Philippine Airlines Files For Bankruptcy

Philippine Airlines has announced its intentions to file for bankruptcy in the US. The struggling Manila-based flag carrier will use the Chapter 11 process as an attempt to deal with more than $2 billion of debts. The airline will also make a parallel bankruptcy filing in its home country, as well as implementing a restructuring plan to trim its fleet.

Parallel bankruptcy filings

2021 is Philippine Airlines’ 80th year of operations. However, the carrier has not been able to celebrate eight decades of service in the way that it might have liked, owing to the challenges of the present global health crisis. The pandemic has been a challenge for carriers worldwide, and the airline announced this morning that it would be filing for bankruptcy.

As seen above, the aforementioned bankruptcy filing will take the form of a US Chapter 11 restructuring program. However, the Manila Bulletin reports that Philippine Airlines will also mack a parallel filing back at home. It is hoped that such procedures will help the struggling carrier alleviate its debts, which presently stand at more than $2 billion.

Philippine Airlines gained a majority approval from its stakeholders to initiate the filings. According to Bloomberg, 90% of the carrier’s lenders approved the plan. A website set up by the carrier to outline its proposed recovery explains that Chapter 11 “will enable PAL to emerge with fresh capital, lower debt, and a sturdier financial foundation for the future.”

The Chapter 11 restructuring now gives us the opportunity to seal in the recovery and get back to a firm financial footing once and for all.  We’re hopeful.  We’re very encouraged that PAL is undertaking a “pre-arranged” Chapter 11 process where we go in with the strong support of our major creditors and the commitment of our shareholders, unlike most Chapter 11 scenarios.”

Fleet restructuring efforts

Part of the restructuring is set to impact the carrier’s fleet. This was on the cards even before the bankruptcy filings, with Simple Flying reporting in May 2021 that Philippine Airlines was looking to cut the number of Airbus A350s and Boeing 777s that it operates. According to data from ch-aviation.com, the carrier’s present fleet consists of 59 aircraft.

Of these aircraft, just 27 are active, with a majority of 32 presently waiting in the wings. Bloomberg reports that the carrier’s restructured fleet will be 25% smaller. Meanwhile, the airline’s recovery plan has set a target of at least 20 aircraft going forward. It will be interesting to see which aircraft stay, and what this will mean for PAL’s network.

Flights to continue

It is important to note that, despite the serious nature of bankruptcy filings, Philippine Airlines will be able to continue its operations for the time being. It explains:

We will continue to fly and to serve our customers throughout this process:  it is business as usual for us.PAL continues to increase domestic and international flights as travel demand recovers with the easing of travel restrictions, and we will roll out new products and services that help make flying safer and more convenient.”

This is because the nature of Chapter 11 means that companies that have made such bankruptcy filings can continue operating while the proceedings progress. This will help Philippine Airlines to avoid widespread cancellations despite its financial difficulties.

n any case, the carrier, which received a $296 million cash injection last May, will likely come out of its bankruptcy proceedings as a rather smaller and different airline.

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Source https://simpleflying.com/philippine-airlines-bankruptcy/

Through The Years: Kam Air’s Diverse Fleet

The scenes at Kabul Hamid Karzai International Airport are horrifying, and it is impossible to know just how awful it is when so far away. Yet ch-aviation.com reports that Afghanistan’s largest airline, Kam Air, is in talks with the Taliban to restart operations. Although it is a highly sensitive matter and timeframes are anything but certain, we look at Kam Air, whose first flight was in December 2004. Since then, 20 aircraft types have been used.

An extremely mixed fleet

Kam Air has operated an extremely diversified fleet in its 17-year history, as would be expected under the circumstances and where mainly wet-leased aircraft were the order of the day. The current year has seen the A340-300 (previously used by Philippine Airlines and AirAsia X) used, along with the B737-300, B737-500, B767-300ER, and ATR-42.

The carrier’s first widebody, a B767-200ER leased from defunct Kyrgyzstan airline Phoenix Aviation, was used in 2005 from Kabul to Dubai. The -200ER was again used from 2007 until 2018, the year the A340-300 entered service. The only B767-300ER appeared in 2020 and 2021.

The MD-87 had the most flights

Across Kam Air’s 17 years, over one-quarter of all passenger flights (27%) were by the MD-87, a type used between December 2012 and October 2019. This is a finding from analyzing schedules using data from experts Cirium.

Aircraft used over the past 17 years

The following lists all aircraft used in order of total flights, led by the MD-87. Note the use of the Antonov 24s and 26s, along with the B727, Saab 340, and Fokker 100. The latter, an important niche regional jet, was used domestically between 2016 and 2017. While we know how often passenger aircraft were used, we cannot be sure about Kam Air’s freighters. As such, they’re shown at the bottom.

  1. MD-87
  2. B737-300
  3. MD-82
  4. B737-200
  5. ATR-42
  6. A320
  7. A340-300
  8. Saab 340
  9. MD-83
  10. AN-24
  11. B767-200ER
  12. B737-500
  13. B737-800
  14. B737-400
  15. B767-300ER
  16. Fokker 100
  17. AN-26
  18. B727
  19. B747-200F
  20. DC-8F

23 destinations from Kabul in 2021

This year, Kam Air’s network was almost fully from Kabul, with the domestic links to Mazar-i-Sharif, Herat, and Kandahar the most-served with over six in ten (63%) flights, Cirium indicates. The top-10 routes are shown below.

  1. Kabul-Mazar-i-Sharif
  2. Kabul-Herat
  3. Kabul-Kandahar
  4. Kabul-Delhi
  5. Kabul-Islamabad
  6. Kabul-Istanbul
  7. Kabul-Tashkent
  8. Kabul-Faizabad
  9. Kabul-Zaranj
  10. Kabul-Jeddah

Multiple aircraft per route

Most routes saw multiple aircraft being used, perhaps right-sizing capacity with demand or based on aircraft availability. The 2,237-mile service from Kabul to Istanbul was no exception, with the A340-300, B767-300ER, B737-300, and B737-500 all deployed this year. With a block time of up to six hours to Turkey, the route is among the longest by Classic Boeing 737s.

Source https://simpleflying.com/kam-air-diverse-fleet/

United Wants To Do More CRJ550 Flying As It Seeks To Increase Gauge

United Airlines knows it has to rebuild and restructure its route network in the post-crisis world. One of the airline’s biggest goals, as domestic flying comes back stronger than international flying, is to increase its systemwide gauge. The airline has lagged a bit in terms of its domestic network, so the carrier wants to increase capacity and increase its usage of the premium CRJ550.

United’s gauge goals

One of the priorities for United is to increase its gauge. Andrew Nocella, Chief Commercial Officer at United, stated the following on the airline’s fourth-quarter earnings call:

“We also plan to get back on track with enhancing connectivity in our mid-con hubs and push aircraft gauge up as we retire our single-class 50-seat jets. While domestic margins may be under more pressure in the next cycle relative to the last, we intend to offset that pressure with changes to gauge and connectivity, a measurement we trail our key competitors on by a substantial margin.” 

Gauge increases make sense for United out of its mid-continent hubs. Mr. Nocella specifically named Denver and Houston as two mid-continent hubs that outperformed other hubs in the fourth quarter, which does not come as a surprise.

In the midst of the ongoing crisis, most of United’s traffic is domestic. And, for domestic connections, Denver and Houston are important hubs for the carrier. At both of these hubs, United is the only full-service carrier with a massive hub operation, and they are ideally placed for East-West and some North-South connections. Chicago is another United hub that works well.

United Airlines has a large fleet of over 800 planes. However, in terms of seating configuration, United’s domestic fleet is skewed more toward smaller aircraft. This includes the Airbus A319, A320, Boeing 737-700, and 737-800. The airline also has Boeing 737 MAX planes that are expected to resume commercial flying in February.

Increasing CRJ550 usage

On the regional side, United Airlines is also skewed more toward small regional jets such as the CRJ200 and ERJ145. However, it has been moving away from those in recent years with plans to take on more Embraer E175 aircraft, and taking some CRJ700s and turning them into CRJ550s.

Adding more CRJ550s will not necessarily increase the airline’s gauge. Still, it will offer the airline, which is limited by its contract with pilots as to the number of larger regional jets it can fly, a chance to put 50-seaters in markets that require a premium cabin. The CRJ200s and ERJ145s did not offer a premium cabin onboard, making United less competitive in certain markets, such as Fayetteville/Bentonville in Arkansas, where retail giant Walmart is headquartered.

Mr. Nocella highlighted increasing CRJ550 use as one of the airline’s investment goals. The others included continuing Polaris cabin retrofits to standardize the airline’s products, enhance digital innovations, increase overhead bin space, and more.

Strengthening a domestic network

Ultimately, United Airlines has lagged behind its competitors when it comes to its domestic network. The airline has the most international exposure of any major US airline, and it is bullish on the return of international flying. However, it does know that it will need to rely on its domestic network to help make that return profitable sooner rather than later.

Structurally, United Airlines has three excellent domestic mid-continent hubs that work well for domestic connections and continue to outperform other system hubs.

ts coastal hubs in Newark, Dulles, San Francisco, and Los Angeles are better suited for providing passenger connections to the airline’s international long-haul operations. These airports will see some increased gauge to the scale of international growth but expect mid-continent hubs to increase gauge a little quicker.

The one wrench in United’s planning is the 737 MAX 10. The carrier knows that it will be an important plane for upgauging domestic flights, but that plane is not expected to enter United’s fleet until 2023

Source https://simpleflying.com/united-gauge-increase-crj550/

HNA Group Bankrupt But Hainan Airlines To Carry On Flying

The parent company of Hainan Airlines, the HNA Group, has reportedly gone bankrupt. The Hainan Provincial higher People’s Court has issued a notice stating that creditors have applied for the group’s bankruptcy as they cannot pay off their due debt. As well as Hainan Airlines, HNA Group has control of 13 further airlines and a global fleet of 900 aircraft. Hainan Airlines has confirmed it is operating as normal, for now.

HNA Group goes bankrupt

The HNA Group is one of the most prolific but largely unrecognized investors in the world. With more than 2,300 companies falling within its group, it strived to obtain a place in the Fortune 100, but its copious spending over the years has come to a crunch in recent months.

Today, the group has received notice that bankruptcy proceedings will commence. The situation has thrown the future of Hainan Airlines and many other aviation-related businesses into doubt. In a statement, the group said,

“On January 29, 2021, our group received the “Notice” issued by the Hainan Provincial Higher People’s Court. The main content is: the relevant creditors applied to the court for bankruptcy and reorganization of our group because our group could not pay off their due debts.

“Our group will cooperate with the court to conduct judicial review in accordance with the law, actively promote debt disposal, and support the court to protect the legal rights and interests of creditors in accordance with the law to ensure the smooth progress of production and operation of the enterprise.”

HNA Group has involvement in 14 different airlines, and maintains a fleet of more than 900 aircraft. It was thought to have assets of at least one trillion yuan ($154.8 billion) and around 500 billion yuan ($77.6 billion) of debt.

What does this mean for HNA Aviation?

The HNA Group has its fingers in many pies, from logistics and finance to media and tourism. However, its story began with Hainan Airlines. In 1993, Hainan Airlines was launched by Chen Feng and Wang Jian, flying a handful of aircraft to ‘China’s Hawaii.’ The airline rapidly expanded, thanks to its superior service, on time performance, and head-turning fleet of Boeing 737s.

The airline’s success spurred the pair to diversify the business, forming the HNA Group in 2000. From there, the group embarked on a significant spending spree, fueled largely with bank loans and money from the airline business. It took up shares in Hilton Hotels, bought Gategroup and Swissport, owns the leasing firm Avolon… and the list goes on.

HNA Aviation is affiliated with multiple Chinese airlines, including Tianjin Airlines, Beijing Capital Airlines, Grand China Air, and more. It also has stakes in numerous airlines based outside of the Chinese mainland, including Hong Kong Airlines, Africa World Airlines, Comair and Tap Air Portugal.

But all this spending was to be the downfall of the group. Amid increasingly burdensome finances, a group made up of China’s aviation regulator and other government officials stepped in to reform HNA Group’s finances. This was done at HNA’s request.

Prior to this, HNA had signed agreements to sell its shares of smaller airlines to local governments. However, these deals stalled as the financial health of the company became more of a concern. The agreements to sell will likely be key to the restructuring that is to come, and pushing them through will become a priority in order to save Hainan Airlines.

For the time being, Hainan Airlines has said it is maintaining usual operations.

Source https://simpleflying.com/hna-bankrupt/

JetBlue Complains of Difficulties In Securing London Slots

JetBlue has filed a complaint with the US Department of Transportation (DOT), complaining of the difficulty in obtaining slots in London. The carrier is very interested in starting up operations across the Atlantic to the UK’s largest cities. However, the airline has had difficulties getting slots in London.

JetBlue complains of London slot difficulties

In a complaint to the DOT, JetBlue complained about the difficulty in obtaining slots in London, even as the crisis means carriers pull services out of the city. A recovery seems uncertain and far away.

The airline really wants to fly to either London-Heathrow (LHR) or London Gatwick Airport (LGW). But, the carrier has been unable to secure slots at either airport for transatlantic operations. The airline noted that carriers have reduced schedules out of Heathrow, but new entrants have not been able to secure any slots.

Meanwhile, for Gatwick, the airline was quite critical about the lack of slots available there. The airline specifically called out Virgin Atlantic for ceasing operations out of the airport altogether while Norwegian has announced it will no longer be flying in the transatlantic market.

However, both Virgin Atlantic and Norwegian continue to hold their slots at Gatwick, even as Virgin Atlantic has not outlined firm plans for returning to the airport. JetBlue was blunt and stated the following in the filing:

“At the same time, carriers like JetBlue, poised to enter the transatlantic market and disrupt the status quo and fulfill a crucial need for lowcost carrier transatlantic service, are unable to sufficiently secure LHR slots or consistently timed LGW slots because of the fiction that carriers are going to return to the pre-COVID-19 status quo. They are not, and the UK Government needs to address this reality immediately.”

JetBlue wants the DOT to strongly urge the UK government to honor the commitments to slot transparency signed under the new US-UK Open-Skies Agreement.

JetBlue did appear to secure slots out of Gatwick, so it presumably wants more slots out of Gatwick to round out that service or transfer all slots to Heathrow.

Why JetBlue should get the slots

There are arguments for giving JetBlue the slots out of London-Heathrow, but especially out of London-Gatwick. Norwegian is no longer going to fly transatlantic missions, and it was a massive carrier out of Gatwick and a large player in the overall transatlantic market.

Norwegian’s exit from the market sent waves through the industry. In fact, United Airlines highlighted Norwegian’s exit as one reason the carrier felt pretty confident with its international exposure.

JetBlue has a strong argument for letting it come into the market. The airline would be able to replenish some, although a small percentage, of Norwegian’s capacity on the transatlantic market. The airline also does have a history of charging some lower fares than its competitors.

London, in general, is seeing severely reduced overall air traffic. Heathrow remains busy, but most other airports are pretty quiet.

The case for keeping things the same

As usual, there is also a case for JetBlue to not get the slots. First, no one knows what the outlook of the crisis is. The recovery could come by late 2022, or it could not come. There is more demand for short-haul travel, which Norwegian will continue to do.

So, if travel rebounds again, the airline could use up those slots to grow Gatwick’s short-haul portfolio. It depends on if the UK wants to keep Gatwick running that way.

In addition, Virgin Atlantic has not completely ruled out ever flying out of Gatwick, which means the carrier could decide to come back to the airport and conduct its full set of operations. Though unlikely in the current environment, a recovery in travel demand could jumpstart this.

Ultimately, the DOT does not have much of a say in who gets how many slots in London. But, JetBlue has made it clear it is not happy with its somewhat undesirable slots at Stansted.

Source https://simpleflying.com/jetblue-london-slots-complain/