Avd 08 20 2020 0.Pdf
Total Page：16
File Type：pdf, Size：1020Kb
The Business Daily of the Global Scheduled Airline Industry Since 1939 August 20, 2020 AIRLINES Incumbent Carriers Gain From China-U.S. Inside: Capacity Boost AIRLINES BRADLEY PERRETT, [email protected] EasyJet Pilot Talks Collapse; Three UK Bases To Close PAGE 3 BEIJING—Incumbent carriers will gain the benefits from an agreement between China and the U.S. to double air service capacity between them. Poland’s Enter Air Places First 737 MAX Order Of 2020 PAGE 5 Routes are also unchanged, according to the U.S. Transportation Department (DOT), which announced the increase in services Aug. 18. Alaska Airlines Sees Q3 Capacity Reaching 50% Of 2019 Level PAGE 7 This rule will disappoint two Chinese carriers, Sichuan Airlines and Hainan Airlines, after having applied to reopen open routes to the U.S. that were closed earlier in the COVID-19 AIRFRAMERS Boeing Seeks More Voluntary pandemic. One of the incumbents, China Southern Airlines, had also hoped to reopen routes. Worker Departures PAGE 4 On Aug. 12, the Civil Aviation Administration of China (CAAC) permitted U.S. airlines to increase total services to eight from four per week, the DOT said. In response, the U.S. AIRPORTS Kenya Airport Operator Warns has permitted the same volume for Chinese airlines. It Will Auction Abandoned Aircraft PAGE 4 The two U.S. carriers, Delta Air Lines and United Airlines, currently connecting both countries will double their current services, all of which serve Shanghai, according to TECHNOLOGY Honeywell Marks Additive representatives of the companies in China. Engine Milestone PAGE 6 While no Chinese airline has announced a new schedule, the DOT indicated that the Chinese side of the business would also add no new airlines or routes to the market. CARRIERS, P. 2 The Daily Memo Pandemic Disrupts South Korean Airline Takeover Plans ADRIAN SCHOFIELD, [email protected] The COVID-19 crisis has interrupted an important phase of underway to attempt to save it. mergers and acquisitions in the South Korean airline industry, Eastar Jet was primed to be taken over by fellow South Kore- leaving the future of at least two of the country’s carriers under an LCC Jeju Air, but Jeju backed out of the agreement on July serious threat. 23. This posed a serious headache for Eastar, which appeared The pandemic arrived at a particularly sensitive time for South to have limited survival options. However, two private equity Korea’s airline sector. Tentative agreements had been signed for groups have since expressed interest in investing, according to the takeovers of Asiana Airlines and Eastar Jet, but the indus- Eastar executives cited by the Yonhap News Agency. try was rocked by the novel coronavirus outbreak before the Any new rescue plan for Eastar faces challenging hurdles. purchases could close. Now one of the acquisitions has been Eastar carries substantial debt and owes wages to its staff. The canceled, and the other remains in limbo as last-ditch talks are airline’s operations have been suspended since March, and its DAILY MEMO, P. 2 Software for Hangars, Lines, and Shops Mobile-enabled and in the Cloud [email protected] AWIN.AVIATIONWEEK.COM/AVIATIONDAILY 1 awin.aviationweek.com/aviationdaily August 20, 2020 CARRIERS, From P. 1 “CAAC further informed the department that the four Chinese benefit and under government orders—after foreign carriers, carriers currently providing scheduled passenger service to the including those from the U.S., severed connections with China. United States have likewise qualified to increase their respective Furthermore, much of the demand between China and the U.S. frequency of service from one-time weekly to two-times weekly,” now is from Chinese students abroad wanting to travel home. the DOT said. “Accordingly, the Department’s Order will modify The CAAC issued no statement in response to the U.S. an- the previous decisions made in June to enable those qualified nouncement. Chinese carriers to increase services to the United States, as The four Chinese airlines that currently each fly once weekly China has permitted for U.S. carriers.” between the two countries are Air China (between Beijing and Why more flexibility has not been allowed is not entirely clear. Los Angeles), China Eastern Airlines (Shanghai and New York), But since the Chinese side already has more airlines and more China Southern Airlines (Guangzhou and Los Angeles) and Xia- routes in this traffic, the U.S. side is likely to have demanded men Airlines (Xiamen and Los Angeles). reciprocity in any expansion. Since U.S. airlines sought in May to Delta has been flying once a week to Shanghai from Seattle restore services they had cut at the height of China’s pandem- and once a week from Detroit, both services stopping in Seoul. ic, a theme in commercial aviation relations between the two United has applied both of its weekly flights to the route be- countries has been Chinese restrictiveness and U.S. advocacy of tween San Francisco and Shanghai. All of these services will a return to a free market. double, according to the company representatives. A common view among Chinese airlines is that they are more Sichuan Airlines applied to the CAAC in July to fly once a deserving, because they persevered with minimal, unprofitable week between Los Angeles and Hangzhou with an extension to international services from February to April—for the national CARRIERS, P. 3 DAILY MEMO, From P. 1 air operator’s certificate has now lapsed, meaning it would have sell its 31% stake to resolve its own liquidity issues. to be renewed. The worsening state of the airline industry has complicated Jeju signed an MOU to buy a controlling 51.17% stake in the closing of the deal. HDC and Kumho have been in dispute Eastar in December 2019. At that time, Jeju saw the potential over whether each side has been meeting their obligations under of adding scale to its operation through acquisition. Jeju is the the initial agreement. The prospective purchasers appear to largest of South Korea’s LCCs, and Eastar was the fifth-largest have less appetite for the deal now—at least in its current form. before the pandemic struck. HDC wants to conduct a fresh 12-week due diligence assess- As well as putting Jeju in an even more dominant position, ment of Asiana and has said it wants to renegotiate the terms. the Eastar acquisition would have been an important first step This has caused disagreements with Kumho and Asiana’s larg- towards consolidation of an increasingly crowded LCC market in est creditors, resulting in the deadline for closing the deal being South Korea. In addition to six incumbents, two more LCCs were postponed more than once. approved by the government last year. Kumho and the main creditor—state-backed Korea Develop- However, the new market dynamics created by the COVID-19 ment Bank—have grown frustrated at the delay. Last week the crisis changed the equation for Jeju. Suddenly, expansion does matter came to a head when they issued an ultimatum to the HDC not look so attractive, and taking on more debt even less so. consortium to close the sale. At that point the deal seemed close This is also a factor in an even larger South Korean airline to being canceled. However, the two sides have resumed negotia- acquisition deal that is at risk of falling through. Hyundai Devel- tions in a last-ditch effort to see if they can reach consensus. opment Co. (HDC) is leading a consortium that won the right to The collapse of the takeover would leave limited options for take over Asiana, although there is now a strong possibility that Asiana and its creditors to come up with a new plan to secure HDC will pull out. the airline’s future. There is a smaller pool of investors now An initial agreement was reached in December 2019 after with the ability or appetite to pour money into airlines. Failure to HDC was selected as the successful bidder for Asiana with the secure a deal would also present a dilemma for the government, support of Mirae Asset Daewoo. Asiana had been struggling which wants Asiana to survive to keep two major full-service financially, and its largest shareholder Kumho Industrial had to carriers in the South Korea market. 2 awin.aviationweek.com/aviationdaily August 20, 2020 AIRLINES EasyJet Pilot Talks Collapse; effective Aug. 31. Stansted and Newcastle will continue to be served by Three UK Bases To Close inbound aircraft, maintaining Newcastle-originating flights to VICTORIA MOORES, [email protected] Belfast, Bristol and Nice, as well as Stansted to Amsterdam, LONDON—UK LCC easyJet is to close three UK bases at Lon- Belfast, Edinburgh and Glasgow. The LCC is withdrawing from don Southend, London Stansted and Newcastle after ending Southend completely, leaving easyJet with eight UK bases. redundancy consultations with pilots’ union BALPA, triggering EasyJet CEO Johan Lundgren described the base closures further potential redundancies at airports operator and ground as a “very difficult decision,” triggered by lower demand in light handling provider Stobart Group. of the COVID crisis. Other bases and routes will continue to be On Aug. 17, BALPA said easyJet had “unilaterally” shut down reviewed. redundancy negotiations, which have been underway for sever- The base closures have had a knock-on impact on Southend al weeks. Airport owner and operator Stobart Group, which also supplies “We have put forward tough measures such as part-time and easyJet with check-in and baggage handling at both Southend part-year working, which would have significantly reduced the and Stansted. need for compulsory redundancies. Rather than considering “As a result of the decision to close these airport bases, these proposals, easyJet have walked away,” BALPA general Stobart Aviation Services will enter a consultation process secretary Brian Strutton said.