September 30, 2020
We understand there have been many impacts this year on the air, ocean, and ground freight markets. At Crane Worldwide Logistics, we strive to provide our clients with the best service and communicate the most current information impacting the market. Find below updates for September 2020. To see our previous updates, please visit our Coronavirus COVID-19 Resource Center on our website.
We have warehouse space available, ground transportation options globally, and are continuing to book air charters and fill space on ocean carriers.
Golden Week, in the People's Republic of China, starts October 1 and ends on October 7. Customs will be closed in both North and South China. We restart consols on October 6th. Note for Hong Kong customs will be open so you can ship as normal.
Week 40 (September 28 - 30)
IATA released an information page listing the status of airlines globally, which is free for all to access. Visit the page here
What charters do Crane Worldwide Logistics have available?
Cathay Pacific Airways - has launched a temporary expansion of its operations in the Americas, with a 12-week cargo service linking Pittsburgh International Airport (PIT) with Southeast Asia. The new service supplements Cathay Pacific Cargo’s existing network throughout the Americas, which encompasses cargo services from Hong Kong to East Coast ports such as Boston, Newark, and Washington, Dulles, as well as a dedicated freighter service to New York (JFK). The first arrival touched down in Pittsburgh on 21 September carrying consumer goods from Asia. The temporary service originates in Ho Chi Minh (SGN) with a stop at Cathay Pacific’s Cargo Terminal at Hong Kong International Airport, before arriving in PIT every Monday and Thursday until 26 November 2020. Flight CX8800 is operated by a reconfigured Boeing 777-300ER passenger aircraft carrying cargo in the passenger cabin. Cathay Pacific has reconfigured two Boeing 777-300ER passenger aircraft into ‘preighters’ to introduce additional cargo capacity for customers. The removal of seats from the Economy and Premium Economy cabins enables the carriage of 12 additional tonnes of cargo under enhanced safety and security measures.
Longjiang Airlines - Despite being the first market to recover and cheer the aviation industry worldwide, China is witnessing its first airline victim going for judicial auction in history. Longjiang Airlines (LJ Air), an airline only flying for three years, is now being sold online, becoming the first airline in China's civil aviation history to be auctioned off due to the impact of the epidemic. The company was established on September 3, 2014, and mainly operating domestic flights from Harbin to other cities. At present, it has three A320 aircraft and two A321 aircraft in the fleet, of which one A321 is grounded due to severe engine problems. The Harbin Intermediate Court in Heilongjiang province conducted a public auction at 10 a.m. on 29th China time on the Jingdong Judicial Auctions website for 98% of the airlines' equity. According to the auction website, the item's starting price was approximately RMB329 million (around USD48.25 million). The auction attracted more than twenty thousand people online to watch the bidding. However, as of 7 p.m. local time, only two people had registered to participate in the auction, making seven bids. The auction is valid for 24 hours and will end at 10 a.m. China time on October 30. No airlines in China have reported bankruptcy under the COVID-19 impact like other parts of the world because of government support. Three airline groups out of four in the market, namely China Southern Airlines (ZNH), Air China, China Eastern Airlines (CIAH) (CEA), have a governmental background.
Global Border Crossing Status and restrictions
Week 39 (September 21 - 27)
Ocean carriers have done a good job at balancing supply with demand based on the use of blank sailings due to COVID -19 Impact
Most of the Blank sailings that were announced earlier in 2020 for late Q3 and early Q4 have now been withdrawn. There have been some recent announcements on blank sailings for the weeks of October 11th through October 18th due to Golden Week which always happen.
Ocean Carrier Fleet Capacity changes for 1st Half 2020
There have been 8 rate increases since May 2020
The China Transport Ministry and the FMC (Federal Maritime Commission) are involved in applying pressure on the VOCC to stabilize the market with regards to vessel space and rate increases
Additional Items to Consider
What began a month ago as unusually constrained capacity at import distribution centers and rail terminals on the US West Coast has now — as warnings anticipated — spread upstream to marine terminals at the ports of Los Angeles and Long Beach as a surge of holiday and restocking volumes collides with limited capacity across all modes of transportation.
And because of the unique circumstances of 2020, with COVID-19 lockdowns followed by an e-commerce-led reopening and a greatly altered cargo mix led by PPE and home improvement goods, it is more difficult than usual to predict how long the current surge will last.
Some carriers and third-party providers are being told by shippers that volumes will remain strong until late in the year, well beyond the end of the traditional peak season for ocean shipping.
Nevertheless, the intensity of the surge is such that executives believe a return-to-normal container flow might still take months given how out of balance the system has already become in recent weeks.
The numbers are staggering: In August, combined volumes from Asia coming through the three largest import gateways in the US — Los Angeles, Long Beach, and New York and New Jersey — doubled versus the volumes in March, while Asian imports across the top 15 US ports grew 90 percent during that time, according to IHS Markit data. In 2019, a more typical peak season by comparison, Asia import volumes at the top 15 ports grew just 33 percent between March and August, and were 13 percent higher in August 2020 versus August 2019.
That growth is putting monumental strains on a system that has historically been unable to marshal significant surge capacity.
Warehouse executives warned over a month ago that a bottlenecks were materializing at their loading docks owing to social distancing rules, causing long delays in the unloading of containers, for example, combined with the difficulties they were facing in filling warehouse jobs.
Those delays have now engulfed the full system, with issues at warehouses affecting chassis availability, container repositioning, and the normal flow of trucks in and out of terminals. Some LA-Long Beach terminals are so busy that they are considering extended hours, and at least one terminal operator recently told a carrier to hold off on docking a ship owing to lack of space for unloaded containers.
Carriers are pressing customers to unload and release containers, but with warehouses still backed up and operating at far less than full capacity, the idling of containers is contributing to a challenge now reaching global proportions. Shippers’ inability to quickly unload containers has contributed delays in repositioning them back to Asia, a point Skou raised during the earnings call. Source: JOC
With effect from 1 December 2020, APL Co Pte Ltd will become CMA CGM Asia Shipping Pte Ltd. The name change does not affect the company’s business, shareholder structure, management or agreements it has entered into. The name change is in line with the developments that the CMA CGM Group has been making across its trade lanes and among its carrier brands over the last three years. CMA CGM took over APL through the purchase of its parent company NOL in a deal completed in September 2016. Transpacific: Capacity and spot rates hit new height.
British Airways - CEO Alex Cruz assured the UK’s Transport Select Committee that the company would not issue any new employee contacts. The controversial topic, known as BA’s ‘fire and rehire’ strategy, had previously caused a significant backlash from the public. Addressing the MPs on September 6, 2020, Cruz said that the COVID-19 pandemic devastated the business and that the job cuts were necessary to survive. “Fewer passengers means fewer flights, and fewer flights means fewer people required to actually service them,” Cruz said in response 12,000 jobs cuts announced in April 2020 causing a national backlash. “I deeply, deeply regret that way too many loyal and hardworking colleagues of mine are having to leave our business, and I understand why MPs are concerned,” Cruz added. The CEO also expressed regret that it took 73 days for the workers’ unions and the airline to begin negotiations. However, MP Sam Tarry responded to that saying, “I would argue that if you hadn’t put a metaphorical gun to their head, then that might not have happened. “Of the 12,000 announced redundancies, 6,000 employees had already opted for voluntary leave by August 7, 2020. In contrast to initial plans drawn out by the company to ax the remaining 6,000 staff, Cruz told the committee that in the end, BA did not ‘need’ to reach that number. How this will affect employees’ future job security and wellbeing still remains uncertain. According to Cruz, BA is currently operating at around 25-30% of its flight schedule compared to 2019. The recovery is slower than anticipated. The airline had initially expected to have returned to around 50% of its traffic capacity by mid-September 2020.
Cargolux - Has added Shenzhen to its network as it looks to strengthen its presence in China. The freighter operator said the weekly frequency is routed Luxembourg-Bangkok-Shenzhen before returning westbound to Luxembourg via Bangkok with an additional stopover in Budapest. Shenzhen is Cargolux’s sixth destination in mainland China. “Shenzhen is China’s fourth busiest and the world’s 24th busiest cargo airport,” the carrier said. “The weekly scheduled all-cargo flight will further strengthen Cargolux’s footprint in the area. “Domenico Ceci, Cargolux executive vice president sales and marketing, added: “Shenzhen is an important commercial gateway and this new frequency will allow us to better connect with customers in the region. This additional service between Europe and China will also offer seamless main-deck capacity between these two commercial centers. Cargolux said the inaugural flight marks the beginning of a regular service between Luxembourg and Shenzhen but the history between the Chinese airport and Cargolux goes back several decades; in November 1992, Cargolux was the first foreign airline, cargo or passenger, to land at Shenzhen airport.
ELAL - Has further expanded its cargo operations through a new service to Dubai and also by entering into a new partnership with CargoJetX on operations between Europe, Asia and the US. The new Dubai service, operated by an Atlas Air B747F, will run on a weekly basis as part of the Tel Aviv-headquartered airline’s Liege operation. The first flight to Dubai took off on September 16. Meanwhile, the airline will in October enter the market between Europe, Asia and the US through a joint venture agreement with CargoJetX. CargoJetX has purchased two B747-400F aircraft that will be used by the joint venture, while EL AL will manage, market and sell the capacity. The joint venture has then contracted Longtail Aviation International, a UK-controlled company in Bermuda, to fly the aircraft as it has the relevant approvals to “fly directly from/To Europe and over the airspace of many countries”, EL AL said. Ronen Spira, head of EL AL’s cargo division, said: “The activity begins with a series of charters flights leased by DSV, the giant forwarding and logistics company. “The Israel-based airline added that in addition to charter flights, EL AL Cargo will offer services to Hong Kong and Shanghai from Liege (LGG) and Frankfurt (FRA) twice a week, with the flights continuing to New York before heading back to LGG and FRA. CargoJetX said: “CargoJetX’s management expresses full confidence in the capabilities of EL AL’s cargo division and intends to continue to expand its fleet of cargo aircraft for international operations as part of the joint venture.”
Qantas - Announced it was reviewing some of its key operating facilities’ size and location as 20,000 employee stand-downs near finalization. The review would mostly focus on non-aviation facilities such as offices, but would also look to touch flight simulator centers in Sydney and Melbourne, and heavy maintenance facilities in Brisbane, the company’s statement read on September 15, 2020. If possible, Qantas said it would like to centralize each of its service branches into single operational points from across Australia. The decision to consolidate naturally followed the company’s workforce downsizing program, out of which 25% of layoffs were reportedly corporate and head office employees. Since the airline does not require as much space anymore, there is an opportunity to reinforce its financial standing further. “As well as simply rightsizing the amount of space we have, there are opportunities to consolidate some facilities and unlock economies of scale,” chief financial officer Vanessa Hudson said, “We’re looking right across the organization for efficiencies, including our $40 million annual spend on leased office space. “After suffering nearly $2 billion in statutory losses in FY20, Qantas expects to “be a much smaller company for a while,” focusing on setting the Group up for long term recovery.
Turkish Cargo - Increased its market share in the first half of the year on the back of its “special cargo operations”. The Istanbul-hubbed airline saw its first half market share increase from 3.9% last year to 5.4% in 2020, according to WorldACD data, which the carrier credited to “its special cargo operations it has been maintaining by building up a global air bridge”. Data from WorldACD show that the airline’s special cargo volumes have grew by 67% year on year in the first half of 2020.The airline said that it services for pharmaceuticals, medical equipment, dangerous goods and valuable cargo had continued uninterrupted and that it had carried 30,000 tons of medicines and nearly 10,000 tons of medical equipment between February 1 and August 31. “Being the first air cargo brand that holds all of the three certificates, namely the “CEIV Pharma”, “CEIV Fesh” and”CEIV Live Animal”, issued by IATA, Turkish Cargo ensures protection at high standards at its special cargo storage rooms with various temperature ranges available at its facilities with a total area of 3,500 sq m at the Istanbul and the Ataturk airports. “Airlines with access to freighters have tended to perform well in the first half of the year as pure passenger airlines have seen much of their capacity removed from the market because of the grounding of operations.Last year, Turkish Cargo reported the highest growth rate of the top 10 freight carriers as IATA data showed traffic increased by 19.3% year on year to just over 7bn cargo tonne kms.
Week 38 (September 14 - 20)
IATA - unveils online platform to ease Covid vaccine supply chain challenges In preparation for global vaccine delivery, IATA has launched ONE Source, an online platform to match shipping needs with infrastructure capabilities and service providers. The platform, which will independently verify information, will list the latest operational information on airlines, airports, handling facilities, forwarders, shippers and truckers and take into account security and risk analysis data. The API platform will be free for all service providers. “ONE Source will give complete visibility of the capabilities and facilities across the supply chain,” said Glyn Hughes, head of IATA Cargo. He pointed out the enormity of the vaccine challenge, which, with just a single dose vaccine for 7.8bn people, would amount to 8,000 747 flights. But while much of the focus so far has been on available airline capacity, Mr. Hughes said facilities also had to be in place. “Once a vaccine has been produced, it will need to be manufactured around the world and distributed safely. There will need to be a focus on Africa, Asia and Latin America, where there are few facilities to manufacture.” Among the numerous challenges were border processes, flight permits and trained, adequate staff numbers at import and export locations, he explained.“To maintain supply chain integrity and temperature control, from the manufacturing site for the entire journey, will require all parties to work together,” he said.IATA is already “working across many fronts”, he said, including with the World Food Programme and other UN agencies, pharmaceutical manufacturers, airlines and handlers.“The biggest challenge will be the final mile, and that’s where the greatest focus is. We already have well-established procedures in the industry, but we will need to scale up – and they don’t cover everywhere. “In Africa for example, there are few passenger services and no real methods of distribution – it’s too large, with too many borders, and you can’t use road or ocean. It will need planning with military precision. One way would be to set up cool facilities at staging points throughout the continent.
Asiana - South Korea plans to inject $2 billion (2.4 trillion won) to Asiana Airlines after the carrier’s acquisition deal between its parent company Kumho Industrial and Hyundai Development Company (HDC) failed on September 11, 2020. The joint investment of 2$ billion will come from the Korea Development Bank (KDB) and another state-owned lender Export-Import Bank of Korea. The two companies would most likely become Asiana’s biggest shareholders after the injection. Initially, HDC and Mirae Asset Daewoo agreed with Kumho Industrial to acquire a stake in Asiana Airlines for $2.1 billion (2.5 trillion won) in December 2020. The deal reportedly collapsed after Hyundai Development called for renegotiations due to Asiana’s surging debt over the impact of COVID-19. Reportedly, Asiana lost $225 million (268 billion won) in the first half of 2020. But even before, the airline was not a profitable project to begin with as it finished 2019 with a $660 million (785 trillion won) in net losses. As of June 2020, the carrier has surmounted a total debt of 12.8 trillion won ($10.8 billion), a 33% increase from the previous year.
Cathay Pacific - announced on Friday that it will no longer apply for employment subsidies from the government for its main business. The move implies that the airline can further make redundancies at its companies. Yet, Cathay (0293) Pacific has filed applications for some of its subsidiaries, such as Hong Kong Express, Hong Kong Airlines, Cargo Terminal, Hong Kong Airport Services, and Cathay (0293) Pacific Catering Services. The financial support protects jobs for the September-November period. Cathay (0293) Pacific has so far received US$5 billion in relief support from the Hong Kong government and has thus avoided major layoffs. Still, the group has warned that it is reviewing all aspects of its business model and expects to see the results in Q4. Cathay (0293) Pacific, which had about 27,000 staff worldwide at the end of last year, has cut about 400 overseas crew members and offered voluntary redundancies. The airline's general manager said the airline will inevitably adjust its fleet to cope with a shrinking travel market. Earlier in July, the airline group had the plan to park one-third of its fleet in Alice Spring, Australia. And according to the South China Morning Post, it is now considering to revise the number and store even more aircraft.
Singapore Airlines - Staff cuts continue to plague the airline sector after Singapore Airlines’ (SIA) announcement to lay off 4,300 employees, 20% of its workforce. SIA took this decision in light of the uncertainty that currently looms over the aviation industry, impeded by the ongoing COVID-19 crisis’s effects, the airline group’s statement read on September 10, 2020.However, the effects of layoffs that are set to affect Singapore Airlines, SilkAir and Scoot, have reportedly been mitigated by retirement schemes and voluntary leaves. The Group said that these measures allowed it to eliminate 1,900 job positions throughout the company’s COVID-19 period. This means that 2,400 employees will end up losing their jobs involuntarily within the Group’s global operations. The Group reportedly expects to continue its services under 50% of passenger capacity until the end of FY2020. SIA further quotes 2024 as the most likely year when the company could expect the return to previous traffic level - a prediction in line with authorities such as IATA and ACI. The airline group expects domestic markets to be the first to improve, a phenomenon that was already recorded in China. However, the airline group commented that as it “does not have a domestic market that will be the first to see a recovery,” SIA is left in a vulnerable position.
Lufthansa - plans to scrap most of its widebody passenger aircraft, which would contribute to additional redundancies on top of the previously announced 22,000 layoffs. According to Bloomberg’s sources, Lufthansa is currently looking at withdrawing its remaining 14 Airbus A380 after already retiring the same amount in August 2020. In addition to the 14 superjumbos, most of the airline’s A340s would also go, alongside Lufthansa’s entire Boeing 747-400 fleet and a portion of the carrier’s narrow-body planes that conduct long-haul operations. On August 6, 2020, Lufthansa disclosed that it would decommission five Boeing 747-400s and eleven Airbus A320s on top of its halved A380 fleet. In total, the carrier planned to shrink its fleet by a total of 100 aircraft by 2023. The additional cuts would push Lufthansa over that mark, also affecting additional jobs on top of the Group’s announced 22,000. In Q2 2020, the carrier revealed a €1.7 billion ($2 billion) net financial loss as its revenue dropped by 80% compared to the previous year. The airline also received a €9 billion ($10.7 billion) injection from Germany’s government to boost its liquidity. Read more: Lufthansa Group to cut 25% of workforce, 14 A380s to follow at the same time, the company has expected a rapid recovery to 95% of short- and medium-haul and 70% of its long-haul operations by the end of 2020. However, Lufthansa’s dreams were shattered by a recent resurgence of new COVID-19 cases in Europe and a slower-than-expected traffic return across the aviation industry.
Week 37 (September 07 - 13)
Maersk announces a more integrated company to serve customers better
On September 01, 2020 Maersk communicated brand specific Customer Advisories related to the strategic integration of Safmarine and Damco into Maersk. These changes are aligned with their goal of becoming the global integrator of container logistics, connecting and simplifying our customers’ supply chains.
What is not changing as part of our announcement today:
IPI Service Delays LAX / NYC – LCL
Due to the continued impacts of Covid-19, we are experiencing equipment and capacity shortages that are contributing to IPI delays nationwide. This is being felt especially in our Los Angeles and New York gateways. Delays in transit time are possible and expectations are for these to continue into the 3rd Quarter of 2020 and possibly beyond.
Amazon Air - A Boeing 767-300 (registered N503AZ) appeared in the Federal Aviation Administration’s registry under Amazon’s name on August 31, 2020. After operating leased wide-bodies for almost five years now, the e-commerce giant finally owns an aircraft of its own. A 29-year-old Boeing 767-338(ER) officially became the first jet in Amazon’s fleet. The N503AZ, then-named the City of Port Macquarie, was first delivered to Qantas back in 1991. Eleven years later, the Australian flag carrier leased the aircraft to Australian Airlines for four years, after which the aircraft returned to its owner and was stored away in 2014. Westjet was the last airline that operated the N503AZ before Amazon bought it. The aircraft currently resides in Tel Aviv, Israel, where it will likely be converted into an Amazon Air freighter. On top of its new aircraft, the company has also reserved four additional registration numbers 521AZ, 563AZ, 569AZ and 571AZ, most likely looking to expand its fleet further. The aircraft registrations came in the wake of Q2 financial results after the company announced $5.2 billion in net income, a 50% increase from the same quarter of 2019. Its sales have reportedly ramped by 40% in comparison to last year as well. And while many businesses were impacted negatively by COVID-19, Amazon’s demand keeps growing due to social distancing and restrictions that people are forced to undergo amid the crisis. At the same time, many airlines have reported increased revenues from their air freight operations due to the peculiar situation cargo found itself in after the pandemic. E-commerce companies transported much of their shipments before COVID-19 in ‘belly capacity’ via passenger planes. When air traffic dropped by 90% in April 2020, prices for air freight increased significantly.
Alitalia - A new Alitalia (AZ, Rome Fiumicino) could be launched in “a matter of a few days” now that EU regulators have cleared EUR199.45 million euros (USD236 million) in state aid for the troubled carrier, to compensate for damages suffered during the coronavirus pandemic. The support will take the form of a direct grant for this amount, which corresponds to estimated damages that the virus directly caused to the airline from March 1 to June 15. The commission said it considered the outbreak to be an exceptional occurrence and an extraordinary, unforeseeable event, with significant economic impact. The European Union’s antitrust chief, Margrethe Vestager, cautioned in a statement, however, that investigations into past support for the airline are still ongoing and that the commission is in contact with Rome on compliance with EU regulations. “We continue working with member states to find workable solutions to support companies in these difficult times, in line with EU rules. At the same time, our investigations into past support measures to Alitalia are ongoing and we are in contact with Italy on their plans and compliance with EU rules,” Vestager said. The most recent measure is proportionate, she added, as “the compensation does not exceed what is necessary to make good the damage.” Following the approval, Italy's transport minister, Paola De Micheli, revealed on the sidelines of the Ambrosetti Forum economic conference that newco flag carrier Alitalia-Tai could now be launched in “a matter of a few days”, the newspaper Corriere della Sera revealed. “I really hope to have news in the middle of the week,” she added.
ELAL - Israeli flag-carrier El Al appears set to broaden its United Arab Emirates reach through a regular cargo service to Dubai, writes FlightGlobal. Several Israeli media outlets are carrying a statement from El Al that a weekly link to Dubai will be added to the route network of a Boeing 747 freighter service from Tel Aviv, although the flight will operate via Liege.The service will begin on September 16.El Al’s operations remain grounded with the exception of its 747-400 freighter, which is not Israeli-registered but wet-leased from US carrier Atlas Air and carries the US registration N487MC.Regular non-stop services between Israel and the UAE will be a subject of negotiations following the disclosure in mid-August that the two sides will normalize diplomatic relations. El Al has already marked the agreement with a special one-off flight from Tel Aviv to Abu Dhabi on August 31.UAE operator Etihad Airways, based in Abu Dhabi, has started offering a sales channel to customers within Israel, through tourism firm TAL Aviation. TAL says it is not yet offering a similar service for Dubai-based Emirates.
Eva Air - Taiwanese carrier EVA Air is amending its order for Boeing 787-10s, swapping some of the outstanding aircraft for B777 freighters and B787-9s.The airline said it had reached agreement with Boeing to exchange seven of the B787-10s yet to be delivered for four B787-9s and three B777Fs.EVA Air said the swap relates to an original order for 20 aircraft – comprising 18 B787-10s and two B777-300ERs – placed in November 2015.The carrier adds that the decision reflects “changes of market demands” as well as a “continuous optimization” of its network and fleet. It stated that the price of each B777F will not be greater than $382m and that for each B787-9 will not be more than $318m.EVA Air added that the total transaction will not exceed $7.3bn.It had previously signaled a potential change to the B787-10 order, in response to the air transport crisis. The carrier has taken delivery of five of the type.
FAA - The Federal Aviation Administration (FAA), throughout the recent history of commercial aviation, has been the global leader for aviation safety and, in the same vein, certification. Whenever a decision was made by the FAA, the world would follow suit. However, could the fallout from the 737 MAX crisis result in the FAA losing its status as a global leader of aviation authorities around the globe? Historically, the FAA held the flag and was the leader on all fronts. When the DC-10 was grounded, for example, the U.S.-based authority was at the forefront of the decision. So in the lead that airlines based in Europe sued the FAA for allegedly overstepping its boundaries when the agency banned foreign-registered DC-10s to operate within the United States’ airspace. Nevertheless, after the administration had grounded the tri-jet, “a number of foreign governments halted DC-10 flights in their airspace,” reported the New York Times in September 1981.A more recent example could be the Boeing 787 Dreamliner groundings. After the 787 suffered several incidents involving its Auxiliary Power Unit’s (APU) lithium-ion batteries, the FAA grounded the wide-body on January 16, 2013. A day later, the European Union Aviation Safety Agency (EASA) issued a statement, whereupon the agency commented that it was working closely with the FAA as “the primary certification authority and Boeing.”“EASA has this morning adopted the FAA Airworthiness Directive in order to ensure the continuing airworthiness of the European fleet,” the statement read. At the time, the European fleet consisted of two Boeing 787 Dreamliner’s operated by LOT Polish Airlines. The Japan Civil Aviation Bureau (JCAB) followed the FAA as well, as the bureau “issued the airworthiness directive (Koku-ko-ki No. 92) based on the above mentioned FAA AD,” which ordered the groundings of the Dreamliner. Coincidentally, the two battery fires that prompted the suspension of operations of the 787 had been on Japanese-registered aircraft, belonging to Japan Airlines (JAL) and All Nippon Airways (ANA).
Week 36 (September 01 - 06)
Port of Los Angeles - Long Beach
IATA market update - Air cargo traffic was stable in July but demand continues to be constrained by the lack of bellyhold capacity, according to the latest monthly report from IATA. Figures from the airline association show that demand in cargo tonne km terms fell by 13.5% year on year in July. IATA said this is a modest improvement from the 16.6% year-on-year drop recorded in June and the 14.1% fall over the first seven months of the year. However, cargo traffic is not increasing as fast as economic indicators suggest it should as a result of limited capacity, which in July was down by 31.2%.The capacity decline was led by reductions in belly hold space, down by 70.5% in July. This was, however, offset by a 28.8% increase in freighter capacity. As a result of capacity decreasing faster than demand, load factors improved by 11.5 percentage points to 56.4%. While economic indicators have diverged from air cargo performance over the last few months, there are some positive signs for the sector .The airline association said that new export orders statistics –a leading indicator for air cargo –show that CTKs should continue to improve in the coming period. IATA director general and chief executive Alexandre de Juniac said: “Economic indicators are improving, but we have not yet seen that fully reflected in growing air cargo shipments. “That said, air cargo is much stronger than the passenger side of the business and one of our biggest challenges remains accommodating demand with severely reduced capacity. “If borders remain closed, travel curtailed and passenger fleets grounded, the ability of air cargo to keep the global economy moving will be challenged. ”Looking at regional performance, airlines from the Asia Pacific region saw their cargo volumes drop by 17.7% year on year in July while capacity was down by 33.2%.“After a robust initial recovery in May, month-on-month growth seasonally-adjusted, demand has softened,” IATA said. North America-based carriers reported a 2.9% increase in cargo volumes during July as a result of strong demand on the transpacific, Asia-North America route, reflecting e-commerce demand for products manufactured in Asia. Capacity was down by 24.4% during the month. Over in Europe, the region’s carriers registered a 22% year-on-year decline in July, while capacity was down by 36.5%. IATA pointed out that this was an improvement on the 27.6% drop off recorded in June. However, it added: “Demand on most key trade lanes to/from the region remained weak. Middle East-based carriers reported a demand decline of 14.9% in July while capacity was reduced by 27.3%.IATA said that demand had improved on June’s result, driven by the aggressive operational strategies of some of the region’s carriers. Latin American carriers posted a 33.2% drop in year-on-year demand in July, down from a 28.6% decline in June, while capacity decreased by 49.2% on last year. “The drop in both demand and capacity was the most severe of all regions,” IATA said. “The Covid-19 crisis is particularly challenging at present for airlines based in Latin America owing to strict lock-down measures. In July the Latin American air cargo market was smaller than the African market for the first time since these statistics have been reported in 1990.”Finally, African airlines posted a contraction of 4% in July as the small Africa-Asia market continued to support the region’s performance. International capacity decreased 33.7%.
Aer Lingus - Aer Lingus withdrawal from Shannon Airport could spell trouble, Throughout the mid-20th century, Shannon Airport (SNN) on the west coast of Ireland was booming, as airlines used the airport as a stopover before making their trans-Atlantic crossing. Now, the airport’s luck might have run out, as the de facto Irish flag carrier Aer Lingus is lingering with moving its transatlantic services to British cities.The trouble started to brew when Aer Lingus sought for tenders in the neighboring British island to place its Airbus A321LR (long-range) aircraft and launch new trans-Atlantic routes, as reported by the Irish Times. Six airports emerged as potential origin destinations for Aer Lingus' new services, including Edinburgh Airport (ED) in Scotland and Manchester Airport (MAN).If Aer Lingus does withdraw its A321LRs from the Irish airport completely, it could spell big trouble for Shannon as a commercial passenger gateway. But the pot of trouble had begun boiling much before the current pandemic rolled over and flattened the airlines’ plans and in turn, income.
Emirates - After the president of Emirates Tim Clark’s announcement about cutting thousands of jobs to diminish the airline’s costs previously in June 10, 2020, Dubai’s government is now demonstrating its financial commitment to the carrier. As the company currently faces a cash crunch, the government provided Emirates a fresh equity injection of $2 billion (AED7.3 billion). While no such injection has been publicly announced by the government of Dubai or the airline itself, the details about financial support were disclosed in a prospectus for a potential bond issuance by the government, reported Reuters. According to Emirates financial report of 2019-2020, the state-owned airline has already raised an additional liquidity of 1.2 billion (AED4.4 billion) in the first quarter and claimed it would aspire banks to raise the debt to fight the effects of the COVID-19 pandemic. Emirates has already cut 9,000 thousands of jobs as it tries to manage the crisis. However, the Gulf carrier is reportedly considering increasing the cuts to about 30,000 jobs, which would make it one the deepest cuts in a global airline industry forced by the pandemic yet. As previously reported by AeroTime News, the percentage of fired workers will most likely rise to 15% over. According to sources, on June 23, 2020, the airline asked cabin crew to take between one and three months voluntarily unpaid leave due to its anticipated staffing needs. As previously the president of the airline estimated, a return to the pre-crisis financial situation of the company may take up until 2024.
Avianca - The fighting-for-survival Colombian airline Avianca is about to get the government's support. Colombian government will lend up to $370 million to the struggling carrier and will participate in the airline‘s restructuring process. The Ministry of Finance announced that, being the largest airline in Colombia and one of the largest air carriers in Latin America, Avianca plays an important role in securing the country's aerial connections. “With a view to guaranteeing service, air connectivity for Colombians and general economic activity, the national government will participate in Avianca’ s restructuring process”, commented the Finance Ministry in a press release. Before filing the bankruptcy, Avianca had been providing about 500,000 direct and indirect jobs, the ministry counts. Moreover, the airline was providing about $3.8 billion per year to the economy of the Andean states, that is equivalent to about 1.4% of gross domestic product. For this reason, Colombian government would not only participate in the airline’s turnaround by providing more than $370 million in loans, but would also contribute to a strategy to attract new investors, reported Forbes Colombia. “The operation will take place through a credit of up to $370 million in an 18-month transaction that corresponds to the estimated time the company’s restructuring process will last”, stated the Ministry of Finance and estimated that Avianca’ s credit would expire until November 2021. Before reaching the company, the loan will have to be confirmed by the Administrative Committee of the country’s Emergency Fund. After evaluation, it will have to be authorized by the judge overseeing the bankruptcy case in New York court. According to a credit rating report prepared by Moody's Investors Service, Avianca already had significant financial liabilities in 2019. As the COVID-19 pandemic hit the aviation industry worldwide and Colombia implemented a strict lockdown, the airline was able to operate only non-scheduled flights between late March and May 2020.The lack of liquidity and a total debt of $7.3 billion at the end of 2019 left the airline particularly vulnerable. On May 10, 2020, it filed for bankruptcy under Chapter 11 protection, identifying an unpredictable impact of the COVID-19 pandemic as the main cause of its collapse.