Alaska Air Group on 22 June is forecasting difficult times ahead for the second and third quarters even as air travel demand begins to slowly emerge. The group is projecting that June capacity will be down 70% year-over-year while revenue will be down 80% year-over-year. Passenger traffic began to increase while cancellations began to decrease in May, but Alaska says "demand remains significantly below historic levels" as the coronavirus pandemic drags on. The parent of company of Alaska Airlines and Horizon Air says in a Securities and Exchange Commission filing that "if demand continues to improve, we expect to moderate our capacity cuts into July and August to approximately down 60% and down 50% from prior-year levels". So far, the uptick in travel led Alaska on 19 June to resume flying eight aircraft belonging to its regional partner SkyWest Airlines. The carrier aims to take delivery of three Boeing 737 Max aircraft by December, along with 15 more in 2021, depending on the regulatory process to recertificate the grounded Boeing aircraft. The mainline parked 156 aircraft through April, reducing capacity by 78% year-over-year, while revenue was down 87%. The reopening of some state economies and businesses has contributed to a slight increase in travel, driving carriers to return some aircraft to service. At 19 June Alaska had $2.7 billion in cash and short-term investments and continues to cut costs. The air group employs around 22,000 workers, 6,000 of whom have accepted voluntary short-term and incentive leave. Alaska Air Group president Ben Minicucci has said the company may reduce its workforce by 3,000 people in 2021. The Seattle-based holding company expects to burn $150 million cash during the month of June, an improvement from the monthly cash burn rate of $400 million at the end of March. It aims to eliminate cash burn by the end of 2020. The group had 319 aircraft in its fleet as of 19 June, including 225 aircraft in the mainline Alaska fleet. In May it permanently parked 12 Airbus A320 family aircraft and said it would refocus pilot training on Boeing aircraft.

Source: Cirium

Mexican flag carrier Aeromexico says it has no plans to file for bankruptcy, but that it is “evaluating alternatives to move towards a better financial position” after the global coronavirus pandemic decimated its liquidity. The public statement on 19 June comes in response to media reports earlier in the day that said the airline is mulling filing for Chapter 11 bankruptcy protection in order to restructure its debt after much of commercial passenger aviation was grounded in the past weeks. “The company hereby informs that it has not initiated, nor has it made the decision to initiate, a restructuring procedure under Chapter 11 of the United States Bankruptcy Code,” the company says. “We are currently identifying additional sources of financing to strengthen operating cash flows,” it says. ”We are also analyzing different alternatives to successfully achieve, in the short and medium term, an orderly restructuring of financial commitments, without affecting or disrupting operations.” Latin American carriers are struggling as the region’s governments have been much slower to respond with support for the air transport industry than in other parts of the world, such as North America and Europe. Billion-dollar aid packages in those regions have helped airlines stay afloat, at least temporarily, and reorganise their operations after passenger demand dropped off sharply when the coronavirus exploded into a global pandemic earlier this year. Chile’s LATAM and Colombia’s Avianca both filed for bankruptcy protection in May in order to shield their businesses from creditors. The airlines say they want to make sure they are able to restart operations smoothly when passenger demand returns and when travel restrictions are lifted. Commercial aviation trade organization IATA has repeatedly criticized Latin American governments’ sluggish response to their aviation industries, and has strongly urged them to intervene on behalf of the sector’s 7.2 million jobs across the region. In May, the body, which represents 290 airlines worldwide, said the goverments had provided less than 1% of the airlines’ 2019 operating revenue in financial aid, making it the least-supportive region in the world. But giving governmet assistance to private companies in countries whose populations are already suffering from economic hardship is a difficult political proposition for many Latin American nations, even though air travel has been able to bridge vast distances across the continent where ground-based transportation networks, infrastructures and systems are sometimes unreliable. Air traffic fell by about 96% in Latin America and the Caribbean as the coronavirus pandemic reached its peak in April, and has yet to make any significant steps toward recovery. While most countries begin to lift restrictions in the coming weeks, Colombia and Argentina expect to have lockdowns in place through the end of August.

Source: Cirium

South African Airways’ final business rescue plan considerably revises down the losses projected over the first three years for the restructured carrier. While a draft plan circulated at the beginning of June indicated losses close to R20 billion ($1.1 billion) for the period, the final plan estimates pre-tax losses of around R6.3 billion. It projects 2023-24 to be the first profitable year, with pre-tax earnings of R836 million. While the draft plan had indicated a fleet being gradually reduced from 40 aircraft, the final business plan appears to presume a fleet of 13 aircraft from the outset, rising to 26 aircraft during 2021-22. This results in a revenue estimate of R1.2 billion for the first year – to the end of March 2021 – increasing to R6.6 billion for 2021-22 and then doubling to a stable figure of about R12-14 billion in subsequent years. By this point the airline would be transporting some 2.8 million passengers per year, with load factors in the low-to-mid-60% range. The business rescue plan estimates that the airline will employ close to 2,900 personnel by 2023. But the whole plan depends on gaining support from creditors, who are set to vote after a crucial meeting to be convened on 25 June.

Source: Cirium