 20 percent reduction of those work groups
- Employees will be paid through September 30, 2020, in compliance with the CARES Act

Second Quarter 2020 Results

Reported adjusted loss per share of $5.96, which excludes one-time, non-recurring charges, as detailed in the section below titled “COVID-19 Related Special Charges”, the benefit from the CARES Act payroll support program, and a portion of the tax benefit attributable to the CARES Act
Completed the quarter with load factor in the month of June of 56.8 percent, up 38 points from April
Total revenue for the quarter was $133.3 million, down 72.9 percent year over year
- Progressive improvement in revenue throughout the quarter with April, May, and June decreases of 95 percent, 75 percent, and 52 percent, respectively
- Despite yield pressure, average air ancillary revenue per passenger for the quarter was $51.57, remaining consistent with prior year
Total operating expense was $246.6 million, down 35.7 percent year over year on reduced capacity of 50.1 percent
- Total operating expense, excluding one-time, non-recurring charges noted below and excluding the benefit related to CARES Act payroll support, was $240.0 million, down 37.5 percent

Network

Reduced second quarter capacity by 50.1 percent
- Anticipate third quarter capacity reductions to be 25 percent of planned capacity but will adjust in accordance with demand trends
Conducted minimal close-in cancellations for the months of June and July to date

COVID-19 Related Special Charges

Recognized total special charges related to COVID-19 of $101 million during the second quarter
- $81.2 million included as an operating expense and $19.8 million included as other non-operating expense
$59 million adjustment resulting from the accelerated retirements of seven aircraft, loss on sale leaseback transaction of four A320 series aircraft, and write-off of other aircraft related assets
$10 million adjustment for additional salary and benefits expense in relation to the elimination of 220 positions as well as other non-recurring compensation expense associated with the acceleration of certain existing awards
- Total cash outlay is expected to be only $1.5 million of the $10 million adjustment
$5 million impairment loss related to an investment interest held by the company since 2018
$2 million write-down on various non-aircraft assets
$20 million accrual on the expectation to terminate the loan agreement with Sixth Street Partners (formerly TSSP) intended to finance the development of Sunseeker Resorts Charlotte Harbor
- Expected to be paid throughout the remainder of the year
$5 million related to suspension of construction at Sunseeker

CARES Act

Received $154.7 million of the $171.9 million Payroll Support Program grant in the quarter
- Remaining $17.2 million to be received in July
- Received $17.4 million in loan funds (recorded as debt and warrants) related to the $154.7 millionreceived
  - Expense offset recognized during the second quarter related to the grant was $74.5 million
  - Remaining $62.8 million recorded as an accrued liability to be relieved during the third quarter
- Future expense offset of roughly $75 million to be recognized during the third quarter
$45.6 million of federal income tax refunds related to net operating losses from 2018 and 2019were received in May
- Additional $48.7 million received during July
Expect a federal income tax refund in excess of $125 million related to 2020 net operating losses to be received during the first half of 2021
Eligible to receive up to $276 million loan under the CARES Act

Balance Sheet, Cash and Liquidity

Total cash and investments at June 30^th was $663.1 million
Entered into a sale leaseback transaction on June 23, which included the sale of four A320-series aircraft, generating $48 million
Further sources of liquidity received during the third quarter around $65.9 million, including:
- Federal income tax refund of $48.7 million related to net operating losses from 2018
- Additional payroll support related to the CARES Act of $17.2 million
Federal excise tax refund of $21 million related to net refunds issued during 2020 is expected during the second half of the year
Evaluating option to access up to a $276 million loan available through the CARES Act as well as other secured financing options available
2Q20 daily cash burn averaged $900 thousand per day ⁽¹⁾
- 57 percent reduction from initial expectations of $2.1 million as reported in our first quarter earnings release
- Gross bookings averaged more than $2.5 million per day during the quarter
3Q20 daily cash burn is expected to be slightly above $1 million assuming gross bookings average roughly $2 million per day
- Includes a portion of the $20 million accrual related to expectation to terminate the loan agreement with Sixth Street Partners
24 unencumbered aircraft and 10 unencumbered spare engines with approximate market values of $387 million
Air traffic liability at June 30^th was $355 million
- Balance related to future scheduled flights is $139 million
- Balance related to travel vouchers issued for future use is $216 million

(1) Daily cash burn defined as cash from operations less debt and rent payments and capital expenditure outflows excluding aircraft and engine acquisitions as they are expected to be financed. Excludes impact of CARES Act Payroll Support Program funding.

Capital Expenditures

Remaining 2020 spend related to capital expenditures is roughly $165 million
- Includes five previously executed purchase commitments for aircraft during 2020, all of which are intended to be financed
Reduced Sunseeker capital expenditures by $300 million for the year
Reduced full year heavy maintenance spend by roughly $70 million, compared to initial guidance of $120 million
- Six planned aircraft retirements within the next ten months and one additional retirement within the next three years
- Five planned CFM-engine retirements

Allegiant Travel Company will host a conference call with analysts at 4:30 p.m. ET Wednesday, July 29 to discuss its second quarter 2020 financial results. A live broadcast of the conference call will be available via the Company’s Investor Relations website homepage at http://ir.allegiantair.com. The webcast will also be archived in the “Events & Presentations” section of the website.

As a result of the COVID-19 pandemic, we will hold this year’s annual stockholders meeting on Tuesday, August 4, 2020.

Allegiant Air aircraft photo gallery:

Allegiant Air aircraft slide show:

https://airlinersgallery.smugmug.com/frame/slideshow?key=j6jV5d&speed=3&transition=fade&autoStart=1&captions=0&navigation=0&playButton=0&randomize=0&transitionSpeed=2

TAP Air Portugal resumes 65 routes in August and 76 in September

TAP Air Portugal has made this announcement:

In September, the Portuguese carrier replenishes about 40 percent of its normal pre-Covid operation.

About 500 round-trip flights per week in August.
In September, TAP will have close to 700 round-trip flights per week, which is equivalent to about 40 percent of its normal pre-Covid operation.

TAP is gradually restoring its operation and has approximately 500 weekly round-trip flights scheduled for August, for a total of 65 routes.

In September, the Company expects to operate close to 700 flights per week, in a total of 76 routes.

TAP increases its offer in the month of August, when it starts offering 18 weekly flights to Brazil, 20 flights to six destinations in North America, 44 flights to 9 destinations in Africa, 329 flights to 30 cities in Europe and 126 flights to six domestic airports.

It is in September, however, that TAP will restore its operation in a more significant way, recovering about 40 percent of what was its normal offer in the pre-Covid period. This month, the national airline will have 22 flights a week to Brazil, 30 flights on eight routes in North America, 59 flights to 13 cities in Africa and the Middle East, 498 flights to 35 European cities and 159 flights between six cities in Portugal.

The list of routes and flights may be adjusted whenever circumstances require, in view of the dynamics of the evolution of taxes and restrictions in the various countries, due to the evolution of the pandemic, as well as the evolution of demand. This list can be found here.

Even knowing that the environment on board is one of the most sterile and safe from the point of view of the contagion of infectious diseases, given the air quality and the cabin configuration, TAP adjusted the routines and implemented new and reinforced procedures, guaranteeing all passengers a Clean & Safe environment at all stages of their journey. Everyone’s health and safety are TAP’s priority.

TAP Air Portugal aircraft photo gallery:

TAP Air Portugal aircraft slide show:

https://airlinersgallery.smugmug.com/frame/slideshow?key=sXHngk&speed=3&transition=fade&autoStart=1&captions=0&navigation=0&playButton=0&randomize=0&transitionSpeed=2

Emirates to resume flights to Clark from August 1, further expanding its Far East network

Emirates has made this announcement:

Emirates announces the resumption of passenger services to Clark with six weekly flights from 1 August, boosting its global network to 68 destinations in August and connecting customers to Europe, the Middle East, Asia Pacific and Africa.

With the resumption of flights to Clark, Emirates will now operate with scheduled services to two gateways in the Philippines, with services to Manila being in operation since 11 June. Furthermore, the network of destinations that it now serves in South East and East Asia has reached 13, across ten countries and territories.

All flights to Clark will be operated with a Boeing 777-300ER and are scheduled at two convenient timings per week to meet customers’ travel needs.

Flights between Clark and Dubai will operate on Mondays, Wednesdays and Saturdays as EK2520, which departs Dubai at 02:55 and arrives at Clark International Airport at 15:45, while EK338 will depart Clark at 17:15 and is scheduled to arrive in Dubai at 21:40. Flights to Clark on Tuesdays, Thursdays and Fridays will operate as EK2572 and will depart Dubai at 04:50 and arrive in Clark at 17:40. On the same days, the return flights to Dubai, operating as EK338, will depart Clark at 19:10 to arrive in Dubai at 23:35.

Dubai is open: Customers from across Emirates’ network can now to travel to Dubai as the city has re-opened for business and leisure visitors with new air travel protocols that safeguard the health and safety of visitors and communities. For more information on entry requirements for international visitors to Dubai, visit: www.emirates.com/flytoDubai

Free, global cover for COVID-19 related costs: Customers can now travel with confidence, as Emirates has committed to cover all COVID-19 related medical expenses, free of cost, should they be diagnosed with COVID-19 during their travel.

This cover is offered by Emirates free of cost to its customers regardless of class of travel or destination. It is immediately effective for customers flying on Emirates until 31 October 2020 (first flight to be completed on or before 31 October 2020), and is valid for 31 days from the moment they fly the first sector of their journey. This means Emirates customers can continue to benefit from the added assurance of this cover, even if they travel onwards to another city after arriving at their Emirates destination.

Customers do not need to register or fill in any forms before they travel, and they are not obligated to utilise this cover provided by Emirates.

Any impacted customer who has been diagnosed with COVID-19 during their travel simply has to contact a dedicated hotline to avail of assistance and cover.

The hotline number, and details of what COVID-19 related expenses are covered, is available on www.emirates.com/COVID19assistance.

Flexibility and assurance: With the gradual re-opening of borders over the summer, Emirates has revised its booking policies to offer customers more flexibility and confidence to plan their travel. Customers whose travel plans are disrupted by COVID-19 related flight or travel restrictions, can simply hold on to their ticket which will be valid for 24 months and rebook to fly at a later time; request travel vouchers to offset against future Emirates purchases, or request refunds via an online form on Emirates’ website or via their travel booking agent.

Health and safety first: Emirates has implemented a comprehensive set of measures at every step of the customer journey to ensure the safety of its customers and employees on the ground and in the air, including the distribution of complimentary hygiene kits containing masks, gloves, hand sanitiser and antibacterial wipes to all customers. For more information on these measures and the services available on each flight, visit: www.emirates.com/yoursafety

Travel restrictions: Customers are reminded that travel restrictions remain in place, and travellers will only be accepted on flights if they comply with the eligibility and entry criteria requirements of their destination countries. Visit: www.emirates.com/travelrestrictions

Dubai residents can check the latest travel requirements at: www.emirates.com/returntoDubai

IATA: Recovery delayed as international travel remains locked down

IATA has made this announcement:

The International Air Transport Association (IATA) released an updated global passenger forecast showing that the recovery in traffic has been slower than had been expected.

In the base case scenario:

Global passenger traffic (revenue passenger kilometers or RPKs) will not return to pre-COVID-19 levels until 2024, a year later than previously projected.
The recovery in short haul travel is still expected to happen faster than for long haul travel. As a result, passenger numbers will recover faster than traffic measured in RPKs. Recovery to pre-COVID-19 levels, however, will also slide by a year from 2022 to 2023. For 2020, global passenger numbers (enplanements) are expected to decline by 55% compared to 2019, worsened from the April forecast of 46%.

June 2020 passenger traffic foreshadowed the slower-than-expected recovery. Traffic, measures in RPK, fell 86.5% compared to the year-ago period. That is only slightly improved from a 91.0% contraction in May. This was driven by rising demand in domestic markets, particularly China. The June load factor set an all-time low for the month at 57.6%.

The more pessimistic recovery outlook is based on a number of recent trends:

Slow virus containment in the US and developing economies: Although developed economies outside of the US have been largely successful in containing the spread of the virus, renewed outbreaks have occurred in these economies, and in China. Furthermore there is little sign of virus containment in many important emerging economies, which in combination with the US, represent around 40% of global air travel markets. Their continued closure, particularly to international travel, is a significant drag on recovery.
Reduced corporate travel: Corporate travel budgets are expected to be very constrained as companies continue to be under financial pressure even as the economy improves. In addition, while historically GDP growth and air travel have been highly correlated, surveys suggest this link has weakened, particularly with regard to business travel, as video conferencing appears to have made significant inroads as a substitute for in-person meetings.
Weak consumer confidence: While pent-up demand exists for VFR (visiting friends and relatives) and leisure travel, consumer confidence is weak in the face of concerns over job security and rising unemployment, as well as risks of catching COVID-19. Some 55% of respondents to IATA’s June passenger survey don’t plan to travel in 2020.

Owing to these factors, IATA’s revised baseline forecast is for global enplanements to fall 55% in 2020 compared to 2019 (the April forecast was for a 46% decline). Passenger numbers are expected to rise 62% in 2021 off the depressed 2020 base, but still will be down almost 30% compared to 2019. A full recovery to 2019 levels is not expected until 2023, one year later than previously forecast.

Meanwhile, since domestic markets are opening ahead of international markets, and because passengers appear to prefer short haul travel in the current environment, RPKs will recover more slowly, with passenger traffic expected to return to 2019 levels in 2024, one year later than previously forecast. Scientific advances in fighting COVID-19 including development of a successful vaccine, could allow a faster recovery. However, at present there appears to be more downside risk than upside to the baseline forecast.

“Passenger traffic hit bottom in April, but the strength of the upturn has been very weak. What improvement we have seen has been domestic flying. International markets remain largely closed. Consumer confidence is depressed and not helped by the UK’s weekend decision to impose a blanket quarantine on all travelers returning from Spain. And in many parts of the world infections are still rising. All of this points to a longer recovery period and more pain for the industry and the global economy,” said Alexandre de Juniac, IATA’s Director General and CEO.

“For airlines, this is bad news that points to the need for governments to continue with relief measures—financial and otherwise. A full Northern Winter season waiver on the 80-20 use-it-or-lose it slot rule, for example, would provide critical relief to airlines in planning schedules amid unpredictable demand patterns. Airlines are planning their schedules. They need to keep sharply focused on meeting demand and not meeting slot rules that were never meant to accommodate the sharp fluctuations of a crisis. The earlier we know the slot rules the better, but we are still waiting for governments in key markets to confirm a waiver,” said de Juniac.

June 2020 Performance

JUNE 2020 (% YEAR-ON-YEAR)	WORLD SHARE1	RPK	ASK	PLF (%-PT)²	PLF (LEVEL)³
Total Market	100.0%	-86.5%	-80.1%	-26.8%	57.6%
Africa	2.1%	-96.5%	-84.5%	-54.9%	16.2%
Asia Pacific	34.6%	-74.4%	-69.6%	-18.5%	63.8%
Europe	26.8%	-93.7%	-90.0%	-31.9%	55.5%
Latin America	5.1%	-91.2%	-89.0%	-16.7%	66.6%
Middle East	9.1%	-95.5%	-90.4%	-40.7%	35.7%
North America	22.3%	-86.3%	-76.9%	-36.5%	52.4%

1) % of industry RPKs in 2019 2) Year-on-year change in load factor 3) Load Factor Level

International Passenger Markets

June international traffic shrank by 96.8% compared to June 2019, only slightly improved over a 98.3% decline in May, year-over-year. Capacity fell 93.2% and load factor contracted 44.7 percentage points to 38.9%.

Asia-Pacific airlines’ June traffic plummeted 97.1% compared to the year-ago period, little improved from the 98.1% decline in May. Capacity fell 93.4% and load factor shrank 45.8 percentage points to 35.6%.

European carriers saw demand topple 96.7% in June versus a year ago, compared to a 98.7% decline in May. Capacity dropped 94.4% and load factor lessened 35.7 percentage points to 52.0%.

Middle Eastern airlines traffic collapsed 96.1% for June against June 2019, compared with a 97.7% demand drop in May. Capacity contracted 91.1%, and load factor crumbled to 33.3%, down 43.1% percentage points compared to a year ago.

North American carriers had a 97.2% traffic decline in June, barely improved from a 98.3% decline in May. Capacity fell 92.8%, and load factor dropped 53.8 percentage points to 34.1%.

Latin American airlines suffered a 96.6% demand drop in June compared to the same month last year, from a 98.1% drop in May. Capacity fell 95.7% and load factor sagged 17.7 percentage points to 66.2%, which was the highest among the regions.

African airlines’ traffic sank 98.1% in June, little changed from a 98.6% demand drop in May. Capacity contracted 84.5%, and load factor dived 62.1 percentage points to just 8.9% of seats filled, lowest among regions.

Domestic Passenger Markets

Domestic traffic demand fell 67.6% in June, improved from a 78.4% decline in May. Capacity fell 55.9% and load factor dropped 22.8 percentage points to 62.9%.

JUNE 2020 (% YEAR-ON-YEAR)	WORLD SHARE1	RPK	ASK	PLF (%-PT)²	PLF (LEVEL)³
Domestic	36.2%	-67.6%	-55.9%	-22.8%	62.9%
Australia	0.8%	-93.8%	-89.1%	-33.8%	44.4%
Brazil	1.1%	-84.7%	-83.3%	-7.1%	74.7%
China P.R.	9.8%	-35.5%	-21.3%	-15.2%	69.5%
Japan	1.1%	-74.9%	-63.4%	-22.4%	48.8%
Russian Fed.	1.5%	-58.0%	-36.4%	-28.9%	56.4%
US	14.0%	-80.1%	-67.4%	-34.9%	54.7%

1) % of industry RPKs in 2019 2) Year-on-year change in load factor 3) Load Factor Level

China’s carriers continued to lead the recovery, with traffic down 35.5% in June compared to the year-ago period, raised from a 46.3% decline in May.

Japan’s airlines saw improved domestic demand after the state of COVID-19 emergency was lifted in late May. Domestic RPKs fell by 74.9% year-on-year in June, compared with around 90% annual declines in the previous two months.

The Bottom Line

“Domestic traffic improvements notwithstanding, international traffic, which in normal times accounts for close to two-thirds of global air travel, remains virtually non-existent. Most countries are still closed to international arrivals or have imposed quarantines, that have the same effect as an outright lockdown. Summer — our industry’s busiest season — is passing by rapidly; with little chance for an upswing in international air travel unless governments move quickly and decisively to find alternatives to border closures, confidence-destroying stop-start re-openings and demand-killing quarantine,” said de Juniac.

IATA urges governments to implement a layer of measures including the International Civil Aviation Organization’s (ICAO’s) global guidelines for restoring air connectivity contained in ICAO’s Takeoff: Guidance for Air Travel through the COVID-19 Public Health Crisis. IATA also sees potential for accurate, fast, scalable and affordable testing measures and comprehensive contact tracing to play a role in managing the risk of virus spread while re-connecting economies and re-starting travel and tourism. “We need to learn to manage the risks of living with COVID-19 with targeted and predictable measures that will safely re-build traveler confidence and shattered economies,” said de Juniac.

Hawaiian loses $106.9 million in the second quarter

Hawaiian Airlines reported its financial results for the second quarter of 2020.

Second Quarter 2020 – Key Financial Metrics
	GAAP	YoY Change	Adjusted	YoY Change
Net Income	($106.9M)	($164.7M)	($174.7M)	($233.6M)
Diluted EPS	($2.33)	($3.54)	($3.81)	($5.04)
Pre-tax Margin	(254.2)%	(265.4) pts.	(383.9)%	(395.3) pts.

“Our second quarter results reflect the continued impact of COVID-19 and State of Hawai’i quarantines on our business,” said Peter Ingram, Hawaiian Airlines President and CEO. “In the face of these unprecedented challenges, we have taken action to preserve and raise cash and are crafting plans to position us for the future even as we address the immediate adversity. With our leisure business model and relentless focus on the needs of the Hawai’i traveler, we are positioned to emerge from this crisis poised for success. I am grateful, as always, for the efforts of my extraordinary colleagues, as they take care of our guests and adapt to this ever-changing environment with passion and dedication.”

Liquidity and Capital Resources

As of June 30, 2020, the Company had:

Unrestricted cash, cash equivalents and short-term investments of $761 million
Outstanding debt and finance lease obligations of $1,006 million
Air traffic liability of $554 million

Second Quarter 2020

The State of Hawai’i was under the mandatory 14-day self-quarantine for both neighbor island and all incoming travelers for most of the second quarter of 2020, and as a consequence, the Company operated an extremely limited schedule. The mandatory 14-day self-quarantine restriction was lifted on June 16, 2020 for neighbor island travel only. Following this announcement, the Company increased neighbor island flight activity, but continued with its reduced schedule for longer haul flights.

In addition to service suspension and schedule reduction, the Company has taken, and will continue to take, actions to minimize cash outflow in an effort to mitigate the effects of reduced demand, including, but not limited to:

Suspended dividend payments on, and the repurchase of, its common stock
Instituted a hiring freeze across the Company, except for operationally critical and essential positions
Deferred non-critical capital expenditures
Instituted voluntary unpaid leave programs and exploring involuntary headcount reduction
Reduced executive pay by 10% – 50%
Reduced other discretionary spending, including contractor and vendor spend
Negotiated payment deferrals with key vendors

As of June 30, 2020, the Company has received $214.2 million in grants and $49.0 millionin loans pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) Payroll Support Program (“PSP”). The Company expects to receive an additional $29.2 million in July 2020.

Third Quarter 2020

Due to the uncertain timing of the relaxation of travel and quarantine restrictions, the Company is unable to provide detailed guidance related to capacity expectations for the quarter ending September 30, 2020. July 2020 capacity, in terms of available seat miles (ASMs), is expected to be approximately 86% below the capacity flown in July 2019, and the Company expects August 2020 capacity to decrease 85% compared to August 2019. As a significant portion of the Company’s costs are fixed, operating expenses are not expected to decline in proportion to the capacity decline.

To further increase liquidity, the Company has entered into additional financing transactions in July 2020. This includes the following:

Raised $114 million through the sale and leaseback of two Airbus A321neo aircraft
Signed a non-binding letter of intent with the U.S. Department of Treasury pursuant to which the Company is eligible to receive up to $364 million in Economic Relief Program (“ERP”) loans offered under the CARES Act; the Company has until March 2021 to determine how much of the available ERP funds to borrow.

COVID-19 Response – Guest Experience and Community Relations

In response to the COVID-19 pandemic, the Company has enhanced cleaning procedures and revised guest-facing procedures in an effort to minimize the risk of transmission of COVID-19. These procedures are in line with current recommendations from leading public health authorities and include:

Performing enhanced aircraft cleaning between flights and overnight, including recurring electrostatic spraying of all aircraft
Frequent cleaning and disinfecting of counters and self-service check-in kiosks in our airports
Ensuring hand sanitizers are readily available for guests statewide and at our mainland airports
Requiring guests and guest-facing employees to wear face masks or coverings, with guests required to keep them on from check-in to deplaning
Modifying boarding and deplaning processes and limiting the capacity of available seats on all aircraft to no higher than 70% to provide physical distancing
Changing in-flight service to reduce close interactions between crew members and guests

The Company, along with its employees, has also taken measures to support the community through the COVID-19 pandemic, which include:

Donating Main Cabin and Business Class pillowcases, blankets, mattress pads, amenity kits, and Business Class slippers to 12 local organizations serving the community during the pandemic
Offering complimentary neighbor island transportation for medical professionals in April and May
Providing complimentary transportation of food and household items from O’ahu to both Moloka’i and Lana’i in April and May
Volunteering to support local non-profit organizations addressing the COVID-19 pandemic, from company-wide efforts to individual employee initiatives

Hawaiian Airlines aircraft photo gallery:

Hawaiian Airlines aircraft slide show:

https://airlinersgallery.smugmug.com/frame/slideshow?key=6fcqqg&speed=3&transition=fade&autoStart=1&captions=0&navigation=0&playButton=0&randomize=0&transitionSpeed=2

Alitalia will operate more flights to international destinations in September and October

Alitalia will operate more flights to foreign destinations in September and October when the medium and long-haul international sector will grow by 7% in September and 29% in October, compared to August.

The Alitalia flight schedule will see in September the resume of direct services from Rome to Buenos Aires and to Japan, Israel and Algeria which were postponed from mid-August to early September, following the extension of the restrictions to travels to those Countries. Alitalia will also resume domestic services from Rome Fiumicino to Verona. From Milan, in September Alitalia will resume Milan Linate–Frankfurt services, as well as flights from Milan Malpensa to New York, another service rescheduled from mid-August to the beginning of the following month. In September, Alitalia will also increase number of frequencies on several international and domestic routes.

In October, Alitalia plans to resume flights from Milan Linate to Düsseldorf and Paris Orly, as well as further increasing number of frequencies on national and international routes served from Rome and Milan.

The airline will operate in October almost 1,630 services per week to 45 airports, including 19 domestic, thus increasing its activity at 46% of what was planned for this month before the beginning of the COVID-19 pandemic.

In detail, from the beginning of September Alitalia will activate air services from Rome Fiumicino to Buenos Aires (4 weekly flights which will be increased to 6 in October), Tokyo Haneda, Algiers (6 flights per week for each airport), Tel Aviv (4 weekly services) and, on the domestic network, the Airline will resume services from Rome to Verona (4 daily flights).

The airline will also increase from September 1 the number of frequencies from Rome to Geneva, Brussels, Nice, Tunis (from 14 to 20 flights per week for each airport), Zurich (from 10 to 14 weekly services) and Cairo (from 6 to 10 weekly flights). Other increases of frequencies are expected in September on domestic routes, such as Rome Fiumicino-Milan Linate, which will grow from 10 to 22 flights per day (14 on weekends), and from Rome Fiumicino to Genoa, Bari and Reggio Calabria, which will double from 2 to 4 daily services on each airport.

Beginning from October 1, Alitalia will increase the number of flights from Rome to Tel Aviv (from 4 to 10 weekly services), Amsterdam (from 14 to 24 weekly flights), Tirana (from 14 to 20 weekly services) and Geneva (from 20 to 28 flights per week). Other increases in number of air services are expected on domestic routes from Rome to Naples and Florence (from 2 to 4 daily services for both airports). In October Alitalia will operate overall 1,100 weekly flights between its hub in Rome Fiumicino airport and 42 domestic and international destinations.

From Milan Linate airport, beginning in September, Alitalia will resume international flights to Frankfurt (14 weekly services) and will increase number of services on the routes from Milan Linate to London Heathrow, Paris Charles De Gaulle (from 2 to 4 flights per day on both airports) and Brussels (from 12 to 24 weekly services). In September the Airline will also restart flights between Milan Malpensa and New York (6 services per week).

Beginning in October, Alitalia plans to resume international services to Düsseldorf (24 flights per week) and Paris Orly (14 weekly services). The Airline has also planned an increase of frequencies from 1 October from Milan Linate airport to Amsterdam and Frankfurt (from 14 to 24 weekly flights on both airports). On the domestic network, Alitalia will increase services from Linate airport to Bari and Naples (from 4 to 6 flights per day on both airports). In October, Alitalia will operate around 670 weekly flights between Milan and 19 destinations.

In compliance with the current laws, all Alitalia aircraft are sanitised with high-powered sanitizing products every day and, thanks to HEPA filters and vertical circulation, the air on board is not only renewed every three minutes, but it is also 99.7% pure, just like in a sterile medical room. All passengers are also required to complete a self-certification form before boarding, which certifies that they have not had close contact with people diagnosed with Covid-19. In addition, passengers must bring protective masks to be worn from their arrival at the airport and during the flight, taking into account that they have to bring an adequate number of protective masks according to the duration of the flight, since it is necessary to replace the mask with a new one every 4 hours.

Alitalia aircraft photo gallery:

Alitalia slider show:

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Reuters: United tells two regional airlines it will continue its contract with just one

United Airlines has informed ExpressJet Airlines and CommutAir that it will drop its contract with one of them according to Reuters.

Both carriers fly Embraer ERJ 145s exclusively for United as United Express carriers. Whoever loses the contract will be hard pressed to replace the revenue.

Read the full report.

JetBlue reports an adjusted pre-tax loss of $754 million

JetBlue Airways Corporation today reported its results for the second quarter 2020:

Reported GAAP loss per share of ($1.18) in the second quarter of 2020 compared to a diluted earnings per share of $0.59 in the second quarter of 2019. Adjusted loss per share was ($2.02)⁽¹⁾ in the second quarter of 2020 versus adjusted diluted earnings per share of $0.60⁽¹⁾ in the second quarter of 2019. Note A to this earnings release includes the GAAP to Non-GAAP reconciliation between reported and adjusted diluted earnings per share.
GAAP pre-tax loss of ($450) million in the second quarter of 2020, compared to a pre-tax income of $236 million in the second quarter of 2019. Excluding one-time items, adjusted pre-tax loss of ($754) million⁽¹⁾ in the second quarter of 2020 versus adjusted pre-tax income of $238 million⁽¹⁾ in the second quarter of 2019.

Operational Highlights from the Second Quarter

Second quarter 2020 revenue declined 90% year over year as a result of the impact of COVID-19. Traffic volumes and yields improved in May and June from an April trough.
Reduced second quarter 2020 capacity by 85% year over year as a result of aggressive action to mitigate cash burn.
Operating expenses decreased 66% year over year. Excluding special items, adjusted operating expenses⁽¹⁾declined 50% year over year. We successfully reduced our second quarter costs by over $900 million driven by variable cost reductions through capacity cuts and fixed cost reductions achieved by adjusting work schedules where possible and eliminating discretionary spend.

Balance Sheet and Liquidity

JetBlue ended the second quarter with approximately $2.9 billion in unrestricted cash, cash equivalents, and short-term investments, or 36% of 2019 revenue. Including the CARES Act PSP proceeds, our liquidity was $3.4 billion at the end of second quarter 2020, or 42% of 2019 revenue.
JetBlue repaid $78 million in regularly scheduled debt and finance lease obligations during the second quarter of 2020.
JetBlue has taken the following measures in the second quarter to manage liquidity:
- Raised $750 million under a secured term loan.
- Executed approximately $120 million under sale-leaseback transactions, and entered a binding agreement for three additional sale-leaseback transactions for upcoming deliveries. In addition, we have entered into two other binding sale-leaseback agreements for aircraft already existing in our fleet.
- Achieved significant variable and fixed cost savings through aggressive capacity reductions and adjusted work schedules.
- Redeployed assets to capture short-term, tactical cash generation opportunities.
Resulting from the actions taken, JetBlue’s average daily cash burn in May was $9 million vs its prior expectations for just below $10 million. Average daily cash burn in the second quarter was $9.5 million vs its prior expectations for $11 million, and the daily cash burn at the end of June was just under $8 million. JetBlue continues to expect average daily cash burn in the third quarter for a range of $7 to $9 million.

Fuel Expense and Hedging

The realized fuel price in the quarter was $0.96 per gallon, a 55% decline versus second quarter 2019 realized fuel price of $2.16.

JetBlue has entered into forward fuel derivative contracts to hedge its fuel consumption for the third and fourth quarter of 2020. Based on the forward curve as of July 17^th, JetBlue expects an average all-in price per gallon of fuel of $1.24 in the third quarter of 2020.

Our Recovery Plan and Actions Taken to Position JetBlue for Future Success

“For the past 20 years we have succeeded against the odds, and we firmly believe that we are laying the foundation and repositioning JetBlue to come out of this historic crisis as a stronger, global player in the years to come,” said Robin Hayes, JetBlue’s Chief Executive Officer.

“In the past two months, we made progress in reducing our cash burn, and have been quick to resize our operations to the very dynamic demand environment. While demand has improved materially from the lows we saw in April, bookings remain choppy, and we remain focused on addressing changing trends as we progress through the summer.

As we move into recovery, we have laid out a three-step framework to set JetBlue up for success and emerge stronger. The first is to reduce our cash burn. The second step is to rebuild our margins. The third and last step is to repair our balance sheet.

We have been nimble and managed the short term with a sense of urgency, to reduce our cash burn and build liquidity. We are confident that our actions to protect the health and safety of our Customers and Crewmembers, our network changes, and focus on costs will help us rebuild our margins faster.”

Action Plan, Revenue and Capacity

“We are laser-focused on managing the current environment of low demand,” said Joanna Geraghty, JetBlue’s President and Chief Operating Officer. “In the short term, we have added tactical point-to-point flights, responding to unserved demand in leisure and VFR markets and supporting our cash generation efforts. In the long term, our actions help us solidify our network strategy to improve our position in our Focus Cities. We are taking advantage of unique opportunities presented by the pandemic to allow us to rebuild our margins when demand returns.

Volumes have increased since demand bottomed out in April, and during the second quarter our revenue broadly tracked to our L-shaped recovery forecast. We expect demand trends will continue to be volatile and recovery will not be linear. Given the choppiness in demand, we will continue to take a conservative approach in planning capacity and forecasting revenue.

As we see booking trends beginning to improve after bottoming out in April, we believe capacity will lead the way to demand and revenue recovery. That said, our guiding criteria is cash generation, and we will continue to be nimble in reacting to changes in demand trends.”

Cost Performance and Outlook

“We continue to manage through this fluid environment with a near-term focus on preserving liquidity. Just as importantly, we are positioning JetBlue to thrive as we emerge from the pandemic,” said Steve Priest, JetBlue’s Chief Financial Officer.

“Last month we raised approximately $750 million with a new term loan backed by JFK, LaGuardia and Washington Reagan slots, as well as by our JetBlue brand. We also entered into sale-leaseback transactions that raised nearly $120 million during the quarter. Our liquidity equated to $3.4 billion at the close of June, or 42% of our 2019 revenue.

Our daily cash burn improved every month since April, to under $8 million at the end of June. The improvement during the quarter came mainly from our efforts to manage capacity, reduce our cost base and manage payment terms. Improvements in revenue trends during the quarter also contributed to our progress in cash burn.

Looking into the third quarter, we continue to estimate our daily cash burn between $7 and $9 million, mainly driven by a continuation of our work to reduce our cost base, and capacity actions to respond to changes in demand. Where we fall within the range will depend on the revenue environment during the third quarter.”

JetBlue Airways aircraft photo gallery:

JetBlue Airways aircraft slide show:

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Corendon Airlines paints a Boeing 737-800 in the colors of 1.FC Nürnberg

Corendon Airlines has painted a Boeing 737-800 (9H-CXA) in the colors of 1.FC Nürnberg:

The aircraft is designed in club colors. On the fuselage and the tail unit of the Boeing 737-800 the 1.FCN logo is displayed. The lettering 1. FC Nürnberg can be read on the fuselage sides. The headrests in the interior are also provided with the 1.FCN logo. Airport Managing Director Dr. Michael Hupe, Chairman of the Board of Corendon Airlines Yıldıray Karaer, Commercial Director of 1. FC Nürnberg Niels Rossow and representative of the Major of the City of Nürnberg Thomas Pirner presented the aircraft.

Corendon Airlines aircraft photo gallery:

Corendon Airlines aircraft slide show:

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Lufthansa to fly to two additional sunny destinations in the Canary Islands

Lufthansa will be offering two new sunny destinations from Frankfurt: Gran Canaria and Tenerife.

Starting Saturday, October 3, 2020, Lufthansa will be operating to/from Tenerife with flight number LH1500/1501 and to/from Gran Canaria with flight number LH1502/1503. The flights to the Spanish Canary Islands will be operated on Saturdays and Sundays with an Airbus A320 family aircraft.

Summer flight schedule (3 – 24 October 2020), local times:

LH 1502 FRA 09:30 – 13:10 LPA
LH 1503 LPA 14:10 – 19:40 FRA
LH 1500 FRA 09:30 – 13:30 TFS
LH 1501 TFS 14:30 – 20:05 FRA

Winter flight schedule (25 October – 27 March 2020), local times:

LH 1502 FRA 09:30 – 13:10 LPA
LH 1503 LPA 14:10 – 19:50 FRA
LH 1500 FRA 09:15 – 13:15 TFS
LH 1501 TFS 14:15 – 20:00 FRA

Lufthansa continues to complement its attractive range of tourist destinations, which are to be gradually expanded. Aside from the existing expertise in the corporate sectors, the Lufthansa Group’s goal is to increase the tourism footprint in the private travel segment in the long term and to actively shape the future of tourism.