American
Airlines sticking with new jet deliveries unlike rivals: CEO
Airlines including American are taking steps to reduce costs and downsize their
fleets to more closely match a drastic drop in travel demand due to the
pandemic.
American had more than 900 jets in its fleet in 2019 and commitments to
purchase another 248, according to regulatory filings.
To reduce its overall fleet size, it will accelerate the retirement of older
aircraft, rather than push back deliveries as rivals like Southwest Airlines Co
(LUV.N) have announced.
In an interview with Reuters, Parker said the airline will have around 100
fewer jets in the summer of 2021 than it had planned given the early
retirements.
"That's how we'll reduce our fleet, rather than pushing off
deliveries," Parker said.
Earlier, American said it was bringing forward the retirement of Boeing 757 and
767 jets, Airbus A330-300s and Embraer 190s due to a decline in demand for
travel.
The retirements, first reported by Reuters in March, contributed to a $1.4
billion one-time charge in the first quarter.
American is due to receive 69 new aircraft this year, including 18 jets from
the Airbus 320neo family and 22 Boeing 737 MAX planes, according to regulatory
filings. On a conference call with investors, the company said those purchases
were already fully financed.
Delivery of the 737 MAX jets is uncertain, however, as Boeing Co (BA.N) awaits
regulatory approval for the jets to fly again since two fatal crashes led to a
global grounding last year.
Airbus
Scraps E-Fan X Electric Hybrid Jet
Airbus has today announced that it is scrapping its plans to launch a
hybrid-electric aircraft called the E-Fan X. The aircraft was a part of a
project between Airbus and Rolls-Royce, which was launched in 2017. However,
given the ongoing pandemic and its impact on the airline industry, Airbus has
assessed that further development on this project is not viable at the moment.
The project was part of the European Commission's Flightpath 2050 vision to
develop a quieter and more environment-friendly aircraft. Moreover, the project
had reached key milestones and was set to undergo its maiden flight in 2021.
The decision
The Chief Technology Officer (CTO) of Airbus, Grazia Vittadini, has said that
the decision has come as a part of Airbus' strategy to prioritize its current
ambitions. She added:
"As with all ground-breaking R&T projects, it's our duty to constantly
evaluate and reprioritize them to ensure alignment with our ambitions. These
decisions are not always easy. But they're undoubtedly necessary to stay the
course."
Over that, Rolls-Royce CTO Paul Stein has openly stated that the cancellation
of the project was a mutual decision based on the current situation. He
said," it has become clear to both parties that the actual requirement to
carry out a test flight with all the elements integrated is not critical at
this time."
Moreover, he reasoned that as an aircraft, E-Fan X was always designed to be a
demonstrator. There were no plans to put the plane into commercial service.
Hence, the scrapping of aircraft development was justified as the industry has
bigger problems to solve right now.
E-Fan X was to be made out of various components of pre-existing electric and
aircraft manufacturers. The body of the aircraft was planned to be the same as
that of British Aerospace (BAe) 146. However, one out of four of its Lycoming
turbofans was to be replaced by a Siemens 2 MW (2700 hp) electric motor.
Although most of the aircraft was pretty much similar to a BAe 146, E-Fan X was
expected to demonstrate the capabilities of electric-powered airplanes.
Unfortunately, the design has been scrapped even before the aircraft took its
first flight. But, Airbus and Rolls-Royce have both been content with the
lessons and learnings that they have gained from this project. Specifically,
those relating to hybrid architectures, high-voltage systems, and battery
technologies. Airbus' innovation segment is already using some of these breakthroughs
for other purposes.
Despite the abandoning of the E-Fan X project, Stein has said that Rolls-Royce
will independently keep working on the power generation systems to capture all
the possible lessons. This involves the integration of the generator with its
control and thermal management systems. This means that Rolls-Royce will
continue with the development of the electric engine, which can be fitted on
any aircraft in the near future.
To conclude, although the plan might be officially canceled, we can be hopeful
to see Rolls-Royce contributing to a similar hybrid-electric aircraft soon.
Lufthansa
pilots offer to sacrifice up to 45% of salary: union
BERLIN (Reuters) - Pilots at Lufthansa (LHAG.DE) are ready to sacrifice up to
45% of their salaries for more than two years to help cut costs, their union
Cockpit said on Thursday, as the airline struggles with the impact of the
coronavirus pandemic.
"The concessions amount to more than 350 million euros and make a
significant contribution to the viability of the company," Cockpit said in
a statement.
The offer affects pilots at Lufthansa's namesake core brand, its freight
division and its budget carrier Germanwings.
British
Airways to cut Gatwick operation and lay off 1130 pilots
Over 1100 cabin crew jobs also to go, and suspension of remaining Heathrow
flights 'not ruled out'
British Airways plans to lose more than 1,100 pilots and make heavy cuts to its
Gatwick airport operation as part of 12,000 redundancies.
The airline has informed staff of detailed plans after it announced on Tuesday
evening that it intended to lay off up to 30% of its workforce.
Letters sent to union representatives for all sections of the airline set out
swingeing cuts, as well as drastic changes to terms and conditions across the
company as it responds to the grounding of most air travel since March due to
the coronavirus pandemic.
BA plans to lay off almost four in five crew managers at Gatwick and 60% of
other cabin crew, more than 1100 of almost 1900 staff. The jobs of just over
400 ground staff will be outsourced to the airport and its contractors.
In emails to staff and unions, managers at BA warned that "there is no
certainty as to when services can return" to London City or Gatwick
airports, and that they had "not ruled out suspending the remainder of our
Heathrow operation".
Ground staff at Heathrow are also likely to be forced to accept the same
contracts as recent starters, which pay around £10,000-15,000 less, according
to employees.
All 4,346 pilots will be asked to sign new contracts changing their terms and
conditions, and accept new rostering arrangements. BA will be seeking to lay
off 1130 pilots.
Pilots union Balpa said it would fight to save every pilot job. The general
secretary, Brian Strutton, said: "The company has declined government
support claiming it is financially secure enough to survive the coronavirus
crisis, so it is hard to see how these cuts can be justified.
"There are many options to ensure BA can continue its business and survive
coronavirus and Balpa does not accept that job losses are the only
answer."
The Unite union has described BA's moves as "unlawful and immoral".
Around 22,000 BA employees were furloughed in April and May, while pilots
accepted unpaid leave instead of furloughing to allow them to restart swiftly
should travel recommence.
The general secretary of Unite, Len McCluskey, said: "UK taxpayers have
not handed over their money to BA for it to embark on an opportunistic course
of slashing jobs, conditions and wages, and potentially jeopardising jobs right
across [the] aviation sector."
BA's parent company IAG announced the planned redundancies to the Stock Exchange
on Tuesday. In a memo to staff, the BA chief executive, Álex Cruz, said:
"What we are facing as an airline ... is that there is no 'normal' any
longer.
"We do not know when countries will reopen their borders or when the
lockdowns will lift, and so we have to reimagine and reshape our airline and
create a new future for our people, our customers and the destinations we
serve."
IAG has declined to seek government help, unlike Virgin Atlantic, which has so
far been rebuffed, or EasyJet, which has received a £600m Bank of England loan.
American
Airlines to defer pension contributions under CARES Act
With air travel praticially halted across the world as a result of the
coronavirus pandemic, American Airlines said it plans to defer its minimum
required pension contributions for 2020 totaling $196 million under the CARES
Act.
American Airlines Inc., Fort Worth, Texas, plans to defer its minimum required
pension plan contributions for 2020 totaling $196 million under the provisions
of the CARES Act.
The airline announced it expects to defer the payment of the contributions to
Jan. 1 in its 10-Q filing with the SEC on Thursday.
The amount includes a $193 million minimum required contribution for its
corporate pension plan and a $3 million minimum required contribution for the
pension plan of its wholly owned regional subsidiaries.
The Coronavirus Aid, Relief and Economic Security Act, signed by President Donald
Trump on March 27, provides companies the option of a one-year holiday from
making 2020 pension contributions, with interest accrued, until Jan. 1, 2021.
American Airlines contributed $1.2 billion to its pension plans in 2019, which
included a $780 million minimum required contribution.
As of Dec. 31, the airline's global pension plan assets totaled $12.9 billion,
while projected benefit obligations totaled $18.2 billion, for a funding ratio
of 70.5%, up from 61.6% at the end of 2018, according to its most recent 10-K
filing. The company did not provide a breakout of U.S. vs. international
pension plans.
American
Airlines, Delta, United to Require Facial Coverings on U.S. Flights
WASHINGTON - Three of the largest four U.S. airlines said Thursday they will
require passengers to wear facial coverings on U.S. flights, joining JetBlue
Airways Corp in taking the step to address the spread of the coronavirus and
convince reluctant passengers to resume flying.
United Airlines, Delta Air Lines Inc and American Airlines Group Inc, along
with the smaller Frontier Airlines, which is owned by private equity firm
Indigo Partners LLC, announced they will require facial coverings next month.
Delta and United's new rules start May 4, while Frontier's start May 8 and
American's requirements begin May 11. The policies exempt young children from
wearing masks or other facial coverings.
Many U.S. airlines are also requiring pilots and flight attendants to use
facial coverings while on board aircraft.
Airlines in the United States have seen a nearly 95% drop in U.S. passengers
and have slashed flight schedules. They are now working to reassure customers
about the safety of air travel by instituting new cleaning and social
distancing procedures.
Some airline unions and U.S. lawmakers have urged the Federal Aviation
Administration (FAA) to require facial coverings for all passengers and crew.
United said it will provide complimentary masks to passengers. Southwest
Airlines Co, one of the largest U.S. airlines, has not required facial
coverings.
The FAA has declined to implement the requirement, and it is not clear if the
agency has the authority to compel passengers to wear face masks. The FAA said
Wednesday it is "working with air carriers to ensure they have processes
in place for addressing public health risks for their crews and
passengers."
Representative Peter DeFazio, who chairs the House Transportation Committee,
called on the FAA Wednesday to "require masks or other face coverings for
all crewmembers and passengers on U.S. flights" and to require airlines
"adopt reasonable, sound procedures for ensuring that passengers are
spaced at safe distances from one another."
Delta said the airline will require face coverings "starting in the
check-in lobby" and at "Delta Sky Clubs, boarding gate areas, jet
bridges and on board the aircraft for the duration of the flight - except
during meal service."
Delta added their use "is also strongly encouraged in high-traffic areas,
including security lines and restrooms. People unable to keep a face covering
in place, including children, are exempt."
American said the rules will prioritize "customer and team member
well-being."
German airline group Lufthansa also said this week it would require facial
coverings for all passengers starting May 4.
Sara Nelson, international president of the Association of Flight Attendants
union, praised the carriers adopting the requirements and added "absent
federal action, we need every airline to require passengers wear face coverings
to keep everyone safe in aviation."
Boeing Must Face Pilot Union's 737 MAX Suit
in Texas Court
- Pilot union
says Boeing interfered in bargaining with airline
- Federal
district court doesn't have jurisdiction
The
Boeing Company will face claims that it falsely represented the 737 MAX
aircraft and interfered in negotiations between Southwest Airlines and a pilot
union in Texas state court, a federal district court decided Thursday.
The decision comes as the Covid-19 epidemic is grounding an increasing number
of U.S. pilots and other airline employees. Boeing stock soared Wednesday after
executives unveiled a plan for surviving the downturn and generating cash again
next year.
The 737 MAX aircraft were a major sticking point in negotiations between
Southwest Airlines Pilots Association and the airline, according to allegations
filed by the union in October.
Boeing purposefully interfered in the collective bargaining agreement to ensure
pilots would agree to operate the MAX 737, the union said.
The union sued Boeing in state court after fatal crashes of two 737 MAX
aircraft resulted in the planes being universally grounded. The company
withheld critical safety information, according to the complaint, which accused
Boeing of fraud, negligence, and interference.
The suit seeks millions of dollars in damages for lost compensation on behalf
of 10,000 airline pilots. Pilots are paid based on the time spent flying, the
union said, and the grounding of the Max 737 forced Southwest to cancel 30,000
flights.
Boeing filed to remove the case to a federal court in 2019, claiming the U.S.
District Court for the Northern District of Texas had jurisdiction under the
Class Action Fairness Act and complete preemption.
The federal court disagreed.
Because there is only one named plaintiff, the case is not a class action,
Chief Judge Barbara M. G. Lynn wrote for the court. And although the case will
require interpretation of the collective bargaining agreement, the court
doesn't have federal question jurisdiction, the judge determined, remanding the
case to a state district court in Dallas County.
Condon & Forsyth LLP and Wick Phillips Gould & Martin LLP represent the
union. Carter Arnett PLLC and Kirkland & Ellis LLP represent Boeing.
Southwest declined to comment. The pilots' union and Boeing didn't immediately
respond to requests for comment.
The case is Southwest Airlines Pilot Ass'n v. The Boeing Company, N.D. Tex.,
No. 3:19-cv-02680, 4/30/20.
