general

As the world hunkers down for Omicron, some investors might expect the global jet market to be withering away. Far from it. Business has begun humming again as airlines look to snap up the greener passenger and freight planes they believe will give them an edge in a post-pandemic recovery driven by predicted travel demand plus the relentless rise of online shopping. From Arizona to Amsterdam, some of the industry's sharpest buyers are eyeing efficient jets for the second half of the decade, aiming to get ahead of the long waiting lists they fear could derail their growth and environmental targets. On Wednesday, Singapore Airlines kicked off a trio of major decisions, with a tentative order to replace its cargo fleet with a new A350 lightweight freighter offering from Airbus. Qantas on Thursday selected Airbus to replace its fleet of ageing narrowbodies in what CE Alan Joyce has described as a "one-in-a-generation" decision that involved a switch from Boeing. The European planemaker also looks likely to seize a narrowbody order from KLM as early as Thursday. "People are thinking about long-term fleet plans and especially about ESG (environmental, social and governance)," said Rob Morris, global head of consultancy at Ascend by Cirium. "It's a case of: 'If I don't think about my replacement cycle now, am I going to get left behind'," he added. Airbus and Boeing are sold out on benchmark medium-haul models until mid-decade after a previous, much larger order boom that was losing momentum when the pandemic wreaked havoc. But with such long lead times before jets can be delivered, the focus is now turning towards the second half of the decade and a move to get in the front of the queue for future capacity.<br/>

Airlines are close to breaking the corporate credit card. Since 2019, the top six network carriers in the United States and Europe have loaded up with an additional $44b of net debt, more than their pre-pandemic EBITDA. Even with a return to normal in 2022 – an increasingly unlikely scenario – paying that off will take years. Alongside flogging planes, laying off staff and asking shareholders for money, airline bosses have borrowed vast sums from banks and capital markets. Taxpayers have also chipped in, with the US Congress approving, somewhat controversially, $54b read more to cover salaries of grounded staff for 18 months. To a large extent, the survival techniques have worked. Only Air France-KLM is close to nationalisation, with the French and Dutch governments holding 29% and 9% stakes respectively. That said, the industry’s debt levels are unsustainable. Since 2019, the three big US carriers Delta, American Airlines and United, and their European counterparts Air France-KLM, Lufthansa and BA-owner IAG have increased net debt by 63% to $112b, according to analyst estimates compiled by Refinitiv. That equates to a whopping 4.7 times next year’s EBITDA. In 2019, the year before the pandemic started, the absolute figure was $69b, just 1.7 times that year’s EBITDA. Story has more.<br/>

Top airline executives on Wednesday told a Senate panel that a tight labor market and difficulty convincing some workers to pick up shifts contributed to mass flight cancellations this year, despite the $54 billion in taxpayer aid the carriers took to cover their labor costs when travel demand collapsed in the pandemic. The CEOs of American Airlines, United and Southwest, and Delta’s chief of operations testified before the Senate Committee on Commerce, Science, and Transportation that the aid helped them survive the crisis and that they’re now ramping up hiring. Senators during the more than three-hour hearing questioned executives on airlines’ hiring trouble, 5G, fuel availability, myriad fees and vaccine mandates though it was called to assess the industry’s bailout, its largest. “I can sum up the [Payroll Support Program] in two words: It worked,” said Southwest CEO Gary Kelly said. US airlines lost a record $35 billion last year but executives say the Payroll Support Program, which prohibited them from laying off workers, was a bridge to get them to the point when air travel demand started to recover in earnest. Travel at the start of the pandemic fell more than 95%. “It’s not an exaggeration to say the program saved the airline industry, which Congress and the administration recognized as critical infrastructure that is as essential to the economy as it is unique,” American’s CEO, Doug Parker, wrote in his testimony. Alaska Airlines CEO Ben Minicucci said in written remarks that by “keeping employees on staff, it reduced the time that would have been required to train people coming back to work – an effort that takes months and significant resources.” While airlines that accepted the aid couldn’t lay workers off, they significantly reduced head count by urging employees to take voluntary measures like buyouts, leaves of absence or temporarily idled workers in exchange for reduced pay. The payroll aid was mostly in the form of grants that don’t have to be paid back as well as some loans.<br/>

Airlines are having trouble hiring pilots, flight attendants and other personnel, and that’s part of what is causing canceled flights and scrapping of service to some airports, executives told legislators on Wednesday. American Airlines CEO Doug Parker said a large service outage in October began when high winds shut down three of five runways at Dallas-Fort Worth International Airport, the airline’s largest hub. American, he said, ended up with jets and people in the wrong places, and had a hard time getting workers to pick up extra shifts to handle the problem. Although workers are doing a great job during the pandemic, they are reluctant to take extra shifts due to the risk of the novel coronavirus and unruly passengers, he said. “We need people to want to pick pick up additional shifts,” Parker told the Senate Commerce, Science and Transportation Committee. Parker said there are enough pilots and staff to run the airline under normal circumstances, but not with surprise weather events. United CEO Scott Kirby said they have to make sure they don’t schedule too many flights for the available resources. He said people who want to be pilots have to spend $150,000 to get the required training, which typically is not covered by federal student loans. Kirby, Parker and leaders of Southwest and Delta all said they’re taking steps to train more pilots.<br/>

Major US air carriers warned on Wednesday that plans by AT&T and Verizon Communications to use spectrum for 5G wireless services could be highly disruptive to air travel and cost air passengers $1.6b annually in delays. Trade group Airlines for America said if a new FAA directive for addressing potential interference from wireless transmissions had been in effect in 2019 “approximately 345,000 passenger flights, 32m passengers, and 5,400 cargo flights would have been impacted in the form of delayed flights, diversions, or cancellations.” The wireless carriers are set to begin using the spectrum in just three weeks. Last week, the FAA issued new airworthiness directives warning interference from 5G wireless spectrum could result in flight diversions. The aviation industry and FAA have raised significant concerns about potential interference of 5G with sensitive aircraft electronics like radio altimeters. In November, AT&T and Verizon agreed to delay the commercial launch of C-band wireless service until Jan. 5 after the FAA raised concerns. They also adopted precautionary measures for six months to limit interference. Aviation industry groups said they were insufficient to address air safety concerns.<br/>

The travel and hospitality sector is grappling with a rising wave of COVID-19 concerns after the federal government warned Wednesday against non-essential trips abroad. At a news conference in Ottawa, Health Minister Jean-Yves Duclos said the Omicron variant is now spreading in Canadian communities and across the globe, prompting a new advisory less than two months after the old one was lifted. Air Transport Association of Canada CEO John McKenna says airline customers have been cancelling bookings by the thousands. He says a decline in international trips will prompt a slowdown in regional ones, since the two feed into each other, and that anxiety over the highly transmissible variant will further discourage domestic travel. The Association of Canadian Travel Agencies says the new advisory will have a "devastating impact" on its 14,000 agents, who depend on holiday travel to bolster business. The association is urging Ottawa to communicate advisories and border measures clearly and quickly on a single website and work more closely with industry. Duclos said the situation became more complicated at a pace he "couldn't have imagined" a few weeks earlier. "To those who were planning to travel I say very clearly, now is not the time to travel," he said. "I know this is difficult for airlines, for travel agencies, for families, for people who haven't been able to see each other for a long time," Duclos added in French.<br/>

Leaders are planning to call for nations to coordinate their travel moves and avoid steps that would “disproportionately hamper free movement” within or into the EU, according to the latest draft of their joint communique obtained by Bloomberg. The wording could change after EU leaders meet Thursday. Greece said Wednesday it will require all visitors, including those from fellow EU countries, to present a Covid test taken within 48 hours of arrival. One day earlier, Italy surprised the bloc with a similar requirement that kicks in on Thursday. Finland didn’t go quite as far. The Nordic country will require travelers from outside the EU and the passport-free Schengen area to present a negative test result from the prior 48 hours. The government is still discussing when to begin enforcing the rule, Krista Kiuru, the minister overseeing the pandemic response, said on Tuesday. The moves, which are a response to fears about the fast-spreading omicron variant, undercut a highly praised element of the EU’s response to the pandemic: the digital Covid certificate that helped travel bounce back in Europe this year. “We need a common approach because crossing the borders, these certificates are the ones that are used,” Estonian Prime Minister Kaja Kallas said in Bloomberg TV interview. “So we definitely need to have a common understanding.” The EU had been planning to use this week’s summit to get an agreement on augmenting the role of the Covid pass and facilitate travel even further. Instead, the bloc criticized Italy for failing to provide advance notice of its testing requirement, as leaders arrive in Brussels.<br/>

The EC said on Wednesday it had extended its suspension of airport slot access rules until October 2022, providing relief for airlines still suffering from reduced traffic due to the COVID-19 pandemic. The Commission said that the slot relief had been extended to the 2022 summer scheduling season running from March 28 to Oct. 29. Airlines are normally required to use at least 80% of their take-off and landing windows or else cede some to rivals. Instead, for the relief period, they will only have to use 64% to retain the rights to those slots. The Commission said that air traffic had not fully recovered to 2019 levels, but reached more than 70% in summer 2021. Eurocontrol has estimated that annual air traffic in 2022 will be 89% of 2019 levels, according to its most likely case. Transport Commissioner Adina Valean said the EU executive was monitoring the impact of the Omicron variant closely and had demonstrated throughout the pandemic that it could act swiftly if needed. <br/>

Tens of thousands of people have been evacuated from coastal areas of the central and southern Philippines ahead of a strong typhoon that is expected to make landfall on Thursday afternoon. Typhoon Rai, which has been upgraded to a category 4 storm, the second-highest classification, has wind speeds of 165 km per hour, with gusts of up to 205 kph, the Philippines' weather bureau said. Nearly 30,000 residents in Eastern Samar province, one of the hardest hit by super typhoon Haiyan in 2013, have been evacuated from their homes in the past two days, Governor Ben Evardone told DZMM radio station. "We are getting pounded already by strong wind and rain," Evardone said. The southern province of Surigao del Sur has aleady started to feel the force of the storm. "The wind and rain is strong," Lita Escarez, who had evacuated from a coastal community, told DZBB. "We have yet to eat breakfast as we cannot go out because of the rain." Airlines cancelled dozens of flights, while transport authorities banned sea and land travel in the central and southern Philippines, leaving thousands stranded at ports.<br/>

Philippine senators on Wednesday approved a bill that will allow full foreign ownership of public services like telecommunications, airlines and domestic shipping firms. The Southeast Asian country, which has been hampered by restrictive ownership limits and bureaucratic red tape, is playing catch-up with many of its neighbours in attracting foreign direct investment. The bill, which updates a 1935 law, will remove the 40% foreign ownership cap on telecommunications, airlines, shipping, railways and irrigation. Foreign ownership limits will remain on public utilities like electricity, water distribution and the operations of seaports and airports. "By opening our economy to a diverse set of investors, we could provide our fellow Filipinos with more and better choices," said Senator Grace Poe, who was one the bill's principal authors. The Joint Foreign Chambers, a business lobby group that includes a range of overseas business chambers, welcomed the passage of the bill was approved by 19 votes to three. Liberalising the economy is one of the key steps needed by the Philippines to secure higher levels of foreign capital enjoyed by its neighbours and to recover from the coronavirus pandemic, it said in a statement.<br/>

The final Airbus A380 ever to be built is being handed over to its new owners on Thursday, the Dubai-based carrier Emirates. It is a landmark moment. The giant of the skies will continue to fly, but its long-term future remains uncertain. Emirates, which owns roughly half of the A380 fleet, looks set to continue using it for many years to come. But several other airlines stopped using their plane during the pandemic, and some have already been scrapped. The A380 is the world's largest passenger jet. In standard configuration, it carries 545 passengers - although in theory it can carry a maximum of 853. The double-decker colossus has four engines, an 80-metre wingspan and a maximum take-off weight of 560 tonnes. It is also very complex - containing around 530km of wiring.<br/>