Airlines slashed cash burn in fourth quarter: IATA
March 02, 2021
Carriers minimised their losses in the last quarter of 2020 through dramatic cuts to fixed costs, according to research from IATA. The association analysed the fourth-quarter results of 20 airlines and found that although they continued to report cash burns on the back of weak passenger numbers, those falls declined significantly. "In this small sample, airline net losses narrowed down close to 1Q20 levels when the pandemic initially hit the industry," says IATA. "It is important to note that this is mostly due to the rigorous cuts in capital expenditures and operating costs since revenues are still less than half of their level in 1Q20." IATA notes that preserving cash has been airlines' top priority through the crisis, and that they have made "significant progress" in reducing fixed and semi-fixed costs. Airlines in IATA's sample reduced maintenance and employment costs by 54% and 39%, respectively, in the last quarter of 2020 against a year earlier, although the decline in operating costs, of 45%, was much lower than the fall in revenues: 67%. IATA warns that 2021 "will also be a challenging year and airlines will look for cost-cutting measures until the recovery starts with the opening up of international markets". The association still expects the sector will burn cash through 2021 as its recovery is delayed to the second half of the year. Passenger revenues remained weak in the fourth quarter, declining by 73%, although cargo revenues increased by over half. Yields declined in November and December as airlines attempted to stimulate demand. December base passenger yields were 2% below a year earlier. "Looking ahead, passenger yields are expected to soften as forward bookings remain limited due to uncertainties related to travel restrictions," states IATA. The association also flags rising oil and jet fuel prices as an issue for carriers, as values returned to pre-pandemic levels in February. Jet-fuel price rises are being driven by the same factors that should enable the recovery in air travel demand, notes IATA, "hence airlines would face pressure on the cost side once the recovery starts".
Czech Airlines files for reorganisation
March 01, 2021
Czech Airlines (CSA) has filed for reorganisation under insolvency regulations as "the last option to save the company" unless it receives government financial support. The carrier says its application to a court in Prague was necessary because an extraordinary moratorium has ended and "all possible solutions to resolve the challenging financial situation" have been exhausted. All scheduled flights of CSA and its parent carrier Smartwings will continue without interruption. CSA says its "payment reputation was challenged significantly" by the pandemic, and laments "unequal and unfair competition" owing to a lack of government support. "Despite recommendations of the European Commission and the International Air Transport Association, CSA did not receive any financial support from the government, as opposed to its direct competitors," the airline asserts. Smartwings and CSA have asked the government to provide financial support to cover around nearly 7,200 flight cancellations when operations were suspended between March and May 2020. Additionally, CSA says that it and Smartwings have since August been asking the government to implement a dedicated air transport support programme similar to schemes in other sectors, and complains: "The Czech state refused to participate in the rescue of CSA… despite the fact that the shareholders declared their readiness for financial support to CSA." CSA argues that Smartwings plans to merge the two airlines under a "common concern solution" will "lead to their rescue and is more favourable for the creditors". The SkyTeam carrier adds: "The proposed reorganisation is the last option to save the company, unless the approach of the Czech government is reconsidered." More than 600 staff contracts have been terminated amid wider restructuring, CSA notes. As a result of the pandemic, the airline suffered a Kc1.57 billion ($73 million) annual loss amid a 20% revenue decline, it says. Data shows that Czech Airlines has one Airbus A319, one A320, one Boeing 737-800 and five ATR 72-500s. The turboprops are listed as being in storage. The carrier has four A220-300s and three A321XLRs on order. CSA says it was scheduled to receive new aircraft from Airbus in late 2020, and planned to launch long-haul flights. Its A320 and 737 are managed by lessor BBAM. Three of the ATRs are managed by ASL Aviation Group and the other two by Nordic Aviation Capital. Smartwings has 27 737NGs and seven 737 Max 8s. Then of the 737-800s and six Max jets are listed as being in storage. Smartwings has another 21 Max 8s on order. All aircraft in Smartwings' existing and on-order fleet are, or will be, leased. The lessors include AerCap, Air Lease, BBAM, Carlyle Aviation Partners, GECAS and Macquarie AirFinance.
LAM 737-700 involved in Mozambique landing excursion
March 01, 2021
One of African carrier Linhas Aereas de Mocambique’s Boeing 737-700s has suffered a runway excursion during landing at Quelimane airport. LAM says the aircraft was operating the domestic flight TM1134 from Maputo on 26 February. The aircraft involved (C9-BAR) came to rest on rough grassy ground after arriving from the capital at about 14:40, the airline adds. Quelimane has a single runway, designated 18/36, around 1,800m in length. LAM says the aircraft “ended up sliding, end at the end of the runway”. Images from the scene indicate passengers were disembarked using airstairs, and the airline says there were no casualties. Meteorological data for the airport at the time of the incident indicates good visibility, with no significant adverse weather, although it suggests crosswinds from the west, and the presence of cumulonimbus cloud in the vicinity. LAM has two 737-700s in a fleet which also includes a pair of Embraer 190s. The aircraft involved in the incident, originally delivered to Aloha Airlines in 2004, was leased by LAM in 2019.