United Airlines let loose a three pronged set of news headlines on Friday, the day everyone uses because bad news doesn’t get read as much.
Following on from the news that one of its partner airlines (see:HiFly, JetBlue, RyanAir, United) was being jettisoned, United terminated ExpressJet.
ExpressJet was the largest of the pair, accounting for 95 aircraft, while CommutAir only has 37. The scale of that reduction shows how far and how deep the cuts United feels it has to make are. If ExpressJet can’t find a way to operate by itself, it’s almost certainly facing imminent bankruptcy. United was a minority shareholder with owners ManaAir LLC.
ExpressJet had only concluded a long term extension with United on February 24th 2020 and a new pay deal with pilots in March. Plans to extend the fleet of E145’s to 121 aircraft were well under way, including a full interior refurbishment. ExpressJet was about to become the worlds largest E145 operator.
How quickly fortunes change. As of today the horror of the move seems not to have permeated into ExpressJet and they’ve made no formal comment. I suspect United would have paid them off quite handsomely, but its hardly the same thing.
Playing politics with peoples lives
United also announced that it was looking at an additional 16,000 staff furloughs and layoffs, most of them permanent. The move is partly real and partly politics. The announcement came as the US Congress considers another stimulus bill, and if airline payroll support schemes should continue, which they are minded to do to the tune of $32 billion. This will help push them in the that direction, as United well knows.
International operations boosted
There are many analysts – and I agree with them – that are warning airlines about over capacity towards the winter months. United announced a sizeable expansion of its international operations from September, including Munich, Frankfurt, more London, Australia and much more.
With the pandemic in the US worsening at a pace that’s hard to keep up with, (somebody dies every minute from Covid 19 at present in the US alone), countries in Europe with extensive quarantines, Australia in virtual isolation for a second time, and again with quarantines, who exactly is going to fly on these aircraft? Airlines are almost too keen to start flying places their passengers just aren’t welcome until Covid is under control, and nobody expects that before this time next year, if then, and only if a vaccine works.
Airlines are in danger of spending too much time and money on unprofitable routes in the vain hope they’ll somehow be OK.
International Airlines Group posted hideous losses yesterday for the first half of 2020, totalling some $4.5 billion US. That compares to a $1.7 billion profit in the same period of 2019.
It allowed for the write off costs of the 32 747-700’s BA let go, the remaining A343/A346 fleet at Iberia, two older A332’s, a couple of A321’s and and a handful of A320’s. The scrap value was estimated at $60 million, on an $800m write down.
Despite the operational losses, IAG is still going to buy AirEuropa, the Spanish leisure operator. It’s also been using AerLingus to strengthen its domestic operations in the UK – The Irish Republic isn’t affected by the UK’s exit from the EU in the same way, for complex reasons dating back to independence in 1922 and the 1998 Good Friday Agreement that ended the ‘troubles’ in the North.
As a result AerLingus has based a fleet of ATR’s in Belfast City Airport, effectively replacing Flybe’s old services to UK cities.
As reported yesterday (BA ends A318 JFK service, Cathay Pacific hibernate,,) British Airways also ended its A318 service from London Docklands.
KLM told staff yesterday that it would be looking to reshape the airline’s future and that 4500-5000 jobs would have to go as it rationalised its operations.
Passenger numbers fell 95% in Q2 and the airline lost US$800m in the first half of 2020, compared to a $200m profit in the same period of 2019.
Losses of US$1.555 billion were reported, but the ailrine has raised plenty of capital. Q2 saw a 92% capacity drop, and it doesn’t plan on getting above 80% reductions even in Q3-Q4.
The company is burning $15-17m per day in costs, and its return to service is based on international restrictions being lifted – which seems ever more unlikely as Covid has never gone away and in places is sharply worsening.
RyanAir Group owned Lauda is to cease being Austrian. RyanAir is giving up its Austrian AOC. Instead it will operate under a Maltese AOC and work in tandem with Malta Air, the RyanAir owned leisure subsidiary. It will in future be known as Lauda Europe.
The Maltese Government operates a highly advantageous tax and operating environment for aviation and aviation services – hence its use by companies like HiFly Malta.
All of Lauda’s Austrian assets will be sold off and the entire business closed in Vienna, shifting it all to Valetta.
ABC’s first 777F is set to be delivered and has just been painted. Rumour has it it might end up with Cargologicair UK, but it’s not showing any of the red markings associated with that subsidiary.