While the coronavirus pandemic has had a wide-ranging impact across African carriers, the timing of the crisis has been particularly calamitous for South Africa’s struggling airline sector. The country’s carriers, notably its two state-held operators, were already in the mire even before the coronavirus pandemic prompted the halting of passenger services and vital revenues. Now it appears long-struggling national carrier South African Airways could be approaching an endgame after wide-ranging reports suggest the government has told administrators running the airline that it is not able to give it any more funds towards its rescue. Debt-ridden SAA was put into formal restructuring last December shortly after a crippling strike added to the carrier’s woes. Business-rescue practitioners have since embarked on major restructuring and cash-saving measures, including streamlining its network and, in March, launching a consultation on potential job cuts. The restructuring was already proving complex – with government officials outlining opposition to some of the network cuts – and finalisation of SAA’s restructuring plan had already been pushed back from the end of February to the close of March. But in the interim, SAA – in line with the implementation of travel restrictions implemented by South Africa to counter the spread of coronavirus – ultimately halted scheduled passenger flights as of 24 March. Media reports in South Africa cite a 14 April letter from SAA’s business-rescue practitioners Les Matuson and Siviwe Dongwana to affected parties, saying they received a response from government that it “is unable to provide additional funding to sustain the business rescue process”. “Neither will lending guarantees be provided in respect of the business rescue process,” the letter is cited as saying, noting the administrators are still assessing the impact of the development on the business rescue process. South African media also report that a copy of finance minister Tito Mboweni’s speaking notes, circulated by the National Treasury during a briefing yesterday, said part of the government’s fiscal response to the coronavirus crisis included closing SAA. South Africa’s public enterprise ministry is quoted as saying it is still exploring options for SAA. Struggling SAA has required a series of state bailouts over the years, as it has battled with its historical debt burden. The airline has also struggled for boardroom continuity, and acting chief executive Zuks Ramasia retired on 14 April, less than a year after assuming the position. Last October, South Africa’s public enterprises minister informed the country’s parliament that SAA and state-held regional operation SA Express are not going concerns, in a letter explaining delays in the carriers’ annual report submission. SA Express too was forced into formal restructuring in February – a ruling the airline initially challenged. On 18 March the regional carrier suspended operations until further notice. While it mentioned the impact of the coronavirus outbreak, SA Express indicated this was only one consideration behind its decision, attributing the suspension to “adverse recent developments”. South African media, citing court papers, report that business-rescue practitioners have complained that the department of public enterprises has withheld required funding and have applied for the liquidation of SA Express. But the ministry said allegations that the government “deliberately withheld financial support to the rescuers, and that the department’s approach to the process was unconstructive, are baseless”. The interim chief executive of SA Express, Siza Mzimela, left the carrier at the end of March. Former SA Express boss Mzimela had returned as part of a state intervention team initially tasked with helping the carrier through operational difficulties, which had resulted in its being grounded in May 2018. While South Africa’s cash-strapped state-owned carriers are feeling the brunt of the crisis, conditions in the country – including tough economic conditions – were also causing problems for private operators. Privately owned South African carrier Comair earlier in April called off its planned acquisition of aircraft leasing specialist Star Air Cargo and Star Air Maintenance as it battles mounting challenges. While no reason was specified for the purchase being abandoned, the airline had been dealing with the impact of the coronavirus crisis on top of a series of existing challenges, including a difficult economic environment, the grounding of the Boeing 737 Max, and additional costs while it transitions to a new maintenance provider. “Despite our efforts over the last few months to preserve cash, maintain liquidity; divestment from non-performing acquisitions; aggressive cost reduction across the group; taking back control of the fleet; and unlocking further operational efficiencies, more remains to be done,” said Comair chief executive Wrenelle Stander in a trading update on 23 March. Comair has initiated a formal labour restructuring process as part of further efforts to reduce its costs.


Source: Cirum

United Airlines says it will receive $5 billion in payroll support from the CARES Act, designed to assist airlines in managing through the decline in demand as a result of the global coronavirus pandemic. Chicago-based United says on 15 April that $3.5 billion will be in grants and an additional $1.5 billion will be in low-interest loans. The carrier adds that its parent company also expects to issue warrants to purchase approximately 4.6 million shares of common stock to the federal government. These funds will cover a portion of our pay and benefits costs through September 30, and we are thankful for the support provided to our employees and their families by the CARES Act,” the airline says in a statement. “This financial support is critical to our people, who are ensuring air service to communities throughout the country and supporting the shipment of much-needed medical supplies and travel of health care professionals around the globe.” Several other airlines including Delta Air Lines, Southwest Airlines, JetBlue Airways and American Airlines have announced in the past days that they will be receiving government aid from the $2 trillion package that was approved by Congress and signed into law by President Donald Trump at the end of March. Altogether about $60 billion was set aside for the aviation industry after demand dried up following global pandemic’s rapid spread around the world. On 14 April, US Treasury Secretary Steven Mnuchin said Alaska Airlines, Allegiant Air, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, United Airlines, SkyWest Airlines and Southwest Airlines had told the government that they plan to participate in the payroll support programme.

Source: Cirium

Boeing confirms it delivered the last commercial 737NG in January when it handed two 737-800s to China Eastern Airlines, ending a production run of the type’s commercial variants that started in late 1997. In the roughly 22 years since, Boeing delivered some 6,900 737NGs to commercial carriers, its data shows. Several media outlets had previously reported that Boeing handed over the final 737NG, also a 737-800, to KLM Royal Dutch Airlines in December 2019. But Boeing says that while the KLM aircraft was the last 737NG to come off its production line, the final delivery went to China Eastern on 5 January. That airline received two NGs on 5 January. Those aircraft, both now in storage, have registration numbers B-20A8 and B-20A1. Boeing started delivering 737NGs in 1997 when it handed the first of the class, a 737-700, to Southwest Airlines. Southwest would become the top 737NG customer, taking delivery of 689 of the jets, according to Cirium. Boeing would go on to deliver 69 737-600s, 1,150 737-700s, 4,989 737-800s, 52 737-900s, 505 737-900ERs and 149 737NG-based Boeing Business Jets, according to the airframer’s data. The 737NG was replaced by the 737 Max which has new, more efficient engines. However, those engines are heavier, requiring the Max to use the Maneuvering Characteristics Augmentation System (MCAS) to adjust the trim to compensate for the weight. Problems with the MCAS have been connected to two fatal crashes of the Max which led to the grounding of the type last year. Boeing has also delivered several hundred military variants of the 737NG, one of which, the P-8 Poseidon maritime surveillance aircraft, remains in production.

Source: Cirium