United Airlines Delays Boeing 737 MAX Delivery Schedule

As it prepares for a new reality following the COVID-19 pandemic, United Airlines has decided to delay the…

United Airlines Delays Boeing 737 MAX Delivery Schedule

As it prepares for a new reality following the COVID-19 pandemic, United Airlines has decided to delay the number of Boeing 737 MAX aircraft that it had planned to add to its fleet. Instead of its original order, United Airlines is now going to take less than half the number of MAXs it wanted over the next couple of years.

United Airlines will take delivery of just 40 MAXs over the next two years. Photo: United Airlines

During a first-quarter earnings call on Friday, United Airlines chief financial officer Gerry Laderman said that the full-service carrier is planning to emerge from the coronavirus crisis as a much different airline.

United now wants just 40 Boeing 737 MAXs

Instead of its pre-coronavirus order, the Chicago-headquartered airline will now receive 40 737 MAX aircraft from the Seattle planemaker by the end of 2021. This new reality means that United has delayed more than half its order with Boeing for the currently still grounded plane.

As far as the first deliveries of the 737 MAX are concerned, United says it is dependent on regulators re-certifying the plane. The Boeing 737 MAX was subject to a worldwide grounding in March of 2019 following two deadly crashes that killed 346 people. If the Boeing 737 MAX receives re-certification soon, United says it could take 16 aircraft this year and 24 planes in 2021.

Delivery of the MAX to United depends on how fast the plane is re-certified. Photo: United Airlines

As well as the new MAX aircraft, United says it is committed to receiving eight Boeing 787-9s this year and eight 787-10s the following year. Both models of the aircraft United had on order were already under construction before the coronavirus struck.

Boeing has had to cut production of the 787 and 777

Regarding United Airlines decision to delay its request, aviation website The Points Guy quotes Boeing’s president and CEO David Calhoun as saying:

“We’ve been having intense discussions for the better part of a month with our MAX customers over deliveries.”

It is not just the MAX where Boeing is taking a hit with a demand for widebody 777 and 787 also under pressure. Airlines cannot hold onto their older planes forever and know there is a lag time between ordering and delivery. Long-term goals must also come into consideration, even though they may be temporarily put on hold until the industry recovers.

United will be a different airline when it emerges from the COVID-19 crisis. Photo: United Airlines

As things stand right now, airlines are starting to realize that there is no quick fix to get people flying again. With all the social distancing, face masks, and blood tests being floated as ideas, knowing where to start is a problem in itself. Ideally, airline bosses are waiting on government advice on what they must do and the lifting of quarantines for international travel before they can come up with a workable plan.

United will emerge from COVID-19 a much different airline

United for its part seems to be taking a worst-case scenario approach with company president Scott Kirkby saying on Friday:

“Disney World needs to be open… Cafes and museums in Paris need to be open before people go back.”

While all this is going on, United has cut its capacity by 90% and is considering what it will do with furloughed employees once the CARES Act assistance expires on September 30.

“When we emerge from this, United Airlines — and the airline industry — is going to look different,” said Kirby.

Any way you look at the airline situation, you cannot see a ray of sunshine. They are all hoping that things pick up sooner rather than later, yet with governments rightly being afraid to lift restrictions too soon, the public is right to stay closer to home.

Source : Simple Flying More   

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€7 Billion Worth Of French Aid Will Go To Air France-KLM

On Monday morning, the European Commission signed off on €7 billion ($7.7 billion) in aid from the French…

€7 Billion Worth Of French Aid Will Go To Air France-KLM

On Monday morning, the European Commission signed off on €7 billion ($7.7 billion) in aid from the French government to Air France to cushion the worst of the blow from the corona-crisis. A mix of bank and shareholder loans will now provide the carrier with desperately needed liquidity.

The European Commission has approved €7 billion for Air France. Photo: Getty Images

The bureaucratic forces have signed off

The French branch of Air France-KLM can exhale for a moment. On Monday, May the 4th, the bureaucratic forces of the European Commission announced it had approved the €7 billion bailout supported by the French government.

The aid measures consist of a state guarantee on loans from a group of banks, and a shareholder loan to the company from the French state, which owns 14.3% of Air France-KLM. While already agreed upon by the carrier, the banks, and the government ten days prior, the loan needed Commission approval as the state is guaranteeing 90% of it.

“The aviation industry is important in terms of jobs and connectivity. In the context of the coronavirus outbreak, Air France has also been playing an essential role in the repatriation of citizens and for the transport of medical equipment. This (…) will provide Air France with the liquidity that it urgently needs to withstand the impact of the coronavirus outbreak,” Commission Executive Vice-President Margrethe Vestager, in charge of competition policy said in a statement.

Air France getty Images
The French state is guaranteeing 90% of the loans. Photo: Getty Images

Conditions and KLM

The bailout does, as previously reported, not come without conditions. Stipulations include being a “good customer” for European plane manufacturer Airbus. They also require Air France to scrap short-haul domestic routes where there is a train connection available under 2 1/2 hours, to help cut carbon emissions.

According to Bloomberg, the Netherlands is still deciding on the final details and amount for its support to KLM. Still, it has said it would land somewhere between €2 billion ($2.2 billion) and €4 billion ($4.4 billion).

These sources of funding can only be used to support each airline separately. It remains to be seen what this can come to mean for the future relationship of the two carriers. This is particularly as the French government will now gain more of a say in Air France, and it was already upset with the Netherlands matching its stake in Air France-KLM in January 2019.

Air France-KLM
KLM and the Dutch government are yet to agree on terms for a bailout. Photo: Getty Images

Why does the Commission need a say?

The amount and structure of the bailout were previously agreed upon by a conglomerate of six French and international banks, along with the government of France. However, as France is in the EU, the European Commission still needed to put its stamp of approval on it before the airline would be allowed to receive the funds.

In general, state-aid is prohibited in the EU. Except for within a few sectors such as agriculture, employment, and environment. This is to ensure a level playing field for all companies on the internal market. However, on March the 19th, just as the pandemic was taking hold, the EU adopted a State Aid Temporary Framework, allowing for an easing of restrictions.

This temporary regulation still requires that the Commission sign off on any loan where the state is guaranteeing over 70% of the amount. Loans provided without EU regulatory review may also not exceed €4 billion ($4.4 billion,) and the guarantee cannot last longer than up to six years.

Do you think we will see a KLM bailout as well before the end of the week? Should aid at this time be slowed down by the decision making process of the European Commission? Let us know your thoughts in the comments. 

Source : Simple Flying More   

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