AviationThis week's aviation wrap: restructuring plans at AirAsia X and Philippine Airlines, IATA's dismal numbers for airline industry despite restart.

Airlines face severe cash burn and financial headwinds

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AirAsia is ceasing operations in Japan.
AirAsia is ceasing operations in Japan.

AirAsia X (AAX) has moved to offset the impact of the Covid-19 pandemic by restructuring billions of dollars of debt, including future lease rentals and aircraft purchase commitments. The airline will also cull non-profitable routes and hopes to raise up to RM500 million (US$120 million) from various sources, including a government-guaranteed loan.

"Based on the current financial position and the industry outlook, the group will not be able to meet our immediate debt and other financial commitments,” the airline said in an exchange statement.

AAX's proposal comes just a few days after Malaysia's national carrier, Malaysia Airlines, revealed its own urgent restructuring proposals.
The AirAsia Group has also signalled it will pull out of its Japanese venture, as the coronavirus pandemic is likely to keep a lid on demand for air travel, its Japanese unit said.

IATA has warned that the airline industry will burn through US$77 billion in cash in 2H 2020.
IATA has warned that the airline industry will burn through US$77 billion in cash in 2H 2020. Photo Credit: Piotr Mitelski/Getty Images

This is how much airlines are losing every day

The International Air Transport Association (IATA) has warned that the airline industry will burn through US$77 billion in cash during the second half of 2020 (almost US$13 billion/month or a staggering US$300,000 per minute), despite the restart of operations.

“With no timetable for governments to reopen borders without travel-killing quarantines, we cannot rely on a year-end holiday season bounce to provide a bit of extra cash to tide us over until the spring,” said Alexandre de Juniac, IATA’s director general and CEO.

Meanwhile, the UNWTO has signed a MoU with IATA as the two parties work together to restart global tourism.

UNWTO secretary-general Zurab Pololikashvili said, “Air travel is an essential component of global tourism. This partnership between UNWTO and IATA will see us work closely together to increase confidence in flying and tourism in general.

“UNWTO will use our expertise in innovation and our status as a connector of public and private sector leaders to help get aviation moving again.”

Flyers don’t fear Covid-19, says OAG

An OAG survey of more than 4,000 global users of its flightview travel app found that overall fear levels over catching Covid-19 while flying are “tepid”.

According to the global travel data provider, some 69% of those polled intend to fly internationally within the next six months, while 79% have plans for domestic air travel. The eagerness to travel is more apparent among millennials and Gen Zs. Also, over three quarters of travellers agreed mask mandates are the most effective safety measure airlines and airports can implement.

Cost cutting measures at PAL will be implemented in 4Q.
Cost cutting measures at PAL will be implemented in 4Q.

PAL trims workforce, suspends aircraft deliveries

Philippine Airlines (PAL) has confirmed it is reducing its workforce by up to 35% as part of a pandemic restructuring and recovery plan.

In a statement, the Philippine flag carrier said the manpower reduction combines voluntary and involuntary measures to be implemented in the fourth quarter of 2020.

PAL said it has also suspended capital expenditures earmarked for acquisition of new aircraft.

SIA eyes more European flights

Singapore Airlines will resume and increase the frequency of flights on a number of destinations by the end of 2020.

“It is expected that by the end of the year the company will bring the volume of flights to 15% of the usual,” a Singapore Airlines’ statement said.
Fights to Amsterdam, Barcelona, London, Milan, Paris and Frankfurt will lead the way.

Big plus for Thai Airways passengers

Thai Airways has unveiled plans to launch an economy plus class on flights to London and Frankfurt.

Economy plus seats will be located in the first four rows of economy class and will guarantee customers alternate seating.

Passengers who book economy plus on flights departing from Bangkok will also receive special services such as priority check-in, five kg of extra baggage allowance, Bangkok Airport lounge access, and meals from business class.

AAPA summit goes virtual

The Association of Asia Pacific Airlines’ (AAPA) annual Assembly of Presidents - scheduled to take place in Japan in November - has been changed to a virtual summit due to ongoing travel restrictions and blanket quarantine requirements in the region.

In particular, this year's AAPA will be restricted to member airline delegates only. A separate virtual briefing will be made for members of the media after the Assembly concludes.

“Prolonged border closures have wider repercussions far beyond the aviation industry, seriously affecting economic and social wellbeing. We sincerely hope governments will come together soon to pave the way for the resumption of international air travel in a safe and secure manner. Only coordinated and harmonised travel policies and health measures would allow much needed business and social activity to resume," said Subhas Menon, director general, AAPA.

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