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ACI WORLD EXPECTS DEEP CUTS TO AIR TRAVEL; RECOVERY MAY TAKE 12-18 MONTHS
Thursday, April 2, 2020
MONTREAL -- A new economic analysis by Airports Council International (ACI) World predicts that, at a global level, the COVID-19 pandemic will wipe out more than 38 percent of passenger traffic and about 44 percent of airport revenues in 2020.

In an economic bulletin published on April 1, ACI World predicted that 38.1 percent of global passenger traffic will be lost when compared to its pre-COVID-19 forecast. This is equivalent to 3.6 billion passengers in absolute terms.

This shortfall in the number of passengers and the cancellation of flights will continue to result in reduced revenues. While the industry was expected to generate about $172 billion, ACI predicts it could lose about 44 percent or more than $76 billion by the end of this year.

"A drastic decline of such magnitude for the global airport industry represents an existential threat," ACI World Director General Angela Gittens said. "A swift, effective and equitable economic policy response from governments is needed to protect millions of jobs, protect essential operations, and give the industry the greatest chance to weather the storm and recover quickly."

A recovery may take 12-18 months to reach pre-crisis traffic levels and the industry may not record pre-COVID-19 traffic volumes again before the end of 2021, acccording to ACI's analysis.

ACI expects to see the fastest recovery in domestic passenger traffic. In the case of international passenger traffic, the recovery will take longer, as any international flight implies reciprocal permissions, while various countries will emerge from the current crisis at different times with varying pace of relaxation of the recently imposed restrictions.

Source:  Airports Council International

 
IATA: AIRLINES FACING RAPID CASH BURN
Wednesday, April 1, 2020
MONTREAL -- The International Air Transport Association (IATA) published new analysis showing that airlines may burn through $61 billion of their cash reserves during the second quarter ending June 30, 2020, while posting a quarterly net loss of $39 billion.

This analysis is based on the impact assessment IATA released last week, under a scenario in which severe travel restrictions last for three months. In this scenario, full-year demand falls by 38% and full-year passenger revenues drop by $252 billion compared to 2019. The fall in demand would be the deepest in the second quarter, with a 71% drop.

The impact will be severe, driven by the following factors:

-- Revenues are expected to fall by 68%. This is less than the expected 71% fall in demand due to the continuation of cargo operations, albeit at reduced levels of activity -- Variable costs are expected to drop sharply-by some 70% in the second quarter-largely in line with the reduction of an expected 65% cut in second quarter capacity. The price of jet fuel has also fallen sharply, although we estimate that fuel hedging will limit the benefit to a 31% decline. -- Fixed and semi-fixed costs amount to nearly half an airline’s cost. We expect semi-fixed costs (including crew costs) to be reduced by a third. Airlines are cutting what they can, while trying to preserve their workforce and businesses for the future recovery.

These changes to revenues and costs result in an estimated net loss of $39 billion in the second quarter.

On top of unavoidable costs, airlines are faced with refunding sold but unused tickets as a result of massive cancellations resulting from government-imposed restrictions on travel. The second quarter liability for these is a colossal $35 billion. Cash burn will be severe. We estimate airlines could be burning through $61 billion of their cash balances in the second quarter.

"Airlines cannot cut costs fast enough to stay ahead of the impact of this crisis. We are looking at a devastating net loss of $39 billion in the second quarter. The impact of that on cash burn will be amplified by a $35 billion liability for potential ticket refunds. Without relief, the industry’s cash position could deteriorate by $61 billion in the second quarter," said Alexandre de Juniac, IATA’s Director General and CEO.

Several governments are responding positively to the industry’s need for relief measures. Among countries providing specific financial or regulatory aid packages to the industry are Colombia, the United States, Singapore, Australia, China, New Zealand and Norway. Most recently, Canada, Colombia, and the Netherlands have relaxed regulations to allow airlines to offer passengers travel vouchers in place of refunds.

"Travel and tourism is essentially shut down in an extraordinary and unprecedented situation. Airlines need working capital to sustain their businesses through the extreme volatility. Canada, Colombia, and the Netherlands are giving a major boost to the sector’s stability by enabling airlines to offer vouchers in place of cash refunds. This is a vital time buffer so that the sector can continue to function. In turn, that will help preserve the sector’s ability to deliver the cargo shipments that are vital today and the long-term connectivity that travelers and economies will depend on in the recovery phase," said de Juniac.

Source:  IATA
Associated URL: Click here to visit

 
AEI RECEIVES TRANSPORT CANADA APPROVAL FOR B737-300/-400SF CONVERSIONS
Monday, March 30, 2020
MIAMI -- Aeronautical Engineers, Inc. (AEI) reports Transport Canada Civil Aviation has approved AEI’s STC (ST01827LA) for the 11-pallet position B737-400SF freighter conversion and the 10-pallet position B737-300SF freighter conversions. Foreseeing an uptick in demand for the B737 Classic freighter programs, AEI initialized the approval process with Transport Canada in the 4th quarter of 2019. In addition to FAA, EASA, and now Transport Canada approvals, AEI’s B737-400SF and B737-300SF freighter conversions are also approved in Russia, Brazil, India, Australia, and China.

The AEI converted 11-pallet position B737-400SF freighter offers a main deck payload of up to 47,100 lbs. (21,364 kg), while the 10-pallet position B737-300SF freighter offers a main deck payload of up to 42,900 lbs. (19,460 kg). Both freighter conversions include a large 86” x 140” Main Cargo Door with a dual vent door system, 9g rigid cargo barrier and a flexible Ancra Cargo Loading System.

AEI announced two firm orders for the B737-800SF conversion for Allied Air in March and has also announced at least 5 B737 classic freighter conversions with various customers in the first quarter of this year alone.

Source:  Aeronautical Engineers
Associated URL: Click here to visit

 

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