Embattled Hong Kong carrier Cathay Pacific has warned that its first-half results for 2020 will be "significantly down" compared with the same period last year, as the outbreak of the coronavirus compounds an already challenging market.
In releasing its traffic figures for January, the Oneworld carrier also announced further capacity cuts across its network for February and March. The carrier, along with its Cathay Dragon unit, will slash passenger capacity by 40%. This, it notes, is an even deeper cut than the 30% capacity reduction it announced earlier this month. Cathay and Cathay Dragon combined carried just over 3 million passengers in January, a 3.8% decrease year-on-year. The carrier cut capacity as measured in ASKs by 0.3%, while traffic in terms of RPKs fell 1.8%. As a result, passenger load factor for January fell by 1.3 percentage points to 84.7%. Cathay Pacific Group chief customer and commercial officer Ronald Lam notes that while inbound traffic into the territory fell again, outbound traffic grew marginally. Cathay inbound traffic fell 40% year-on-year, slightly better than the 46% seen in November and December. Traffic figures at the carrier had already been impacted by political unrest in Hong Kong, where pro-democracy protests have been raging since June. Outbound traffic rose 1% in January. Lam says this was due to the earlier falling of the Chinese New Year holiday this year, which began at the end of January. Cathay says yield and load factors for its long haul routes were improving at the start of January, only for the coronavirus outbreak to hit its performance. "Our performance deteriorated rapidly in the last week of January as the novel coronavirus situation became more severe, and it continues to weaken significantly. We saw significant cancellation of bookings within a short period of time," says Lam. While Hong Kong is the not the epicentre of the coronavirus outbreak, travel restrictions imposed by some countries have also included Hong Kong. This, says Lam, led to a rise in cancelled bookings. Since last year, Cathay has flagged a financially challenging first half of 2020 amid the backdrop of local unrest. "The first half of 2020 was already expected to be extremely challenging financially. As a result of this additional significant drop in demand for flights and consequential capacity reduction caused by the novel coronavirus outbreak, the financial results for the first half of 2020 will be significantly down on the same period last year," Lam says. In early February, the carrier asked staff to take unpaid leave, in a bid to stave off the financial fallout from the virus outbreak.

Source: Cirium

Argentinean investigators have opened a probe after an Embraer 190 apparently lost its left-hand nose-wheel in Rosario.
The Austral Lineas Aereas twinjet (LV-CHQ) had arrived at Rosario following a service from Buenos Aires on 16 February. Argentinean accident investigation authority JIAAC says the incident occurred at about 23:10 local time and none of those on board were injured. But the incident is the second nose-wheel loss to occur to an Austral E190 in about two years. Last tear, JIAAC completed an investigation into the previous incident, to LV-CID in January 2018, which occurred before take-off at Mar del Plata when the left-hand nose-wheel detached during taxiing. Examination of the failure turned up evidence of corrosive pitting and that this had led to an undetected fissure. JIAAC had stated in its conclusions that it believed the incident was “isolated”. It has yet to disclose any findings regarding the circumstances of the latest incident, or indicate whether a similar mechanism led to the failure. Cirium fleets data shows that the two aircraft first flew six weeks apart – LV-CHQ in November 2010, LV-CID in December 2010 – before they were respectively delivered to Austral in December 2010 and February 2011.

Source: Cirium

The Office of the US Trade Representative (USTR) has raised its tariffs on large European aircraft to 15%, up from the 10% levy implemented last October, in an ongoing dispute over subsidies. “The United States is increasing the additional duty rate imposed on aircraft imported from the EU to 15% from 10%, effective March 18, 2020, and making certain other minor modifications,” the USTR says in a statement published on 14 February. At the centre of the ruling last October were EU subsidies for Airbus, which the arbitrator heavily criticised as being “WTO-inconsistent”, and causing adverse effects to the USA. While the USTR was permitted to impose up to 100% tariffs on $7.5 billion of goods — including Airbus jets — the office said at the time it would initially impose 10% levies on new commercial aircraft of more than 30t, and 25% levies on other products such as Irish and Scotch whisky, German machinery, and cheese. The increase to 15% is in response to a World Trade Organization report related to a longstanding subsidy dispute involving Airbus. That report, released 2 December, concluded that changes made to A350 and A380 development loans were insufficient to bring European governments into compliance with WTO recommendations. On 12 December, the US Trade Representative announced a review of the tariffs and requested public comments. It says it received more than 26,000 responses. “Based on this review, the US Trade Representative has determined to revise the action being taken by increasing the rate of additional duties on certain large civil aircraft, and by modifying the list of other products of certain current and former EU member states subject to additional 25% duties,” the USTR writes in its ruling. With this new ruling, the tariffs on non-aircraft products remain at 25%. Airbus has a large presence in the USA, including an A320 and A220 assembly site in Mobile, Alabama. It said in October that 40% of its aircraft-related procurement comes from US companies. The ruling, which applies to aircraft built in Europe, means that parts shipped over to Mobile to be assembled appeared to be exempt from the additional tariffs.
While US carriers with large Airbus fleets such as Delta Air Lines and JetBlue will receive some of their deliveries from Mobile, the majority of Airbus aircraft are still manufactured at the company’s European hubs of Hamburg and Toulouse. It is unclear as to what the effect of these increased tariffs will have on the affected airlines, as well as the traveling public who may ultimately pay higher fares as a result. Airbus has been working to mitigate the impact of tariffs since they were initially imposed. Chief executive Guillaume Faury stated at a briefing on 13 February that the tariffs have had a ”direct imipact” on its US commercial aircraft customers which “we are working to manage”. “Later this year the WTO is expected to authorise the EU to impose tariffs on US products. We remian hopeful that the US and EU will find a negotiated settlement to avoid further damage,” he says. The US government will be allowed to impose the tariffs until the EU brings its practices into compliance with WTO standards. In arriving at the $7.5 billion price tag, the arbitrator took into account the value of the lost sales of large Boeing aircraft as a result of the subsidies.

Source: Cirium