Airlines Look For a Third PSP, Prepare for Layoffs
Stop us if you’ve heard this story before. Airlines and labor unions alike are pushing Congress for another PSP (this would be the third, if you’re scoring at home). If it doesn’t happen? Well, layoffs of course. Just to add more pressure, airlines are starting to push out formal WARN notices of potential layoffs to take effect when the current loan program expires on April 1.
American and United alone sent WARN notices to a combined 27,000 employees that their jobs are again on the chopping block for involuntary furlough when the funding runs out in about eight weeks. In an internal memo, AA CEO Doug Parker and COO Robert Isom told employees that capacity would be down 45% in January 2021 compared to 2020, and that the airline does not expect to operate all of its aircraft this summer. (If you’re surprised, we’ve got a bridge to sell you.)
Congress approved $25 billion in the original PSP last spring, which expired on September 30. Following tens of thousands of layoffs last fall, Congress passed a second PSP – this time for $15 billion – late in December, prompting most furloughed workers to be recalled. But the spigot for this round of funding — also $15 billion — runs out on March 31, and nearly all employees who were just brought back are likely to be given the yo-yo treatment… furloughed once more.
Much of the first two PSP’s were based in the false hope that travel demand would return and the loan would be a bridge back to profitability for the airlines. But U.S. airlines lost a record $34 billion in 2020, a figure that would have been higher if not for all the flights booked by normal people fleeing Florida.
Air Canada Pauses Rouge
Air Canada is suspending the operations of its low-cost, leisure-based subsidiary, Air Canada Rouge. Due to its leisure focus, most of Rouge’s route network flies Canadians to warm-weather destinations to escape Canada’s winter. The Canadian federal government announced a ban on non-essential travel and asked four airlines, including Air Canada, to halt service to Mexico and the Caribbean.
With the ending of flights to Mexico and the Caribbean, Air Canada Rouge’s route network was left with flights to California, Florida, Hawai’i and Las Vegas. What demand remains for these routes will be operated by Air Canada itself, eliminating the need for the offshoot. Approximately 80 jobs will be lost when Rouge suspends operations on February 8.
The cessation of service on the snowbird routes to warm-weather destinations is expected to remain in place until April 30. Prime Minister Justin Trudeau is hopeful that by then, most of the country will have begun to thaw out from the winter, and won’t even notice the lack of available flights to the tropics. Passengers who hold a ticket on a Canadian airline to a destination in Mexico or the Caribbean after February 8 can receive a refund and a VHS tape titled “NHL Season in Review: 1992-93,” after the government found thousands of leftover tapes during a regular cleaning of Parliament Hill in Ottawa.
Qantas Aligns Itself with Alliance
Qantas Airways has completed an agreement with fellow Australian carrier Alliance Airlines to provide Qantas additional regional capacity.
Despite vaccine rollout being underway in Australia, the country is planning to keep its international borders closed until 2022. The closed borders have Qantas preparing for a significant increase in domestic tourism, and it plans to use more of Alliance’s planes to operate throughout the country.
Alliance will provide Qantaslink with its fleet of Embraer 190 aircraft with 94-seats and a five hour range that can connect most of Australia from its regional hubs. Alliance is initially expected to operate between three cities Adelaide (ADL), Alice Springs (ASP), and Darwin (DRW), with those initial E-190 aircraft being based in Adelaide and Darwin. Qantas will be able to redeploy the Boeing 737s it currently uses on those routes, while offering greater frequencies for customers due to the smaller size of the E-190.
Qantas will operate the aircraft with 10 business class seats in the front and 84 economy seats in the back. Qantas owns 20% of Alliance Airlines, which also operates some domestic routes on behalf of Qantas’ chief domestic rival, Virgin Australia. Qantas did make an attempt to write into the contract that the planes it would operate would be the same flown under VA’s name. Qantas cleverly figured if it took those planes, VA would be left without any aircraft in the agreement, but the ruse was quickly shut down by Virgin Australia’s legal team.
Federal Government Re-Authorizes Venezuelan Airport Ops
The U.S. Treasury Department issued a license on Thursday decriminalizing Venezuela’s port and airport operations that are managed by its federal government. The license does not apply to the export of oil or talented shortstops.
The license lifts penalties against American individuals or corporations that used any port or airport in Venezuela that was managed by the Venezuelan government, or a group that had 50% or more controlling stock interest from the government.
The new law also authorizes transactions with the government of Venezuela which are deemed to be necessary to use the seaports and airports, but stops short of allowing Americans to conduct business with the Venezuelan government for any other reason.
Lufthansa Extends First Class Cuts on U.S. Routes
After cutting first class from its flights to and from the United States last year, Lufthansa is now extending the cuts until at least May.
With travel demand between the U.S. and Germany at an all-time low and travel restrictions and bans strongly in place on both sides of the Atlantic, Lufthansa is downgrading its aircraft between the two countries. Routes where Lufthansa traditionally flew the Boeing 747-8 will now see the smaller Airbus A350-900 which does not feature a first class cabin. Lufthansa was hoping to use a Cessna 172 to better match demand, but the logisitics didn’t work out.
Lufthansa operates its A350-900 with 36 flat beds in business, 21 premium economy seats and 262 seats for the hoi polloi in economy. In the best of times, winter and early spring are the quietest time of the year for transatlantic travel, and the raging pandemic isn’t making things any better. With Lufthansa in the process of likely retiring its entire fleet of A380 and A340-600 planes, the 747-8 will be the airline’s last remaining fleet with first class.
Airline Potpourri
- Air New Zealand began a new cargo route yesterday from Christchurch (CHC) to Guangzhou (CAN).
- Azul Cargo Express saw its revenues improve 64% in Q4 2020 compared to 2019.
- Belavia Belarusian Airlines appointed Igor Nikolaevich Cherginets as General Director of the airline. A well-deserved promotion, for sure.
- Cayman Airways is resuming 737 MAX operations, putting one of its four MAX aircraft back into service, with the other three expected to follow soon. The move comes after the airline was given the green light by the Civil Aviation Authority of the Cayman Islands (CAACI), which is two guys on a beach with a view of the runway at Grand Cayman Airport (GCM).
- Eastern Airlines, the UK version this time, is launching two new flights to Gibraltar (GIB). The airline will operate twice-weekly from both Southampton (SOU) and Birmingham (BHX) beginning on May 24.
- Himalaya Airlines and Yeti Airlines, both carriers in Nepal, agreed to a partnership in order to integrate their route networks, grow their sales, and gradually expand both airlines’ e-commerce capabilities.
- Qatar is preparing to lay off another 5% of its workforce due to redundancies as soon as next month.
- SkyWest proposed the FAA to extend its rule allowing carriers to temporarily reconfigure passenger aircraft to cargo operations.
- Wizz Air will establish a new base at Sarajevo (SJJ) beginning this May. It will base one aircraft, an A320, at the airport and launch nine new routes.
Andrew’s Moment of Levity
The detective discovered what the murder weapon was in a record time. It was a brief case.