South Africa’s government is urging creditors and unions to support South African Airways’ proposed rescue, warning that the airline’s liquidation is the worse of the options available. But the opposition Democratic Alliance believes the country’s treasury, which is having to cope with funding pressures from the coronavirus crisis, is reluctant to continue bailing out the troubled airline as part of any rescue. The government’s department of public enterprises has been backing a rescue plan on which creditors are set to vote on 14 July. Liquidation, it says, would be “protracted and costly” and will “lead to financial hardship” for employees as well as a “substantial undervaluation” of the airline’s assets. “All SAA stakeholders… should realise that business rescue provides a better outcome than liquidation and should be supported for their collective interests,” it adds. The department argues that a rescue is a “viable alternative” which supports job preservation and can “bring the airline back from the brink”. “Transformation of SAA into a competitive airline will unfortunately require sacrifices and a major restructuring, starting on a conservative basis and gradually and systematically building up over the next three years,” it says. But the treasury outlined South Africa’s financial pressures during a joint meeting, on 3 July, between the parliamentary standing and select committees on finance. “Higher government spending and borrowing has not led to higher growth in many years,” it stated. “We should not confuse people’s desire to lend us money with our ability to pay it back.” The treasury added that it considered the government has a choice between a “looming debt spiral or fundamental reform – and no other option exists”. South Africa’s political opposition, the Democratic Alliance, is accusing the department of public enterprises of misleading the public into believing that funds for SAA’s rescue have been budgeted, stating that an emergency budget last month “did not make any provision” for SAA funding. It says the rescue plan requires R33 billion in funding for three years but offers “no guarantee”, despite projections, that the rescued airline – which the party is describing as a “dead-duck vanity project” – will become profitable in its fourth year.

Source: Cirium

Israeli carrier El Al is putting another 400 personnel on furlough after pilots chose not to operate a number of services.
The airline had been operating a limited number of passenger and cargo services from Israel, although its scheduled passenger flights had been suspended until 31 July. But it says the “non-staffing” of flights by the airline’s pilots has forced it to cancel remaining services at least until this date. El Al has been trying to reach an agreement with the Israeli finance ministry for a $400 million loan but requires productivity deals with its employees. The airline is under increasing financial pressure having recorded a heavy first-quarter loss and it has warned that the loan is crucial to its survival. Chief financial officer Dganit Palti says the crisis has resulted in a “serious liquidity problem” at the airline. Palti states that the airline had a substantial cash balance of $264 million at the beginning of the year. But the burden of debt taken on during the fleet modernisation, as El Al replaced its Boeing 767s and 747s with 787s, has been exacerbated by the slump in the airline’s revenues – down 25% in the first three months. “The decrease in fuel prices – which in normal times is a blessing – has led to losses in hedging transactions which, at low consumption rates, are in part not recognised as effective,” says Palti. El Al recorded a charge of $56 million attributed to this situation in the quarter. It has secured agreements to defer lease payments, and increased its liquidity by arranging the sale-and-leaseback of three aircraft. The company has also sold its stake in logistics firm Maman.

Source: Cirium

All passengers flying with Qatar Airways in economy class will be required to wear face shields as part of health and safety measures announced by the carrier today in response to the risks posed by the coronavirus pandemic. Those shields are in addition to face masks or coverings, and will be provided by the airline. Economy-class passengers must wear shields and masks throughout the flight, the Middle Eastern carrier states, except during drink and meal services. Business-class passengers “are asked to wear their face shield and mask on board at their own discretion, as they enjoy more space and privacy”, the airline says. All passengers will receive a complimentary “protective kit”, which will include a single-use surgical face mask, large disposable gloves and an alcohol-based hand-sanitiser gel. The face shields will be distributed at check-in for Doha-origin flights, and at the gate for overseas-origin departures. Qatar Airways has also confirmed that cabin crew will wear a “new protective gown” in addition to safety glasses, gloves and masks. By mandating face shields, the airline’s measures go beyond those adopted by most other carriers, which tend to focus on face coverings only. “Throughout the COVID-19 crisis, the safety of our passengers has been our highest priority,” states Qatar Airways chief executive Akbar Al Baker. “As the largest international airline flying consistently throughout the pandemic, we have become one of the most experienced in safety and hygiene. We will continue to lead the industry in terms of the services offered to our passengers, so that they can travel with confidence. Al Baker said he expected the global hunger for travel that was important to Qatar Airways’ business model would return, powered by a scientific breakthrough. “The entire scientific community is working to defeat this pandemic and I’m sure there will be a breakthrough that will make people have confidence to travel again,” he said.

Source: Cirium