After surviving the chaos of the pandemic, the world’s biggest airlines are facing a new crisis before the last one is even over. Russia’s invasion of Ukraine has sent the price of oil rocketing to a 14-year high and set off a sequence of unprecedented flight bans around the world. Investors have taken fright and sent airline shares tumbling, leaving the industry at the mercy of a global crisis for a second time in as many years. “We have dealt with the pestilence, only to be visited with a war,” said Ryanair CE Michael O’Leary. “I think it’s going to be very difficult for most airlines for the next 12 months.” Airlines are used to dealing with geopolitical shocks and executives and analysts think demand for flying is strong enough to help passenger numbers recover from Covid-19. But Russia’s invasion of Ukraine comes at a critical time as it threatens to hit demand for flying, testing the fragile balance sheets of the carriers and delaying the return to profits after the industry racked up an estimated £200bn of pandemic losses. Lufthansa’s CE Carsten Spohr said the company faced “another challenge” from the “unimaginable events” as the airline last week warned over the uncertainty stemming from the conflict. “We’re looking at a delay or somewhat of an interim setback in the airline path to financial recovery,” said Philip Baggaley, a managing director at S&P Global. The immediate financial problem is the soaring price of crude oil, which has risen as high as $139 per barrel, at a time of broader inflationary pressures. Fuel can represent up to 35% of airline operating costs, according to Scope Ratings and several carriers in Europe changed their hedging policies after being stung by a collapse in the price of oil and demand for flying in 2020.<br/>
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Finnair said on Wednesday it had noticed interference with its planes’ GPS signals near Russia’s Kaliningrad enclave, while other aircraft reported similar problems near Finland’s eastern border with Russia since Sunday, Finnish authorities said. The interference began soon after Finland’s President Sauli Niinisto met US counterpart Joe Biden in Washington on Saturday to discuss deepening defence ties between Finland and NATO due to Russia’s attack on Ukraine. Prime Minister Sanna Marin told Reuters on Wednesday she had no information about the source of the disturbances, nor about whether they originated in Russia, while the Foreign ministry said it was looking into the events. “If they would be caused by outside influence, it would surely be said publicly,” Marin said. The Kremlin did not immediately reply to a request for comment about the reported interference. Some of Finnair’s Asian flights and most of its European ones go past Kaliningrad, which is sandwiched between NATO members Lithuania and Poland on the Baltic Sea’s eastern coast, the company told Reuters. “Our pilots have noticed interference in GPS near the Kaliningrad area in the past few days,” a spokesperson for Finland’s national carrier said in an email. Some 10 aircraft have also reported unusual disturbances in GPS signals near Finland’s eastern border with Russia since last Sunday, Finnish Transport and Communications Agency Traficom said on Tuesday. Traficom said it had asked aviation authorities to alert aircraft pilots to the situation by issuing an official Notice to Airmen (NOTAM) notification. The disturbances were continuing, it said. “Flying is still safe. Airlines have operational procedures for such situations if the GPS signal is lost,” Traficom’s director Jari Pontinen said. Lithuanian airline Transaviabaltika told Reuters it had been forced to cancel 18 flights between Helsinki and Savonlinna in eastern Finland after the lack of GPS made it impossible to land because Savonlinna airport does not have alternative navigation equipment.<br/>
Global leasing companies staring at an imminent sanctions deadline to repossess more than 400 jets worth almost $10b from Russian airlines have received mostly radio silence as experts warn of legal wrangling that could last a decade. Western bans imposed after Russia's invasion of Ukraine give most leasing firms until March 28 to sever ties with Russian airlines - sparking a game of cat-and-mouse from Asia to Africa as lenders frantically try to seize aircraft. Leasing companies are terminating leases and asking for planes to be returned along with the paperwork that must be secured for planes to be placed with new airlines. But so far, Western observers say that is not happening. "There is nothing official, but Russian airlines are not giving aircraft back. The only ones are a handful that were already outside Russia and could be repossessed," said independent aviation adviser Bertrand Grabowski. Those include two jets seized in Istanbul and Mexico City, according to trade journal ch-aviation. Others have wriggled through the repo net. An Aeroflot Boeing 777 narrowly escaped being seized at the initiative of a non-Russian bank in Southeast Asia and the Gulf in the past week, two people familiar with the matter said. An Airbus A321neo leased to the same flag carrier was the target of a failed repossession in Egypt, aviation publication The Air Current reported. In total there are almost 780 jets leased by Russian airlines, including 515 from abroad. Even some leased within Russia are subject to claims from foreign banks. Some 425 of these are most at risk in what looks set to become aviation's biggest mass default, according to consultants Ascend by Cirium who have seen "virtually no progress" in seizing jets. For a maturing industry with portfolios worth up to $300b, that remains far from the global impact of the pandemic that grounded over 15,000 jets.<br/>
Around a dozen Russian aircraft are stranded at Swiss airports by the closure of airspace in many European countries to punish Moscow for its invasion of Ukraine, Switzerland's civil aviation authority estimated on Wednesday. "I expect that it will be around a dozen aircraft in Switzerland," a spokesperson for the Federal Office of Civil Aviation said. This included EuroAirport near Basel, which straddles the Swiss-French border. There were two aircraft in Geneva, including an Aeroflot passenger jet, and none in Zurich, he said, adding that not all airports had responded to his survey. Swiss broadcaster SRF said its investigation had found private aircraft believed to belong to Russian oligarchs were on the ground at EuroAirport. It said one of the aircraft was believed to belong to Chelsea Football Club owner Roman Abramovich, and had flown to Basel from London at the end of February. Another was thought to belong to billionaire Viktor Vekselberg, it said. Neither could be reached for immediate comment on the report. The airport declined comment. Switzerland adopted EU sanctions against Russia and closed its airspace to Russian aircraft and airlines on Feb. 28. Abramovich and Vekselberg are not personally sanctioned in Switzerland but would still be affected by the airspace closure.<br/>
Just as the travel industry was seeking to climb out of a two-year depression, Russia’s assault on Ukraine has scrambled schedules and given Americans pause as they consider international vacations. The extent to which travelers will feel the effects of the war depends on where they’re going, though experts say the rising price of oil will likely affect all airline ticket prices, even on domestic routes. For Americans with international plans, the world map, which recently seemed to be expanding with the relaxation of Covid restrictions in many countries, has shrunk anew. Operators have largely scrapped travel in Russia for the rest of the year, which greatly affects Baltic cruise itineraries where the marquee port of call was St. Petersburg. All of this comes at the time of year when many Americans plan their summer vacations. Some are hesitating. In a recent survey of about 350 American travelers on the impact of the war, the market research firm MMGY Global found that 47% are waiting to see how things pan out in Ukraine before making Europe plans. The conflict leapfrogged Covid-19 as a factor influencing decision-making, with twice as many respondents citing concern about the war spreading beyond Ukraine as those who fear the pandemic. So far, travel companies are not seeing mass cancellations as travelers, who may have been conditioned to remain flexible by the pandemic, are sticking to their resolve. Nearly 65 percent of American adults surveyed by TheVacationer.com, a travel strategy website, said they would accept higher prices, longer transit times or another deterrent in order to travel in 2022. “We’re not seeing a change in behavior for now from our American travelers,” said Sarah Casewit, a senior travel curator with Origin, a membership-based travel-planning service, which has seen a rise in Europe bookings in recent weeks. No commercial carriers from the United States fly to Russia, and those with code-share and interline agreements with Russian carriers, including Delta and American, have cut them. But the FAA’s prohibition on flying over Ukraine, Belarus and much of Russia requires some routes to make costly diversions. Story has more.<br/>
US airlines will likely recover a surge in fuel costs from customers amid a robust desire for travel, according to the president of Sun Country Airlines Holdings Inc. The industry “takes time” to pass along pricier fuel into higher airfares but will do so in the coming months by reducing the amount of flying available, Dave Davis said Wednesday. “The demand environment is incredibly strong,” he said at a Raymond James Financial conference. “Our demand is way up versus pre-Covid, 2019.” Barry Biffle, the CEO of Frontier Airlines Holdings, echoed those comments. “You have spring break yields that you haven’t seen in years and summer yields look great, so we’re excited to see what happens,” he said at the conference. Alaska Air Group and Allegiant said Tuesday that they would start paring some flights from their schedules. Reducing the supply of tickets could let airlines raise ticket prices to recover the jump in fuel costs from the war in Ukraine. Despite a surge of more than 50% in spot jet-fuel prices this year, Sun Country expects its unit cost to continue dropping as the airline flies more each day. The company sees costs below the 2019 level of 6.31 cents a seat mile by year-end, from 6.44 cents in 2021, Davis said. “The demand environment is incredibly strong,” he said at a Raymond James Financial conference. Further fuel-price increases could affect that outlook. Sun Country has three dozen Boeing Co. 737 narrow-body jets plus 12 cargo aircraft it flies for Amazon.com Inc. The carrier plans have to 74 passenger 737s by the end of 2025, as well as additional cargo jets for Amazon. A sizable charter operation and its business with Amazon mean Minneapolis-based Sun Country can charge customers directly for much of its fuel purchases. “We have no fuel exposure on a third of our revenue,” Davis said.<br/>
The FAA is in one of the most demanding periods in its history as it grapples with controversial new 5G mobile phone service, the fallout from twin Boeing 737 Max tragedies and the Covid-19 pandemic. Now the agency must contend with the potential of operating without a confirmed leader. The surprise announcement last month that its administrator is leaving at the end of this month has come as partisan conflict in the Senate has stalled all transportation-related nominees. Its architect, Florida Republican Senator Rick Scott, has vowed to continue the block until his demands for a hearing on the nation’s supply-chain issues are met, his spokeswoman said. “The aviation community and the FAA needs continuity, needs clarity and strong leadership,” said Hassan Shahidi, president and CEO of the nonprofit Flight Safety Foundation. “It is important to have that strong leadership from the top and to do it quickly and without delay.” FAA Administrator Steve Dickson on Feb. 16 announced that he was stepping down about halfway into his five-year term. Transportation Secretary Pete Buttigieg told reporters March 2 at the Capitol that a nominee would come “soon.” Numerous names have been floated by lawmakers, unions and the news media, but the administration hasn’t signaled whether it has narrowed its choice toward any of them. Story lists possible nominees.<br/>
An Airbus jetliner freshly handed over to Russia’s flag-carrier airline left France for Moscow several hours after President Vladimir Putin had launched his invasion of Ukraine, prompting sweeping sanctions. Airbus transferred the A350 widebody’s title to Aeroflot on Feb. 22, according to monthly delivery figures published Wednesday. Airline-tracking website FlightRadar24 indicates, though, that it departed the manufacturer’s Toulouse base only on the evening of Feb. 24, after the war was underway. An Airbus spokesman said that the handover was pre-planned, compliant with rules at the time and in no way sped up because of the political situation, adding that airline customers generally determine when to fly out an aircraft. On the day of the A350 title transfer, curbs were being imposed on Russia after Putin recognized two separatist republics in eastern Ukraine and continued to build up forces ahead of the main incursion. The US unveiled sanctions on the sale of sovereign debt, while Germany warned of penalties. Airspace closures to Russian planes and a ban on aerospace shipments didn’t take effect until several days after the invasion. Airbus said that it “is applying and will continue to apply the sanctions fully.” The world’s biggest planemaker still has 13 of the long-haul A350s destined for Aeroflot, which it can no longer hand over. France shut its airspace to Russian aircraft from the evening of Feb. 27, the same day as a broader European Union ban was agreed. According to FlightRadar24 data, the plane took a direct route to Moscow from Toulouse, as airspace bans weren’t yet in place. The data shows that following its delivery the airline’s new A350 has performed flights to Maldives, Seychelles and Cuba.<br/>
The FAA said Wednesday it is finalizing three safety directives for some grounded Boeing 777 planes with Pratt & Whitney 4000 engines that will allow them to return to service. The new final airworthiness directives cover Boeing 777s like a United Airlines 777 that failed shortly after takeoff from Denver in February 2021, showering debris over nearby cities. No one was injured and the plane safely returned to the airport. The FAA said the new directives, which were proposed in December after three reported in-flight fan blade failures, require enhanced inspections and modifications that will allow Boeing 777-200 and -300 airplanes equipped with those Pratt & Whitney engines to resume flights after being grounded for more than a year. One directive requires installing debris shields on the thrust reverser inner wall, inspecting fan cowl doors for moisture ingression and repetitive checks of the hydraulic pump shutoff valves. Another requires modifying the engine inlet to withstand fan blade failure events. A third requires specific corrective actions depending on inspection results. The directives will be effective in mid-April. In February 2021, the agency ordered immediate inspections of 777 planes with PW 4000 engines before further flights, after the National Transportation Safety Board found a cracked fan blade on the United engine. United, which is the only US operator of 777s with the PW4000 engine and has 52 of those planes, said the step "is a good and safe outcome for our industry and United customers."<br/>
A proposed bill to fund the US government's operations through September would cut $2b from a COVID-19 program to boost aviation manufacturing and repair businesses. The US House of Representatives is set to vote on the bill on Wednesday that redirects $15.6b in COVID-19 relief programs to other COVID programs. In total, the US DoT has offered $673m nationwide in three rounds of awards in the $3b program. The aviation manufacturing payroll subsidy program created in 2021 covers up to half of eligible companies' compensation costs for up to six months. Some major aerospace firms like Boeing and General Electric opted not to participate. Grantees may not conduct furloughs without employee consent or lay off workers covered by subsidies during that period. Among the 593 awards offered were $75.5m to Spirit AeroSystems, $20.9m for Connecticut-based Hexcel Corp, $17.5m to BAE Systems Controls, $12.9m to Airbus' US arm, $15m to Learjet, a unit of Bombardier Inc, and $12.5m to Dassault Falcon Jet Corp. France's Safran, the world's third-largest aerospace supplier, was offered about $40m for various US units. The department said the awards will support 31,000 US jobs in 43 states.<br/>
Britain said on Wednesday it had impounded a plane connected to a Russian billionaire under new aviation sanctions which give authorities the power to detain any Russian aircraft and to ban exports of aviation or space-related goods to Russia. The measures to strengthen action against Russian aircraft mean it is a criminal offence for any to fly or land in the United Kingdom. The ban includes any aircraft owned, operated or chartered by anyone connected with Russia or designated individuals or entities, and will include the power to detain any aircraft owned by persons connected with Russia, the Foreign Office said. Transport minister Grant Shapps said one aircraft had already been impounded at Farnborough Airport in southern England while further investigations were carried out. A British government source said the private jet was linked to Eugene Shvidler, a billionaire business associate of Roman Abramovich, the owner of Chelsea soccer club. <br/>
Gatwick is expecting 3m passengers a month this summer as the easing of travel restrictions and the return of takeoff and landing slot rules help the airport recover from its pandemic slump. The airport reported narrower losses of just over GBP1m a day in 2021, down GBP95m on 2020 to GBP371m, despite passenger numbers falling further to 6.3m last year. Gatwick is expecting more than 30m passengers in 2022, operating at 85% capacity in the summer, aided by the return of slot rules that ensure airlines use their alloted takeoff and landing slots at least 70% of the time. The south terminal, mothballed to save money, will reopen at the end of March, when British Airways will also return to short-haul flying from the airport. Gatwick’s biggest airline customer, easyJet, plans to expand to record levels with 120 routes this summer, partly using slots leased from BA. The airport said the decision to reinstate slot regulations, paused in 2020, would “restore discipline” and be more efficient and economically beneficial for the region but denied it would lead to “ghost flights”. CE Stewart Wingate said load factors on flights were already high before the new rules came into effect, adding: “My biggest worry has been having a ghost terminal.” He said the end of travel restrictions had increased demand, and businesses at the airport had been recruiting for more than 2,000 new posts over recent months.<br/>
Fuel shortages in Nigeria have caused domestic airlines to cancel some internal flights and delay others this week, two of the country’s biggest carriers said on Wednesday. Air Peace, Nigeria’s biggest carrier by passenger numbers, flying to Dubai and Johannesburg, said it was likely to experience flight disruptions on Wednesday and in the coming days due to jet fuel scarcity. “Unfortunately, the fuel scarcity is starting to seriously impact our operations,” it said. Another carrier, Arik Air, delayed almost all its flights on Tuesday and cancelled others, it said, adding that there was no certainty on the situation in the coming days. Nigeria imports almost all its jet fuel, which has nearly doubled to as high as 625 naira ($1.50) per liter since December, Arik Air said. Global jet fuel prices have hit a near 14-year peak as Russia’s invasion of Ukraine triggered a surge in the crude oil market, hitting airlines and passengers with steep cost increases. The latest crisis marks a further blow to an airline sector still recovering from the effects of COVID-19 restrictions. Airline passengers in Nigeria pay for fares in naira, which has weakened sharply due to devaluations. Fuel suppliers however are paid in dollars, a scarce currency in Africa’s top economy. Nigeria’s fuel crisis has been exacerbated by imports of sub-standard petrol. This has angered motorists, who have been spending hours in lines to fill their tanks, while some public transport owners have taken advantage to hike fares.<br/>
Singapore will make a “fundamental shift” to a full border reopening in due course, as the city-state stresses that recovery of its aviation sector remains its “immediate priority”. Speaking at a parliamentary debate on his ministry’s budget plans, Singapore transport minister S Iswaran did not provide a timeline for reopening, except to say that it will be worked out with the country’s pandemic taskforce, and depends on “the public health situation in Singapore and the world, among other things”. The minister’s remarks come more than half a year after Singapore’s launch of the Vaccinated Travel Lane (VTL) scheme, which allows fully-vaccinated travellers to enter the country without quarantine. The list of countries under the travel scheme has grown to 32 , including Thailand, Malaysia, the USA, Australia, as well as Germany. Calling the VTL scheme a “first phase” of a “careful and calibrated” border reopening plan, Iswaran adds: “The next phase will entail a more fundamental shift – from Vaccinated Travel Lanes to vaccinated, quarantine-free travel." This means all inoculated travellers from “low risk” and “general travel” countries can enter quarantine-free. “This will effectively reopen our borders to the rest of the world,” the minister adds. Other countries, including India, Malaysia and Australia, have announced a full border reopening in recent months, ending two years of shut borders amid the coronavirus pandemic. The transport ministry is targeting to restore Changi Airport’s passenger volumes to half of pre-pandemic levels by end-2022, a significant jump from the 15% pre-Covid-19 levels reported in December 2021. <br/>
The Government will commit S$500m to support aviation companies and workers in the coming financial year as air travel picks up, announced Transport Minister S Iswaran in Parliament on Wednesday. He said the OneAviation Resilience Package will help the sector to ramp up its capacity in managing increased traveller volumes, in order to rebuild and reclaim Singapore’s status as an international aviation hub. "Changi’s air connectivity anchors the Singapore economy. ... To lose Changi’s connectivity, is to lose this key competitive advantage, and our livelihoods that depend on it," said Iswaran. "Fortunately, we are in a different situation today thanks to a better understanding of the virus, well-established safe management measures, and high levels of vaccination in our population. Hence, we have been able to take careful and calibrated steps to reopen our borders." The OneAviation Resilience Package includes S$60m to rebuild the sector's workforce, the Ministry of Transport (MOT) said in a separate press release. Aviation companies will receive wage support via an extension of the Aviation Workforce Retention Grant for six months, covering 10% of wages paid to local employees from April to September this year. A cap of S$4,600 of gross monthly wages per employee applies. Another S$390m will be set aside for cost relief and support for public health safeguards. This includes extending rebates on fees payable by aviation companies at Changi Airport and Seletar Airport for six months. Further support will be given based on the extent of air travel recovery, MOT said. The Government will also continue to defray the cost of implementing public health and safe management measures at the airport, which the ministry said will enable safe air travel, protect aviation workers and the wider community.<br/>
The Airlines Association of Thailand (AAT) is urging the government to let them add a fuel surcharge onto tickets for domestic flights, as the Russia-Ukraine conflict continues to push up oil prices. As oil prices surged by 40-50% from last year, airlines want to add the fuel surcharge onto domestic tickets to reduce the impact of such high volatility, said Puttipong Prasarttong-Osoth, president of the AAT and Bangkok Airways. A surcharge on domestic flights would be based on the price of fuel. If oil prices fall to a specific level in the future, no additional cost would be added onto air tickets. The AAT has already submitted a letter to the Civil Aviation Authority of Thailand (CAAT) asking them to allow airlines to collect a fuel surcharge. Puttipong said there had been no feedback from the CAAT and no further meetings with airlines to consider the issue. For Bangkok Airways, fuel accounts for just 10% of operational costs as demand has not yet fully recovered to pre-pandemic levels. Higher costs come from aircraft leasing, which accounts for 25%, followed by payroll. Puttipong said airfares would be adjusted in accordance with operational costs and the overall market to remain competitive. Every airline is now selling discounted tickets to attract passengers. While some airlines may opt for oil hedging, Bangkok Airways will wait and see how Russia's invasion of Ukraine turns out over the next 1-2 months before speculating on fuel prices in advance.<br/>
The Government is providing a further $250m in subsidies until March 2023 to keep air cargo links open, despite the easing of Covid border restrictions this year. New Zealand’s closed borders as a result of Covid-19, and record low passenger numbers, resulted in air cargo capacity dropping, and sent the cost of freight skyrocketing. The top-up will kick in on April 1. The Government put an extra $195m in the Maintaining International Air Connectivity (MIAC) scheme for flights between the start of November 2021, on top of $170m in support from May to October last year. In total, the Government has spent more than $700m so far on aviation support, including an initial $372m in 2020. The MIAC scheme aimed to ensure the international aviation sector kept operating services to New Zealand, and to maintain connections with key trade partners. The Ministry of Transport was working with airlines to confirm the routes and services that would come under the extension, and the schedule would be finalised over the coming weeks, Transport Minister Michael Wood said on Thursday.<br/>
Brazilian airframer Embraer ended 2021 on a high note, posting total revenue of $4.2b, up from $3.8b in 2020. The San Jose dos Campos-headquartered company says, however, that fourth quarter revenue was lower than during the same period a year ago, falling to $1.3b during the final three months of the year, compared to $1.8b in 2020. That decline comes as a result of the company delivering fewer jets in the final quarter of the year – 55 compared to 71 in the same period in 2020. Embraer says, though, that it earned a profit of $2.1m in Q4 2021, compared to a $3.3m loss in the same quarter in 2022. For the full year, the airframer’s loss shrank to $44.7m, from $732m in 2020. The company’s commercial aviation unit reported 2021 revenue growth of 18%, to $1.32b, due to higher E195-E2 deliveries in 2021, and higher prices, Embraer says. “The E-Jets E2 family (especially the E195 E2) representing 44% of deliveries in 2021, compared to 25% of total deliveries in 2020,” the company adds. Executive aviation jets’ 2021 revenue rose 5% year-on-year, to $1.13b, driven by higher deliveries and higher prices also. All told, the airframer delivered 141 jets during the year - 48 commercial aircraft and 93 executive jets (62 light and 31 mid-size). In 2020, the company delivered 130 aircraft in total. At the end of 2021, the company’s backlog stood at $17b – the highest since Q2 2018.<br/>