United Airlines says that it will involuntarily furlough 16,370 employees at the end of this month as the long-term effects of the corona virus crisis continue to take its toll on the air transport industry. But that number is about 55% less than the initial estimates and the number of employees who were warned in July that their jobs may be on the chopping block. Officials at the Chicago-based airline say that the difference is due to a large number of employees who have chosen to take early exit or a variety of voluntary leave programs. Nonetheless, that number was not high enough to avoid furloughs completely, the company says. “Unfortunately, all of our efforts so far to cut costs, raise debt and introduce voluntary options have not been enough to avoid involuntary furloughs entirely,” the company tells its employees in an internal memo on 2 September. “Today, each of our operations leaders communicated directly with their teams to share the heart-wrenching news that approximately 16,000 United employees will be notified of an involuntary furlough effective as early as October 1.” On 8 July, United sent out so-called WARN notices, a federal requirement when mass layoffs are imminent, to 36,000 employees telling them their roles may be in danger. Since that date, about 7,400 employees have decided to voluntarily leave the company completely, either through separation agreements or early retirements, the carrier says. For all of the work groups, the actual furloughs, as the numbers stand currently, will be less than the number of WARN notices sent out in July. Of the total, the work groups which will be most affected are pilots and flight attendants. Currently about 2,850 pilot and 6,920 flight attendant roles will be eliminated. The company says that 450 pilots took advantage of the early retirement scheme it offered, and that it is still in negotiations with the union so a final number is still not yet available. Pilot furloughs come with additional complexity over other work groups because of the extensive training requirements each pilot needs by law to maintain currency. In addition, should a pilot be shifted from one aircraft type to different type, he or she must complete a certain number of hours of initial training, and maintain currency with regular recurrent training afterwards. So when pilots are furloughed, bringing them back is often more difficult than with other work groups, officials say. PAYROLL SUPPORT EXTENSION? Many US airlines and their unions have pushed lawmakers to pass an extension of the payroll support program that so far helped keep airlines afloat after the corona virus brought air transport to a near-standstill earlier this year The US government set aside about $58 billion in grants and loans for the industry as part of the $2 trillion CARES Act, as long as no involuntary furloughs took place until the end of September. That deadline is fast approaching and passenger demand has not rebounded enough to allow the carriers to operate as they had prior to the global pandemic.
”To be clear, an extension would be the one thing that would prevent involuntary furloughs on October 1 and hopefully delay any potential impact on employees until early 2021,” the airline says in the memo to its workers. United says it would be open to an extension of the program with similar conditions. “That is a deal that we would readily and happily accept,” says one official who asked not to be named. The airline also says that during the month of September it will be flying about 63% of capacity that it had in the same month a year ago. That’s up from the lows in April and May, but is still dragging on the company’s bottom line. United has said it does not expect normalization of operations and widespread travel demand to return until a vaccine is widely available.

Source: Cirium

Traffic among Arab air carriers is not now expected to return to pre-crisis levels until at least 2024 and could potentially not reach those levels before 2027, fresh analysis from the Arab Air Carriers Organisation (AACO) shows. In its third status report of the impact of the pandemic on the economy, travel and tourism, published on 31 August, the Arabian airline body estimates the best-case scenario for passenger traffic among Arab carriers returning to 2019 levels is in 2024. But it considers a worst-case scenario that traffic for these airlines will not return to the previous highs until 2027. The fresh analysis comes as it now expects the global return in traffic to pre-crisis levels to take a year longer, in 2024, than its previous expectations. After a bright start to the year, Arab carrier traffic was all but wiped out by the pandemic during April. Passenger traffic among these carriers in the first half was down 55% - on capacity cut 51% - compared to the same period in 2019. ”As for the second half of 2020, demand is expected to improve gradually as restrictions are relaxed and passengers regain confidence to travel,” AACO says. It expects traffic to be 57% down among airlines in the region for the full year, though it sees capacity cut only a third compared to 2019. AACO also now sees a deeper impact for tourism to the Arab region. It had expected international tourist arrivals to be down 55% this year in a best-case scenario. It now projects a 65% drop in international visitors to the region in 2020 compared to last year. Echoing its traffic outlook for the region, it expect international tourist arrivals to remain below 2019 levels until 2024 at best. “If the pandemic intensifies and other related industries continue to suffer from its repercussions, the recovery path is expected to follow the worst-case scenario, where international tourist arrivals to the Arab world are forecast to remain below 2019 levels until 2027,” it says. The analysis also highlights the impact on the Arab economy, particularly from lower oil prices. AACO’s previous best-case forecast was for the Arabian economy to recover to 2019 levels next year. ”However, the impact of the dual-shock (the pandemic and the drop in oil prices), caused more damage than expected, leading to contraction in trade and a collapse in oil revenues, travel and tourism, and remittances,” it notes As a result it now see a return to last year’s levels in 2022 at the earliest - assuming average oil prices stay at around $45-50. If the oil price stays lower the economy may not reach 2019 levels until 2023. ”The outlook in the region remains highly related to the changes in the global oil markets,” AACO adds, noting oil revenues represented on average around 65% of the Arab world nominal GDP in 2019.

Source: Cirium

The lack of co-operation between governments is stymieing the restart of commercial air travel amid the coronavirus pandemic, potentially causing “irreparable demand to global connectivity”, according to IATA. Reflecting on a bleak set of figures for July passenger traffic today, IATA director general Alexandre de Juniac lamented that while governments had worked together to set guidelines for the ramping-up of air travel, that co-operation has ended when it comes to implementing the restart of services. “That’s why 90% of international flying has stopped,” de Juniac states. “The demand is there. When borders open without quarantine, people fly. But there is too much uncertainty in how governments are managing the situation for passengers to rebuild the confidence to travel. ”What is killing aviation is the fact that governments are not managing the risks of opening borders. Instead, they are keeping global mobility effectively in lockdown.” He cautions that if this continues, ”the damage to global connectivity could become irreparable”, with “severe consequences” for economies and public health. IATA’s latest figures for passenger travel in July show that traffic measured in RPKs was 80% down on the same month in 2019. Any uptick in demand is largely being driven by domestic markets – particularly in China, where RPKs were only 28% lower year on year. International markets remain in the doldrums, with demand 92% down year on year in July. Intra-European travel saw the most positive trend – lower by 79% from 2019 – but transatlantic, transpacific and intra-Asia travel had almost flat-lined at close to 100% down on 2019 levels. Looking into August, IATA expresses concern that the gap between capacity being added by airlines and the demand for travel is widening in the wrong direction. It notes that unlike during the recoveries from previous crises, airlines have been unable to use low ticket prices to stimulate demand, largely because depressed traveller numbers are related to low consumer confidence, which is being exacerbated by inconsistent travel restrictions. IATA also notes that it is increasingly seeing downside risks in its end-July projection for the industry’s recovery – which was itself a downgrade on previous expectations. With this challenging outlook in mind, the airline body has proposed a three-point action plan for governments to safely re-open borders, based around three areas: implementing ICAO’s “Take-off guidance” universally; building on ICAO’s Aviation Recovery Task Force (CART) to develop a common framework to reopen borders; and developing testing measures to aid the opening of borders. “Airlines have been largely grounded for a half-year,” de Juniac states. “And the situation is not improving. In fact, in many cases it is going in the wrong direction. We see governments replacing border closures with quarantine for air travellers. Neither will restore travel or jobs. Worse, governments are changing the entry requirements with little notice to travellers or coordination with their trading partners. “This uncertainty destroys demand. 10% of the global economy is sustained by travel and tourism; governments need to do better to restart it.” IATA also suggests that with state-support schemes coming to an end around the world, the airline industry is likely to need a second injection of financial help amid the weak demand recovery. It also reiterated its demand for a waiver of the 80:20 slot regulation from the European Commission, which has regulatory oversight of around half the almost 200 slot-controlled airports worldwide.

Source: Cirium