The US Department of Transportation (DOT) has published rules that US carriers must follow if they decide to accept government aid as a result of financial difficulties resulting from the global coronavirus crisis. The DOT says in a show cause order released on 31 March that airlines will be required to conduct minimum service levels “to the extent reasonable and practicable” between now and 30 September as part of the 880-page Coronavirus Aid, Relief, and Economic Security (CARES) Act support passed by the US Congress and signed into law by President Donald Trump last week. “The order proposes that air carriers receiving financial assistance under the CARES Act maintain minimum air services on a nationwide basis, with some exceptions,” the DOT says. The determination will be based upon airline schedules prior to 1 March 2020. For example, if before 1 March an airline served a US city with one flight per day at least five days per week, the carrier would need to provide at least one flight per day, five days per week, for that point, the DOT says. If it was one flight a day on less than five days per week, the carrier would only need to serve that point with at least one flight on one day per week. “A covered carrier can also meet its minimum service obligation for a given point by dividing its flights across multiple cities, if it so chooses. If several carriers served a point, each would have to serve the point in accordance with the minimum service levels, regardless of the service decisions made by the other carriers serving that point,” the DOT writes. The DOT also points out that the new provisions do not lift antitrust rules currently in place. That said, airlines can also request exemptions where it would not be “reasonable or practicable” to maintain service. On 27 March, the President signed a $2 trillion aid package designed to support distressed companies and employees after the coronavirus pandemic massively disrupted the US economy in the past weeks. The Coronavirus Aid, Relief, and Economic Security Act has provisions for the air transport industry and its workers to the tune of $58 billion. It includes provisions for passenger and cargo airlines, general aviation, as well as air transport-related employees and contractors who fear for their livelihoods after demand for air travel dropped as the pandemic spread around the world. The Senate approved the bill on 25 March after about a week of negotiations between politicians of the two chambers. The measure includes loans to passenger airlines and related businesses ($25 billion), cargo airlines ($4 billion) and business “critical to maintaining national security” ($17 billion). Aside from loans, the bill will provide ”payroll support” of about another $29 billion for passenger and cargo airlines, and $3 billion for contractors like baggage handlers and catering workers. This money must be used for wages, benefits and health care. Airports will also receive an additional $10 billion, with $100 million going specifically to smaller general aviation airports. The document also provides relief from excise taxes for general aviation commercial operations.

Source: Cirium

China Eastern Airlines enjoyed a boost in operating and net profit last year while strengthening its cash position, but the coronavirus pandemic is creating "significant uncertainty" in 2020. The Shanghai-based carrier's operating profit gained 8.3% to CNY10 billion ($1.4 billion) for the year ended 31 December 2019. Net profit increased 18.3% to CNY3.2 billion. These figures came from revenues of CNY121 billion, up from CNY115 billion in 2018. China Eastern reported cash and cash equivalents of CNY1.4 billion at the end of 2019, compared to CNY646 million at the end of 2018. The outlook for 2020, however, is not so clear, as the coronavirus pandemic has created "significant uncertainty" for its domestic and international business. "[T]he general impact on the operation and financial condition of the group for the year cannot be precisely predicted currently," it says. Throughout 2019, China Eastern, which says it has been "continuously practising the vision of green development and optimising its fleet structure in recent years", introduced 44 aircraft to its fleet and retired one aircraft. "With the introduction of new aircraft, such as A350-900, B787-9 and A320neo, the group’s fleet age structure still continues to remain young," it says. At period-end, the company's fleet had an average age of 6.4 years. The airline adds that the daily utilisation rate of its passenger jets increased by 0.12h per aircraft year-on-year to 9.55h. As at 31 December 2019, the group operated a fleet of 734 aircraft, comprising 723 passenger aircraft and 11 business aircraft held under trust. Among these are 14 737 Max aircraft, grounded since March 2019. This has only been compounded by the worldwide grounding of passenger jets as the coronavirus crisis wipes out air travel demand. China Eastern originally planned to introduce 11 Boeing 737 Max 8s in 2019, ten of which were not delivered by the end of the year. It was also planning to introduce 34 and 12 737 Max 8s, respectively, and retire 12 and eight 737-800 or 737-700 aircraft, respectively, in 2020 and 2021. The company says: "The group is negotiating with Boeing regarding the time for resumption of operation and delivery of B737 Max 8, which is still with greater uncertainty."

Source: Cirium

Air Canada says it is cutting 16,500 employees and slashing its network by up to 90% in April and May, confirming earlier reports in Canadian media. “Due to the unprecedented impact of Covid-19 upon its business, the airline will reduce capacity for the second quarter of 2020 by 85%-90% compared to last year’s Q2 and will place 15,200 members of its unionised workforce on off duty status, and furlough about 1,300 managers. The workplace reductions will be effective on or about April 3 and are intended to be temporary,” the airline writes in a statement on 30 March. News of the staff reduction, which accounts for more than half the airline’s total staff of 30,000, comes two weeks after Canada’s largest airline announced it had temporarily laid off 5,100 flight attendants. It is unclear if the 16,500 staff cuts announced on Monday include the 5,100 attendants. ”To furlough such a large proportion of our employees is an extremely painful decision but one we are required to take given our dramatically smaller operations for the next while. It will help ensure that Air Canada can manage through this crisis that is affecting airlines everywhere,” says chief executive Calin Rovinescu. In addition to the staff reductions, Air Canada will be taking extraordinary measures to protect its liquidity, including cutting salaries of top executives, delaying share buy-backs, drawing down lines of credit and implementing a cost reduction and capital deferral program, the company says. The union representing the airline’s flight attendants, the Canadian Union of Public Employees, says it does not have any information regarding ”additional” layoffs among flight attendants. That could imply that the 5,100 layoffs announced on 20 March are part of the 16,500 mentioned on Monday. This past weekend, Air Canada said it was continuing repatriation flights for Canadians who have been stranded overseas as the coronavirus brought most international air travel to a near-standstill. On 28 March alone, the company says it operated 59 flights carrying 8,500 passengers. Between 27 and 29 March, the company will have brought home about 22,500 passengers on 175 flights form Asia, Europe, Latin America and the United States, the airline says in a statement on 29 March. Earlier this month, Air Canada had said it will draw down most of its network but keep some trans-border and international flights after 1 April “to maintain a number of ‘air bridges’ to facilitate essential travel and ensure the continued movement of emergency supplies and other vital goods”. The carrier withdrew earnings guidance for 2020 and 2021, and requested government aid to ease financial losses it expects to suffer in the coming months.

Source: Cirium