Accounts – Fun With Justin Mon, 03 May 2021 13:46:43 +0000 en-US hourly 1 Accounts – Fun With Justin 32 32 Vietnam seeks billions for airport expansion over next 30 years – Wed, 07 Apr 2021 23:14:12 +0000

Vietnam plans to raise $ 15.8 billion to build and expand airports over the next 10 years, according to the Vietnam Civil Aviation Authority (CAAV), with an additional $ 37 billion to be spent between 2030 and 2050.

The new construction projects include the first phase of Long Thanh International Airport to serve Ho Chi Minh City, Sa Pa Airport in the northern province of Lao Cai and Quang Tri Airport in the center of the country. .

Existing airports to expand include Tan Son Nhat International Airport in Ho Chi Minh City, Noi Bai International Airport in Hanoi, Da Nang International Airport and Cam Ranh International Airport near the port. south of the same name.

The biggest projects are Long Thanh (see below) and the Noi Bai expansion, which are expected to cost around $ 5 billion each.

The expansion of Tan Son Nhat, Da Nang and Cam Ranh airports is expected to cost more than $ 5 billion in total.

Part of the funding for the works will come from state loans and grants, but also from private investments and public-private partnerships.

CAAV proposed that the government approve low-interest loans, guarantee bank loans, and issue favorable tax and land policies to attract private investment in the aviation industry.

The VnExpress news site city Tran Quang Chau, vice president of the Vietnam Association of Aviation Science and Technology, said private investment would be essential to meet the financing needs of the projects.

Hoang Van Cuong, a member of the National Assembly’s Finance and Budget Committee, said state coffers should only be used for essential elements of projects, such as track construction and mine clearance.

He added that private investment should be sought for terminals, storage facilities and aprons.

Image: Noi Bai International Airport, near Hanoi (Tycho /CC BY-SA 3.0)

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Biden’s $ 2T plan sees massive infrastructure investment as Hill’s battle begins Wed, 07 Apr 2021 23:14:12 +0000

President Joe Biden’s $ 2 trillion infrastructure plan would invest $ 621 billion in transportation infrastructure and be funded by an increase in the corporate tax rate, among other measures.

Biden released the U.S. Jobs Plan on Wednesday morning as lawmakers begin efforts to legislate on an infrastructure package in the coming months. To pay for parts of the plan, Biden proposed a Made in America tax plan to set the corporate tax rate at 28% from 21%.

This is the first of two bills, the second focusing on free access to community colleges, universal preschool and others. Municipal bond provisions were not mentioned in Biden’s plan, but stakeholders expect those details to be considered in Congress and most expect there to be a protracted battle. between the two parties on how to pay all arrangements.

President Joe Biden released his $ 2 trillion infrastructure plan on Wednesday.

Bloomberg News

“We didn’t expect many financing details to be released in this project and this was confirmed today,” said Brett Bolton, vice president of federal legislative and regulatory policy at Bond Dealers of America. “What we’re looking for are our friends on Capitol Hill to take on this role and really start looking for financing options that include a strong effort to include municipal bond market priorities.

How the bill or bills reach Congress is also uncertain. Republicans are against raising taxes and Democrats want a massive new infrastructure package that demands it.

The possibility of a reconciliation bill still looms.

Reconciliation is a tool that allows lawmakers to bring levels of taxation and spending into line with levels set in a budget resolution. It can only be used twice this year and has already been used to pass COVID relief this month.

Raising the corporate tax rate to 28% from 21% – the rate set by the 2017 Tax Cuts and Jobs Act – like any tax increase, will face repression from the Republicans .

And this week, Three House Democrats have said they will not support any of Biden’s tax hikes unless the plan includes a repeal of the $ 10,000 cap on state and local tax deductions.

In a divided Congress, this could block legislation.

However, key players in the House and administration have expressed support for the municipal bond provisions.

House Ways and Means Committee Chairman Richard Neal, D-Mass., Told BDA he plans to push through an infrastructure package for his committee by late spring or early summer.

Neal also reiterated his support for specific provisions on municipal bonds such as tax-exempt prepayments, the expansion of PABs, the reinstatement of direct-payment bonds that would be exempt from sequestration and the increase in the cap for tax-free prepayments. small borrowers for the amount of tax exemption. bonds that they can issue in a year and remain eligible for sale to banks with favorable banking status.

U.S. Transportation Secretary Pete Buttigieg said many provisions on municipal bonds hold promise, such as increasing the federal cap on private activity bonds, returning a pay-out bond, and reinstating the tax-exempt early repayment.

“Having a leadership like that in administration, working with the leaders on the Hill, really helped point them in the right direction and really reassured that Bonds will get a good chance in the deliberations over the next few months. ”Bolton said.

Home Transportation and Infrastructure Committee Chairman Peter DeFazio, D-Ore., Backed Biden’s plan.

“In announcing this plan, President Biden took the conversations I had with him, Vice President Harris and Secretary Buttigieg, and he put those words into action,” DeFazio said. “The U.S. Jobs Plan will not only make bold and transformational investments in our nation’s transportation and infrastructure, it will do so with a focus on creating well-paying jobs, supporting U.S. manufacturing. , investing in rural and urban communities, and addressing the greatest challenge of our time, the climate crisis.

“I’m intrigued to see how the Hill reacts and I guess they’ll be looking to the fundraising part of that soon,” Bolton added.

The National Association of State Treasurers wants to discuss funding tools to support Biden’s infrastructure plans with the administration and Congress.

“We remain particularly focused on efforts to reinstate tax-exempt prepayment obligations as part of any infrastructure package going forward,” said Shaun Snyder, Executive Director of NAST.

Among the details of the plan, it would modernize 20,000 miles of highways, roads and streets, repairing thousands of small bridges along the way. Biden also wants to replace thousands of buses and rail cars, renew airports, and expand transit and rail to new communities. Biden proposed an increase of $ 115 billion to modernize highways, streets and bridges.

Biden’s plan also calls on Congress to invest $ 85 billion to modernize existing transit to meet passenger demand.

“This investment will double federal public transit funding, reduce the repair backlog and bring bus, bus rapid transit and rail services to communities and neighborhoods across the country,” they said. written.

Congress is also expected to invest $ 25 billion in airports, including funding for the Airport Improvement Program, or AIP, the Biden administration said, as well as $ 17 billion in inland waterways, coastal ports. , land ports of entry and ferries.

The American Association of Port Authorities supported Biden’s plan.

“Investments in port infrastructure support growing opportunities across the national economy and ensure continued global competitiveness,” AAPA said. “US ports look forward to working with President Biden and bipartisan leaders in Congress to advance significant investments in our nation’s infrastructure.

Airports Council International noted that the airports were underfunded, adding that this had created a backlog of $ 115 billion in projects.

“As we roll into the brighter days ahead, US airports are ready to take off,” said Kevin Burke, President and CEO of ACI-NA. “These much-needed funds will help America’s airports rebuild and create jobs that will support a vibrant 21st century economy.”

Clean water was another focal point of Biden’s sketch with a plan to phase out all lead pipes and service lines that can be paid for by investing $ 45 billion in the State Revolving Fund for the drinking water from the Environmental Protection Agency and in improving water infrastructure for the Nation Act.

State revolving funds act as infrastructure banks by providing low-interest loans for water infrastructure projects. As the money is returned to the state revolving credit fund, the state makes new loans for other projects. These recycled payments of loan principal and interest income allow the government fund to “spin” over time.

Biden wants to invest $ 100 billion to modernize and build new public schools, through direct grants and $ 50 billion in bonds.

The Government Finance Officers Association was encouraged by the fact that Biden’s proposal seeks to invest in public transit, water and broadband.

“We recognize that the process of turning this proposal into legislation has yet to happen. We therefore hope that as this effort begins, our federal partners recognize the importance of protecting tax-exempt municipal bonds given that this is a tool with a long history in infrastructure investments. . Said Michael Belarmino, senior policy adviser to GFOA.

Biden will speak more about his plan later Wednesday at an event in Pittsburgh. “The President looks forward to working with Congress and will come up with additional ideas in the coming weeks to reform our tax code so that it rewards work, not wealth, and ensures that the highest income earners pay their fair share, ”his administration wrote.

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Group of planes loan plane for exhibit at Western Nebraska Regional Airport | Aeronautics Wed, 07 Apr 2021 23:14:12 +0000

Jeff Robbins, right, and David Kiraly, are members of Local 608 of the Experimental Aircraft Association. This Rutan Long EZ single-seater aircraft is on loan for display at the Western Nebraska Regional Airport. It was built by local businessman Joe Ostry in his basement and garage.

JERRY PURVIS / Star-Herald


The Western Nebraska Regional Airport has a new static display in the Main Terminal, a homemade Experimental Aircraft Association (EAA) Chapter 608 local aircraft.

Jeff Robbins, EAA member and airport board member, gave an overview of the aircraft and the association to his fellow board members at their monthly meeting.

“Our organization started in 1953 in Wisconsin to develop and develop the pleasure of flying,” said Robbins. “Today, members still build planes and restore old planes. Just as county fairs promote the fun of farming, so do theft. “

Each June, the local EAA chapter helps organize the Airport Appreciation Day, which includes a pilot fly-by around the Panhandle, static displays of planes of all sizes, to other demonstrations. .

“Our Appreciation Day is all about getting people here to see what the airport has to offer the community,” said Robbins. “We want people to familiarize themselves with flying.”

During Appreciation Day, the local EAA Chapter also offers Young Eagle flights. The free program gives children 17 and under their first flying experience.

The goal of the Young Eagles program is to get young people interested in aviation as a career while pushing the fun side of the industry.

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Covid propels governments into the cockpit with the help of a flag bearer Wed, 07 Apr 2021 23:14:12 +0000

Decades after being freed from government control, many of Europe’s largest airlines are being forced back into state arms by the pandemic.

With air travel still showing no signs of recovery in the region, carriers may have to face their saviors as powerful shareholders for some time to come. Air France-KLM on Tuesday became the last to secure a € 4 billion ($ 4.7 billion) bailout that will see the French government reappear as its largest shareholder with a stake of until 30%. The flag bearer joins Germany Deutsche Lufthansa AG, Alitalia SpA, Sweden SAS AB and TAP Air Portugal to see a greater state presence as a result of the aid sought to tackle one of the industry’s worst crises.

Airlines have been among the hardest hit by Covid-19, which has decimated air travel. Even before the last setbacks, the The International Air Transport Association said carriers would need an additional $ 80 billion in government money this year. The current concern in Europe is that demands from state shareholders risk skewing the industry in ways that would impact everything from cost reductions to route decisions and ticket prices.

“While the bailout of airlines in the context of the Covid-19 crisis is certainly a legitimate emergency measure, it is suspected that this could serve as an excuse to revert to public carriers serving political agendas, at least for some. governments, ”said Sascha Albers, professor of international management at the University of Antwerp.

Condition check

Rescues mean countries increase stakes in airlines

Source: Bloomberg data, airline filings

Before Air France-KLM’s announcement on Tuesday, European Union states had funneled at least 23 billion euros into airlines through loans, guarantees, capital injections and subsidies.

Airlines around the world have received state aid. In June, Cathay Pacific Airways Ltd. sold preferred shares and warrants to the Hong Kong government convertible into a stake in the airline. Singapore Airlines Ltd. raised funds through a rights issue backed by a state investor Temasek Holdings Pte. In the United States, the government has made about $ 50 billion in aid available to carriers since the start of the pandemic in the form of grants and loans to cover personnel costs.

Job cuts

European governments find themselves with serious stakes more than two decades after the start of the privatization of the region’s airlines – British Airways in 1987, followed by Lufthansa in 1997 and Air France in 1999. – cost of carriers, EasyJet Plc and Ryanair Holdings Plc.

To prepare for the post-pandemic era, airlines will need to carefully consider their cost structures and organization. In Europe, with strong unions in former public carriers, political interference in business operations can be tempting for some governments, especially with issues such as layoffs, analysts said.

“Many governments still see a national carrier as part of their overall political vision,” said John Strickland, who heads JLS Consulting in London. “It is not surprising to see new government investments in Air France but the key question is whether this will lead to attempts to impose political direction on the group’s management beyond their business objectives.

In France, a country with a long history of State intervention in the corporate world and a long-standing participation in Air France-KLM, the government was quick to offer guarantees that it would ensure the carrier survival.

“Air France is a major and strategic company for France,” Finance Minister Bruno Le Maire said in an interview with Bloomberg TV on Wednesday. “I would not say that this is the last support we are providing to Air France.”

Public interest

Even in the Netherlands, which was more wary – slower to grant loans last year and not offering additional help on Tuesday – the government admitted the airline was too important for the country to go bankrupt.

“The AF-KLM network is important to our economy and the two airlines indirectly facilitate a lot of jobs,” said the Minister of Finance WopKe Hoekstra wrote on Twitter on Tuesday. “It is in the public interest of France and the Netherlands that the airlines Air France and KLM go through this crisis.”

Germany’s 20% stake in Lufthansa following its multi-a billion-euro bailout has plunged the state back into the heart of a company privatized with fanfare two decades ago. Berlin also loaned billions to Condor and TUI AG to fly them through the coronavirus storm.

“For many airlines, the lack of government support could ultimately spell disaster, especially for the major carriers.” said Shukor Yusof, founder of aviation consulting Endau Analytics.

Strict conditions

The European Commission has been under pressure to authorize aid and save the region’s economy. It’s respected, but comes with stringent conditions that make it less comfortable for carriers – forcing them to abandon airport slots, limiting executive pay and banning acquisitions in some cases. It is also playing hard bullet on Italy’s plan to create a new, smaller transporter from the ashes of Alitalia.

All this has not stopped discount carriers such as Ryanair and Wizz Air Holdings Plc to cry foul. They argue that the bailouts will distort the market and create an unfair advantage.

Ryanair, which Wednesday warned it will struggle to return to profitability this year, has filed more than a dozen legal appeals against the EU approvals. He argues that such help discriminates against it unfairly and will help rivals come out stronger, lower tariffs and swallow up others.

In February, the Irish company suffered a setback in the first two appeals, when the bloc’s lower court ruled that the French and Swedish grants did not violate EU state aid rules. He has vowed to appeal his first legal losses to the EU’s highest court.

Slot machine war

In France, Air France is being asked to give up 18 slots at Orly airport. Ryanair says that is nowhere near enough to allow others to offer a competitive challenge to its dominance. Air France-KLM has around 1,000 slots at Charles de Gaulle and Orly, the two airports in the Paris region.

In Germany, bailout terms will do little to loosen Lufthansa’s iron grip on the country’s most lucrative airports and travel routes. While the Commission has asked Lufthansa to leave 24 slots at its two main German hubs, take-off and landing rights cannot go to companies that already have bases at these airports, preventing Ryanair from expanding to Frankfurt and Easyjet in Munich.

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US repays government loan with AAdvantage funding Wed, 07 Apr 2021 23:14:12 +0000

American Airlines has repaid its government loan. Released in the fall, the carrier leveraged its AAdvantage loyalty program in the private market to raise a whopping $ 10 billion in funding. The airline has touted this funding as one of the reasons it doesn’t need to seek cash – the $ 10 billion in new funding will go a long way in strengthening the airline’s liquidity position.

American Airlines repaid its government loan with funding backed by the AAdvantage loyalty program. Photo: Vincenzo Pace | Simple theft

American Airlines AAdvantage Financing

On March 14, two simultaneous events occurred. First, American Airlines completed its offering of $ 3.5 billion senior secured 5.5% notes due 2026. The airline also completed its $ 3 billion senior secured offering. guaranteed at 5.75% maturing in 2029. Another simultaneous transaction took place. American Airlines has entered into a $ 3.5 billion term loan facility.

Interest payments on the Notes will begin on July 20, 2021. The principal outstanding on the Notes maturing in 2026 will be repaid in quarterly installments of approximately $ 292 million on each payment date beginning July 20, 2023. The principal overdue Notes maturing in 2029 will be repaid in quarterly installments of $ 250 million on each payment date, commencing July 20, 2026.

Payments will be made quarterly, on January 20, April, July and October of each year starting this year. Interest will also be paid on these days.

American 787-9
The financing consists of two note issues, one at $ 3.5 billion and one at $ 3.0 billion, and a loan facility of $ 3.5 billion, for total financing of $ 10 billion. Photo: Vincenzo Pace | Simple theft

The $ 3.5 billion term loan facility will mature on April 20, 2028. Its interest rate is equal to the London Interbank Offered Rate (LIBOR) (with a minimum of 0.75% per annum) plus a margin of 4.75% per year. American will repay the outstanding principal on the loans in quarterly installments of $ 175 million on each payment date, which is synchronous with the payment dates listed above.

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The American repays his government loan

Along with this private market financing, American Airlines repaid its loan from the US government. In September of last year, the American borrowed $ 550 million a term loan facility provided under the CARES (Coronavirus Aid, Relief, and Economic Security) law adopted by the US government.

As part of the loan, the carrier had to issue warrants to the US Treasury Department to buy up to nearly 4.4 million shares at $ 12.51 per share. With the early repayment of the loan by American, the agreement was terminated.

The government loan had a total of $ 7.5 billion available to Americans. Photo: Vincenzo Pace | Simple theft

The total government loan amount made available to American Airlines $ 7.5 billion. However, the carrier had used its AAdvantage loyalty program as collateral for this total term loan facility. These loans were distinct from the payroll support that American Airlines received.

CEO Doug Parker said the following when repaying the loan:

“Americans could not have borrowed $ 7.5 billion against our AAdvantage program during the uncertainty of 2020, but the CARES Act provided the bridge that allowed us to effectively raise $ 10 billion in public markets over early this month. We wouldn’t be in the position we find ourselves in today without this bipartisan support, and it’s something we will never take for granted.

“We recognize that we have a responsibility to continue to safely meet our nation’s transportation needs, and we are pleased to have provided a solid return to taxpayers on this loan.” We are delighted to support the reopening of the economy as our citizens and neighbors around the world return to the skies.

Doug parker
American Airlines CEO Doug Parker. Photo: Getty Images

Why repaying the loan makes sense

American is joining with its other big competitors, United and Delta, in leveraging its loyalty program to raise cash. Delta Air Lines, in fact, raised $ 9 billion through the offer. Looking at this, as the American could only leverage his program to raise $ 7.5 billion from the government, the carrier saw an opportunity. American originally planned to raise $ 7.5 billion through AAdvantage funding but later that figure reached $ 10 billion.

Under the new financing, American Airlines has access to additional financing of $ 2.5 billion, and the overall financing is payable later, which means less debt obligations in 2025. The term loan facility Government guarantee would have matured and should have been paid in a single payment in 2025, compared to the spread of financial contributions over a period of time in this case.

American Airlines Chicago O'Hare
The American is still in rough times, but as a recovery begins to formulate, the airline is finally in a position where it isn’t going out and is specifically looking for more money. Photo: Getty Images

As American Airlines implements its “green flag plan” to get out of the crisis, this additional funding confidently led her team to say that they are not currently going out in search of more cash.

What impact will this have on AAdvantage members?

AAdvantage members are not expected to see an impact due to the new funding agreement. Members will still be able to keep their miles, some of which are subject to expiration dates, and use them as they see fit. The winning rates will not change due to the funding either, but American may adjust them as its partnerships are adjusted.

AA JEtblue
Passengers should still be able to earn and burn miles on American and its partners. Photo: Vincenzo Pace | Simple theft

Basically, the customer side of the loyalty program will not change as a result of this funding. American still has the option of adjusting parts of the program, as facilitating obtaining elite status or by adding new partners with which customers can earn and burn miles.

Do you think American’s private fundraising using the AAdvantage program was a good idea? Let us know in the comments!

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Air France-KLM obtains $ 4.7 billion in state aid to survive Wed, 07 Apr 2021 23:14:12 +0000

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Air France-KLM will receive up to 4 billion euros ($ 4.7 billion) in a French bailout that may not be enough to see the beleaguered carrier through the still raging pandemic.

The package will see the French government reemerge as the biggest investor with a stake that could be just under 30%. It comes after months of difficult negotiations between French and Dutch shareholders, and the European Commission, which has given its blessing. The plan aims to give the carrier some leeway as it faces one of the worst crises to hit the airline industry.

With discussions still underway for possible additional financial assistance from the Dutch state as well as measures still unspecified for the whole group in the coming year, “it is not the end of actions to strengthen the balance sheet, ”Bernstein analyst Daniel Roeska said in a note.

France’s long-awaited package comes amid a Covid-19 outbreak in the region that has forced new lockdown measures in the country and led the UK to sway on a May 17 goal to reopen for overseas travel. The pandemic has been particularly brutal on European airlines and prompted further rescues, with the German government taking a 20% stake in Deutsche Lufthansa AG and Italy completely nationalize their bankruptcy Alitalia SpA.

For Air France-KLM, “this is the first step” in repairing the unprecedented financial damage caused by the pandemic, financial director Frédéric Gagey said in a phone call Tuesday with journalists. The support for Air France “should be followed by other equity measures” to allow Air France-KLM to return to a normal level of debt, he said.

Shares remained virtually unchanged at 2:04 p.m. in Paris.

Plan details

The French plan aims to ease the carrier’s heavy indebtedness, which exploded last year when the two shareholder governments granted a total of € 10.4 billion in direct loans and state-guaranteed guarantees in response to the initial virus wave, when air traffic has come to a virtual standstill.

France will convert its direct loan of 3 billion euros into hybrid instruments. The airline will also carry out a capital increase of until 1 billion euros. The transaction will bring cash and lead to a reshuffle of the airline’s shareholding structure.

The French state will participate in the recapitalization “while maintaining its participation strictly below 30% of the share capital and voting rights,” the airline said in a press release. declaration. Shareholder China Eastern Airlines will also participate but will keep its participation below 10%. Delta Airlines, which owns 8.8%, and the Dutch state, which has around 14%, will not subscribe.

France does not intend to own more than 29.9% of the capital of Air France-KLM or to take control of the carrier, the French and Dutch ministers said in a statement declaration. A Dutch package is still being studied and negotiated, they said.

“The urgent need for KLM is less urgent,” said Dutch finance minister WopKe Hoekstra wrote on Twitter, telling Parliament in a letter that the Dutch stake could drop to around 9.3% after the capital increase.


France and the Netherlands have often been at odds since the Air France and KLM merger in 2004, with the Dutch branch long feeling French control, lower Air France profitability and history of labor disputes. .

The sneak acquisition by the Netherlands of a stake in the carrier just over two years ago sparked a unprecedented spitting. Although the move blinded Paris and exposed the Netherlands’ intention to exert more influence over Air France-KLM, it is not yet clear how this will work when France increases its stake.

By granting permission for the aid package, the EU secured conditions to offset antitrust concerns. CEO Ben Smith called talks with the Commission “long and arduous,” but said the 18 daily slots the airline is expected to give up at Orly airport, outside Paris, to competition will not harm its plans to extend its low-cost. Transavia arm.

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United Airlines tells staff it is hiring hundreds of pilots for travel recovery Wed, 07 Apr 2021 23:14:12 +0000

United Airlines Boeing 737 Max 9 aircraft lands at San Francisco International Airport.

Justin Sullivan | Getty Images

United Airlines Thursday, told staff it would soon start hiring hundreds of pilots – a process the airline was forced to stop when the coronavirus pandemic devastated travel demand last year, according to an e- internal mail reviewed by CNBC.

The Chicago-based airline is the first of major U.S. airlines to announce it will resume hiring pilots, the latest sign it is preparing for a recovery. The airline will start by hiring around 300 pilots who had conditional job offers or training planned last year before the airline canceled the hiring.

Over the past year, airlines, including United, have urged thousands of workers to agree to buyouts, early retirement packages and time off as they rush to cut costs during the pandemic. United and its pilots’ union – the Air Line Pilots Association – reached an agreement to avoid time off with its pilots last year, including reduced hours for some junior pilots, although these inferior guarantees are suspended due to federal aid.

Congress included a third round of federal payroll support for airlines that bans job cuts until September 30 as part of the $ 1.9 trillion coronavirus aid package last month. As of March 2020, lawmakers have set aside $ 54 billion in subsidies and loans for airlines to pay workers during the crisis.

U.S. airlines lost $ 35 billion last year, but expect a steady increase in bookings as more of the public are vaccinated and feel more comfortable getting on planes.

“With increasing vaccination rates and the trend in travel demand on the rise, I am delighted to announce that United will resume the driver recruitment process which was interrupted last year,” wrote Bryan Quigley , United’s senior vice president of flight operations, in a staff note Thursday. , which was viewed by CNBC. “We’re going to start with the 300 or so pilots who had a new hiring class date that was canceled, or who had a conditional job offer for 2020.”

Demand for air travel has recently picked up. The Transportation Security Administration screened an average of about 1.2 million people a day last month, up 15% from last year, when the pandemic and stay-at-home orders halted nearly every day. trips.

Volumes last month are still below half of March 2019 levels, with business and international travel still largely stalled, but demand for leisure is starting to climb. United CEO Scott Kirby told an industry conference on Wednesday that domestic demand for leisure had almost fully recovered.

“I am especially happy that we were able to protect our people during this disaster,” Todd Insler, president of the United Chapter of the Airline Pilots Association and United captain said of the pandemic. He said if the company had been granted his leave it would have been much more difficult to capitalize on the rebound in travel.

Like United, other carriers are starting to see a need for additional staff, especially pilots, whose training is expensive and time consuming.

Spirit Airlines last month, said it had resumed hiring pilots and flight attendants, while other budget carriers Allegiant Air and Sun Country Airlines also expect to hire this year.

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Relief bill will save tens of thousands of airline and airport jobs Wed, 07 Apr 2021 23:14:12 +0000

The pandemic relief bill that President Biden signed Thursday afternoon will protect tens of thousands of aviation jobs, providing a lifeline for an industry that is likely to struggle for some time even as vaccinations accelerate.

After Congress this week approved the legislation, which includes $ 14 billion for airlines and an additional $ 9 billion for airports and other businesses, American Airlines and United Airlines told 27,000 employees they could ignore the notice of leave they had received in recent weeks. Airlines had issued the warnings, which are legally required ahead of the sweeping cuts, as they prepared to take the leave at the end of this month, when a first round of federal aid expired. The new bill extends this assistance until September.

“If you have one of those WARN Act notices that we sent out in February, tear it up,” Doug Parker, CEO of American, said in an Instagram video. “There will be no time off at American Airlines in April and, with the rise in vaccinations, I hope never again.”

The relief package, which Mr Biden says is necessary to protect the economy and workers and which many Republican lawmakers have criticized as excessive, is the third to provide funding to keep airline workers employed since. the start of the pandemic. Last March, Congress granted passenger airlines $ 25 billion in loans and an additional $ 25 billion in wage subsidies. He renewed payroll funding in December with an additional $ 15 billion and again this week.

Biden’s relief bill also sets aside $ 1 billion for aviation contractors and $ 8 billion for airports to help them operate normally, limit the spread of the virus, pay workers and to repay their debts. In return for the aid, airports, contractors and airlines are barred from major layoffs until September and have been forced to make further concessions.

The aviation and travel industry has been among the hardest hit by the pandemic. A year ago, passenger numbers began to drop as the virus spread widely and government officials restricted or discouraged travel. By early April, the number of people who fly each day had fallen 96% from the previous year.

Since then, travel has recovered somewhat. On average, around one million people per day were screened at airport security checkpoints over the past week, down about 46% from the same period in 2019, according to Transportation data. Security Administration.

Yet airlines collectively lose $ 150 million a day on average, according to Airlines for America, an association that represents American, United and the other major carriers. Widespread vaccine distribution has given the industry hope for a rebound, but airlines are expected to continue to lose money through the summer, and most industry analysts and executives are not sure. don’t expect travel to return to 2019 levels until 2023 or 2024.

In a report released Thursday, Fitch Ratings said it now expected a slower first-half air travel recovery in the United States and Canada than it had previously forecast. But the second half of the year could see a “pretty robust rebound,” Fitch analysts said, citing recent surveys that show many people are eager to travel once they feel safe.

“Fitch thinks it may not be necessary to achieve full herd immunity to at least start bouncing travel,” the analysts wrote. “On the contrary, a drop in death rates caused by vaccine coverage among vulnerable populations may be enough to ease restrictions on the pandemic and increase the comfort of travelers.”

In the meantime, airlines are doing what they can to get people to book tickets, set up direct flights to popular beach destinations, cut fares and promise strict enforcement of security procedures.

But obstacles remain. This week, the Centers for Disease Control and Prevention said people who had been fully vaccinated could safely engage in a wider range of activities than those who had not, including congregating in small groups at home without masks or social distancing. To the frustration of airlines and other industry leaders, the agency continued to recommend that everyone avoid travel.

Airlines have argued that there is a low risk of in-flight virus transmission due to high-end cabin ventilation systems, strict disinfection practices and stringent mask requirements. But travel has nonetheless facilitated the spread of the virus around the world.

“We know that after mass travel, after vacation, after vacation, we tend to see an increase in cases,” CDC director Dr. Rochelle Walensky said on MSNBC Monday night. “And so, we really want to make sure – again with only 10% of people vaccinated – that we limit travel.”

Widespread distribution of vaccines will not solve all of the industry’s problems either. It could be at least a year, if not much longer, before business and international travel, which tends to be much more profitable for airlines than leisure bookings, starts to bounce. Some people have speculated that business travel could be permanently reduced because salespeople and other professionals have become accustomed to video conferencing and have come to realize that many trips they made were a waste.

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Airlines Offer Crown Jewel Loyalty Programs To Bond Market Wed, 07 Apr 2021 23:14:12 +0000

When the coronavirus pandemic brought travel to a halt, airlines turned to whatever sources of funding they could find – even their previously untouched loyalty programs. Whether this is a positive development for the industry depends on who you ask.

United Airlines Holdings Inc., Delta Air Lines Inc. and American Airlines Group Inc. have raised more than $ 25 billion through debt transactions supported by their traveler loyalty programs. Americans $ 10 billion supply, a combination of bonds and loans, was the largest ever for an airline and reportedly attracted $ 45 billion in orders from yield-hungry investors. The carrier used the proceeds to repay a pandemic US Treasury loan that had more onerous terms. Spirit Airlines Inc. and Hawaiian Holdings Inc. have raised an additional $ 2.05 billion supported in part by their loyalty programs.

It is all the more incredible that no airline has attempted to monetize your loyalty program that way until the pandemic. At first glance, this looks like an incredible feat of ingenuity from Wall Street. United was the pioneer of the fundraising vehicle with help from Goldman Sachs Group Inc. after a previous separate debt deal backed by aging planes had to be scrapped due to investor concerns about the value of this collateral amid a potential glut of retired jets. Loyalty programs, on the other hand, generate a lot of money and in theory tend to be less volatile than traditional airline ticket revenues or the underlying fleet value.

All it takes is a quick glance at the yields on these bonds to see that investors place a lot of importance on loyalty programs. United’s MileagePlus debt valued a 7% return in June, compared to the 11% return that had been announced in informal pricing talks a month earlier, just as Warren Buffett said Berkshire Hathaway Inc. had abandoned its stakes in a handful of airlines. In September, Delta issued an eight-year debt that returned just 4.75%. Eight-year US bonds were valued this month at 5.75%, mainly due to the recent rise in US benchmark yields. The spread between T-bills was only 20 basis points wider than Delta’s, even though Moody’s Investors Service rated US securities four rungs lower.

Mileage credit redemptions fell by two-thirds at American in 2020, in line with declining overall passenger revenue, according to the company’s annual report. But the revenue associated with the marketing component of the loyalty program – defined as the use of intellectual property, including the American brand, advertising, and access to the loyal member list – has only declined by one. about fifth. According to a report by Savanthi Syth, analyst at Raymond James Financial Inc., the average member of AAdvantage has been participating in the loyalty program for 10 years, and 40% of users have income over $ 100,000. This type of stability helps explain why credit rating companies are willing to rate these debt transactions higher than the companies themselves.

Loyalty programs offer “a lot of what’s good for airlines without what’s bad for airlines,” Syth said in a telephone interview. But if airlines offer their crown jewel to creditors, what is left for equity investors? Retail traders have piled on these stocks as pandemic shows signs of easing: US exchange-traded fund Global Jets (ticker: JETS) topped $ 4 billion in assets this month, an increase of over 2,600% from the previous year.

Some airlines, including Air Canada and Gol Linhas Aereas Inteligentes SA, have created their loyalty programs with the aim of monetizing these lucrative programs and creating shareholder value. But the independent oversight of loyalty programs has created an inherent conflict of interest and deprived airlines of some of the benefits of having these systems in the first place. The main idea of ​​the airline is to retain customers, but independent programs may seek to maximize profits by selling mileage credits to third parties such as credit card partners. So Air Canada reabsorbed its loyalty program in 2019 and Gol try at do the same with its Smile loyalty system. Rather, monetizing loyalty programs through leverage offers financial benefits without the operational headaches, but there is still a conflict of interest inherent in this transaction as shareholders have fewer rights to these lucrative assets.

“For a stock holder, even airline asset backed securities are a problem,” Syth said. “If you can’t pay the bondholder, the plane will be blown away and you will have less value. The same evaluation should be done with these programs. “

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Western Global Airlines pilots join union Wed, 07 Apr 2021 23:14:12 +0000

The National Mediation Council on Tuesday certified the Airline Pilots Association as the negotiating representative of the 180 pilots of the all-cargo carrier Western Global Airlines. The pilots were previously not represented.

Sixty-nine percent of the attendees voted to join the world’s largest pilots union.

Western Global Airlines, based in Estero, Florida, is a 6-year-old company that flies planes under contract to airlines and logistics companies. Its fleet consists of MD-11s and Boeing 747-400 freighters. Customers include UPS, DHL Express, Postal Service, Amazon, and the Department of Defense.

The company received $ 34 million in federal COVID relief payments in last year’s CARES law, along with millions of other payroll protection program loans, which House Democrats complained about was money the company didn’t deserve because that the pandemic had not made him lose business.

In 2019, logistics company Flexport abandoned Western Global as charter operator due to service issues.

On a related note, Aloha Air Cargo runway workers last week ratified a new contract that includes beneficial wage and working rule changes, said Clazy Griswold, the Air Division coordinator. for Teamsters Local 986. Negotiations were negotiated by the National Mediation Council.

“In difficult times, we did well,” he says.

Teamsters Local 986 represents approximately 200 Aloha Air ground officers and pilots on separate contracts. Aloha Air Cargo, a subsidiary of Northern Aviation Services, operates a Boeing 767 and a 737 between the Hawaiian Islands, as well as two routes connecting Honolulu to Los Angeles and Seattle.

Click here for more FreightWaves / American Shipper stories by Eric Kulisch.

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