Aviation News in Brief 27 May 2020

Air New Zealand, China extends flight limits, Cathay Pacific, Latam bankruptcy, Brisbane Airport, Tigers, ATR, Finnair, Air Astana

Airlines around the world, including Cathay, had to ground thousands of planes at the height of the COVID-19 pandemic. (PHOTO: Shutterstock)

air-new-zealand-finalises-order-for-dreamlinersAir New Zealand outlines finances and impact of pandemic: New Zealand’s flagship airline reported its short-term liquidity sat at NZ$640 million (US$396 million), which does not include a NZ$900 million loan from the government. “We have not yet needed to draw down on the government loan facility, as we continue to utilise all available levers to reduce our cash burn and right-size the business to reflect the expectation that, for some time, our airline will be smaller than it was pre-COVID-19,” Chief Financial Officer Jeff McDowal said. Prior to COVID-19, the airline says it was in a strong position, with a resilient balance sheet and short-term liquidity of more than NZ$1 billion. It has no significant debt maturities until 2022. The airline has cut costs including labour reductions to 4,000 employees, which is expected to save between NZ$350 million to NZ$450 million, suspension of short-term incentive schemes and reduction of pay to the executive team. Due to these measures, the company is expecting to reduce its average monthly cash outflows by between approximately NZ$50 million to NZ$60 million for the 2021 financial year. Airline officials said they were preparing for the airline to be 30 percent smaller than pre-COVID levels in two years’ time.

China extends flight limits: China is extending flight limits it implemented in March to combat the COVID-19 pandemic. Major domestic airlines unveiled June flight schedules showing little increase in international service. Carriers including China Southern Airlines, China Eastern Airlines, XiamenAir and Juneyao Airlines largely carried over their May schedules for June. Air China, the flagship carrier, plans to add only two international routes linking Beijing with Madrid and Manila in June, according to the airline’s latest schedule. Several foreign airlines seeking to resume flights into China submitted applications to Chinese regulators but have not yet received approvals. China’s civil aviation regulator said  that the March policy capping international flights would remain in effect. Dubbed the Five-One policy, the rule limits all domestic airlines to one international flight per week to each country, while foreign airlines can fly into China no more than once per week. No flight should be filled to more than 75 percent of capacity, according to a notice issued by the Civil Aviation Administration of China (CAAC).

Cathay may have trouble in China: Reuters is reporting that China’s aviation regulator may make it difficult for Hong Kong’s Cathay Pacific Airways to merge regional arm Cathay Dragon into its main brand because of infractions during last year’s pro-democracy protests. The airline is looking to cut costs, streamline marketing and consolidate pilot contracts around Cathay Pacific and low-cost arm HK Express. Singapore Airlines is doing the same with regional arm SilkAir and budget arm Scoot. But the Civil Aviation Administration of China (CAAC) would view such a move as an expansion and could block Cathay from keeping access to 20 mainland routes flown only by Dragon. The Cathay Pacific brand flies only to Beijing and Shanghai, while Dragon destinations include smaller cities like Fuzhou and Nanjing. China’s aviation regulator stepped up inspections of Cathay planes last fall after warning the airline that staff participating in anti-government protests in Hong Kong would no longer be allowed to fly to mainland destinations or even in Chinese airspace, Reuters reported.

Touch and go on Brisbane’s new runway: Brisbane Airport Corporation (BAC) and Airservices Australia conducted two flight checks on Brisbane’s new runway. BAC’s flight check included the first ‘touch and go’ on the new runway, undertaken by a small turboprop aircraft. The first official passenger jet landing and departure will take place on runway opening, Sunday 12 July 2020. Prior to the flight check, Airside Operations will complete a runway serviceability inspection. Project Director Paul Coughlan said the flight check aims to test the lighting systems that provide critical guidance to aircraft approaching and landing at the airport, including the precision approach path indicator (PAPI) and runway lighting. The flights are part of several test flights which have been conducted since March and form part of the wider Operational Readiness and Testing (ORAT) program for the new runway which also included a recent multi-agency emergency exercise, the decommissioning of Runway 14/32 and the implementation of Stop Bars.

Latam Airlines Group files for Chapter 11 bankruptcy: Latam Airlines Group, Latin America’s largest air carrier, has filed for Chapter 11 reorganisation in a US federal bankruptcy court  as the COVID-19 pandemic has grounded flights across the region and indeed around the world. The group will keep operating while in reorganisation. The company’s shareholders include Chile’s Cueto family and Delta Air Lines and has commitments for a bankruptcy loan of up to US$900 million, according to media reports. The money is coming from shareholders including the Cuetos, the Amaro family and Qatar Airways, according to a company statement. Latam also has about US$1.3 billion in cash on hand. Latam’s affiliates in Brazil, Paraguay and Argentina aren’t part of the bankruptcy case, which was filed in the Southern District of New York.

HK-based Tigers expands into new warehouse:  Supply chain specialist Tigers has expanded into a newly-built 50,000 square metre omnichannel fulfilment facility in Rotterdam, the Netherlands, offering sustainable e-commerce products and low-cost last mile B2B and B2C solutions across Europe. The carbon-neutral warehouse has 60,000 pallet positions, 550,000 bin locations, and has been equipped with solar panels and energy-efficient LED lighting. Tigers, which has had a Rotterdam base for over 20 years, offers dedicated account management at the new mega hub, as well as turnkey e-commerce platform integrations, fiscal representation, and duty reporting in compliance with European law.

Finnair signs MRO deal with ATR: ATR and Finnair have signed a 10-year Global Maintenance Agreement (GMA). Through this package, Finnair and Nordic Regional Airlines (NoRRA) – who operates Finnair’s regional ATR traffic – will benefit from a customised support from ATR, which will help the airline better anticipate maintenance costs while enhancing the dispatch reliability of its fleet of 12 ATR 72-500. This pay-by-the-hour contract covers the repair, overhaul and pooling services of Line Replaceable Units, along with their door-to-door delivery and an on-site leased stock of spare parts. Finnair will also benefit from blades maintenance and availability, and maintenance recommendations based on ATR’s expertise to enhance aircraft reliability.

Air Astana announces plans for cargo carrier: Air Astana plans to launch an international air cargo division operating a fleet of three converted Boeing 767-300 aircraft, which had previously been in passenger service with the carrier since 2013. The decision to launch Air Astana Cargo results from a strong increase in the demand for regional freight transport in the recent months and a strategic review of Air Astana’s overall fleet plans in the wake of the global health crisis. The first Boeing 767 is already undergoing conversion into semi-cargo configuration at Air Astana’s technical centre in Almaty, with the removal of all seating and other passenger amenities. Associated amendments to technical documents and approvals for freight operations from local aviation authorities are also in process.

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Matthew Driskill is the Editor of Asian Aviation and is based in Cambodia. He has been an Asia-based journalist and content producer since 1990 for outlets including Reuters and the International Herald Tribune/New York Times and is a former president of the Foreign Correspondents Club of Hong Kong. He frequently appears on international broadcast outlets like CNN, Al Jazeera and the BBC and has taught journalism at Hong Kong University and the American University of Paris. Driskill has received awards from the Associated Press for Investigative Reporting and Business Writing and in 1989 was named the John J. McCloy Fellow by the Graduate School of Journalism at Columbia University in New York where he earned his Master's Degree.


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