general

The Treasury Department released new details Monday night on how it will award grants and loans for airlines affected by the coronavirus pandemic, and urged companies to submit some applications by Friday to begin receiving funds as soon as possible. The aid was approved as part of a $2t economic relief package Congress passed last week, which included $25b in grants, along with $25b in loans and loan guarantees for passenger airlines, $4b for cargo carriers and $17b for other firms critical to maintaining national security. The Treasury said Monday night that passenger and cargo airline companies should submit their requests for grants to cover payroll expenses no later than 5 p.m. on April 3, or risk processing delays, and applications submitted after 11:59 p.m. on April 27 may not be approved. Payroll-support grants will be based on an airline’s total salaries and benefits paid to employees from April 1 through Sept. 30, and are contingent on the companies refraining from involuntary layoffs, furloughs or salary reductions during that time period, the Treasury said. Companies must also identify in their applications any financial instruments, such as warrants or equity, and proposed terms “to provide appropriate compensation for the government,” the Treasury guidance said. The law authorised Treasury Secretary Steven Mnuchin to take a stake in airlines as part of the grant and loan agreements.<br/>

The FAA is rejigging staffing at air traffic control centers to respond to the dramatic falloff in flights and to reduce the impact of coronavirus cases. US airlines are parking hundreds of airplanes and cancelling tens of thousands of flights as a growing number of states issue stay-at-home orders and government agencies urge people to avoid non-essential travel. The FAA has reported positive coronavirus cases at 15 US facilities and some have forced the temporary closures of air traffic control towers, including at Chicago Midway and Las Vegas airports, that resulted in the cancellation of hundreds of flights. An FAA flexible schedule agreement said all air traffic facilities would divide personnel “into the maximum number of crews possible, with each crew being greater than or equal to the identified daily minimum staffing number.” Employees within each crew will work with the same group for the duration of the workweek to limit potential exposure to the coronavirus. The rotation schedule will continue until the emergency related to the pandemic is over. The FAA said on Monday it had a new positive coronavirus case at Houston Air Route Traffic Control Center and was cleaning the facility.<br/>

Britain will spend GBP75m to get stranded citizens home on charter flights, foreign minister Dominic Raab said Monday, adding that airlines would be flexible in offering commercial routes where possible. Tens of thousands of stranded British travellers will be flown home under the new arrangement, which sees airlines including British Airways, easyJet, Virgin, Jet2 and Titan offering alternative bookings where routes are canceled. “Where commercial flights are no longer running, the government will provide the necessary financial support for special charter flights to bring UK nationals back home,” Raab said. “We’ve designated 75 million pounds to support those flights and the airlines in order to keep the cost down and affordable for those seeking to return to the UK.” The chartered flights will operate on a strict cost-recovery basis paid by the taxpayer, ticketed through a government-procured management company, at fares determined by the foreign office (FCO). “Those genuinely unable to pay will be offered an emergency loan by the FCO if they have exhausted all other avenues,” the letter said. Talks between the government and airlines over a broader support package for the sector have so far not yielded a result. The British Airline Pilots Association (BALPA) called for clarity over the support that airlines would be getting and also sought reassurance that airline staff would have protective equipment.<br/>

Airbus is suspending the majority of its production in Spain, in line with the Spanish government’s stricter embargo on all ‘non-essential activities’ until 9 April, 2020. “Some key activities in [our] commercial aircraft, helicopters and defence and space [divisions] remain essential,” the aircraft manufacturer said. “Minimal activity in these areas for necessary support functions, such as security, IT, engineering, will remain under the stringent health and safety measures implemented by Airbus to protect its employees against the COVID-19 pandemic.” All other activities in the aforementioned departments have been suspended until the latest restrictions are lifted, it said. “Airbus will work closely with its social partners to apply the social measures applicable under the latest restrictions,” added the statement. “Employees in Spain whose jobs are not linked to production and assembly activities and can work from home will continue to support [the company’s] business continuity in these difficult times.”<br/>

Companies that lease aircraft are hopeful that government stimulus funds can help steady struggling US airlines, as half of carriers worldwide seek rent relief on their planes. The precipitous drop in demand for air travel caused by the coronavirus pandemic has hurt not only airlines, but also the companies that supply about 40% of their planes, collecting rent from the operators. The stock price for Los Angeles-based Air Lease has fallen 56% since the start of the year, while AerCap in Dublin has decreased 65%. The $2t US stimulus bill signed into law on Friday includes no money for the leasing industry per se, nor do the rescue packages governments put forth this month for Norwegian Air Shuttle or airlines in China. But the law earmarks $58b in loans and loan guarantees for US passenger airlines and cargo carriers, with half set aside to pay employees’ wages and benefits, and waives aviation excise taxes for the year. Suppliers from caterers to fuel providers to lessors will feel the trickle-down effect, said Alvin Khoo, chief financial officer at GA Telesis, a midsize Florida company that leases, repairs and sells parts from aircraft. “Liquidity for your customer is good,” Khoo said. “It’s a significant credit positive for the entire leasing community. How it works its way through the funnel I don’t know, but I’m sure every lessor is calling up the airlines and saying, ‘OK, you just got this cash. Don’t forget us.”<br/>