COVID-19 cases surge in the US, global aviation impact spreads: CAPA update 20-Mar-2020

Boeing announced (19-Mar-2020) the resignation of Nikki R Haley, the US Ambassador to the UN, from the company's board of directors, effective 16-Mar-2020. Ambassador Haley served on the finance and audit committees, having joined the board on 29-Apr-2019. Ambassador Haley informed Boeing that, as a matter of philosophical principle, she does not believe it should seek support from the Federal Government, and therefore decided to resign from the board. Boeing is involved in discussions to address the near term liquidity needs of the aerospace, travel, and other sectors affected by the current COVID-19 crisis. [more - original PR]

China: CAAC calls on airlines to reduce intl capacity, diverts Beijing arrivals to other airports

IATA: Middle Eastern airlines lose USD7.2bn in revenue due to plummeting travel demand

IATA reported (19-Mar-2020) Middle Eastern airlines have lost USD7.2 billion in revenue as of 11-Mar-2020, due to the effects of coronavirus on travel demand. Ticket refunds have increased 75% year-on-year in 2020, and 16,000 frequencies have been cancelled since the end of Jan-2020. Domestic bookings are now down 20% in Mar-2020 and Apr-2020 and 40% in May-2020 and Jun-2020, while international bookings are down 40% in Mar-2020 and Apr-2020 and 30% in May-2020 and Jun-2020. IATA published a list of expected disruptions to countries affected by coronavirus, which included the following:

• Saudi Arabia: USD3.1 billion in base revenue losses, 15.7 million in passenger volume losses and more than 140,300 jobs at risk;
• UAE: USD2.8 billion in base revenue losses, 13.6 million in passenger volume losses and more than 163,000 jobs at risk;
• Egypt: USD1 billion in base revenue losses, 6.3 million in passenger volume losses and approximately 138,000 jobs at risk;
• Kuwait: USD547 million in base revenue losses, 2.9 million in passenger volume losses and more than 19,800 jobs at risk;
• Jordan: 118.5 million in base revenue losses, 645,000 in passenger volume losses and at least 6100 jobs at risk. [more - original PR]

Moscow Sheremetyevo Airport to temporarily close terminals E and C

Moscow Sheremetyevo Airport announced (19-Mar-2020) plans to temporarily close terminals E and C from 20-Mar-2020, due to the reduction in demand and the introduction of restrictions on international services. All services will be transferred to terminal D and F. [more - original PR - Russian]

Hawaiian Airlines to reduce system wide capacity by nearly 40% in Apr-2020

COVID 19: US airline capacity plummets as demand vaporises

The major global US airlines have slashed capacity by unprecedented levels as the country works to combat the spread of COVID-19 coronavirus through drastic measures, with large municipalities in the US encouraging bars, restaurants and cinemas to shut down. Schools across the country have already closed, with a growing level of uncertainty over when children will return to normal studies.

In conjunction with a major pull-down in supply, some large US airlines are also parking a large portion of their respective fleets. Delta's decision to ground 300 aircraft represents approximately 33% of its operating fleet. American is also temporarily parking a substantial number of widebody jets.

The grounding of these aircraft is necessary, but as capacity comes out of the system and revenue continues its free fall, it will take some time for the cost actions that airlines are taking to catch up with the precipitous decrease in demand.

Unfortunately, it could be some time before US and airlines worldwide see the bottom of the demand curve, and as those operators continue to adjust their expectations amid an increasingly fluid situation, management at Delta and United appear to be the most candid with their employees regarding the severity of the crisis.

Like their larger counterparts, low cost and budget operators in the US are working to fortify their balance sheets, slashing capex and cutting their capacity as COVID-19 dries up demand for air travel in the short term.

Alaska, Southwest, JetBlue and Spirit are cutting their capacity growth to varying degrees, and Alaska and Southwest are taking steps to borrow funds to withstand the crisis - the duration of which is anyone's guess.

As bookings continue to turn negative and cancellations continuing to spike, US operators are no doubt ratcheting up their messaging that a proposed financial aid packaging totalling more than USD50 billion needs to materialise sooner rather than later.