The coronavirus-led airline industry downturn seems to have left airlines with 2 means by which to cull the number of jets in their fleets. They can keep flying old jets longer while slashing their number of new aircraft deliveries, or they can ground older, less-efficient jets while continuing to acquire new aircraft, analysts note. Which strategy airlines will ultimately take remains uncertain, but analysts say the outcome could determine which segment of the aerospace market – OEMs or aftermarket providers – fare best amid the downturn and eventual recovery. “It’s going to be a delicate balancing act,” says an analyst with Teal Group. “Cheap fuel sure incentivises people to keep 25-year-old jets.” <br/>
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The Treasury Department has missed a deadline to start paying airlines to keep workers employed, and the two sides were still negotiating terms of the federal help Monday. The chief holdup is Treasury’s insistence that some of the US$25b in payroll assistance be in the form of loans, not cash. The impasse suggests that airlines will face a harder job getting federal help than they expected. Airline stocks fell Monday. The airlines thought they had a deal last month: Congress agreed to give passenger airlines $25b in cash grants to cover payroll costs for 6 months. But Treasury secretary Steven Mnuchin told CEs of the 6 largest airlines Friday that 30% of the aid instead would be low-interest loans that they would have to pay back with securities that could be converted to stock. That surprised the airlines. <br/>
US air-safety regulators, seeking to make it easier for airlines to ramp up transportation of cargo aimed at combating the pandemic, are poised to allow such shipments in the cabins of passenger planes, according to people familiar with the issue. The new guidance is slated to be issued in the coming days, they said, and is expected to resemble earlier moves by carriers and foreign aviation authorities from Canada to Ethiopia and the Middle East. Normally, operating restrictions and aircraft structural limits mean passenger jets must put all cargo in the bellies of aircraft. But in consultation with plane makers and airlines, FAA officials are ready to lift those restrictions in order to give US airlines greater flexibility to satisfy swiftly changing shipping demand around the world. <br/>
The rapid spread of COVID-19 across the US, which now leads the world in cases, is raising fresh questions about how much air travel contributed to the nation’s outbreak. A data analysis by The Atlanta Journal-Constitution found that air traffic in and out of Hartsfield-Jackson International — the world’s busiest — remained at 2019 levels well into the first weeks of March as the airline industry kept assuring the public air travel was safe. “Yes, America is still open for business,” A4A said March 10. “Numerous govt and health officials agree — it is safe to fly.” The industry urged Americans to follow through with their spring break trips, and added: “The World Health Organisation has advised against the application of travel or trade restrictions, which are ‘not effective’ in preventing the spread of COVID-19.” <br/>
Many European airlines spent much of the past two decades asking govts to leave the airline industry. Now, many are begging for help, and most will get it, even if all may not deserve saving. It is different than in the US. The US govt is bailing out airlines because the country needs a robust transportation network, but if one carrier doesn’t make it, life will go on. Other airlines, perhaps even new ones, will fill gaps. In Europe, bailout discussion is more fraught. In this crisis, govts are not always thinking about how much capacity markets need, but instead about national pride. Regardless of market conditions, lawmakers may not want to see national airlines go bust, for reasons of politics, nostalgia, and even national security. <br/>
Airports across Asia-Pacific have had to make changes to operations as they grapple with reduced traffic due to the coronavirus outbreak. In Japan, Tokyo Narita International has closed 1 of 2 runways from April 12 until further notice. It adds that it expects recovery to take “a considerable amount of time”. Australia’s Brisbane airport has brought forward the decommissioning of runway 14/32 in order to provide parking space for grounded aircraft. It had planned to decommission the runway in May as part of the preparation process for its new runway. Perth Airport said April 10 that it closed its Terminal 1 domestic pier after Virgin Australia cut its schedule further. Previously, it warned that terminal closures were inevitable. <br/>
About a month after it first extended a financial lifeline to its aviation sector, Taiwan has unveiled a second round of relief measures to cope with the impact of the coronavirus outbreak. It will provide the sector with credit guarantees and other subsidies. The package is expected to cost the Taiwanese govt NT$50b (US$1.66b), states the Ministry of Transportation and Communications, and will be adjusted according to how to the coronavirus outbreak pans out. As part of the package, the Taiwanese government will provide special funds as credit guarantees, for any company that has applied for financial institution loans to sustain their operations. It will also offer interest subsidies to companies. <br/>
Carriers in the Asia-Pacific received 14 of the 49 new airliners delivered in March 2020, as airframers and countries continued to grapple with the coronavirus pandemic. The region trailed North America, where carriers took 17 new aircraft, but led Europe, which saw just 13 deliveries. While Asia-Pacific March deliveries grew from just 11 in February, they represent a quarter of the 53 new aircraft delivered in March 2019. On a global basis, March’s 49 deliveries are less than half of the 124 new aircraft delivered a year earlier. Last week, Airbus said that 60 aircraft were produced in Q1, but have yet to be delivered to the world’s airlines. Travel restrictions have prevented crew and other personnel collecting aircraft. No new aircraft were delivered in China for the second consecutive month. <br/>