Covid-19; Impact on the aviation industry

Kcormahs

Podge_irl wrote: »

The 20% cuts are not evenly spread across the company. Entire teams/departments will be gutted and others left relatively unscathed.

Whats the case in Aer Lingus? Those 20% (900 jobs) will be mostly crew and a few pilots? those are the biggest departments

BZ

Air France announced earlier today they will be retiring their A380s now rather than the end of 2022. In the last hour lufthansa have confirmed they will only reactive 7 of their 15 A380s if at all. Emirates are also negotiating with Airbus about cancelling their last 8 orders even with 5 in production.

https://www.airlive.net/breaking-emirates-seeks-to-cancel-last-five-a380-orders/

The A380s days are fast becoming numbered.

WishUWereHere

BZ wrote: »

Air France announced earlier today they will be retiring their A380s now rather than the end of 2022. In the last hour lufthansa have confirmed they will only reactive 7 of their 15 A380s if at all. Emirates are also negotiating with Airbus about cancelling their last 8 orders even with 5 in production.

https://www.airlive.net/breaking-emirates-seeks-to-cancel-last-five-a380-orders/

The A380s days are fast becoming numbered.

Thanks to this link, I also came across the following:

https://www.airlive.net/etihad-airways-to-resume-flights-to-belgrade-dublin-geneva-milan-paris-and-toronto/

How will this work with a 14 day mandatory ( I believe ) on arrival for everyone in Ireland?

Blut2

Podge_irl wrote: »

The 20% cuts are not evenly spread across the company. Entire teams/departments will be gutted and others left relatively unscathed.

Well yes, but its unlikely that its going to be some departments gutted 90% and the rest 0%, though. Generally if a company is making 20% cuts overall the departmental cuts will be across the entire range of 0-100%, with most somewhere closer to the 20% average. And if a department is cutting anywhere from 0-40% staff - as most of them would be - the points made in my post would stand.

WishUWereHere wrote: »

Thanks to this link, I also came across the following:

https://www.airlive.net/etihad-airways-to-resume-flights-to-belgrade-dublin-geneva-milan-paris-and-toronto/

How will this work with a 14 day mandatory ( I believe ) on arrival for everyone in Ireland?

The arrival quarantine in Ireland is currently only in theory mandatory - its not enforced at all. And given Croatia & Slovenia already have fully open borders with no arrival quarantine, Italy will be the same in 14 days, Germany & France are aiming for the same for June 15th etc its highly unlikely we either keep to ours and/or actually make it mandatory going forwards.

donkey balls

smurfjed wrote: »

Is there any reason why companies don’t try other options such as cutting hours or job sharing, is there a negative side to this financially to these companies?

During the last recession a lad I know company were going let the junior staff go , Himself and the other lads approached the mgmt about reduced hours.
They came up with doing a 3 day week while signing on for the other 3 days, The thing is they didn't have to do it they could easily have let the other lads be thrown to the wolves.
I'm would do the same in my company but their are others that are me me & F**k everyone else, Thankfully our company hasn't gone down the route of temp layoffs etc.

Gael23

Sky News done an article a few days ago about how utterly screwed the airline industry is. Stuff like wearing face masks on board but then you have to remove those to eat and drink, a particular problem for long haul travel. What about toilets as well? And then there’s measures like not allowing passengers to move around the csbin, but you need to do that on long flights to prevent DVT.

Darkest days in history ahead for aviation, potentially worse then 9/11 if that’s conceivable

AnRothar

A lot of the time it is to exert maximum pressure on unions to accept major long term pay and conditions cuts for everyone.

Management 101. Never waste a good recession.

donkey balls

AnRothar wrote: »

Management 101. Never waste a good recession.

Exactly just like the one 12 years ago.

Van.Bosch

Gael23 wrote: »

Sky News done an article a few days ago about how utterly screwed the airline industry is. Stuff like wearing face masks on board but then you have to remove those to eat and drink, a particular problem for long haul travel. What about toilets as well? And then there’s measures like not allowing passengers to move around the csbin, but you need to do that on long flights to prevent DVT.

Darkest days in history ahead for aviation, potentially worse then 9/11 if that’s conceivable

I would say multiple times worse than 9/11

IngazZagni

Van.Bosch wrote: »

I would say multiple times worse than 9/11

No doubt about it. Not even close. 9/11 didn't impact European traffic as much as it did in the U.S. in fact traffic at Dublin continued to rise throughout 01, 02, 03 etc.

Tenger

I think the published plan for BA starkly illustrates the measures that some airlines will try to force through.
I honestly believe that this crisis will be worse that 9/11 or 2008 for global aviation.
How it will play out I dont know, will we see a lot more airlines going bust? Probably. I certainly think that airfares will increase if we see more bankrupcies.

The ideas of job sharing or reduced hours is a nice one. And would possibly be welcomed by the airline workers (the current 50% reduction agreed at Aer Lingus for example) However going forward this isnt really sustainable unless the airline itself has an end date to the vastly reduced flight operations. And regardless of the level of income a staff member earns their living costs will be commensurate to this income. So while a senior pilot may be better positioned to absorb a short term 40% salary cut than a recently hired check-in agent they still wont be able to sustain it for more than 12 months.

Then you have the "dont waste a good crisis" mentality.
Senior execs in some airlines will be looking at this and thinking a 20% reduction in costs is needed to keep themselves afloat.....but then they are also thinking that this is an opportunity to obtain a 40-60% reduction in staff costs. They arent just looking at the next 2 years, they are looking further ahead towards long term low cost non-fuel costs.
So a well intentioned workforce/mgmt team may like the idea of reducing salaries temporarily to get past the crisis, the business aim of increasing shareholder value/company valuation will require permanent long term reduction in staff costs and longer/more flexible working conditions.

I think we can see the benefit of the Ryanair cashpile. While the US business companies are all about share dividends and buying back stock we see that they are in a very precarious situation now due to lack of cashflow and/or actual cash.

Gael23

I can see a scenario where only the big players will survive. Airlines like the ME3, BA, IAG backed airlines etc. But every other player in the market has fairly well been thrown under a Bus

Van.Bosch

Gael23 wrote: »

I can see a scenario where only the big players will survive. Airlines like the ME3, BA, IAG backed airlines etc. But every other player in the market has fairly well been thrown under a Bus

I’d even question the survival of the ME3 in their current form. There is talk of Dubai being bailed out by Abu Dhabi with certain state assets being merged. Emirates and Etihad merging would make sense if you strip the ego out of it.

rivegauche

Aer Lingus will have it tough on the far side of this pandemic
Many of the flag carriers are getting Government support while IAG and in particular Aer Lingus aren't.
The LCCs will be snapping at their heels on overlapping routes and much of this Government support which may be deemed legal by the E.U. will be misused by competitors to push weaker competitors off routes.
Aer Lingus will be one of those weaker airlines.
Which routes do you think will Aer Lingus find hard to defend.
I'll start the ball rolling with FRA-DUB as Lufthansa are getting 9BN of support/shareholding and can afford to carry losses for a long time.

Sheep Shagger

Vast majority of UK-IE routes are operated in some way shape or form by IAG.

CDG-DUB, AMS-DUB and swiss flights could be at risk given Air France/KLM and Swiss are all getting state bail outs too.

kevinandrew

rivegauche wrote: »

Aer Lingus will have it tough on the far side of this pandemic
Many of the flag carriers are getting Government support while IAG and in particular Aer Lingus aren't.
The LCCs will be snapping at their heels on overlapping routes and much of this Government support which may be deemed legal by the E.U. will be misused by competitors to push weaker competitors off routes.
Aer Lingus will be one of those weaker airlines.
Which routes do you think will Aer Lingus find hard to defend.
I'll start the ball rolling with FRA-DUB as Lufthansa are getting 9BN of support/shareholding and can afford to carry losses for a long time.

It’s far too early to tell what unique struggles Aer Lingus might face, at the moment every airline is facing the same crisis and while some have received state support, I doubt this will prove to be the make or break for airlines that some predict it will.

The Lufthansa Group has been given a lifeline, one that it likely desperately needs when you consider its airline portfolio. Lufthansa and Swiss are the only “strong” carriers within the group, but both are very premium heavy at a time when premium cabins are likely to fly empty for many months to come. The other group airlines, Austrian, Brussels Airlines and Eurowings all had their own issues long before the pandemic came along.

IAG is a stronger group, yes it only has two “major” carriers in its portfolio but all of them, no matter their size, are healthy, well known brands, clear strategies, strong balance sheets and very little overlap with each other. The only weakness in the group is LEVEL but that remains an Iberia operated ‘virtual airline’ so can be easily adjusted either way.

Going back to Aer Lingus, its proven before that it can be very resilient, no other legacy carrier in the world has been able to completely reinvent itself quite like Aer Lingus has done. This mindset will be an advantage to the airline if it comes down to a fight for survival, it can and will do what it takes.

In terms of its current business, I expect a back to basics approach but with the fundamentals remaining in place for if and when things recover. A smaller and but robust network, an easy and stress feel travel experience, a suitable fleet and good regional presence.

The only thing that I fear may let Aer Lingus down in the long term is its capability to innovate and implement new processes for passengers in a post-pandemic world. Aer Lingus is great at business reform but less so at a passenger experience level, how it implements new social distancing rules, how it communicates these with passengers and how it proves its worthy of peoples business after this will be a uphill battle.

Again, none of this is essentially unique to Aer Lingus and it’s far too early to claim they’ll somehow have it more difficult than others.

0lddog

Understandably, y'all focus on operators. Sooner rather than later most of the leasing companies must find themselves in it...

Lots a fresh frames around for very little money per month ?

Was it a situation like this that saw the birth of Virgin Atlantic ?

Will history repeat itself ?

rivegauche

rivegauche wrote: »

Aer Lingus will have it tough on the far side of this pandemic
Many of the flag carriers are getting Government support while IAG and in particular Aer Lingus aren't.
The LCCs will be snapping at their heels on overlapping routes and much of this Government support which may be deemed legal by the E.U. will be misused by competitors to push weaker competitors off routes.
Aer Lingus will be one of those weaker airlines.
Which routes do you think will Aer Lingus find hard to defend.
I'll start the ball rolling with FRA-DUB as Lufthansa are getting 9BN of support/shareholding and can afford to carry losses for a long time.

If the Irish Government had a spine they'd be objecting to this State support of foreign airlines but they are probably keeping quiet in the hope of getting a few crumbs from that €500 billion support package which Germany and France are brewing up.

smurfjed

I'll start the ball rolling with FRA-DUB as Lufthansa are getting 9BN of support/shareholding and can afford to carry losses for a long time

LH restart operations (permit pending) from the Middle East in June, the one-way fares that they are offering are significantly higher than round trip fares last year, so regardless of their bail-out, they aren’t passing that benefit on to their customers.

@Olddog, unfortunately i doubt that many people actually know the size of the Irish leasing business.

Marcusm

Gael23 wrote: »

I can see a scenario where only the big players will survive. Airlines like the ME3, BA, IAG backed airlines etc. But every other player in the market has fairly well been thrown under a Bus

Some will cannibalise just as the US airlines have done numerous times over the past 30 years. For example, bankruptcy and restructuring allows a survivor airline to shed pension liabilities, debts, lease contracts, tenure for staff etc. BA has made it clear that they are using this as an opportunity to rescind the valuable Worldwide and Eurofleets and merge them onto the terms of Mixed Fleet (in place 12 years or so now) which is nowhere near as costly etc. In old Irish terms, we have seen that as “yellow packing”.

bk

What will be interesting to watch, is what will Ryanair do with their big cash pile? Will they look to do a repeat of their post 9/11 moves? Buy up aircraft and perhaps other airlines on the cheap, to grow into new markets. Them using the opportunity to finally enter the "lower cost" (not "low cost") transatlantic market like they have long threatened to do could be a major threat to Aer Lingus.

billy few mates

bk wrote: »

What will be interesting to watch, is what will Ryanair do with their big cash pile? Will they look to do a repeat of their post 9/11 moves? Buy up aircraft and perhaps other airlines on the cheap, to grow into new markets. Them using the opportunity to finally enter the "lower cost" (not "low cost") transatlantic market like they have long threatened to do could be a major threat to Aer Lingus.

They won't need that many aircraft, the days of people jumping on a €9.99 special to somewhere purely because it only cost them €9.99 are long gone and won't be coming back anytime soon. The only people flying will be those who absolutely have to and nobody will want to travel on a packed airplane for two or three hours when that sort of close contact is banned in every other aspect of their lives.

bk

billy few mates wrote: »

They won't need that many aircraft, the days of people jumping on a €9.99 special to somewhere purely because it only cost them €9.99 are long gone and won't be coming back anytime soon. The only people flying will be those who absolutely have to and nobody will want to travel on a packed airplane for two or three hours when that sort of close contact is banned in every other aspect of their lives.

Sure, in the short term, but eventually there will be a vaccine and people will look to travel again. They will likely be planning for how this is an opportunity for them to grow their market share and move into new markets, say over the next 5 to 10 years.

Post 9/11 loads of airlines cancelled their orders for new planes. Boeing were desperate, Ryanair offered to by lots of planes off them at a fraction of their normal cost and thus grow into the airline they are today.

They have often said their interested in transatlantic, but that the necessary aircraft were too expensive. Now might be a good time to do the same again.

billy few mates

Nobody has a crystal ball to be able to predict accurately what the future holds so there are no right or wrong answers here but my guess is until there's a vaccine or the virus disappears completely nobody's going to want to go on a cruise and nobody is going to want to travel on a packed airliner. Airlines won't be able to make it pay if they can't operate with either full loads or massive subsidies to offset the losses with reduced loads or massively increased air fares but increased air fares would only further deter people from wanting to fly.
My other guess is that this virus will eventually just disappear, whatever happened to SARs, bird flu, swine flu, Zika virus, H1N1 and all the other viruses we've had in recent years?

x567

kevinandrew wrote: »

The only thing that I fear may let Aer Lingus down in the long term is its capability to innovate and implement new processes for passengers in a post-pandemic world. Aer Lingus is great at business reform but less so at a passenger experience level, how it implements new social distancing rules, how it communicates these with passengers and how it proves its worthy of peoples business after this will be a uphill battle.

Well argued post. The quoted point raises the perennial issue about airlines being at the mercy of airport operators for many of the ‘processes’ that affect their passengers’ experience though. Aer Lingus do need to be innovative in this area, but they need to work very closely with the Irish airports who also need to be proactive and innovative.

kevinandrew

billy few mates wrote: »

Nobody has a crystal ball to be able to predict accurately what the future holds so there are no right or wrong answers here but my guess is until there's a vaccine or the virus disappears completely nobody's going to want to go on a cruise and nobody is going to want to travel on a packed airliner. Airlines won't be able to make it pay if they can't operate with either full loads or massive subsidies to offset the losses with reduced loads or massively increased air fares but increased air fares would only further deter people from wanting to fly.
My other guess is that this virus will eventually just disappear, whatever happened to SARs, bird flu, swine flu, Zika virus, H1N1 and all the other viruses we've had in recent years?

Sorry to drift off topic somewhat but...

The sudden disappearance of SARS (SARS-CoV-1) is something that nobody fully understands but most researchers believe its relatively low transmissibility made the traditional quarantines and track and trace measures more effective in containing the virus and essentially killed it off.

Unfortunately, despite how similar it is, we simply don't have that advantage with SARS-CoV-2 which is the cause of the current COVID-19 outbreak. While SARS was more deadly, symptoms showed very quickly and in almost every person infected. This isn't the case with COVID-19 where it can take up to two weeks to show symptoms and many others remain asymptomatic.

In terms of mutations, the virus has mutated as expected with various versions around the globe but none of these mutations have fundamentally changed the way the virus behaves which is good news for a vaccine but suggests any mutation into something less dangerous is now unlikely.

H1N1 still exists and it's still very much a threat to people, there were considerable outbreaks last year in Malta, Iran and Morocco. H1N1 is the flu strain associated with the Spanish Flu outbreak, it also includes swine and avian flu and the 2009 outbreak was a new strain of this virus. A vaccine was available as part of the usual seasonal flu vaccine by late 2009, Barak Obama was famously photographed getting his vaccine that winter season. Again, we don't have that advantage with COVID-19 as a vaccine for its closest relative, SARS, was never produced.

Zika is still a threat too but not on the same level as the others mentioned, it has periodic outbreaks with the last major concern in the Americas in 2015-2017, a vaccine is in trials but isn't expected until later this decade.

The bottom line is, as much as we all hope this virus disappears overnight much like the SARS outbreak seemingly did, the factors involved in that disappearance just aren't applicable to the current pandemic which means we're in this for the long haul until something considerable changes.

Your first guess, while pretty grim for the industry and indeed the wider society, is likely closer to reality than we'd all like to hope.

WishUWereHere

Gael23 wrote: »

Sky News done an article a few days ago about how utterly screwed the airline industry is. Stuff like wearing face masks on board but then you have to remove those to eat and drink, a particular problem for long haul travel. What about toilets as well? And then there’s measures like not allowing passengers to move around the csbin, but you need to do that on long flights to prevent DVT.

Darkest days in history ahead for aviation, potentially worse then 9/11 if that’s conceivable

Have to agree. Throw into that equation the fact that both of the 'Big 2' airframe constructors are having trouble selling planes ( Airbus with their A380 & Boeing with their ongoing troubles with the 737 Max ) things ain't looking good for the foreseeable future.

bk

Excellent post kevinandrew. The nature of SARS-CoV-2 unfortunately allows it to spread much more easily and widely compared to those others. The fact that you are highly infectious for a few days before showing symptoms and some never even develop symptoms or just very mild ones and that you can remain infectious for up to 14 days almost makes it the perfect spreader.

In some ways we are "lucky" that it doesn't have a R0 rate closer to Measles (12 to 18) and that it doesn't have a very high mortality rate.

On mutations, it seems to be a very stable virus, with relatively very little mutation seen and the mutations make little difference to the nature of the virus. I've read it put this way, the HIV virus shows more mutation in a single person, then SARS-CoV-2 does in all cases found in the world!

This has two implications. Firstly it is less likely to mutate into something less deadly (or more deadly for that matter). But on the positive side, if a vaccine is developed for it, there is less concern of it mutating away from how the vaccine can fight it.

On the vaccine side, while of course we won't know for certain until one is widely delivered, from what I've read, there seems to be a relatively strong consensus from the experts in this field that it is highly likely a successful vaccine will be developed for it.

There are over 100 vaccines in development, 8 have already entered Phase 1 human trials and 2 or 3 have even finished Phase 1, seen good results and are now entering Phase 2. Of course no guarantee, but looks very promising.

BTW Interestingly a lot of these leading vaccines are the same ones or using very similar techniques as vaccines that were developed for SARS, MERS, Zika, Ebola. So vaccines were developed for those virus, they just never got through all phases of trials before those viruses were controlled and interest in vaccines for them died out.

bk

WishUWereHere wrote: »

Have to agree. Throw into that equation the fact that both of the 'Big 2' airframe constructors are having trouble selling planes ( Airbus with their A380 & Boeing with their ongoing troubles with the 737 Max ) things ain't looking good for the foreseeable future.

Well the A380 isn't such a big deal for Airbus, as they were already planning to stop production next year. The bigger issue is falling orders across all their other lines.

Boeing are in a worse mess. I'm not sure that the Max will ever fly and the 777x may well see falling interest.

L1011

The 777X may never get certified either, which is another issue!