Major US airlines are expected to reiterate the strength of travel demand when earnings season gets underway later this week. But with rising interest rates, high inflation, mounting job losses and turmoil in the banking industry increasing the odds of an economic recession, the spotlight will be on the elasticity of consumer demand. Pent-up travel demand as well as constrained airline capacity due to shortages of aircraft, spare parts, and labor have, thus far, allowed the industry to avoid the fallout from a slowdown in the broader economy. The question remains how long this travel boom will last. "The fallout from the recent banking turmoil and rising interest rates does in our view skew risk to the downside," said Christopher Stathoulopoulos, an analyst at Susquehanna Financial Group. CEs of major carriers last month rushed to reassure jittery investors after a profit warning from United Airlines (UAL.O) stoked worries about the industry's pricing power.The industry has been leaning on soaring consumer demand to mitigate higher labor and fuel costs with higher fares. Yet, Delta, which kicks off the earnings season on Thursday, has said its Q1 earnings would suffer due to a run-up in operating costs after its new contract deal with pilots. The Atlanta-based carrier is expected to report a profit of 30 cents a share. Chicago-based United, which is due to report its first-quarter result next week, is tipped to post a loss of 66 cents a share due to higher costs from a potential contract deal with pilots. Analysts at Moody's Investors Service estimate labor expense for US carriers will increase by 19% this year.<br/>
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A US judge on Tuesday ordered Russia's largest cargo airline to pay aircraft lessor BOC Aviation $406.2m after being declared in default on leases for three Boeing 747-8F planes following Russia's invasion of Ukraine. US District Judge Lewis Liman in Manhattan found the defendant AirBridgeCargo Airlines LLC and its parent Volga-Dnepr Logistics BV liable, after the invasion and resulting sanctions left the plaintiff BOC Aviation unable to reclaim the aircraft. Lawyers for the defendants did not immediately respond to requests for comment. A lawyer for Singapore-based BOC Aviation had no immediate comment, having yet to hear from his client. Aircraft lessors have sued dozens of insurers and lessees for billions of dollars over hundreds of aircraft stuck in Russia since the February 2022 invasion of Ukraine. BOC Aviation said AirBridgeCargo went into default after being unable to maintain required reinsurance coverage. This followed restrictions imposed by the European Union against Russian carriers on aircraft used in Russia, and Russian sanctions on foreign assets, including internationally-leased aircraft. BOC Aviation said it was able to recover one leased plane and two of its four engines, while the two other planes and two other engines remained in Russia. The lessor's majority shareholder is Bank of China. In a 57-page decision, Liman said BOC Aviation had proven that the Russian government had "effected a seizure" of the planes and engines by keeping them from being used outside Russia, "save perhaps to areas in Ukraine or for the purposes of the war."<br/>
Travel bookings in China have recovered to pre-pandemic levels after being suppressed last year by zero-COVID policies, and are set to boom for the upcoming May Day holiday, according to data from popular booking apps. Travel and restaurant booking app Meituan said its bookings for the upcoming May Day holiday from April 29-May 3 had reached a five-year high by the start of this week. The five-day May holiday is traditionally one of China’s busiest tourist seasons as spring moves into summer. Tourist spending and travel volumes were hit heavily last year by China’s zero-COVID policy to stop the spread of the virus. Domestic trips made during the holiday in 2021 reached 230m, a record high, according to the Ministry of Culture and Tourism. But the number dropped 43% to 160m last year. “The backlog of consumer travel demand since February is expected to be released during May Day holiday. Major domestic tourist cities and vacation destinations are expected to benefit from this,” said Fang Zeqian, an industry analyst at Trip.com. The app data is a bright spot for the consumer industry which is still struggling to recover as people tighten their budgets due to worries over the slowing economy and employment. Jin Hui, CEO of Chinese hotel chains operator H World Group that operates more than 8,500 hotels, said COVID had brought significant changes to people’s shopping habits.<br/>
Boeing reported Tuesday that deliveries of new jetliners jumped in March, helped by the return of the long-range 787 Dreamliner, as the U.S. aircraft maker edged out European rival Airbus in both deliveries and new orders. Boeing said it delivered 64 commercial airplanes last month, nearly matching the combined total of January and February. Seven were 787s, which Boeing had been blocked from shipping to airlines for several weeks while U.S. regulators looked into questions about pressure seals in the front of the planes. Arlington, Virginia-based Boeing has been forced to halt 787 deliveries several times in the last two years because of production and regulatory issues, and last week the Federal Aviation Administration proposed that airlines inspect their 787s for lavatory leaks that could let water seep into electronic equipment. The bulk of March deliveries — 52 of them — involved the smaller 737 Max jet, including 12 each to Southwest Airlines and United Airlines.<br/>Deliveries are an important source of cash for Boeing, which is trying to bounce back after losing more than $5b last year. Airbus reported 61 deliveries last month, bringing its total for the year to 127, almost all in its A320 family that competes with Boeing 737s. Boeing said it took new orders for 60 planes, but orders for 22 others were canceled, leading to a net gain of 38 in March. The largest chunk involved a previously disclosed order of 21 Max jets by Japan Airlines.<br/>
Boeing on Tuesday that 11 Chinese airlines have resumed operation of the 737 MAX as of April 10, in a positive sign for the US planemaker's attempts to rebuild its business in the world's second-largest aviation market. Based on these airlines, the number of 737 MAX returning to commerical service reached 43, accounting for approximately 45% of the Chinese 737 MAX fleet, the company also said in a social media post on its official WeChat account. The best-selling Boeing model was grounded in March 2019 after fatal crashes in Indonesia and Ethiopia, but returned to service around the world starting in late 2020 after modifications to the aircraft and pilot training. China is the last major market to resume flying the MAX amid ongoing trade tensions with the United States, and the return comes as domestic travel demand rebounds after China abandoned zero-COVID policies. Foreign airlines began flying the MAX to China in October 2022. In January, China Southern Airlines flew from Guangzhou to Zhengzhou using a MAX plane, marking the plane's first passenger flight in China in nearly four years.<br/>
Brazilian planemaker Embraer aims to sign a deal for the sale of 20 commercial jets to a Chinese airline during President Luiz Inacio Lula da Silva's visit to China this week, two people familiar with the matter told Reuters on Tuesday. The deal would mark a breakthrough for Embraer in China, where it has struggled to find new business since the 2016 closure of a joint venture at a factory in Harbin. That venture with Chinese group Avic, launched in 2003 during Lula's first presidential term, produced a previous generation of regional jets and Legacy 650 executive jets. Embraer has delivered 110 commercial aircraft to Chinese airlines, including 70 to Hainan Airlines and 20 to China Southern, according to securities filings. The planemaker has not received a new order from a Chinese airline since leaving Harbin in 2016. ICBC Financial Leasing, a subsidiary of the Industrial and Commercial Bank of China, had received five of 10 next-generation E-195-E2 on order at the end of last year, according to an Embraer filing.<br/>
Air cargo demand slipped again in February but exceeded pre-pandemic levels for the first time in eight months. The latest statistics from IATA show that demand in February fell 7.5% year on year in cargo tonne kilometres (CTKs). However, CTKs for the month were up 2.9% compared with February 2019 levels. The last time demand beat pre-pandemic levels was June of last year. Also, the decline was lower than the 14.9% year-on-year decline recorded in January and the 15.3% fall in December.<br/>Cargo load factors for the month were down 7.9 percentage points compared with last year at 45.6% as capacity increased by 8.6%. The increase in capacity reflects the addition of belly capacity as the passenger side of the business continues to recover. IATA director general Willie Walsh says: “The story of air cargo in February is one of slowing declines. Year-on-year demand fell by 7.5%. That’s half the rate of decline experienced in January. “This shifting of gears was sufficient to boost the overall industry into positive territory (+2.9%) compared to pre-pandemic levels. An optimistic eye could see the start of an improvement trend that leads to market stabilisation and a return to more normal demand patterns after dramatic ups and downs in recent years.” Looking at market indicators, IATA said that the global new export orders component of the manufacturing PMI continued to increase in February and China’s PMI level indicated that demand for manufactured goods from the country is growing. Meanwhile, global goods trade decreased by 1.5% in January, which was a slower rate of decline than the previous month of 3.3%. <br/>