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29 April 2020
With the aviation sector badly hit by the global COVID-19 crisis, AviaPro consultants are looking through the uncertainty at what lies ahead for our industry, arguably one of the hardest-hit by the crisis.
Around the world, air carriers have been making difficult choices. Some are undergoing administration to stave off insolvency, such as Virgin Australia; others are going into insolvency, like German Airways, which is looking at how it will restructure.
The bad news keeps adding up. According to AviaPro’s Head of Industrial Services, Jorge Abando, over the past month there has been an increase of surplus grounded aircraft with no planned entry into service at the other end.
“We’ve also seen a rise in transactions involving used aircraft being sold for parts, which adds pressure on PMA-holding third party manufacturers”.
- Jorge Abando, Head of Industrial Services, AviaPro Consulting
In parallel, lessors are under pressure from operators when it comes to negotiating lease payment deferrals. Some lessors are in turn canceling orders as they restructure their own order books. One example is the B737 Max order cancellations by GE Capital Aviation Services and the Chinese Development Bank.
While aircraft values have fallen (by up to 16% for regional aircraft) along with aircraft rentals, some good news is to be had.
Airbus has initiated a new e-Delivery process which it says can be sustained post Covid-19, with improved workflow efficiencies, greater flexibility and increased transparency -- “all of which were designed to raise the overall customer experience in a more environmentally friendly way”, adds Jorge Abando.
IN THE NEWS:
As the COVID-19 crisis subsides across China, the Chinese domestic aviation market is showing signs of a slow recovery. Domestic flights rose by a fifth in March versus February, although flights were still down from pre-outbreak levels.
According to Johns Hopkins University, as of April 29th China had 83,940 total confirmed cases of COVID-19, with 78,455 cases declared as recovered.
Reuters reports that Civil Aviation Administration of China official Jin Junhao said the number of flights climbed by 20.5% in March to reach 6,533. Overall, however, domestic flights are down 42% compared to pre-COVID-19 level.
Read the article by Reuters’ Stella Qiu and Jamie Freed here.
Do you have questions about how the COVID-19 pandemic is impacting your company, and what actions you can take to minimize negative impacts while preparing for the global economic recovery? Please write to us at email@example.com, and let’s start a conversation.