general

Two decades ago, as a resurgent Russia sought to reclaim its place on the global stage, flagship airline Aeroflot PJSC and various startup carriers accelerated their shift from Soviet-era Ilyushins and Tupolevs to modern jetliners. That proved a bounty for Airbus SE and Boeing Co., of course, but it also enriched a less exalted corner of the aviation business: aircraft leasing firms. Dozens of lessors jumped in, and today about half of the 1,000 planes in the Russian fleet are owned by companies outside the country. Vladimir Putin’s war in Ukraine has thrown that market into turmoil, setting up a high-stakes tussle between leasing companies and their insurers, who say they’re not obligated to pay many claims because sanctions required them to drop coverage in Russia. Days after the invasion, the European Union, seeking to pressure Moscow to withdraw its troops, ordered lessors to take back their planes. About 30 jets were seized in places such as Hong Kong, Istanbul, and Mexico City. But the Kremlin quickly imposed its own ban on most international flights for Russian airlines, leaving almost 400 foreign-owned aircraft stranded. When the places where the planes were registered—mostly Bermuda and Ireland—withdrew their safety certifications, Russia encouraged its carriers to also register them at home, a move that’s banned by international aviation treaties. “I don’t think anyone in the insurance market contemplated Russia re-registering Western aircraft,” says Garrett Hanrahan, global head of aviation at insurance broker Marsh. “The equipment, the hulls, and the engines in Russia are likely to stay there.” Story has more.<br/>

China’s domestic airline capacity, which halved after a recent lockdown in Shanghai, is reviving slowly but a full recovery could take until the end of June, travel data firm OAG said on Wednesday. Scheduled seat capacity in China rose 12.5% in the week to Monday from the previous week, OAG said, in a gradual recovery following the Shanghai lockdown that began in late March and has entered its fourth week. However, the rise in capacity does not necessarily signal a quick return of demand, OAG Chief Analyst John Grant said. “Chinese airlines have been extremely flexible in taking capacity out and putting it back in quickly,” he said in a webinar. “To some degree, they don’t really seem to care whether demand returns quickly or not, and it probably doesn’t because of the natural conservatism about travelling when you come out a lockdown.” The outlook for next week’s five-day Labour Day holiday in China is bleak. Daily COVID counts have declined in Shanghai, but the capital Beijing is grappling with new outbreaks that have led to mass testing and mobility curbs for some parts of the city. Aviation data firm Variflight expects the average number of domestic flights across China will fall below 3,000 per day during the Labour Day holiday, up from a recent low of 1,670 flights on April 4, but still down over 70% from a year earlier. Weekly flight numbers have begun to rebound, but they are still hovering around the lowest levels since 2003, Variflight said.<br/>

Spanish airport operator Aena said on Wednesday its net loss in the frist quarter narrowed 60% from a the same period a year ago as traffic recovered 72% of its pre-pandemic level. Aena posted a net loss of E96.4m in the January through March period. Passengers in the airports it operates in Spain and elsewhere jumped almost four-fold to 43m during the quarter boosting aeronautical servieces revenues 277% from the same period a year ago. A regulation change on the leasing of its shop areas caused Aena’s commercial revenues to fall 7.6% during the first quarter. Traffic at Spanish airports grew 360% to 37.9m passengers during the quarter from the first three months of 2021. <br/>

The Civil Aviation Authority of Thailand (CAAT) has informed airlines worldwide of new arrival rules to be imposed this Sunday, including an end to compulsory Covid-19 tests upon arrival. The CAAT announced yesterday that from May 1 inbound passengers with full Covid-19 vaccinations can enter the country without an additional Covid-19 test. However, they will be advised to take antigen tests if they develop any suspicious symptoms. Those unvaccinated or inadequately vaccinated can undergo RT-PCR tests within 72 hours before travelling. If they do not have a prior RT-PCR test result, they must be quarantined for five days and undergo an RT-PCR test on the fourth or fifth day of quarantine. All air arrivals must have Covid-19 insurance with coverage worth at least US$10,000 (about 343,000 baht) during their stay in Thailand. All visitors by air must provide evidence of their vaccination status or RT-PCR test results and their Covid-19 insurance to the Thailand Pass system before travelling. When their documents are verified, they will receive a QR code for the Thailand Pass system. Airline staff can deny boarding to any passengers without a QR code. The airlines concerned must take responsibility for returning passengers without a QR code to the countries of origin, the CAAT said.<br/>

Boeing reported a wider adjusted quarterly loss and lower revenue than analysts expected as the company faced higher costs on both commercial and defense aircraft and charges tied to the war in Ukraine. The manufacturer said it will pause production of its 777X plane, which has not yet been certified by US regulators, through 2023, a plan the company says will create $1.5b in abnormal costs starting in Q2. Boeing also doesn’t expect deliveries of the plane to start until 2025, more than a year later than it previously forecast. Its shares shed 7.5% Wednesday to $154.46, a more than 16-month low. Boeing has enjoyed a resurgence in demand for its 737 Max plane, which returned to service in late 2020 after two fatal crashes. But production problems and certification delays have hampered other aircraft programs. “Through our first-quarter results, you’ll see we still have more work to do; but I remain encouraged with our trajectory, and we are on track to generate positive cash flow for 2022,” Boeing CEO David Calhoun said in a note to employees Wednesday. “We are a long-cycle business, and the success of our efforts will be measured over years and decades; not quarters.” Boeing said it submitted its Dreamliner certification plan to the Federal Aviation Administration, a step toward getting regulators to sign off on resuming deliveries of the wide-body jets. Those handovers to customers have been suspended for most of the last 18 months, and buyers like American Airlines said they scaled back some international flying in response. The company posted a net loss of $1.2b in Q1, wider than the $561m loss it posted a year earlier. Revenue of $13.99b fell 8% from the first quarter of 2021 and short of analysts’ estimates.<br/>

Boeing said Wednesday it recorded a $660m charge in its development of Air Force One as its chief executive questioned the planemaker's US presidential aircraft deal. In December 2016, then US President-elect Donald Trump extracted a promise from then Boeing CEO Dennis Muilenburg that the cost of replacing Air Force One would not exceed $4b. Trump had earlier urged the government to cancel purchase of Boeing's new Air Force One saying it was "ridiculous" and too expensive. Boeing on Wednesday recorded a $660m charge on the Air Force One program, "primarily driven by higher supplier costs, higher costs to finalize technical requirements and schedule delays." It recorded a $318m charge in April 2021 on the program "largely due to COVID-19 impacts and performance issues at a key supplier." "Air Force One -- I'm just going to call a very unique moment, a very unique negotiation, a very unique set of risks that Boeing probably shouldn't have taken," Boeing CE Dave Calhoun told investors. "But we are where we are, and we're going to deliver great airplanes. And we're going to recognize the costs associated with it."<br/>