The aviation industry is selling debt at a record pace, reflecting investors’ continuing willingness to buy debt from companies hard-hit by the pandemic -- at the right price. Airplane companies sold a combined $32b of debt in a series of blockbuster deals last week. Boeing raised $25b of bonds Thursday, the largest ever bond deal outside of an acquisition and a record for the aviation industry. One day before, Delta sold $3.5b of bonds, the largest sale ever by an airline, along with a $1.5b loan, according to JPMorgan Chase & Co. As the pandemic’s fallout rattled markets in recent weeks, investors avoided debt from companies they thought were going to struggle as Americans stayed at home and spent less. Investors’ enthusiasm for debt from airlines and aircraft manufacturers bodes well for other companies affected by the coronavirus looking to raise cash, said Kevin Foley, head of debt capital markets at JPMorgan. “The investor base is not fixated on the status quo, it’s focused on where these companies will be when the virus is managed,” said Foley, whose team helped lead the debt sales on behalf of Boeing and Delta.<br/>
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Steven Mnuchin, the US Treasury secretary, said it was “too hard to tell” if the US will loosen international travel restrictions affecting Asia and Europe this year, even as measures limiting domestic economic activity are lifted. US President Donald Trump was “looking about ways to stimulate travel”, Mnuchin said, but he suggested this effort would initially be limited to travel within the US. The Monday comments compounded a sell-off in airline stocks triggered by news over the weekend that Warren Buffett had sold his entire investment in the sector. The country’s three largest carriers — American Airlines, Delta and United — were the three worst performing stocks in the US S&P 500 index in lunchtime trading in New York, each down at least 8%. Asked if international travel would be “opened up this year”, Mnuchin said: “Too hard to tell at this point. I hope down the road it is ... Our priority is opening up the domestic economy.” He then added: “Obviously, for business people that do need to travel, there will be travel on a limited basis. But this is a great time for people to explore America.”<br/>
The last time the airline industry was struggling, in 2008, executives decided to start charging customers for checked bags. Bag fees became the norm and rose steadily, turning into a big money maker for airlines. How big? US airlines collected $5.8b in baggage fees in 2019, nearly a billion dollars more than in 2018 thanks to fee increases and strong travel demand, according to annual figures released Monday by the federal Bureau of Transportation Statistics. Together with $2.8b in ticket change and cancellation fees, it's $8.6b in revenue airlines will desperately miss this year as the coronavirus crisis keeps passengers and their suitcases home for the foreseeable future. "The money airlines collect from these optional product fees are their financial lifelines," said Henry Harteveldt, co-founder of Atmosphere Research Group. "It's become a core part of their revenue. It is central to how they do business." Airlines started 2020 optimistic about travel demand. But with planes flying nearly empty, there are few bags to check, and ticket change fees are being waived, drying up fee revenue along with ticket sales. Q1 BTS figures for 2020 aren't out yet but won't show the full impact from coronavirus because the crisis started hitting US airlines hard in late February. <br/>
UK aviation is in “a death spiral” and in need of immediate government support to save jobs, the British Airline Pilots’ Association (Balpa) has warned. Brian Strutton, general secretary of the pilots’ union, has written to the chancellor, Rishi Sunak, to demand a moratorium on job losses in aviation. Since the coronavirus pandemic took hold, passenger aviation to, from and within the UK has dropped by around 95%. BA last week revealed plans to make 12,000 of its 32,000 staff redundant, including around 30 per cent of its pilots. BA has warned it may close its base at London Gatwick. Further job losses are expected to be announced by other UK airlines this week, in addition to pay cuts for pilots of up to 70%, according to Balpa. The union has accused airlines of “deliberate exploitation of the situation”. Hundreds of airline staff lost their jobs when the regional airline Flybe collapsed in early March, just as Covid-19 started to deplete passenger numbers. Strutton said: “Government has not recognised the crisis in aviation and has not done enough to prevent what is now happening: a death spiral that could severely damage UK aviation. Balpa will not stand by and watch the industry crumble – or allow airlines to use this as a chance to make unfair redundancies, or make unnecessary reductions to terms and conditions."<br/>
Spain’s transport ministry is seeking to help airlines tap bank state-baked loans but more help may be needed, Minister Jose Luis Abalos said. “I do believe airlines will tap those loans, but it is possible that they may need a reinforcement to those credit-lines, which now are enough to help liquidity only in the short-term,” Abalos said Monday. “They will almost certainly need more help in the future, for treasury, and to recover their activity.” Spain has also formed a working group with Germany, France and Italy within the European Commission and may have some options on May 13, Abalos said. IAG ’s Spanish units Iberia and Vueling announced May 1 that they were tapping a combined E1b in state-backed loans.<br/>
The aviation industry took another hammering from the coronavirus crisis Monday as GE cut 10,000 aerospace jobs and airline stocks fell on Warren Buffett’s weekend comments about the sale of his holdings in the sector. The new permanent lay-offs at GE Aviation come on top of 2,600 cuts to its US headcount last month and are expected to hit a quarter of a 52,000-strong workforce that stretches from Ohio to Europe over the coming months. US Treasury secretary Steven Mnuchin said it was “too hard to tell” if the US would relax restrictions on international travel to Asia and Europe this year. President Donald Trump was looking for “ways to stimulate travel”, Mnuchin said, but he suggested this effort would initially be limited to travel within the US. “To protect our business, we have responded with difficult cost-cutting actions over the past two months. Unfortunately, more is required as we scale the business to the realities of our commercial market,” David Joyce, CE of GE Aviation, wrote in a statement to employees.<br/>