A government aid package currently making its way through the US Congress calls for loans and payroll support for airlines and aviation industry workers of $78 billion altogether, but links the assistance to strict conditions regarding executive pay, stock buybacks, dividends and requirements to maintain employee levels through the third quarter of the year. According to a Senate official familiar with the $2 trillion draft bill, the legislation as it stands on 25 March 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 Senate seeks to provide ”payroll support” to the tune of 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, the official adds. Additional details about the payroll assistance remain unknown, though they would come with “government warrants”. The airline industry had been pushing lawmakers to provide payroll help in the form of grants, which would not need repayment. The aid would help prop up an industry whose demand had fallen sharply practically overnight after the coronavirus spread into an international pandemic. The text of the bill as it currently stands sets conditions for this assistance, which include preventing airlines from furloughing employees until the end of September, putting a stop to stock buybacks and dividends until September 2021, and limits executive pay to $3 million per year, while forbidding ”golden parachutes” - large sums of money offered as severance pay if executives leave the company. Should assisted companies violate the terms of the agreement, the government has written a clause into the bill that would allow it to claw back the support, the official says. Exact details and language in the legislation are still being hammered out behind closed doors, but the Senate is expected to vote on the bill later in the day, before it goes to the House of Representatives for a vote there, and, ultimately, is signed into law by President Donald Trump. Airlines have been heavily criticised for their past perceived behaviour of putting shareholders and investors ahead of their employees. While Republicans focused on getting help to the airlines so they could maintain their business and start up quickly again when the pandemic subsides, Democrats pushed for provisions that would protect workers and contractors affected by the sharp and sudden drop-off in business. “Some 80 to 90% of passenger load has disappeared,” says Dick Durban, a Senator from Illinois, the home state of Chicago-based United Airlines as well as the headquarters of Boeing. “Employees have asked for help, and we are prepared to do that. But I do believe accountability and transparency are necessary.” “I wished that we would have gotten more requirements on the airline industry on the grant section of this bill,” Senator Maria Cantwell says. Cantwell is one of two senators from Washington state, where Boeing has numerous factories and one of the US hotspots for the virus. “I will continue to fight for the aviation supply chain so that when we come out of the crisis that the US is well positioned to return to building Americas single largest export.” Earlier this week, Boeing closed its Seattle-area factories for 14 days, and told suppliers to hold shipments for those factories. Meantime, airlines are beginning to extend their change waivers in anticipation that the sector may be affected and aircraft grounded longer than previously expected. American Airlines says on 25 March that its change fee waivers will be in effect for flgihts booked through 15 April, also for its non-refundable fares.

Source: Cirium

Brazilian aircraft maker Embraer has begun manufacturing parts for ventilators in an effort to support the country’s medical industry as the coronavirus pandemic grips all corners of the globe. Embraer says on 25 March it has also begun working with a Sao Paolo hospital to provide technical support for air filter systems and air quality control that could turn regular hospital wards into intensive care units. The work is taking place at the company’s headquarters facility in San Jose dos Campos. “The actions, developed jointly with Embraer’s supply chain, include the manufacturing of parts for the ventilator and respirator industry, the replacement of imported components for ventilators, the development of high-efficiency filtration systems for transforming regular hospital beds into intensive care beds and studies for the development of simple, robust and portable respirators aimed at rapid implementation and availability,” the manufacturer says. The company adds the filters used in air conditioning systems on aircraft can be modified to be used by clinics and hospitals, helping meet immediate health care needs. "The global health care system is facing an unprecedented scenario, and Embraer plans to apply its capacity during this moment of global collaboration and demand for effective and short-term solutions,” Embraer says. According to the Johns Hopkins University’s Coronavirus Resource Center, more than 466,000 people have been infected by the virus worldwide, resulting in more than 21,000 deaths in 173 countries. Brazil reports 2,433 cases, with 57 deaths.

Source: Cirium

Boeing chief executive David Calhoun insists government aid to the struggling airline and aerospace sectors should not be contingent upon the government taking equity in US companies. “Nobody has an interest in retaining government equity in their company. We want to pay everything back,” Calhoun tells Fox Business on 24 March. He also insists Boeing remains fundamentally sound despite the severity of the coronavirus downturn. “I have no less optimism for our commercial business than I did before this started,” he says. His comments come as Boeing seeks $60 billion in federal US aid to help itself, its 17,000 suppliers and the broader aerospace industry weather the coronavirus downturn. Meanwhile, Boeing’s US airline customers have urged Congress to provide them with some $58 billion in financial support. Congress has been wrangling over the package in recent days, with sticking points including worker protections, the degree to which aid will be in the form of grants or loans, and whether the government will take equity in, or set other conditions upon, companies that receive aid. On Fox Business, Calhoun denies that requests by Boeing and other companies for government funds amount to corporate welfare. “It’s anything but corporate welfare,” Calhoun says. “Government is supposed to step up, to get us from one end to the other. Whatever tool they put in place should be simple, straightforward and immediately accessible.” Calhoun notes Boeing holds $15 billion in cash. He says the company “will get through this” and that the “enterprise is not threatened”. “But the credit markets are closed to us,” Calhoun adds. Boeing on 23 March announced it will suspend production in Washington state for two weeks due to a coronavirus outbreak at its facilities. Aerospace manufacturing suppliers have likewise been reeling, reporting fast-moving developments and broad business uncertainly. On 23 March, General Electric said GE Aviation, which makes commercial aircraft turbofans, is laying off 10% of US workers and furloughing half its maintenance, repair and overhaul staff for 90 days. GE did not immediately say if Boeing’s production halt will spur additional staff or production actions. Supplier Triumph Group on 24 March said it will lay off 250 salaried staff and 250 contractors, and Spirit AeroSystems is halting much of its Boeing-related work. Another supplier, Collins Aerospace, says some of its sites “have been closed in areas that have been hardest hit by the virus, and some have been closed temporarily for cleaning”. “The majority of our sites are still up and running,” Collins says. Another engine maker, Pratt & Whitney, says all its facilities are up and running. On Fox Business, Calhoun insists Boeing will survive even without government aid. He says the company might need more “haircuts” without federal support, while stressing Boeing must do all possible to limit staff reductions so as to ensure it has resources needed to resume operations when the coronavirus crisis abates. “I have to keep my workforce in place and we have got to be ready when recovery comes,” he says. The chief executive also insisted the 737 Max remains on track for mid-2020 certification. “We remain on schedule… Everything so far looks good for the certification of the Max at the mid-point of the year.”

Source: Cirium