BA’s franchise partner in Africa is expected to resume flights in November, with a much smaller fleet.
London Air Travel
Comair Boeing 737 Aircraft (Image Credit: Comair)
British Airways’ franchise partner in Africa, Comair, will remain grounded until November 2020 at the earliest.
Comair is currently in a process known as “business rescue” whereby it seeks to restructure itself whilst protected from creditors.
In addition to operating a BA franchise in Africa, Comair also operates the Kulula airline brand and SLOW lounges in Africa.
Business rescue practitioners have been appointed to oversee the process. They have today, Tuesday 2 June 2020, published an outline plan for the company.
Comair’s airlines will remain grounded until November 2020 at the earliest as the company requires a substantial cash injection to resume trading.
The business rescue practitioners have approached 30 potential investors to secure new funding and 6 are in active discussions.
Whilst Comair intends to focus on its airline business, it is expected that Comair’s fleet will be substantially downsized from 27 aircraft to 13 Boeing 737-800 aircraft and three spare Boeing 737-400 aircraft.
With such a significant reduction in fleet it seems implausible that it will continue to operate under both the BA and Kulula names.
Neither BA nor its parent company IAG have made any official comment on the business rescue process. BA owns a 11.49% stake in Comair. If neither BA nor IAG participate in a recapitalisation of the airline, its shareholding will be wiped out.
It will be for Comair’s new shareholders to decide on its business model and whether the BA franchise should continue. Currently, BA is still selling flights on Comair from 1 November 2020.
Welcome to London Air Travel’s weekly briefing on air travel around the world, as published every Monday at 06:00 BST.
London Air Travel
London Heathrow Terminal 5A, May 2020 (Image Credit: Heathrow)
Welcome to London Air Travel’s Monday Briefing for the week beginning 1 June 2020.
Aviation’s June Return
As many countries in Europe are due to lift travel restrictions this month, the UK is determined to remain an outlier.
Its mandatory quarantine regime on passengers arriving in the UK is due to come in to force next Monday, 8 June 2020.
As per the front page lead of today’s Times, it has been widely condemned by the aviation industry as destructive, ill-judged and unenforceable. If the UK government’s “test and trace” contact tracing system is anything to go by, it will not instil confidence.
The Sunday Telegraph reports that the government has recruited the professional services firm KPMG to advise on what mandatory measures should be put in place on passengers departing from the UK. These are reportedly due to be agreed this week.
The Department for Transport is also working on plans for “air bridges” to countries deemed to have a low risk of COVID-19 transmission. These are due to be finalised by 15 June.
Other options under consideration include 20 minute COVID-19 tests on arriving passengers.
Elsewhere, there are small signs that aviation is starting to rebuild.
Austrian Airlines will resume flight operations from Monday 15 June. This will include a daily flight to London Heathrow.
Brussels Airlines will also flight operations from Monday 15 June, with flights to London Heathrow resuming on Monday 22 June.
Further afield, Hong Kong InternationalAirport will begin accepting transit passengers from today.
Virgin Australia Whittles Down Final Bidders
Deloitte, the administrators of Virgin Australia, may announce the two final round bidders for the airline as soon as today.
Bain Capital, BGH Capital, Cyrus Capital and Indigo Partners submitted second round bids last week. Canadian asset manager Brookfield is reported to have entered the bidding process at the 11th hour.
Visions for the airline appear to vary widely with some bidders planing a return to its low cost short-haul roots and others seeking the maintain its ambition to be a full service rival to Qantas.
There appears to be a risk that the airline may fall into liquidation before the bidding process has completed with Deloitte reported to have made an unsuccesful plea to the Australian federal government for emergency funding. (Sydney Morning Herald).
Things have been relatively quiet as far as Virgin Atlantic is concerned. That’s not necessarily a bad sign. A lack of leaks to the press often indicates progress behind the scenes.
JetBlue has maintained plans to launch transatlantic flights from London from late 2021.
London Air Travel
Robin Hayes, JetBlue, CNN International, 28 May 2020 (Image Credit: CNN International)
An inevitable consequence of a demand shock to aviation like COVID-19 is that airlines put expansion plans and new projects on hold.
Qantas has postponed, albeit not indefinitely, plans to order aircraft capable of flying from London to the East Coast of Australia non-stop. Almost all airlines envisage being substantially smaller over the next two years.
Last year, JetBlue confirmed it plans to launch transatlantic flights from London to Boston and New York JFK from 2021. These will be operated with Airbus A321 long range aircraft.
Speaking to CNN’s “Quest Means Business” on Thursday 28 May 2020, JetBlue CEO Robin Hayes, with the aid of a not so subtle hint behind him, confirmed the airline still plans to launch flights from London in 2021, albeit more later in the year.
JetBlue maintains its promise to lower air fares on transatlantic routes. However, the market may pre-empt this. It is likely that all airlines will face lower yields as the return of business travel is likely to lag the lifting of travel restrictions and large scale events remain cancelled.
The airline is clearly in the process of reviewing its route network, with nothing off the table, and further changes are likely in the coming weeks.
BA launched fights to Moscow Sheremetyevo in October 2018, to complement existing flights to Moscow Domodedovo airport.
Passengers whose flights have been cancelled can rebook on to alternative service to Moscow Domodedovo. Any consequential costs such as ground transportation will be at passengers’ expense. BA is currently due to resume flights to Moscow Domodedovo from Wednesday 1 July 2020. This is of course subject to change.
Passengers are also entitled to a full refund. Affected passengers can check the status of their booking using the Manage My Booking tool and should contact BA or their travel agent.
British Airways has changed the terms and conditions of the Executive Club to prevent members in North America joining class action suits.
London Air Travel
British Airways Coat Of Arms (Image Credit: British Airways)
The US is well known for being a litigious society, which often takes the form of class action suits brought against businesses by consumers.
To give an example, I recently received an e-mail out of the blue from a law firm that had brought a class action suit against a restaurant I visited in Los Angeles years ago over the treatment of staff tips. Still waiting for the settlement of tens of dollars, after the deduction of the lawyers fees!
BA has itself faced class action suits. In 2018, BA settled a suit, in the form of Avios, brought by members of the Executive Club in respect of cash fuel surcharges which were added to reward flights. Members argued that the fuel surcharges were inflated and had no correlation to the cost of fuel.
Executive Club Class Action Waiver
BA has today, Thursday 28 May 2020, updated the terms and conditions of the Executive Club to include a class action waiver for residents of the US and Canada.
Of the 9 million active members of Avios frequent flyer programmes, there are about 1 million registered in the Americas. This includes members of other IAG frequent flyer programmes such as Iberia Plus.
Where a dispute arises between BA and a member of the Executive Club in the US and Canada, these changes effectively seek to prevent the member from joining a class action suit or taking the airline to court.
Instead, BA aims to resolve the issue on an individual basis only through binding arbitration.
There is also a time limit of two years on members based in the US bringing a claim from when they “knew or should have known” about the issue that caused the dispute. This alone could easily result in litigation. How do you prove what somebody “knew or should have known”!?
We’re not qualified to comment on how enforceable these changes are. It will no doubt be tested at some point in the future.
Full details of these new clauses are reproduced below.
British Airways has permanently suspended all flights between London Heathrow and Leeds-Bradford airport.
London Air Travel
British Airways Airbus A319 aircraft in BEA livery, London Heathrow (Image Credit: British Airways)
British Airways has suspended its route from London Heathrow to Leeds-Bradford.
The route launched in December 2012 and was one of the first new short-haul routes BA started at London Heathrow after its acquisition of bmi British Midland.
The route is officially suspended from 1 July 2020. Though, it has not operated since the end of March due to COVID-19.
It has evidently not been one of BA’s strongest performing domestic routes. Frequencies had been cut to around 10 return flights a week, operated only with Airbus A319 aircraft. This, combined with the fact that aircraft do not “night-stop” at Leeds-Bradford, makes it difficult for business travellers to use it for day trips to London.
When there is a demand shock to aviation, it is inevitable that weaker routes are subject to suspension.
If your flight is cancelled you are entitled to a full refund. Though, you will need to call BA to secure a refund instead of a voucher. It is possible to change to a BA flight between London Heathrow and Manchester. Though, any consequential costs will be at your expense.
BA has an interline agreement with London North Eastern Railway so you should also be able to change your journey between London and Leeds-Bradford to the train.
Affected passengers can check the status of their booking using the Manage My Booking tool on ba.com
British Airways has mortgaged 40 short-haul and 8 long-haul aircraft to raise new funds of $750m.
London Air Travel
BA Airbus A319 aircraft at London Heathrow (Image Credit: British Airways)
British Airways has mortgaged 48 aircraft to raise $750m of new finance.
According to filing submitted to Companies House in the UK on Tuesday 26 May 2020, BA has entered into a $750m facility agreement arranged by Citigroup Global Markets Inc.
To obtain these funds, BA has mortgaged 40 short-haul and 8 long-haul aircraft, with Citibank acting as a security trustee.
These are detailed in Schedule 1 of the document and include:
2 Airbus A318 aircraft (It was widely thought one of these had been sold to Titan Airways!)
4 Airbus A319 aircraft
24 Airbus A320 aircraft
10 Airbus A321 aircraft
5 Boeing 777-200ER aircraft
2 Boeing 777-300ER aircraft
1 Boeing 787-9 aircraft
This represents around a third of BA’s short-haul fleet at Gatwick and Heathrow. The majority of the aircraft mortgaged were delivered to BA between 2000 and 2010, so some will be approaching retirement in the coming years. More recently delivered aircraft are likely to be subject to other financing arrangements.
Neither BA nor its parent company IAG appear to have made any official comment on this.
For the avoidance of doubt, BA will continue to own and operate these aircraft. In the event that BA defaulted on loan repayments, Citibank would be entitled to seize the aircraft.
British Airways has introduced a new rebooking policy for passengers wishing to return to the UK in advance of a mandatory 14 day quarantine.
London Air Travel
London Heathrow Terminal 5 (Image Credit: Heathrow)
British Airways has introduced a flexible rebooking policy for passengers due to return the UK after the introduction of a mandatory quarantine period on passengers arriving in the UK.
The UK government has announced a mandatory 14 quarantine period on all passengers arriving in the UK from Monday 8 June. Full details, including exemptions for transit passengers, are on the UK government website.
Any passenger who is mid-journey and due to return to the UK on a BA operated flight between 8 June and Sunday 28 June 2020 can rebook on to an alternative BA flight from Wednesday 27 May to Sunday 7 June 2020.
Of course, BA schedules are extremely limited at the moment. The airline is operating a small number of long-haul flights at London Heathrow Terminal 5 to key US destinations such as Boston, Chicago O’Hare, Los Angeles, New York JFK and Washington Dulles. If you are due to return from another airport in North America, you should be able to return via an airport where flights are operating. Short-haul schedules are also significantly reduced.
Passengers can check the status of their booking using the Manage My Booking tool on ba.com and should contact BA if they need to change their booking. If your flight is cancelled you are entitled to a full refund.
Welcome to London Air Travel’s weekly briefing on air travel around the world, as published every Monday at 06:00 BST.
London Air Travel
British Airways Pilots & Cabin Crew (Image Credit: British Airways)
Welcome to London Air Travel’s Monday Briefing for the week beginning 25 May 2020.
BA’s War Of Words With Trade Unions
A war of words has broken out between BA and its trade unions over planned redundancies and changes to staff terms and conditions.
On Friday, BA CEO Alex Cruz sent a message to staff which was leaked to the Financial Times. According to this, BA is having “productive conversations” with its pilots union BALPA. It is also claimed that representatives from GMB and Unite, who represent cabin crew and ground staff, have not attended any meetings with the airline.
“Consultation is so important, and productive conversations are already being held with Balpa. I am sorry that neither Unite nor GMB have attended any of the daily meetings they are invited to so that they can provide ideas and input into any of the other proposed changes, and maximise the number of jobs saved.”
Unite claims the consultation is a sham and has instead chosen to run a public campaign against the airline accusing it of betrayal.
Taken at face value, this appears to be worrying for BA staff who are caught between the two sides.
The unions’ strongest leverage at the moment is the repeated and on the record comments by IAG CEO Willie Walsh to its investors and MPs that it will engage in a “genuine and meaningful” consultation “with a view to reaching an agreement” in accordance with legislation on labour relations.
History has shown that BA and its trade unions can sometimes, against all expectations and far more often than they are given credit for, achieve a lot behind closed doors.
History has also shown that when there is a mandate for change from the top of the airline stonewalling doesn’t work and change will be imposed. BA will also sit out any negative publicity.
It is possible that this, like previous incidences where BA has imposed change when talks with unions break down, could result in litigation. Whilst there are “optics” and political scrutiny surrounding this, the consultation process BA has initiated is a formal legal one. If this does go to court, it will focus on the adherence of all sides to the legal process and not what IAG would term “the noise”.
Virgin Raises Funds To Support Virgin Atlantic
Virgin Group has raised $366m by selling down part of its stake in Virgin Galactic. It will retain a 40% stake in the space tourism business.
The proceeds will be used to support Virgin branded businesses. There’s been little news on potential new investors in Virgin Atlantic. Meanwhile, according to Sky News, lenders to the airline have appointed the professional services firm Deloitte to advise on their financial exposure to the airline.
On the question of state support for airlines, today’s Financial Times reports that the Chancellor of the Exchequer Rishi Sunak has agreed to a state bailout plan to save, in exceptional circumstances, “strategically important” companies whose failure would “disproportionately harm the economy” and are “viable companies which have exhausted all options” including existing government loan schemes.
This may pave the way for state support for airlines that are unable to qualify for existing government support schemes.
Sir Stelios Presses On
Sir Stelios Haji-Ioannou is undeterred having failed to oust four easyJet directors last Friday.
Sir Stelios has alleged that there were voting irregularities which could have affected the result. He is also pressing on with a campaign to encourage whistle blowers to come forward with information on alleged irregularities in connection with the order for new aircraft from Airbus.
Even if this comes to nothing, it may not be the end of the rancour between Sir Stelios and easyJet.
easyJet licences its brand name from Sir Stelios. Full details are on the easyJet website. The two sides have previously reached an out of court settlement over disputes in relation to the licence. easyJet agreed a new licence agreement in December 2010 for 50 years and a minimum term of ten years, which conveniently expires later this year.
British Airways has suspended its summer seasonal routes to Calgary and Charleston for 2020.
London Air Travel
Charleston, South Carolina (Image Credit: Charleston)
British Airways has suspended its summer seasonal long-haul routes from London Heathrow to Calgary and Charleston for 2020.
These routes were due to operate until October 2020. Both Calgary and Charleston are currently scheduled to resume from Sunday 28 March 2021. This is of course subject to change.
BA has also delayed the planned launch of its new route from London Heathrow to Portland, Oregon from Monday 1 June to Wednesday 2 September 2020 at the earliest.
Passengers whose flights have been cancelled are entitled to a full refund. You will need to call BA to secure this. You can check the status of your booking using the Manage My Booking tool on ba.com. If you cancel your flight through ba.com you will be given a voucher which can be exchanged for travel up to and including 30 April 2022.
