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Wednesday, March 18th, 2020

Italian government looking to step in and rescue long-bankrupt Alitalia

In a surprise move at a time when all travel to and from Italy has been banned, the Italian government has announced it is looking to re-nationalize Alitalia, the airline which filed for bankruptcy in 2017 and which, while still operating, has been losing an estimated €2 million per month.

Since Alitalia went into administration, the Italian government is rumored to have courted investors including the state railway company Ferrovie dello Stato, infrastructure group Atlantia, European carriers EasyJet, Ryanair, Lufthansa, Wizz Air, Air France-KLM, and the U.S. legacy carrier Delta Airlines, none of which showed any interest.

Currently the carrier has two state loans outstanding which have yet to be repaid, including a €300 million bridging loan and a further loan of €600 million. However, since it went into administration, according to figures disclosed in November 2019, passenger revenues during the first eleven months of 2019 rose by 1.6% in comparison to the corresponding period in 2018. When compared to 2017’s results, this constitutes a rise of 8.8%. Its intercontinental sector reached its twenty-fifth consecutive month of revenue increase and “continues to drive the overall growth”, according to the November statement.

Italy’s AGI news agency has reported that Italy has set up a €600 million fund to aid the aviation sector during the coronavirus outbreak. In a government decree published this Monday, the government’s plan for Alitalia was outlined, though analysts have estimated that the cost of rescuing the ailing carrier would extend to approximately €600 million on its own. Concerns for Alitalia remain as it has permanently struggled to compete with fellow low-cost carriers Ryanair and easyJet, and analysts consider the Italian carrier will struggle to return to profitability as it is overstaffed for the number of flights it operates. It flew only 22 million passengers and saw its market share in Italy slip to 14 percent in 2018.

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Air Cargo essential to fight against COVID-19

The International Air Transport Association (IATA) and its members continue to support governments in their efforts to contain the spread of COVID-19. Since the crisis began, air cargo has been a vital partner in delivering much-needed medicines, medical equipment (including spare
parts/repair components), and in keeping global supply chains functioning for the most time-sensitive materials. This has been done through dedicated cargo freighter operations, utilization of cargo capacity in passenger aircraft and with relief flights to affected areas.

Air cargo is also instrumental in transporting food and other products purchased online in support of quarantine and social distancing policies implemented by states.

The dramatic travel restrictions and collapse of passenger demand have severely limited cargo capacity. IATA calls on governments to take urgent measures to ensure that air cargo will be available to support the global fight against COVID-19.

“Over 185,000 passenger flights have been cancelled since the end of January in response to government travel restrictions. With this, vital cargo capacity has disappeared when it is most urgently needed in the fight against COVID-19. The world’s fleet of freighter aircraft has been
mobilized to make up this capacity shortfall. Governments must take urgent measures to ensure that vital supply lines remain open, efficient and effective,” said Alexandre de Juniac, IATA’s Director General and CEO.

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EuroAtlantic Airways and AerCap sign lease agreement

AerCap and EuroAtlantic Airways, a provider of ACMI services as well as charter aviation services, have signed an agreement for the lease of two used Boeing 787-8 aircraft.

The aircraft are scheduled to deliver in the spring of 2021, and will be the first 787s to be based in Portugal.

Strata successfully implements automated manufacturing

Strata Manufacturing (Strata), the advanced composite aero structures manufacturing facility
wholly-owned by Mubadala Investment Company PJSC, has deployed two of the latest generation MTorres Automatic Tape Laying (ATL) machines to support its Airbus A350-900 manufacturing capabilities.

The Al Ain-based manufacturer has gained First Part Qualification and First Article Inspection design and quality verifications for the use of the computer-controlled robotic ATL machines that will automate Strata’s production of the inboard flap components.

“The deployment of breakthrough technologies brings enhanced efficiencies and increased productivity that will drive the company’s long-term competitiveness in a rapidly evolving and increasingly competitive industry,” said Ismail Ali Abdulla, CEO of Strata. “Through the quick adoption of cutting-edge technologies and solutions such as ATL, Strata will further advance its position in the global aerospace industry, facilitate our evolution to manufacture more complex aircraft parts and establish Strata as a key industry player with the technological capabilities to grow in advanced manufacturing.”

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Norwegian to temporarily lay off 90% of its workforce

Stagnating demand and enforced travel restrictions by authorities worldwide due to COVID-19, has caused Norwegian to gradually cancel most of its flights and temporarily lay off a major share of its workforce.

“What our industry is now facing is unprecedented and critical as we are approaching a scenario where most of our airplanes will be temporarily grounded. Several governments in Europe have already said that they will do everything they can to ensure that their airlines can continue to fly when society returns to normalcy. We appreciate that the authorities of Norway have communicated that they will implement all necessary measures to protect aviation in Norway, consequently securing crucial infrastructure and jobs,” said CEO Jacob Schram of Norwegian.

As a result of most of the company’s planes being parked, Norwegian has to temporarily lay off more than 7,300 employees, which equates to approximately 90% of its workforce, which includes pilots, cabin crew, maintenance and administrative staff.

The layoff procedures vary from country to country and Norwegian’s team is already in constructive dialogues with union and HSE representatives at all its locations across the network.

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Sabre appoints Otto Gergye to lead airline operations in North Asia

Sabre Corporation has appointed Otto Gergye as Vice President, Regional General Manager, North Asia, Travel Solutions Airline Sales. Gergye will be responsible for Sabre’s airline operations in North Asia, a key growth region for the company.

His role will involve identifying business opportunities and further expanding Sabre’s already strong presence in this fast-growing region. He will also seek to strengthen successful and trusted relationships with existing airline customers. 

Airbus to pause production in France and Spain for next four days

Airbus released that it will temporarily pause production and assembly activities at its French and Spanish sites across the Company, for the next four days. This is meant to allow sufficient time to implement stringent health and safety conditions in terms of hygiene, cleaning and self-distancing, 

Airbus said that it is doing its utmost to support its employees who are affected by schools and child care closures by providing them with a maximum of flexibility in dealing with the situation. This includes enabling home office where possible, while at the same time ensuring business continuity at Airbus to meet customer commitments and complying with national regulations. 

Airbus employees are advised to restrict travel to business critical missions only excluding to high risk regions. Visits to Airbus from high risk regions are halted. Employees having returned from any high risk regions must self-quarantine for 14 days.

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Air capacity to China slashed by 80%

A report by ForwardKeys, the travel analytics company, reveals that four fifths of flight capacity between China and the rest of the world has been cut back as a consequence of the coronavirus outbreak.

In response to emergency government regulations, seat cancellations began in early February and by the third week of the month, only 20% of seats remained in service.

Looking at the different regions of the world, Asia has experienced the greatest impact in terms of the total number of seats lost, at around 5.4 million in March. In percentage terms, travel to North America is worst affected: American, United, Delta, and Air Canada cancelled all their flights to mainland China; and Chinese carriers cut their capacity by 70%. Between China and Europe, over 2,500 flights have been axed in March: the three major Chinese carriers cut capacity by 69%; while BA, Lufthansa and Finnair ceased their services completely. Qantas and Air New Zealand also stopped flying to China, which left only about 200 flights in March to Oceania, provided by Chinese airlines. Capacity between China and the Middle East & Africa is also substantially down but less in both percentage and absolute numbers. Most flight suspensions are currently due to remain in force until March 28, the end of the winter season.

According to China’s Civil Aviation Authority, during the third week of March, 72 destinations in 38 countries had direct air links to China, which is around a third of the pre-crisis level.

Olivier Ponti, VP Insights, ForwardKeys said: “At the start of the year, we were looking at another year of healthy growth in air travel from China. But now, we are witnessing the grounding of aircraft on an unprecedented scale. The loss in seats is more than the entire outbound market from the five Nordic countries combined.”

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Brussels Airlines suspends all flights as of March 21

The worldwide Coronavirus crisis forces Brussels Airlines to temporarily suspend its flight operations from March 21, 2020. Between now and March 21, Brussels Airlines’ flight operations will be reduced gradually in a controlled and structured manner in order to bring passengers and crews home.

As of March 17, the airline will gradually reduce its flight schedule until March 20. From March 21 until April 19 (included), all flights will be suspended.

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Tamar