December 22, 2020

Congress Approves $15 Billion for U.S. Airlines

Congress has approved a bill resuscitating the Payroll Support Program (PSP) which had expired on September 30. The PSP extension offers $15 billion to U.S. airlines to secure payroll and benefits through March. The bill includes back pay to December 1. All the restrictions from the first PSP — including no dividends, buybacks, etc — remain in place for this new round.

More than 32,000 employees who were furloughed after the original PSP expired on September 30 will be brought back to work — albeit temporarily — until either PSP 2.0 expires on March 31 or the industry finds a genie to grant its wish for a magical recovery by Spring Break.

For a more detailed breakdown of PSP 2.0 and what it means for airlines and employees, check out today’s post on crankyflier.com.


Delta Feeling Spicy

Indian LCC SpiceJet currently has a request pending with the U.S. Department of Transportation (DOT) to begin service to the United States from India. Atlanta-based Delta has filed a petition with the DOT asking the government to deny that request. Why? Delta feels salty when it comes to flights to India since it was denied codeshare access by the Indian government.

Delta was ordered to end its codeshare agreement on flights to India with its joint venture partner Air France-KLM despite peppering the Indian government with requests to keep the codeshare active. The persistent requests earned a compromise, allowing Delta to continue to codeshare on Air France flights from France, but the sage leadership of the Indian government continued to deny Delta the option to codeshare on KLM flights from the Netherlands.

SpiceJet responded to Delta that its issue is with codeshare service and not flights on its own metal. It says Delta should butt out and bide its thyme bothering another airline.

SpiceJet plans to initially operate passenger and cargo service with its own Boeing 737 aircraft — that is not a typo — between New York/JFK and Delhi. Delta has one daily flight between the two airports that began operating in December of 2019, but has been suspended since March due to the pandemic. Delta is insisting it will not simply toss its caraway, but will continue to contest the petition.


Alaska and Boeing Agree to be Exclusive-ish

Airbus may have asked Alaska to attend the aviation industry formal dance in Toulouse next summer as a couple, but Alaska has already found a dance partner with its long-time on-again, off-again fling and Seattle-based neighbor Boeing. Alaska upped its order to 68 B737-9 MAX aircraft from Boeing to replace its entire fleet of A319s and A320s, and it holds an option to purchase another 52.

Alaska will receive 13 new planes in 2021, 30 in 2022, 13 in 2023, and 12 in 2024. Now it just has to figure out how to get U.S. passenger demand to return so it has somewhere to fly them. The 52 planes Alaska has on option would be delivered between 2023 and 2026. The airline plans to take advantage of Boeing’s delivery guarantee, ensuring it will deliver the plane from factory to the front door of airline HQ within 30 minutes or your next plane is free.

The A319s and A320s in the fleet — all inherited from the Virgin America merger — will go away by 2023. This leaves only a small 10-aircraft fleet of Airbus A321neos which Boeing can’t adequately replace due to the neo’s superior runway performance. The airline plans to begin revenue service with its first 737 MAX 9 in March, but with the way travel demand is looking these days, calling it a revenue flight might be a bit optimistic. 


Airbus Not Thrilled About AirAsia X Restructuring Plan

Malaysian-based LCC AirAsia X — the long-haul arm of AirAsia — announced in October that it would enter into a restructuring process to avoid bankruptcy and eventually resume flights. The proposal focused on two areas — debt and corporate restructuring — in order to manage the $15.5 billion in debt the airline was carrying at the time.

When AirAsiaX announced it plan, it acknowledged it would be subject to the approval of shareholders, creditors, and Malaysia’s High Court.  The proposal was sent to the three groups, and several creditors, led by Airbus, don’t love it. Airbus claims it would lose $5 billion if the plan is approved, and the manufacturer prefers being compensated for the $5 billion.

In a filing at Malaysia’s High Court, Airbus stated it has built — or is nearing completion of — seven A330neos for AirAsia X, and the airline has another 71 aircraft on order. With its head in the sand, the airline responded filing an affidavit stating its creditors are in favor of the restructuring plan.

The Malaysian High Court is likely to hear arguments between the airline and the creditors after the New Year. In the meantime, AirAsia X is forcing its employees to work over the holiday the next two weeks, spending hours a day in the office, frantically applying online to see what credit cards they are pre-approved for as a contingency to pay the $5 billion, if needed. Management suggested the staff start with airline-based credit cards, stating, “If we’ve got to payoff the $5 billion on credit cards, we might as well get some miles for it.”


LOT to Receive a Lot of Aid

LOT Polish Airlines, the flag carrier of Poland, is set to receive nearly $800 million in bailout funds from the Polish government after the package was approved by the European Commission. The amount of aid offered to LOT exceeds what the European Commission generally has approved in the past for airlines both prior and during the pandemic, but, well, times are tough.

Since its last restructuring — which isn’t ever a great thing to say when you’re looking for money — LOT has become more stable and has doubled the size of its operation since 2016. It had plans to add two new long-haul flights to San Francisco and Washington/Dulles, but both are currently on hold due to the pandemic.

Approximately $485 million of the package will be in the form of a loan, with the remaining $300 million functioning as a cash injection. The airline plans to use $299,995,000 of the cash injection to cover payments to creditors and ensure it can meet its payroll obligations, while preserving the remaining $5,000 to throw a kick-ass New Years Eve party next week.


Airline Potpourri

  • Aer Lingus received formal permission from the DOT to begin flying between the U.S. and U.K. under the open skies agreement between the two nations.
  • ANA resumed flying its Tokyo/Narita to Brussels route which had been suspended since March. Upon arrival, the flight crew was gifted Belgian chocolate as a gift, or as they call it in Belgium — chocolate.
  • Myanmar Airlines had its first brand-new Embraer 190 operate its inaugural flight yesterday, flying four segments from its Yangon hub. Those who flew the inaugural received a commemorative urban sombrero. The airline will receive its second E190 tomorrow, and it will launch service this weekend flying a charter for employees of the J.Peterman catalog visiting Myanmar.
  • Peace Air operated a nonstop charter flight between Lagos, Nigeria (LOS) and Montego Bay, Jamaica (MBJ), the first direct flight between the two nations.
  • Pegasus Airlines signed a lease agreement with Air Lease Corporation for a brand-new A321-200neo to be delivered in April 2023. The airline finally broke down and signed the agreement when Air Lease Corporation agreed to add in a 30,000 mile warranty and complimentary rust coating.
  • Uganda Airlines took delivery of its first A330-800neo today, becoming the first African airline to receive the aircraft.

Andrew’s Moment of Levity

Why is Christmas with your kids so much like your job? Because you do all the work and then a guy in a suit slides in from upstairs and gets all the credit.