United Releases Q2 Financial Report
1 United Airlines lost $1.6 billion in Q2 of 2020 the airline announced late Tuesday. It is currently sitting on a strong cushion of $15.2 billion in cash and cash equivalents.
United’s revenue fell more than 87% from a 2019 to just $1.48 billion for the 2nd quarter of the year. The airline is hopeful it can reduce its cash burn to $25 million a day in the Q3, down from the $40 million figure it posted in Q2. You’ll recall that for June, similarly-sized Delta had reduced its cash burn down to $27 million a day.
United has eliminated thousands of daily flights from its network and parked hundreds of aircraft to reduce cash burn. Earlier in July, United sent WARN Act notices to 36,000 employees, with the airline hoping to keep the total of furloughs and laid off workers below 30,000.
Masochists will be pleased to find out United executives will hold a call with analysts to break down their results and outlook at 10:30 a.m. ET Wednesday.
Nearly 30% of Southwest’s Staff Willing to Take Leave
2 Nearly 17,000 Southwest Airlines employees have expressed a willingness to take part-time, unpaid leave or accept a buyout from the airline. The 16,895 employees represent almost 30% of Southwest’s workforce, with 4,400 requesting early retirement and the rest offering to take an extended break.
The announcement comes two days before Southwest announces its Q2 financial report on Thursday. In its 50-year history, Southwest has never been forced to lay off employees, and the hope is that this streak can continue thanks to all of these volunteers.
In the meantime, those employees who have accepted the early retirement option will be asked to report to Southwest’s headquarters in Dallas. They will lineup in an orderly fashion, with those who have been with the company the longest, or the “A” group, lined up first. Employees will be asked not to line up until their group is called, and at that point they’ll be given their retirement packages.
Lufthansa and Belgian Government Agree on Brussels Airlines Bailout
3 After several months of negotiations, Lufthansa and the Belgian government have come to an agreement on a financial aid package to save Brussels Airlines from going under.
In the deal, Brussels will remain a Belgian airline, and Lufthansa agreed to build up Brussels airport (BRU) as a hub in its system. It is rumored that as part of the deal, Lufthansa has requested Brussels be split into 27 different operating certificates so that the airline can reach the group’s preferred level of complexity.
The Belgian government will provide a €290 million loan to the airline to be paid back by 2026. Lufthansa will pony up €170 million itself to help save the airline. As a sweetener, the Belgian government is believed to have agreed to provide Lufthansa Group’s board with an unlimited supply of Belgian beer, chocolate, french fries, and waffles.
Norwegian Air Shuttle Takes Boeing to Court
4 With a claim of over $1 billion in damages, Norwegian Air Shuttle is taking Boeing and its British subsidiary Boeing Commercial Aviation Services-Europe to court as part of what is clearly a novel plan to raise cash. When purchasing 110 MAX aircraft from Boeing, Norwegian purchased the Gold Care service package from BCASE with the planes. Clearly this was Norwegian’s first mistake — extended warranties are almost always a scam. In fact, documents show that Norwegian also purchased the rust-proofing and fabric protection.
Norwegian claims fraud, breach of contract and gross negligence by Boeing. Additionally, the airline claims BCASE is charging for maintenance services not delivered. (Again, never buy the rust-proofing).
Norwegian’s claims are similar to those of other MAX customers, that Boeing produced an airplane that was unsafe, covered up design issues, and claimed the MAX is virtually identical to the 737 NG, requiring no unusual transition training.
Norwegian revealed that it paid more than $1 billion for 18 MAX aircraft delivered so far, totaling more than $55 million per plane.
Ryanair Threatens to Close Crew Bases in Germany
5 Ryanair informed its German pilots that it will close its crew base in Frankfurt while also looking at closing bases in Berlin and Dusseldorf after pilots narrowly rejected a new deal on salaries. The closures potentially would effect the 170 Malta Air — not to be confused with Air Malta — pilots, a Ryanair subsidiary, that are based in Germany. The proposed agreement was rejected by a slim 0.6% margin.
The union noted that Ryanair is currently hoping to acquire several takeoff slots that Lufthansa will need to temporarily relinquish in order get hold of a €9 billion government-backed bailout. If Ryanair is successful in acquiring the slots, the airline will likely need more pilots stationed in Germany.
If Ryanair does end up needing more pilots in Germany, it can look just about anywhere to find new pilots. Anywhere except…Pakistan.
Airline Potpourri
- Alaska will expand its presence in San Diego this winter, adding 4x weekly service to Cancun (CUN) & daily service to Missoula (MSO) in addition to its previous announcement of new service to Fort Lauderdale (FLL).
- British Airways is closing its Cityflyer’s Edinburgh (EDI) crew base.
- Condor has resumed flying from Leipzig/Halle (LEJ), serving nine destinations.
- Eastern Airways — the UK airline, not the goofy thing flying in the US — plans to begin service from Dublin on August 17.
- Emirates will resume service to Stockholm with once-weekly service beginning August 1.
- Indigo will be laying off 10% of its current workforce.
- JetSMART plans to launch a Peruvian subsidiary in the first half of 2021.
- Korean plans to fly two round trip flights to Auckland during August.
- Nepal Airlines will resume service on August 17.
- Qantas has extended its suspension of service to New Zealand through October 24.
- Turkish has delayed the start of its service to Newark from August 1 to August 21. The route will operate 3x weekly once it begins.
- United was belatedly granted a DOT exception to suspend service to Aguadilla, PR (BQN) through August 5.
- Virgin Atlantic returned to the air Monday with service from London/Heathrow to Hong Kong. Flights to New York/JFK and Los Angeles resume today.
Andrew’s Moment of Levity
Just as I had suspected, someone has been adding soil to my garden. The plot thickens.