Five More Airlines Sign LOIs for Treasury Loans
1 On the heels of American and four other airlines signing letters of intent to take advantage of a loan from the U.S. Treasury, five more U.S. airlines have joined the party. Alaska, Delta, JetBlue, Southwest, and United have now all signed letters of intent with the Treasury to receive cash from the government to improve their liquidity heading into the fall. That leaves Allegiant as the biggest U.S. airline not to have signed.
This money differs from previous CARES Act payments as it is a loan that must be repaid, but the broad level of interest indicates airlines can get this money cheaper than they could on the open market. Airlines that receive the cash must commit to certain requirements under the CARES Act to maintain employment levels and limit employee compensation, dividends, and share repurchases.
At least one unnamed airline plans to take the CARES Act loan cash, go to Vegas, and place it on red. Red hits, you’ve doubled your money. Pay the government back and all is well. It’s a simple business, really.
United Announces International Schedule Additions for September
2 United announced three additional international routes between now and October as the airline continues to slowly add service back toward pre-pandemic levels.
To start, the airline is launching a new route with 3x weekly service to Tel Aviv from its hub at Chicago/O’Hare. The flight will operate on a 787-9 and will be United’s fourth city to have service to Israel. United is increasing its flight from Newark to Tel Aviv to 10x weekly, will resume service from Washington/Dulles in the fall, and continues to operate its 3x weekly flight from San Francisco. Apparently Israel is doing incredibly well for United despite still being off limits to US tourists.
Two other routes will resume in September, as United sees once weekly service from Chicago/O’Hare to Hong Kong and 3x weekly flights from Los Angeles to Sydney. We’ve tried to figure out the rationale for these, but we’re at a loss. It could be related to cargo, maintenance routings, or it’s just where the dart landed.
GoGo to Provide Wifi from 3,000 Feet and Above
3 GoGo announced that its wifi service will be available on most commercial aircraft once the plane reaches 3,000 feet, as opposed to the current 10,000 feet the plane must reach prior to wifi kicking in.
Customers all over the world rejoiced over this change, as the 3 minutes it takes a plane from getting from 3,000 to 10,000 feet on climb out are often very crucial for Very Important Businessmen. Very Important Businessmen are often seated next to you both on board and in an airport lounge. They carry on Very Important Business Conversations on their phones and do so very loudly. They often are on their phones long after the aircraft door is shut and the cabin crew has told them to get off the phone.
This change will allow them to fail to connect to wifi 3 minutes earlier upon departure. It will have no impact upon arrival since the service will have already cut out long before.
The change will be effective on July 20.
New Canadian Airline Waiting in the Wings
4 In a move that someone, somewhere in the world thinks makes sense based on the current economic climate, Montréal-based charter airline Nolinor Aviation is ready to launch a new commercial airline, OWG, in the coming weeks.
The airline received permission to operate international routes by the Canadian Ministry of Transport on July 6. It plans to offer 737 service from Quebec to “southern destinations,” geared at leisure travelers from the French Canadian province headed to the Caribbean. The airline will announce destinations and routes “shortly,” whatever that means.
OWG says “Unlike many airlines, the aircraft used by OWG will be tracked in real-time using a sophisticated communication system.” Apparently OWG just invented GPS and radar. The airline also says it will be amongst the first airlines in the world to offer seats on its aircraft along with seat belts and restrooms.
Israel’s Government Will Take Majority Stake In El Al
5 It’s been a challenging few months for Israel’s flag carrier, El Al, and the Israeli government has made the decision to nationalize the airline once again. The airline lost $140 million in Q1 with Q2 expected to be much worse — and Q3 isn’t off to a great start either with the airline having ceased operations for the time being.
El Al, which was government-owned until 2005, is receiving $400 million in funding from Israel. The money is coming in the form of a $250 million loan and a $150 million purchase of stock along with $100 in a savings bond from El Al’s bubbie. The government does not plan to hold the airline indefinitely; instead hoping that it can sell its stake to an outside bidder once the airline is stabilized.
The deal is pending the approval of El Al’s labor unions, and is not a slam dunk as the government and airline plan to slash 2,000 jobs as a condition of the sale.
- Aeromexico plans to reduce its fleet size as it emerges from bankruptcy. The airline is returning its entire fleet of nine E170s plus five of its 11 737-700s and 5 of its 35 737-800s.
- Air Canada has resumed service to Dublin with 3x weekly service from its Toronto/Pearson hub.
- Air New Zealand has placed a temporary hold on international bookings.
- Austrian will receive €150 million in aid from the Austrian federal government.
- Emirates has ended service to Adelaide (ADL) indefinitely.
- Lion Air is cutting 2,600 jobs across its three brands.
- United has requested an extension of its service exemption to Aguadilla, PR (BQN) through August 6. The request seems reasonable since the airport is closed and will remain closed through August 5.
Andrew’s Moment of Levity
“I have a split personality,” Tom said, while being frank.