PARIS (Reuters) – Airbus delivered 49 aircraft in July, up from 36 in June as it continues to recover from a slump in deliveries during this year’s coronavirus lockdowns, the company said on Thursday.
The aircraft were all narrow-body jets, highlighting a dearth of demand for the industry’s biggest models, which last month prompted Airbus to trim A350 production for a second time.
The month’s deliveries included 47 A320neo-family jets.
Airbus also scored its first orders in three months as it sold two A320neos to an undisclosed customer and two A321neos to Lufthansa Technik, the modification and repairs business of German carrier Lufthansa <LHA.DE>.
So far in 2020, Airbus has delivered 245 jets and sold 369, or 302 after cancellations.
Demand for aircraft has been crippled by the coronavirus crisis and its heavy impact on air travel.
Airbus is boosting deliveries on a monthly basis despite the industry’s worst crisis as it negotiates deals with airlines.
But although deliveries are rising compared to the trough seen in April, several bankers and analysts have questioned how many of the aircraft are being placed into service as airlines struggle to save cash. Some are said to go straight to storage.
Airbus has issued default notices and threatened to sue airlines that refuse to collect planes already built while showing flexibility in deferring jets not yet in the factory.
(Reporting by Tim Hepher; Editing by Keith Weir)
An Airbus A320neo aircraft is pictured during a news conference to announce a partnership between Airbus and Bombardier on the C Series aircraft programme, in Colomiers near Toulouse, France
BRUSSELS (Reuters) – The European Union’s competition watchdog on Monday approved French state aid worth 7 billion euros ($7.66 billion) for Air France <AF.PA>, saying the support would provide cash to soften the economic shock of the coronavirus pandemic.
Airlines across Europe have sought state rescues as coronavirus lockdowns have forced them to ground their fleets for more than a month, with no end in sight.
“This 7 billion euro French guarantee and shareholder loan will provide Air France with the liquidity that it urgently needs to withstand the impact of the coronavirus outbreak,” the EU’s top competition official Margrethe Vestager said in a statement.
The European Commission noted the importance of Air France, with more than 300 planes, to the French economy and the role it has played in repatriating stranded citizens and transporting medical supplies.
The Commission said in its statement that the support will take the form of a state guarantee on loans and a subordinated shareholder loan to the company by the French state.
The French and Dutch governments each hold close to 14% of the Air France-KLM group, which was created by the 2004 merger between the two national carriers.
(Reporting by Gabriela Baczynska and Robin Emmott, editing by Ed Osmond and Barbara Lewis)
FILE PHOTO: Air France airplanes on the tarmac at Paris Charles de Gaulle airport in Roissy-en-France
FILE PHOTO: EasyJet planes parked at Luton airport after the airline grounded its entire fleet
LONDON (Reuters) – EasyJet can survive a nine-month shutdown thanks to its measures to contend with the coronavirus crisis and is planning for a slow recovery, the British airline said on Thursday.
As airlines worldwide battle for survival after lockdowns and travel bans brought the sector to a virtual standstill, EasyJet announced a new fleet plan to manage its emergence from the enforced hibernation.
The UK-based company said it will start to shrink its fleet and the number of planes it operates will not reach pre-crisis levels until 2022, signalling that it does not expect a quick recovery for the industry.
“We’ve been able to adapt ourselves to reduced demand for the next couple of years, then have the flexibility to increase as demand picks up again,” Chief Executive Johan Lundgren told reporters.
The industry is split on how quickly the sector can recover. Lufthansa, plane manufacturers and airline body IATA have warned that it will be a slow process. EasyJet’s bigger low-cost rival Ryanair, meanwhile, has predicted a swift rebound in traffic.
Lundgren said that, while he does not expect the grounding of easyJet’s fleet to last nine months, the company would remain cash-positive even if that were the case and could survive for longer than that by seeking additional funding.
Among the steps it is taking, easyJet is in talks over the sale and leaseback of some planes to leasing companies, with expected proceeds of up to 550 million pounds ($687 million).
“Overall, the company has presented a very credible response to the crisis,” said Goodbody analyst Mark Simpson.
In addition to the deferral of new orders and non-renewal of leases, easyJet said it now plans to sell six aircraft.
The airline, however, has faced calls from its founder and biggest shareholder, Stelios Haji-Ioannou, to terminate its 4.5 billion pound order with Airbus for 107 new jets.
He escalated his row with management on Thursday, issuing a statement saying he planned to call for the removal of Lundgren as well as chairman John Barton at forthcoming meetings. He said Lundgren should not send money to Airbus for planes while running an “aircraft parking lot”.
CASH PILE
Through various funding initiatives, easyJet expects to generate total additional liquidity of about 1.85 billion to 1.95 billion pounds, leading to a notional cash balance of about 3.3 billion pounds.
Given the level of continued market uncertainty, the company said it is not possible to provide guidance for the remainder of the 2020 financial year.
However, it said winter bookings are well ahead of those at the same stage last year, with Lundgren adding that he expects there to be pent-up demand for holidays as people emerge from lockdown.
But travel restrictions are likely to ease slowly and easyJet will have to be flexible, the CEO said. “I don’t think this is going to be a case of let’s just open everything up,” he added.
Measures under consideration include disinfecting aircraft and steps to ensure social distancing on planes.
“We will clearly look to have the middle seat empty as we start,” Lundgren said. “I think that is actually what the customers would like to see.”
EasyJet shares were up 2.2% at 616 pence at 1207 GMT, having lost more than 50% year to date.
($1 = 0.8007 pounds)
(Reporting by Sarah Young; Editing by Kate Holton and David Goodman)
FILE PHOTO: VW hosts photo workshop at Zwickau plant
FRANKFURT (Reuters) – German carmakers including Volkswagen <VOW.DE> and Mercedes-Benz <DAI.DE> will restart production at some German factories next week after the country eased restrictions designed to contain the coronavirus outbreak.
Chancellor Angela Merkel on Wednesday said that Germany has achieved a “fragile intermediate success” in its the fight against the coronavirus and that its emergence from lockdown would begin with the partial reopening of shops next week and schools from May 4.
Unlike Italy and Spain, Germany never banned car production, though factories came to a standstill after authorities restricted the movement of people and ordered the closure of car dealerships, hitting demand.
Volkswagen said it will start producing cars for its core brand in Zwickau, Germany, and in Bratislava, Slovakia, on April 20.
Plants in Russia, Spain, Portugal and the United States will ramp up production from April 27 onwards, joined by factories in South Africa, Argentina, Brazil and Mexico in May.
“With the decisions by the federal and state governments in Germany and the loosening of restrictions in other European states, conditions have been established for the gradual resumption of production,” Ralf Brandstaetter, Chief Operating Officer of the Volkswagen brand, said in a statement.
The carmaker has retooled production to ensure that workers keep 1.5 metres apart. Other measures include the staggering of shifts and lunch breaks, plus steps to change worker interaction in VW’s supply chain.
Bernd Osterloh, Chairman of the company’s Works Council, said: “In the light of the pandemic, we need to adapt our routines. One answer is our new agreement on health protection. With about 100 measures, we are keeping the risk of infection at Volkswagen as low as possible.”
In China, where a Volkswagen has already implemented health measures, 32 of the 33 plants have resumed production and no coronavirus infections among employees have been reported.
Mercedes-Benz parent Daimler said that its plants in Hamburg, Berlin and Untertuerkheim will resume production next week. Its Berlin plant makes engine-management systems for vehicles sold in China.
Production will initially start in a one-shift system, Daimler said, with plants in Sindelfingen and Bremen also making preparations to ramp up production.
(Reporting by Edward Taylor and Jan Schwartz; Editing by David Goodman)
Since the COVID-19 outbreak began, Emirates and dnata have been adapting operations in line with regulatory directives as well as travel demand.
The airline has aimed to maintain passenger flights for as long as feasible to help travellers return home amidst an increasing number of travel bans, restrictions, and country lockdowns across the world. It continues to maintain vital international air cargo links for economies and communities, deploying its fleet of 777 freighters for the transport of essential goods including medical supplies across the world.
With many of its airline customers dramatically reducing flights or ceasing services altogether, dnata has also significantly reduced its operations, including temporarily shutting some offices across its international network.
HH Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive of Emirates Group said: “The world has literally gone into quarantine due to the COVID-19 outbreak. This is an unprecedented crisis situation in terms of breadth and scale: geographically, as well as from a health, social, and economic standpoint. Until January 2020, the Emirates Group was doing well against our current financial year targets. But COVID-19 has brought all that to a sudden and painful halt over the past 6 weeks.
“As a global network airline, we find ourselves in a situation where we cannot viably operate passenger services until countries re-open their borders, and travel confidence returns. By Wednesday 25 March, although we will still operate cargo flights which remain busy, Emirates will have temporarily suspended most of its passenger operations. We continue to watch the situation closely, and as soon as things allow, we will reinstate our services.”
Having received requests from governments and customers to support the repatriation of travellers, Emirates will continue to operate passenger and cargo flights to the following countries and territories until further notice, as long as borders remain open, and there is demand: the UK, Switzerland, Hong Kong, Thailand, Malaysia, Philippines, Japan, Singapore, South Korea, Australia, South Africa, USA, and Canada. The situation remains dynamic, and travellers can check flight status on emirates.com.
Sheikh Ahmed added: “Emirates Group has a strong balance sheet, and substantial cash liquidity, and we can, and will, with appropriate and timely action, survive through a prolonged period of reduced flight schedules, so that we are adequately prepared for the return to normality.”
Cost reduction measures
The Emirates Group has undertaken a series of measures to contain costs, as the outlook for travel demand remains weak across markets in the short to medium term. This includes:
Postponing or cancelling discretionary expenditure
A freeze on all non-essential recruitment and consultancy work
Working with suppliers to find cost savings and efficiency
Encouraging employees to take paid or unpaid leave in light of reduced flying capacity
A temporary reduction of basic salary for the majority of Emirates Group employees for three months, ranging from 25% to 50%. Employees will continue to be paid their other allowances during this time. Junior level employees will be exempt from basic salary reduction
Presidents of Emirates and dnata – Sir Tim Clark and Gary Chapman – will take a 100% basic salary cut for three months
The Emirates Group has strong liquidity, with a healthy cash position but it is prudent that it take steps to reduce costs at this time. Emirates remains committed to serving its markets and looks forward to resuming a normal flight schedule as soon as that is permitted by the relevant authorities.
Safeguarding customers, employees, and communities
Emirates Group closely monitors the situation and keeps in regular contact with all relevant authorities, so that it can implement the latest guidance to keep travellers and its employees safe and healthy.
The company has strongly discouraged its employees from non-essential travel, implemented work from home policies for all employees where operationally feasible, enhanced cleaning and disinfection protocols at its facilities, introduced temperature screening at its key office entry points, and launched internal educational campaigns on hand hygiene and health practices to reduce risk of COVID-19.
Over the past weeks, the airline has also implemented enhanced cleaning and disinfecting measures on all of its aircraft departing Dubai as a precaution, and worked closely with airports to implement screening measures as required by the local authorities.
Frontline employees such as crew and airport teams have also been provided with support to stay safe while on duty, including providing hand sanitizers and masks where required.
The Emirates Group fully supports all initiatives to safeguard the health of communities in every market where it operates, including the UAE’s national COVID-19 response.
