American Airlines plans pilot training on Boeing 737 Max in November

An American Airlines Boeing 737 MAX 8 flight from Los Angeles lands at Reagan National Airport shortly after an announcement was made by the FAA that the planes were being grounded by the United States in Washington, March 13, 2019.

Joshua Roberts | Reuters

American Airlines is planning to start training its pilots on the still-grounded Boeing 737 Max this November, according to a company memo sent Monday.

The jets were grounded worldwide in March 2019 after two crashes killed 346 people, prompting software and other changes on the aircraft. The Federal Aviation Administration is going through some of the last steps that would allow the planes to fly again but hasn’t provided a specific timeline. The FAA last month issued the safety changes needed for the planes to fly again. Public comments on those changes are due Monday.

An American Airlines spokesman said that the company hasn’t made any “definitive plans” on the Max an that the pilot training date can be adjusted based on regulators’ work.

“With the planned return to service for our B737 MAX aircraft in the near future, we will begin conducting B737 MAX Special Training for our B737 pilots,” Ameya Kingaonkar, director of flight training planning and scheduling, said in a pilot memo, which was seen by CNBC. 

Kingaonkar said that the company expects to train all of its 737 pilots on the Max by the end of January.

Southwest and United said they didn’t have any updates on potential 737 Max pilot training.

“We are awaiting the FAA’s guidance regarding the Max, and that guidance will drive our future timelines,” a Southwest spokesman said.

The 737 Max, while fuel-efficient, would return to air travel running at just a fraction of last year’s levels because of the coronavirus pandemic. Last week, Transportation Security Administration screened 4.9 million people at U.S. airports, down about 5% from the previous week and nearly 70% lower than a year ago.

Airline stocks were down sharply on Monday as concerns over further Covid-19 restrictions in Europe amid more outbreaks of the virus.

In afternoon trading, American Airlines’ shares were down more than 7%, Delta was off 9% and United was down 8%, while the S&P 500 was down 2.4%.

Southwest Airlines trims cash burn, will keep middle seats open through November

A bird flies by in the foreground as a Southwest Airlines jet comes in for a landing at McCarran International Airport on May 25, 2020 in Las Vegas, Nevada.

Ethan Miller | Getty Images

Southwest Airlines on Wednesday said it has logged a “modest” improvement in bookings through October, helping it trim its daily cash burn estimate for this quarter by $3 million to an expected $17 million.

Despite the uptick in bookings, the Dallas-based airline expects revenue to drop 65% to 75% in October and capacity down 40% to 50% from the same month last year as the coronavirus pandemic continues to hurt travel demand. It forecast November capacity to drop 35% to 40% from 2019.

Southwest said it would extend a policy that leaves middle seats open on its flights, except for travelers in the same party, through the end of November, an effort to calm travelers nervous about flying in a pandemic and better compete at the start of the end-of-year holidays. Delta Air Lines, for example, last month said it would limit capacity on flights through Jan. 6.

Southwest shares were up 0.8% in premarket trading.

Rising debt is a 'very serious issue' that governments face, says Singapore minister

Tharman Shanmugaratnam, Singapore’s deputy prime minister, speaks at a panel discussion during the spring meetings of the International Monetary Fund (IMF) and World Bank in Washington, D.C., U.S., on Wednesday, April 18, 2018.

Andrew Harrer | Bloomberg | Getty Images

One of the biggest challenges that governments will face in the next decade is bringing down debt, a senior minister in Singapore said on Monday.

Governments around the world have increased spending to support their economies hit hard by the coronavirus pandemic. Some have to borrow more to do so — which is a “sensible economic strategy” when confronted with the current crisis and uncertainties, said Tharman Shanmugaratnam, Singapore’s senior minister and coordinating minister for social policies.

But “the big issue in the next decade is how to ensure that debts are sustainable,” said Tharman, a well-known economic and finance expert, at the opening day of the virtual Singapore Summit.

He added that the new high levels of debt that many countries are moving toward cannot continue without hurting growth. That’s because today’s economies — unlike those in the period after the Second World War — can no longer rely on rapid economic growth and inflation to bring down debt, he explained.

inflation is not going to be tolerated by older societies. They may be tolerated when societies are young and everyone’s incomes are going up, it’s not going to be tolerated now.

Tharman Shanmugaratnam

Singapore’s senior minister

“Rapid growth is no longer possible, these are now aging societies, productivity growth is much lower than before,” said Tharman, who chaired the International Monetary and Financial Committee from 2011 to 2015. The IMFC is the International Monetary Fund’s policy steering body.

“And inflation is not going to be tolerated by older societies. They may be tolerated when societies are young and everyone’s incomes are going up, it’s not going to be tolerated now,” he added.

In addition, current ultra-low interest rates will at some point rise to more normal levels — which will raise the cost of debt financing, said the minister. So, governments must find a way to balance their budgets with growing their economies without simply expanding the deficit, he added.

However, very few advanced countries are addressing that issue, according to Tharman. He cited Germany and Italy as one of the few countries running a primary budget surplus.

“It’s a very serious issue. You’re going to need fiscal reforms, not simply cutting down on spending but quality spending and ways of raising revenue that don’t dent growth,” he said, adding that governments must incentivize more private investments to boost productivity growth and defy secular stagnation.

United Airlines bets on Africa, India and Hawaii in 2021 expansion

A Boeing 787 Dreamliner operated by United Airlines takes off at Los Angeles International Airport (LAX) on January 9, 2013 in Los Angeles, California.

David McNew | Getty Images

United Airlines is setting its sights on Africa and India, regions that have long been minor players in its network as it tries to expand as profitably as possible during the coronavirus pandemic.

The Chicago-based airline on Wednesday said next spring it will launch three weekly nonstop flights from Washington Dulles International Airport to Accra, Ghana, and Lagos, Nigeria, a bid for travelers visiting friends and family. It had discontinued a Houston-to-Lagos route, at the time its only Africa flight, in 2016 in the wake of the oil bust. United will also add a daily nonstop flight from Newark, New Jersey, to Johannesburg, adding to the South Africa service it launched with a Cape Town flight last December as it chases leisure travelers.

“We are looking to places where we have low share that has more upside for the future United and our travelers,” United’s chief commercial officer, Andrew Nocella, said in an interview. 

The airline is also planning to add daily service to Bangalore, India, from San Francisco next summer, a move that aims to capture business travelers between the two major tech hubs. That sets it up for a battle with American Airlines, which in February announced plans for service to Bangalore from Seattle. United will also add daily nonstop flights between Chicago and New Delhi late this year.

“Bangalore has been one of the most requested destinations at United over the last few years,” said Nocella, adding that United could expand service beyond a once-daily flight there later on.

The new flights’ success hinges on how the pandemic develops and a web of travel advisories and restrictions. Dozens of countries remain off limits for U.S. citizens, including most of Europe. 

“We all know that Covid will some day come to an end and we know that borders will reopen, so we’re looking toward the future,” Nocella said. “This is the time to do it.”

The pandemic has quickly remade airlines’ networks and reshaped traveler behavior. United and its rivals that enjoyed robust international networks before the pandemic have focused more of their service within the U.S. In October 2019, international flights accounted for 44% of United’s capacity and that share will drop to 35% this October, a spokesman said.

As part of that domestic push, United will add more service to Hawaii with nonstop flights between Chicago to Kona and between Newark and Maui next summer.

Another major change in consumer behavior is that travelers are booking closer to departure, Nocella said. “We think the vast majority of travelers are waiting a bit longer” to make holiday reservations “but we expect them to be strong.”

And facing a dearth of business travel, United’s customers are skewing younger than before the pandemic, he added.

Earlier Wednesday, United said its capacity in the third quarter of 2020 would likely be down 70% from last year, slightly more than the 65% decline it previously forecast.  United expects its third-quarter passenger revenue to be 85% lower compared with 2019, worse than a previous estimate of an 83% drop.

CEO Scott Kirby has said he expects demand to plateau at 50% of 2019 levels until there is a coronavirus vaccine.

Labor Day weekend air travel hits nearly 6-month high, but holiday caps dismal summer season

Travelers wearing face shields and protective masks walk with their luggage inside Tom Bradley International Terminal at Los Angeles International Airport (LAX) in Los Angeles, California, U.S., on Thursday, Aug. 13, 2020.

Bing Guan | Bloomberg | Getty Images

Late-summer getaways helped lift air travel during the Labor Day weekend but the coronavirus pandemic has left its mark on what has shaped up to be a dismal season for airlines.

The number of people screened by the Transportation Security Administration reached 968,673 on Friday, the highest since March 16, agency data released on Monday showed. During the Friday-through-Monday holiday weekend, close to 3.3 million passengers passed through TSA checkpoints, down nearly 60% from the holiday weekend in 2019. That, however, is an improvement from the depths of the coronavirus crisis in April when passenger volume was off by more than 95%.

From Memorial Day through Labor Day weekend, which comprises what is generally the busiest and most lucrative time of year for airlines, TSA screened 65 million people, down nearly 76% from the 269 million it screened on the same dates last year.

Airlines are now scrambling to create more flexible policies to win over travelers, particularly as what is generally the slower fall season followed by the end-of-year holidays approach. Among the changes is a scrapping of domestic ticket-change fees by United last month. A move Delta and American followed with similar policies.

Facing a dearth of business travel as companies are still reluctant to fly workers for meetings and events during the pandemic, carriers are also adding service to leisure destinations near mountains or beaches to try to fill planes.

Chinese banks' profits will weaken even more in the second half of 2020, says Fitch Ratings

People wait outside a Bank of China branch in Beijing on July 11, 2014.

GREG BAKER | AFP | Getty Images

Banks in China are likely to record greater declines in profits in the second half of this year as bad loans are set to rise further as a result of the coronavirus pandemic, according to Fitch Ratings.

In January to June this year, Chinese banks collectively lost around 1 trillion yuan ($146.2 billion) in net profit — or a 9.4% decline — compared to first half of 2019 on lower margins and higher expected loan losses, the ratings agency said in a Wednesday report. The five Chinese mega banks reported at least 10% year-on-year fall in profit — their biggest earnings declines in at least a decade.

Fitch said Chinese authorities have aimed to dispose 3.4 trillion yuan ($497 billion) worth of bad loans from the banking sector this year. Only around one-third of that — or 1.1 trillion yuan ($160.8 billion) — were written off in the first half of 2020, the agency added.

China, the first country hit by the coronavirus, is among the earliest to mark a recovery in its economy. But many challenges remain and the pressure on Chinese banks’ profitability could persist into the next year, said Fitch. 

In addition to the pandemic, Fitch cited the ongoing U.S.-China tensions as an uncertainty weighing down prospects in the Chinese banking sector.

“Despite the challenging outlook on profitability, we believe the Chinese banks still aim to pay dividends for 2020, which could limit their pace of growth,” it added.

Chinese banks have been at the front line of the government’s effort in managing the pandemic’s economic hit on households and businesses. Lenders in China — many of which are controlled by the government — were asked by Beijing to sacrifice returns to help companies by lowering lending rates and deferring repayments on loans.

But Fitch has maintained its “stable” outlook for the operating environment of Chinese banks. It explained that by actively recognizing and resolving bad loans, China’s banking system can prevent a large build up in credit risks.

Still, shares of Chinese banks have continued to lag the broader markets on the mainland.

The FTSE China A 600 Banks Index — which tracks large- and mid-cap banks listed on mainland exchanges — declined by around 10.8% so far this year, while the broader FTSE China A 600 Index jumped 17.1% during the same period, according to Refinitiv data.

United Airlines plans to cut 16,000 jobs as coronavirus continues to hammer demand

A United Airlines Boeing 737-800 and United Airlines A320 Airbus on seen approach to San Francisco International Airport, San Francisco.

Louis Nastro | Reuters

United Airlines on Wednesday said it is planning to cut more than 16,000 jobs as early as next month, after federal coronavirus aid that protects aviation jobs runs out.

Those involuntary cuts, many of them furloughs that mean employees can be called back if demand returns, make up close to 17% of United’s staffing level at the end of 2019.

The number, however, is far lower than the 36,000 staff Chicago-based United warned in July that their jobs were at risk. The reduction is thanks to thousands of volunteers who accepted buyouts, early retirement packages and more than a dozen other forms of temporary leaves or reduced schedules. Airlines pleaded with employees to take such options to reduce their headcounts, offering perks like continued health care in some cases, a selling point during the pandemic. More than 7,000 United employees opted to separate from the company.

The company could still further lower the number of involuntary job cuts through voluntary measures, particularly with its pilots.

“The pandemic has drawn us in deeper and lasted longer than almost any expert predicted, and in an environment where travel demand is so depressed, United cannot continue with staffing levels that significantly exceed the schedule we fly,” the airline said in an employee memo.

The planned involuntary cuts of 16,370 jobs include 6,920 flight attendants, 2,850 pilots, 1,400 management jobs, 2,010 mechanics and 2,260 in airport operations, among others.

United’s announcement comes after American last week said it plans to cut 19,000 jobs and, along with voluntary leaves of absence and buyouts, end up 30% smaller than before the pandemic unless it gets more federal aid.

Airline labor unions and executives have urged Congress for another $25 billion in federal aid to preserve jobs through the end of March, but lawmakers haven’t yet approved a new national coronavirus relief package that could include the airline relief.

The original allotment for airlines, passed in the $2.2 trillion coronavirus relief package in March, prohibits airlines from cutting jobs or pay rates through Sept. 30.

That payroll support was supposed to help airlines manage a plunge in demand in the hopes that travelers would return this summer, but demand has hovered around 30% of last year’s levels, according to federal data, and airlines have scrambled to reduce their headcounts.

United’s CEO Scott Kirby has said he expects demand to plateau at half of 2019 levels without a coronavirus vaccine. The carrier and others are now trying to win back customers. On Sunday, it said it would permanently get rid of $200 domestic ticket-change fees for travelers with all but the cheapest tickets, a move that was quickly followed by Delta and American.

China's mega banks lost billions of dollars in profit as bad loans rise during coronavirus pandemic

Profit declines for China’s big banks in first half of 2020 due to bad loans during coronavirus