While the economy seems to be slowly picking up, recent breakouts seem to tell us that a vaccine is the most important thing that can happen – worldwide! But the question is when? Everybody is affected and passenger travel is one of the worst victims. Airlines everywhere are suffering, laying off workers and in the USA future layoffs seem inevitable. For example the following layoffs are what we are hearing if US airlines don’t get any additional funding from the US government: Alaska Airlines said they will be sending out some 1,600 notices soon (4,200 nationwide and it is reported that the majority of these numbers will be from flight attendants); United has 3,900 pilots at risk if assistance is not provided. Furthermore, not long ago they warned some 35,000+ employees of the risk of potential layoffs; and American is looking at some 25,000 furloughs as well. One big question is what the Governments will do for airlines worldwide. More importantly, if a vaccine for COVID-19 is created, how long will it take to get dispersed, and resultantly, how long will it take for the air market to return? One report predicts 2024! Air travel not expected to recover until 2024


GOGO

As part of its continued cost reduction initiatives to align the scale of its organization with current demand for aviation connectivity services, Gogo is eliminating 143 fulltime positions, predominantly from the Company’s Commercial Aviation business.

“As the pandemic continues to impact commercial airline travel, we are taking additional actions as part of our comprehensive 16-lever strategy to reduce costs. Based on our current expectations of the scope and timing of a recovery in the industry and our Commercial Aviation business, reducing our workforce has become a necessary step. We do not take this action lightly, but we believe it is critical in our efforts to preserve our financial flexibility, while maintaining the quality of our service and relationships with our customers,” said Oakleigh Thorne, Gogo’s President and CEO.

The reduction in force will take effect on August 14, 2020, and represents approximately 14% of the Company’s overall workforce. In addition to the reduction in force, Gogo will continue certain furloughs and maintain the salary reductions that were previously implemented. In keeping with the previously announced 16-lever plan to reduce costs, Gogo will continue to pursue non-personnel cost-savings levers, including renegotiating terms with suppliers, delaying aircraft equipment installations, deferring purchases of capital equipment, reducing marketing and travel expenses, and eliminating non-essential spend.


ASTRONICS

Astronics Corporation Reports 2020 Second Quarter Financial Results

  • Sales for the quarter were $123.7 million with bookings of $61.5 million
  • Net loss was $(23.6) million, after goodwill impairment charges of $12.6 million
  • Adjusted EBITDA was $9.2 million, or 7.4% of sales
  • Cash from operations was $18.3 million for the quarter, $41.5 million year-to-date

AIRBUS

AIRBUS had €1.14b net loss in 2Q20 (vs €1.2b profit in 2Q19) on 55% lower revenues; Commercial Aircraft lost €1.9b (vs €1.2b profit) on 65% lower revenues. Employment remains flat from Jan 1.

AIRBUS says commercial aircraft are now being produced at rates under new production plan announced in April; however, it is further dropping A350 rate from six to five per month for now. It adds that 145 commercial aircraft could not be delivered as scheduled in 1H20 due to COVID-19.


BOEING

The company reported second-quarter revenue of $11.8 billion, GAAP loss per share of ($4.20) and core loss per share (non-GAAP)* of ($4.79), primarily reflecting the impacts of COVID-19 and the 737 MAX grounding (Table 1). Boeing recorded operating cash flow of ($5.3) billion.

“We remained focused on the health of our employees and communities while proactively taking action to navigate the unprecedented commercial market impacts from the COVID-19 pandemic,” said Boeing President and Chief Executive Officer Dave Calhoun. “We’re working closely with our customers, suppliers and global partners to manage the challenges to our industry, bridge to recovery and rebuild to be stronger on the other side.”

In the second quarter, Boeing restarted production operations across key sites following temporary pauses to protect its workforce and introduce rigorous new health and safety procedures. Despite the challenges, Boeing continued to deliver across key commercial, defense, space and services programs. The company also resumed early stages of production on the 737 program with a focus on safety, quality and operational excellence. Following the lead of global regulators, Boeing made steady progress toward the safe return to service of the 737, including completion of FAA certification flight tests.

To align to the sharp reduction in commercial market demand in light of COVID-19, the company is taking several actions including further adjusting commercial airplane production rates and reducing employment levels. “The diversity of our balanced portfolio and our government services, defense and space programs provide some critical stability for us in the near-term as we take tough but necessary steps to adapt for new market realities,” Calhoun said. “We are taking the right action to ensure we’re well positioned for the future by strengthening our culture, improving transparency, rebuilding trust and transforming our business to become a better, more sustainable Boeing. Air travel has always proven to be resilient – and so has Boeing.”

The latest Boeing NPRM on the 737-8 and 737-9 (737 MAX) aircraft.

(Editor’s Note: Boeing had $2.4B net loss in the second quarter this year, but less than in 2019 ($2.9B in the same quarter last year) and we note they have $326B backlog. Watch for the B737 to build slower, as well, while the goal will ultimately be some 30 per month. Also, Boeing reports the 747-8 will end in 2022. Further, we expect the company to shut down production of the 787 Dreamliner in Everett because of the slow-down and move existing production to South Carolina, no doubt because of demand and reduced labor costs. Be prepared, there will be more job cuts!)

 


COMING ATTRACTION

Next week we will deliver our readers a report on an amazingly small, incredible sounding BOSE product that you might consider getting for your family as you are all staying at home during COVID-19. And, yes, if you can’t send one of your youngsters to school, you have an audio out.


OTHER

Chicago | July 29, 2020–Boeing President and CEO Dave Calhoun issued the following letter to employees today addressing aerospace market realities:

Team,

These past few months have been unlike anything we’ve seen. The pandemic’s effect on our communities and industry is ongoing. And the challenges we face as a company are still unfolding.

As cases continue to rise in areas around the globe, health and safety remain a top priority. My thanks go to everyone who is supporting our safety efforts, wearing face coverings and upholding our shared accountability for keeping one another safe. All those affected directly by COVID-19 also have my sympathies.

The reality is the pandemic’s impact on the aviation sector continues to be severe. Though some fliers are returning slowly to the air, their numbers remain far lower than 2019, with airline revenues likewise reduced. This pressure on our commercial customers means they are delaying jet purchases, slowing deliveries, deferring elective maintenance, retiring older aircraft and reducing spend — all of which affects our business and, ultimately, our bottom line. While there have been some encouraging signs, we estimate it will take around three years to return to 2019 passenger levels.

That’s why we’ve been taking decisive actions. To bolster our near-term liquidity, we suspended our dividend, terminated our share repurchasing program, reduced discretionary spending and overhead costs, and issued $25 billion in new debt.

While these steps help us navigate the pandemic, they don’t change the fact that the commercial marketplace is different, and we must change with it. To align to a smaller market, we lowered commercial production rates and took tough workforce actions throughout the quarter.

Unfortunately, it’s become clear that we need to make further adjustments based on the prolonged impact of COVID-19.

The changes include further lowering our commercial airplane production rates:

– We will have a slower ramp-up in 737 production than previously planned, with a gradual increase to 31 per month by the beginning of 2022.

– We will reduce the combined 777/777X production rate to two per month in 2021, which is one unit lower per month than we announced last quarter.

– We will further reduce 787 production to six per month in 2021. This is an adjustment down from the reduction we announced last quarter to 10 per month currently and seven per month by 2022. With this lower rate profile, we will also need to evaluate the most efficient way to produce the 787, including studying the feasibility of consolidating production in one location. We will share more with you following our study.

– While our 767 and 747 rates remain unchanged, in light of the current market dynamics and outlook, we’ll complete production of the iconic 747 in 2022. Our customer commitment does not end at delivery, and we’ll continue to support 747 operations and sustainment well into the future.

The work you’ve done on these programs has been tremendous. I have been impressed during every visit to our production facilities. These production rate changes are not a reflection on your work or our capability. The market simply won’t support higher output levels at this time, and we need to adapt accordingly.

As you know, we previously announced a net 10% workforce reduction in 2020 through a combination of voluntary layoffs, attrition and involuntary layoffs (ILOs) to align to a smaller market. The first wave of associates affected by ILOs received notification in May, and we continue to conduct smaller, phased workforce reductions to reach this target. Managers are communicating the latest wave of those reductions beginning today.

Regretfully, the prolonged impact of COVID-19 causing further reductions in our production rates and lower demand for commercial services means we’ll have to further assess the size of our workforce. This is difficult news, and I know it adds uncertainty during an already challenging time. We will try to limit the impact on our people as much as possible going forward. And as always, we will communicate openly, honestly and transparently with you.

The diversity of our portfolio and our government services, defense and space programs provide some stability in the near term as we take these tough but necessary steps. And we’ll continue working to meet our commitments and deliver on our priorities.

As we look to the future, we also are focused on not just adapting and recovering but also emerging stronger and more resilient. That includes proactively reviewing every aspect of our company to identify opportunities to improve, align to our new market and strengthen our culture. We are looking holistically at our infrastructure footprint, our overhead and organizational structure, our portfolio and investments, our supply chain health and stability, and our ability to drive operational excellence and a keen focus on safety in everything we do.

And while we’re facing challenges, it’s important to remember the good work and innovation underway across our company. This is absolutely necessary for our future. Aerospace has always proven to be resilient — and so has Boeing.

Thank you for facing these challenges with me. I could not ask for a better team.

Dave

Loss of more than 4.6 billion passengers and $97 billion in revenue forecast for 2020

Montreal | May 5, 2020– Airports Council International (ACI) World has released updated modelling that shows the worsening economic impact on the global airport industry.

The forecasts of prolonged – and more widespread – impacts and effects of the COVID-19 pandemic have resulted in worsening predictions for traffic and revenue losses for airports across all regions.

ACI World now estimates a reduction of more than two billion passengers at the global level in the second quarter of 2020 and more than 4.6 billion passengers for all of 2020. The estimated decline in total airport revenues on a global scale is estimated to be $39.2 billion (figures in US Dollars) in the second quarter and more than $97 billion for 2020.

This outlook provides yet another stark illustration of the need for government assistance for airports to preserve essential operations and to protect the jobs and livelihoods of the millions of people that work in airports around the world. Last week, ACI World and the International Air Transport Association (IATA) came together to call for urgent tax relief and direct financial assistance that is to the benefit of the entire aviation ecosystem.

“The impact of the COVID-19 pandemic on airports, the wider aviation ecosystem, and the global economy continues to worsen and represents an existential threat to the industry unless governments can provide appropriate relief and assistance,” ACI World Director General Angela Gittens said.

“As traffic and revenue have collapsed, the airport industry has taken all possible measures to preserve stability, but the challenge remains that a significant portion of airport costs are fixed.

“Airports are critical in the air transport ecosystem which is a key driver of local, regional and national economies and the communities they serve, and this global economic multiplier effect needs to be safeguarded to help underpin recovery.

“Jobs need to be protected and airports given financial support so people can rapidly return to work while operations can be scaled up to meet demand as the industry restarts.”

ACI World has applauded those governments around the world that have acted to support airport jobs and operations, but time is running out for assistance to be provided.

ACI World has called for comprehensive financial relief including wage subsidy schemes to allow continued operations and a rapid return to full operations, the protection of airport charges and revenues, urgent tax relief to provide much-needed financial oxygen to airports to ensure continuity of operations and safeguard airport jobs, waivers to airport rents and concession fees, the continuation of charges on air cargo operations to maintain essential airside and cargo facilities. Grants and subsidies, secured financing, loans at preferential rates, and bank guarantees should be made available.

“Financial relief and assistance is urgently needed but it is crucial for the prospects of a balanced recovery that any assistance benefits the entire aviation ecosystem and does not target once sector over other,” Angela Gittens said.