Moody's Investors Service has downgraded the senior unsecured debt ratings of Boeing and its finance arm Boeing Capital Corporation due to strain on the company's financials and uncertainty of the coronavirus's impact on demand for new aircraft. The rating has fallen one notch to 'Baa2' from 'Baa1' and the outlook is negative, Moody's said in a rating report published 10 April. "The coronavirus is likely to become a significantly greater pressure point on Boeing than the long-running 737 Max crisis," stated Moody's senior vice president and lead analyst Jonathan Root. Moody's said that the "near-term impact of the coronavirus is acute". "The potential for order deferrals and cancellations is a material risk factor, fueled by expected significant reductions in airlines and aircraft lessors' fleet sizes and/or orderbooks for indeterminate time periods." On 11 March, Air Canada cancelled an order for 11 Boeing 737 Max jets, while Avolon announced on 3 April that it would cancel 75 of the type. With more than half the global fleet grounded due to the health crisis and evaporating demand, more cancellations are expected at both Boeing and Airbus. As for the company's financials, Moody's said Boeing remains investment-grade, "albeit tempered by considerable operational and financial risk in upcoming years". "We now estimate external funding needs in 2020 to at least double – to $30 billion – compared to our pre-coronavirus expectations," said Root, noting that Boeing has funded about half of this need with the $13.8 billion delayed-draw term loan facility arranged in February. "Inherent in the company's ratings is also Moody's' expectation that Boeing would avail itself of support from the US government, via one or more loan programs, possibly including the Primary Market Corporate Credit Facility, to the extent that this may be needed," the agency added. The CARES Act – the US government's coronavirus aid programme – makes available $17 billion for businesses important to maintaining national security, which is widely believed to include Boeing. On 24 March, IATA director general Alexandre de Juniac said that if governments did not act to provide liquidity to the industry urgently, "half the companies [airlines]" face collapse "in the coming weeks".

Source: Cirium

Major Japanese carriers have shrunk domestic schedules after the country entered a state of emergency to try and halt the spread of Covid-19. This applies to Tokyo, Osaka, and five other prefectures, and was effective 8 April. It takes the form of a request rather than an order, but gives authorities more power to encourage people to stay home and businesses to close. In response, Japan Airlines (JAL) said on 10 April it was stepping up cuts to its domestic network over the next couple of weeks. From 12-19 April, JAL is increasing average daily flight reductions by 194 to 415, meaning its domestic network has been cut by 49% for that period. By comparison, its domestic network was reduced by 16% between 6-28 March. For the rest of April, its domestic network will be reduced by about 32% compared to its normal schedule. In a 9 April update, All Nippon Airways (ANA) said it was changing flight frequencies for certain cities, affecting a total of 1,523 flights serving 56 routes. A scan of the schedules indicates frequencies on ANA's domestic routes affected are roughly halved. AirAsia Japan will also halt all domestic flying with from 9-30 April.

Source: Cirium

WestJet plans to rehire 6,400 employees if Canada's government passes the proposed wage subsidy programme that would make C$71 billion ($50.6 billion) available to companies that lost 15% of their revenue in March year-over-year due to the coronavirus pandemic Canada's Prime Minister Justin Trudeau on 8 April said he is working to recall parliament and pass the proposed legislation, called the Canada Emergency Wage Subsidy (CEWS). Lower demand due to the coronavirus pandemic forced the Calgary-based airline on 24 March to lay off nearly half of its workforce - about 6,900 employees -through both "voluntary and involuntary leaves”, WestJet chief executive Ed Sims said at the time. If CEWS legislation is passed, it would not bring all those employees back to work during the downturn but would help nearly all those laid off to "make ends meet" by returning them to the company payroll, Sims says 8 April, “We will not be grounding this airline unless instructed to by the governments," Sims says. "I will reiterate our intention to continue serving the 38 cities to which we currently fly, and I am proud we continue to do so. While most of these cities will see less flights over the course of the week, we continue to be there for them.” Air Canada is also watching for Ottowa to approve CEWS legislation, having announced its intent to seek wage subsidies for 36,000 domestic employees, including roughly 16,500 workers who have already lost their jobs. The CEWS legislation, proposed in March, is intended to encourage employers who already have laid off workers to put them back on the payroll. The programme would reimburse up to 75% of employees’ salaries to a maximum of C$847 weekly, according to the government’s website. It would be in place for a 12-week period and apply retroactively from March 15 to June 6.

Source: Cirium