European authorities are putting forward proposals to ease airline licensing rules and ground-handling companies’ regulatory burdens, with the intention of reducing costs during the coronavirus crisis. Airlines which are unable to meet financial obligations over the next 12 months would normally have their operating licences revoked, or be issued with a temporary licence to enable the operator to restructure. But the European Commission states that a temporary licence “sends a very negative signal” to the market about the airline’s ability to survive – impeding cash-flow and exacerbating its financial problems. “It is likely that many airlines, which were financially healthy before the crisis, will end up in a situation whereby their liquidity problems lead to the legal need for their operating licence to be suspended, revoked or replaced by a temporary licence,” it states. The Commission says this would create an unnecessary administrative burden with no clear safety or economic benefit, and it is proposing to suspend temporarily this obligation on the condition that safety is not jeopardised. It also says that the coronavirus crisis is likely to last for several months, which means temporarily lifting procedural requirements on emergency measures relating to traffic rights, which were originally designed to address short-term issues. This will enable states to keep proportionate emergency measures in place beyond 14 days. The proposal will extend until the end of 2021 the contracts of European Union ground-handing suppliers which were due to expire by the end of this year. This is intended to provide greater security to the creditors of ground-handling companies, whose activities have been badly hit by the crisis. “Bankruptcies [of ground-handlers] would be detrimental to the entire sector in that they would restrict competition in the short and medium term – and lead to a disruption of ground-handling services, which could also affect the recovery,” the Commission says. It adds that it will introduce an urgent procedure allowing an airport operator – in the event of a ground-handling company’s collapsing – to directly choose a replacement handler, for a six-month period, without having to organise a formal selection process. European transport commissioner Adina Valean says the proposals “should allow companies in the [air transport] sector to start focusing on their much-needed recovery”.

Source: Cirium

Boeing believes it will resume 737 Max deliveries in the third quarter of 2020, with chief executive David Calhoun saying the company is progressing well through certification work despite challenges posed by coronavirus. “We currently expect the necessary regulatory approval to allow Max deliveries in the third quarter,” Calhoun says on 29 April. “We are very confident that the process will conclude with the… certification.” Boeing is now working through what Calhoun describes as “a mountain” of documentation work. He says the certification pace has been hampered by the coronavirus pandemic, which has forced staff to work from home. Boeing expects to resume 737 Max production this year at “low rates”. It does not specify initial production volumes but says production will “gradually increase” to 31 aircraft monthly in 2021, with additional increases to follow. “The slower production rate ramp-up reflects commercial airline industry uncertainly due to the impact of Covid-19” and the pace at which Boeing is able to deliver the roughly 450 Max in storage, Calhoun says. Boeing produced those 450 jets since the grounding in March 2019, but has been unable to deliver them during the grounding.

Source: Cirium

British Airways is proposing a restructuring programme which, it warns, could result in up to 12,000 redundancies. The IAG-owned carrier states that it has notified its trade unions about the measure and – while it remains subject to consultation – the proposal is likely to affect “most” of the UK airline’s employees. It furloughed over 22,600 personnel in April. But BA says it is preparing for the expectation that the recovery of passenger demand to last year’s pre-coronavirus crisis levels will “take several years”. UK cockpit union BALPA says the disclosure has “come as a bolt out of the blue”, adding that the flag-carrier’s personnel are “devastated”. “BALPA does not accept that a case has been made for these job losses and we will be fighting to save every single one,” it insists. Over the first quarter IAG turned in an operating loss of €535 million, and it has taken an exceptional charge of €1.3 billion on its pre-tax profit arising from ineffective fuel and currency hedging. All of the reduction in the operating result for the quarter occurred in March, says the company. BA bore the majority of the impact, followed by Iberia and Aer Lingus. Spanish budget carrier Vueling experienced a “modest increase” in operating loss, says IAG. IAG adds that it expects its operating loss for the second quarter to be “significantly worse”, given the collapse of passenger traffic and despite a degree of relief from the government on staff costs. Passenger capacity in April and May has been cut by 94%. IAG conducted some 350 cargo-only flights in the month to 26 April. “Capacity from June will depend on the timing of the easing of lockdowns and travel restrictions by governments around the world,” the company adds. Total cash and undrawn aircraft finance facilities amounted to €9.5 billion at the end of March, including €6.95 billion of cash, cash equivalents, and interest-bearing deposits. IAG is set to detail its results for the quarter on 7 May.

Source: Cirium