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LATEST NEWS
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Thursday, April 30th, 2020
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Having posted its worst-ever quarterly loss, British Airways (BA), part of IAG, has announced its intention to lay off over 25% of its 45,000-strong workforce. Alex Cruz, BA CEO, has written to staff making it clear that there is little point in continuing with the U.K. government furlough scheme where 80% of staff wages up to a maximum of £2,500 per month are covered by the U.K. taxpayer as that could never be a long-term solution and there was no sign of any bailout from the British taxpayer.
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In his letter, Cruz said: "In the last few weeks, the outlook for the aviation industry has worsened further and we must take action now. We are a strong, well-managed business that has faced into, and overcome, many crises in our hundred-year history. We must overcome this crisis ourselves, too. There is no Government bailout standing by for BA and we cannot expect the taxpayer to offset salaries indefinitely. We will see some airlines go out of business."
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Currently, in Europe, Germany’s Lufthansa is preparing to file for bankruptcy if it is unable to secure an €8 billion rescue package from the German Government. Virgin Atlantic has been turned down for a £500 million U.K. taxpayer loan and Sir Richard Branson is now actively seeking private investment in the long-haul, trans-Atlantic carrier.
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IAG has also announced first-quarter revenue had fallen 13 per cent with operating losses of £535 million, while also being hit by a €1.3 billion charge for financial hedges on fuel and foreign currency. IAG, which also owns Iberia and Aer Lingus, has also warned that with passenger numbers falling by 94 per cent, “The group expects its operating loss in the second quarter to be significantly worse than in the first quarter. Recovery to the level of passenger demand in 2019 is expected to take several years, necessitating group-wide restructuring measures.”
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BA has opened talks with trade unions, which said they were devastated and pledged to fight the job cuts. (£1.00 = €1.14 or US$1.24 at time of publication.)
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Orders for the ground-use air and surface purification system developed by Aviation Clean Air (ACA) and International Aero Engineering (IAE) continue to accelerate, as the companies have ramped up to effectively meet customer demand. Since production of the Ion Distribution Unit for Ground Use Only began in March, a large number of units are being shipped daily to customers around the world. The system, which uses the same proven technology as ACA’s patented airborne system, was adapted to proactively sanitize aircraft interiors while on the ground.
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“We’ve delivered units to all the major OEMs, a wide range of aircraft owners and operators, FBOs and maintenance organizations, domestically and around the globe,” said Howard Hackney, ACA Managing Member. “The effectiveness of the system, along with the ease of use and the lessened impact on personnel and aircraft downtime has helped these organizations continue their operations safely and efficiently.”
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The companies have increased daily production rates to keep pace with the continued demand.
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Boeing has posted first-quarter revenue of US$16.9 billion, net loss amounted to US$641 million, primarily reflecting the impacts of COVID-19 and the 737 MAX grounding. Boeing recorded operating cash flow of US$-4.3 billion.
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As the pandemic continues to reduce airline passenger traffic, Boeing sees significant impact on the demand for new commercial airplanes and services, with airlines delaying purchases for new jets, slowing delivery schedules and deferring elective maintenance. To align the business for the new market reality, Boeing is taking several actions that include reducing commercial airplane production rates. The company also announced a leadership and organizational restructuring to streamline roles and responsibilities, and plans to reduce overall staffing levels with a voluntary layoff program and additional workforce actions as necessary.
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Boeing has also taken action to manage near-term liquidity, as it has drawn on a term loan facility; reduced operating costs and discretionary spending; extended the existing pause on share repurchases and suspended dividends until further notice; reduced or deferred research and development and capital expenditures; and eliminated CEO and Chairman pay for the year. Access to additional liquidity will be critical for Boeing and the aerospace manufacturing sector to bridge to
recovery, and the company is actively exploring all of the available options. Boeing believes it will be able to obtain sufficient liquidity to fund its operations.
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DRA - Deutsche Regional Aircraft GmbH and sister company 328 Support Services GmbH, have appointed Martin Nüsseler as the company’s Chief Technology Officer.
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Leveraging his significant aviation industry experience, Nüsseler is responsible for product strategy, technology road map and oversight of the engineering development team.
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Nüsseler joins after 17 years with Airbus - the last five of those spent leading the Airbus alternative propulsion systems and technologies unit. Nüsseler worked for Fairchild Dornier in the late 1990’s.
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The engineering development team’s primary focus is enhancing the D328® platform and delivering its future technology roadmap. The technical mission for the aircraft is based on a clear commitment for more sustainable aviation with significant positive impacts on short range regional transportation, versus today’s standard technologies.
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In the first quarter of 2020, MTU Aero Engines generated revenue of €1,272.7 million, an increase of 13% compared with the prior-year period (2019: €1,131.2 million). The operating profit declined by 3% from €187.6 million to €181.8 million due to the revenue mix. The adjusted EBIT margin was 14.3% (2019: 16.6%). Adjusted net income was €128.0 million, compared with €133.5 million in the prior-year period.
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In the first quarter of 2020, the highest revenue growth at MTU was in the commercial maintenance business, where revenue rose by 21% to €794.9 million (1-3/2019: €655.1 million). The main source of revenue was the V2500 for the classic A320 family. Adjusted EBIT increased by 16% from €56.8 million to €65.7 million. The EBIT margin was 8.3%, compared with 8.7% in the same period of 2019.
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Revenue in the commercial engine business increased by 4% from €385.6 million to €399.3 million. The main revenue drivers were the V2500, the PW1100G-JM for the A320neo and the GEnx, which is used in the Boeing 787 and 747-8 models.
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In the OEM business, adjusted EBIT declined by 11% to €116.2 million in the first quarter (1-3/2019: €130.5 million). The adjusted EBIT margin was 23.4%, compared with 26.6% in the prior-year period.
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MTU's order backlog at the end of the first quarter was €19.4 billion (December 31, 2019: €19.8 billion). The majority of these orders related to the V2500 and the Geared Turbofan™ engines of the PW1000G family, especially the PW1100G-JM for the A320neo.
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Despite adjustments to various procedures while on board an aircraft, social distancing is not always possible. Therefore, in order to increase the protection of passengers and crew from the transmission of the Covid-19 virus, beginning Monday, May 4, the airlines of the Lufthansa Group are requiring that all passengers wear a facial mouth/nose covering for use while on board their
flights. Furthermore, it is recommended that passengers wear this protective covering throughout their entire journey, for example, at the airport before and after the flight, and whenever the required minimum distance cannot be guaranteed without restriction. All Lufthansa Group flight attendants in direct contact with customers will also be required to wear a corresponding mask.
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Under these new guidelines, passengers are asked to bring their own facial mouth/nose covering. A reusable fabric mask is recommended, but all other types of coverings, such as disposable masks or scarves, are also sound alternatives.
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This newly introduced requirement is in line with many European countries’ official guidelines and regulations, whereby facial coverings are now mandatory in public. The obligation to wear the mask while on board will preliminarily apply until August 31, 2020.
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Furthermore, and as a result of this new regulation, the middle seat that has thus far been left vacant in Economy and Premium Economy Class, will no longer remain a necessity, as the facial covering provides the necessary protection. Yet, currently, due to a decrease in flight demand, seats will be allocated as far apart as possible throughout the cabin.
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AvAir, an industry leading inventory solutions provider for the aviation aftermarket, and Lufthansa Technik have signed a long-term aftermarket sales agreement. AvAir has purchased the majority of Lufthansa Technik's overstock of rotable spares inventory. The Arizona-based company acquired 9,000 line items, comprising of components including IDGs (Integrated Drive Generator), FADECs (Full Authority Digital Engine Control) and Starters.
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The first components will be delivered immediately from Lufthansa Technik facilities in Germany to AvAir facilities in Ireland and Chandler, Arizona in the United States. The complete transfer will be finalized within the next three months.
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Under a profit share agreement, Lufthansa Technik receives a share of the proceeds from the resold components. All parts are in serviceable or better condition and come from the Lufthansa Airline Group and other Lufthansa Technik customer fleets. The majority of the parts has been maintained by Lufthansa
Technik.
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Don Milum, U.S. Senior Sales Manager for Universal Avionics (UA), has announced the appointment of John Berizzi and John Wasmund to the U.S. sales team. John Berizzi joins the company as South-Central U.S. Regional Sales Manager and John Wasmund as Southwest U.S. Regional Sales Manager.
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John Berizzi is based out of UA’s office in Duluth, Georgia and in his new role, supports the company’s Authorized Dealer and Integrator Network along with aircraft owners and operators throughout the states of Texas, Oklahoma, Arkansas, Louisiana, Mississippi, Tennessee, Alabama, and Georgia. He joins UA with over 30 years of experience in the aviation industry.
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John Wasmund is based out of the greater Phoenix, Arizona area and in his new role, supports the company’s Authorized Dealer and Integrator Network along with aircraft owners and operators throughout the states of California, Nevada, Utah, Arizona, Colorado, and New Mexico.
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