The pandemic relief bill that President Biden signed Thursday afternoon will protect tens of thousands of aviation jobs, providing a lifeline to 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 that they could ignore the furlough notices they had received in recent weeks. The airlines had issued the warnings, which are legally required in advance of sweeping cuts, as they prepared to carry out the furloughs …
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After more than a decade working at Manchester Airport in the northwest of England, Tracey Moore finally got the job she wanted — at Virgin Atlantic’s passenger check-in desk. Then, at 3:30 p.m. on Oct. 22, after about a year on the job and months on furlough, she returned to the airport and handed in her uniform.
She had taken a buyout and left her dream job.
“I’ve fought hard to get onto Virgin and that’s why I think I’m more upset,” Ms. Moore said. Devastated by how the pandemic had hollowed out the air travel industry, Ms. Moore took the buyout because she figured her hours and her pay would be cut, if she wasn’t one of the people eventually laid off.
“I don’t think I had a real choice,” she said, adding, “I loved being in the uniform.”
But she didn’t work for Virgin Atlantic. She was one of the thousands of people let go at Swissport, an international company that provides ground handling services for airlines, including passenger check-in and loading and unloading baggage.
From check-in through takeoff and landing, travelers with Virgin Atlantic end up interacting with hundreds of other companies the airline has hired to provide the services and goods that make up a smooth flying experience. It is the same with most big airlines. Virgin doesn’t cook the in-flight food, or print the menus, or build the business-class seats, or de-ice the wings, or unload the baggage at the airport, or return your luggage when it gets lost; it hires companies to do these and many more tasks.
But eight months after governments closed their borders and imposed travel restrictions to stop the spread of the coronavirus, lockdown restrictions have only partially eased and a second wave of the pandemic has besieged Europe, stamping out tourism.
Virgin Atlantic, which relies heavily on long-haul routes and trans-Atlantic travel, has had almost no opportunity to recover. The airline has laid off 4,700 employees, nearly half of its staff.
The companies contracted by Virgin, with names like Gogo (a provider of in-flight internet), ESP Colour (printing services) and Eagles Couriers, have also been knocked down by the pandemic’s crushing blow on air travel, in some cases cutting staff and closing facilities.
Information about these companies rarely comes to light. But this summer, when Virgin feared it would run out of cash in the fall, it worked out an intricate $1.6 billion private rescue deal. It included about $226 million from a hedge fund; capital raised in share sales from Virgin Galactic, Richard Branson’s space venture; and agreements to defer debt payments.
As part of the plan, 162 companies around the world to whom Virgin owed about $69 million were essentially offered a choice: Get paid 20 percent less, with the balance paid in installments until September 2022, according to court documents, or risk Virgin Atlantic falling into bankruptcy, and perhaps getting little back. Most voted for the offer on the table, and so it applied to all of them.
The organizations, which include a charity, large hotel chains and consultancy firms, provides a map of the domino effect that economists have feared since the start of the pandemic: That the companies hurt most directly — aviation, hotels and restaurants — would kick start a wave of devastation that could extend widely into the economy.
Virgin Atlantic declined to comment, and referred to earlier statements. In September, when the refinancing deal was announced, the chief executive, Shai Weiss, called it a “major step forward in our fight for survival.”
“We greatly appreciate the support of our shareholders, creditors and new private investors,” he said in a statement at the time. “Together, we will ensure that the airline continues to provide vital connectivity and competition.”
These companies didn’t attribute their financial problems to Virgin Atlantic but rather the cumulative pain of the dramatic drop in air travel.
One of the companies is Swissport Ireland, part of an international group that serves airlines at 300 airports.
“Around 95 percent of our revenue disappeared in two weeks,” said Luzius Wirth, the executive vice president for Europe, the Middle East and Africa for Swissport International. The company had to stop spending quickly and furloughed as many staff members as possible, he said.
Swissport’s British operation was able to keep its staff employed through the country’s furlough program, which helped pay up to 80 percent of wages at companies hit by the pandemic. But that government subsidy was set to expire on Oct. 31, prompting Swissport to offer layoff packages. About 950 workers accepted them, including Tracey Moore. (In November, the government extended the furlough through March.)
“The problem is, we all know that the business will take years to recover; this is not going to be over in 12 months,” Mr. Wirth said. Swissport’s income is a direct reflection of the amount of air travel. Airlines don’t agree to any minimum level of spending with the company. The flexibility that the company offered to airlines suddenly became a curse — as flights vanished from schedules, so did Swissport’s income. Until demand for flights resumes, Swissport will be a much smaller company, Mr. Wirth said. It has already laid off about 3,250 employees in Britain, 40 percent of its work force.
Swissport’s competitors have also been forced to drastically reduce staff, including some workers who have spent decades behind the scenes at airports.
Leonardo Aquaro is one of the casualties. In 2003, at age 23, he started working in London’s Heathrow Airport at an airline check-in and ticket desk. Most recently Mr. Aquaro was an operations controller for Menzies Aviation, managing the dispatchers of flights who get planes turned around quickly at the airport. In March, he was furloughed, then in September, laid off. He doesn’t think he’ll ever return to the industry.
“There isn’t much out there at the moment, even if you have a lot of experience,” he said. And he says the industry has changed: Demands to cut costs have stretched staff and worsened contracts. Instead, he’s studying marketing and web design online and spending more time with his son, 7, and infant daughter.
Four year ago, Eagle Couriers, a corporate delivery service based in Scotland, decided to diversify into the business of returning lost luggage to passengers, known as baggage repatriation. It acquired THS Couriers, a creditor of Virgin Atlantic.
Eagle Couriers was slowly but surely integrating THS into its business before the pandemic, said Richard Beaton, the commercial director. Eagle Couriers is essentially paid for every bag it handles. With so few passengers, there are fewer opportunities for bags to get lost and for Eagle Couriers to step in. Over the summer, they were moving about 10 percent of the bags they would normally transport. As Britain’s furlough program was scheduled to end, the company laid off half of its baggage repatriation team.
“There’s no way we are getting back to previous volumes,” Mr. Beaton said. “If ever.”
For Safran Seats GB, a company based in Wales that designs and makes business and first-class seats for Virgin and other carriers as well as for Boeing and Airbus, the impact of the pandemic came in waves. In March, it was the airlines asking to defer plans to retrofit their cabins. Six weeks later, it was the aircraft manufacturers deferring plans for new aircraft.
The workers manufacturing the seats have been the most severely affected, said Victoria Foy, the chief executive. “The airlines who are clearly struggling for cash have said they cannot continue right now with those programs,” she added. By the end of the year, she expects the company to have about 900 employees, 700 fewer than at the start of 2020, and one of its facilities, in Camberley, southwest of London, has already been shut.
For the staff who design and develop new seats, the picture is less bleak. It takes several years to deliver a new design, and so Safran Seats can afford to wait out the pandemic in this area.
“We believe — firmly believe — that it will come back,” Ms. Foy said of air travel. “It’s a question of when, not if.” In the meantime, Safran is working with other companies to design airline interiors for a pandemic, with bigger partitions between passengers and hands-free reclining.
And then there are the organizations that Virgin Atlantic financially supports. In January, the airline signed a three-year deal to be the headline sponsor of Manchester Pride, an L.G.B.T.Q.+ charity that hosts an annual street festival to raise money for activities promoting greater inclusivity and empowerment.
As part of Virgin’s restructuring plan, Manchester Pride has accepted a reduced contribution from the airline on top of the revenue lost from having to move the festival online. This year’s revenue is likely to be less than a million pounds; typically, the charity takes in a little under £4 million, the charity’s chief executive, Mark Fletcher, said. A planned expansion of the team to 20 people has been put in reverse, and after several layoffs it now has a staff of 10.
Once its restructuring plan was worked out, Virgin Atlantic agreed to remain the festival’s sponsor for the next two years.
Manchester Pride’s previous headline sponsor was Thomas Cook, the British airline and package holiday operator, which collapsed last year and left 150,000 customers stranded abroad. “When I saw what happened with Thomas Cook airlines, I did take a closer look at the airline industry,” Mr. Fletcher said.
He said the charity did its due diligence and had worked with other successful airlines before, including British Airways and easyJet. Virgin Atlantic had been expanding in Manchester, and wanted to do something big.
“They were keen to be recognized as a key player in the region,” Mr. Fletcher said. For Manchester Pride, the promise of a minimum three-year commitment allowed organizers to consider growing the charity. “For us, this was incredible that Virgin was willing to bite the bullet and go big from the offset,” he said.
Of course, the charity’s due diligence did not foresee a pandemic. Few people did.
For Ms. Moore, who has lost a job she loved, her last day at Swissport came on Oct. 31. She would travel an hour and a half from a village in the Peak District National Park to reach Manchester Airport each day.
“There’s nothing quite like the feeling of an ungodly hour in the morning, you’re walking airside, you’re laughing with your friend and it’s dark and the sun is coming up and the lights are on in the planes on the tarmac,” she said. “You can’t explain it, if you’ve not felt it.”
At 59, Ms. Moore has just started a new job as an aide in a nursing home.
Confidence about the course of the coronavirus pandemic has helped put passengers back on planes in recent months, and Thanksgiving week is shaping up to be one of the busiest periods for U.S. air travel since it came to a near-standstill in the spring. News that effective vaccines may be close at hand lifted airline stocks.
But new concerns over the spread of the virus are rattling travelers and threatening airlines’ hopes for the months ahead.
United Airlines said Thursday that bookings had slowed and cancellations had risen in recent days because of the surge in virus cases. The Centers for Disease Control and Prevention urged Americans to avoid holiday travel altogether, presenting the industry with its latest wrenching question: How dark can this winter get?
“There’s two trains running toward us,” said John Grant, a senior analyst with OAG, an aviation data firm based near London. “One is full of optimism on a vaccine, and the other is, sadly, full of more caution. Who gets there first?”
When Angela Henry booked her Thanksgiving flights months ago, she had no idea that the United States would be setting new coronavirus infection records as the holiday approached. She also didn’t know that she would be pregnant.
Ms. Henry, 30, and her husband agonized over whether to stick to their plan to fly to Atlanta from Northern California to spend Thanksgiving with his family. After soliciting advice from loved ones and medical professionals and weighing the risks, they recently decided to go through with it.
“It’s been tough,” she said. “I was just trying to find that rational middle ground.”
Airlines argue that flying is generally safe because of the various policies put in place to limit contagion, high-end air filtration aboard planes and the relatively few published cases of coronavirus spread in flight. But the science is far from settled, travelers are still at risk throughout their journey and many would-be passengers have been discouraged by lockdowns and outbreaks in the places they hoped to visit.
Passenger volumes remain down more than 60 percent from last year, and the industry is losing tens of millions of dollars a day.
Airlines for America, a group representing the nation’s largest carriers, said it expected more people to fly around Thanksgiving than in the weeks before or after, though it estimated that the number of seats for sale will still be down about 40 percent compared to last year. American Airlines said it expected to operate about 15 percent more flights around the holiday than in the rest of the month. Delta Air Lines said it expects to fly about two million passengers over the holiday period, and United expects Thanksgiving week to be the busiest one since the pandemic began, crediting measures to guard against the virus’s spread that it says have put passengers at ease.
“They see that mask compliance is really good; they’ve seen how clean the planes are; they’ve maybe even seen the electrostatic sprayers in action; they’ve seen us board the plane back to front, they’ve seen social distancing on the jet bridge — all of that has contributed to greater confidence in air travel,” said Josh Earnest, United’s chief communications officer.
Thanksgiving may improve the airline industry’s fortunes, but prospects for passenger demand in the weeks ahead are dimming. Southwest Airlines said last week that booking momentum seemed to be slowing for the rest of the year. American Airlines, which has also seen demand dip because of the virus, has slashed December flights between the United States and Europe, leaving just two daily flights out of Dallas-Fort Worth International Airport, to London and Frankfurt.
To some extent, the unevenness of the travel recovery comes as little surprise, said Helane Becker, managing director and senior airline analyst at Cowen.
“We always knew that it would be choppy, but that said, we think that people want to travel and they’re looking for ways to get out,” Ms. Becker said during a Thursday panel at the Skift Aviation Forum.
In Europe, the mood is far bleaker, with hopes of a revival over the holiday season largely dashed by the resurgence of infections and the lockdown measures reintroduced this month to curb the spread of the virus.
Ski resorts in the United States remain hopeful for winter travel, but those in France, Austria and Italy are closed until at least the end of November. Thousands of Christmas markets — which attract millions of visitors each year with mulled wine, roasted chestnuts and handmade holiday gifts — have been canceled, and Santa Claus displays have been taken online.
“Looking at the landscape across Europe now, we do not have high expectations for the winter season,” said Eric Dresin, secretary general of the European Travel Agents’ and Tour Operators’ Association. “We are in a situation where we can’t plan anything, and naturally that is crippling for the industry.”
The European Union uses a traffic light system for determining travel restrictions, labeling countries and individual regions green, amber or red, based on the rate of new infections, test rates and incidence per 100,000 inhabitants in the previous 14 days. Most member states require travelers arriving from high-risk red areas to take a coronavirus test or quarantine themselves upon arrival. At the end of last week, all European countries were labeled red, except Norway and Finland.
Travel and airline associations across Europe are calling for coordinated testing and contact tracing protocols to replace blanket quarantine measures, arguing that they cause uncertainty and confusion among travelers and have a limited effect on the spread of the virus.
Elsbeth McGawley, a restaurant manager from London, had to rush back to Britain from France in August to avoid a two-week quarantine requirement that was announced just 24 hours before it went into effect. She had six days remaining on her hotel booking, but she had to cancel because she could not afford to take time off from work because of a quarantine.
“It was a nightmare, trying to get my ticket changed and make it back in time,” she said in a telephone interview. “I just wanted a small break, a change of scene after being cooped up at home for months, but it turned into an ordeal and it wasn’t worth the hassle.”
Ms. McGawley usually books her Christmas travel to European cities a year in advance, but this year she canceled her plans and has decided to stay in Britain to avoid any last-minute disappointment.
“It’s impossible to book even now, a month in advance,” she said. “There are restrictions everywhere, and even if one place opens up, there is no way of knowing if things will stay that way. It’s a big gamble and it’s not worth the risk, because there are no guarantees that you will get a refund if things go wrong.”
Travel operators across Europe said they had seen an increase in people searching for winter holiday destinations in recent weeks, but few of those inquiries have turned into bookings because of the uncertainty about travel restrictions. The lack of such strict restrictions has kept travel flowing in the United States, but for how long is anyone’s guess.
“It’s just such a difficult situation for everyone at the moment,” said Mr. Grant of OAG, the aviation data firm. “We are all sitting here waiting to see how the next couple of weeks shake out, not just from Thanksgiving, but also likely Covid infection rates.”
The Federal Aviation Administration on Wednesday cleared the way for Boeing’s 737 Max to resume flying, 20 months after it was grounded following two fatal crashes blamed on faulty software and a host of company and government failures.
The decision ends a devastating saga for Boeing, which had predicted billions of dollars in losses stemming from the Max crisis even before the coronavirus pandemic dealt a ruinous blow to global aviation. The agency’s chief, Stephen Dickson, signed an order Wednesday formally lifting the grounding.
“The path that led us to this point was long and grueling, but we said from the start that we would take the time necessary to get this right,” he said in a video message. “I am 100 percent comfortable with my family flying on it.”
The Max was grounded worldwide in March 2019 when the F.A.A. joined regulators in dozens of other countries in banning the plane after the crashes in Indonesia and Ethiopia killed all 346 people on board.
Investigators have attributed the crashes to a range of problems, including engineering flaws, mismanagement and a lack of federal oversight. At the root was software known as MCAS, which was designed to automatically push the plane’s nose down in certain situations and has been blamed for both crashes.
In August, the F.A.A. determined that a series of proposals by Boeing — including changes to MCAS, flight crew training and the jet’s design — “effectively mitigate” its safety concerns. Mr. Dickson, a former Delta Air Lines pilot, took the controls on a test flight in September, saying he liked what he saw.
In a news conference on Tuesday in anticipation of the F.A.A. announcement, relatives of victims on the second plane that crashed, Ethiopian Airlines Flight 302, questioned whether Boeing had done enough to address safety concerns with the plane.
“Aviation should not be a trial-and-error process; it should be about safety,” said Naoise Ryan, whose husband, Mick, was aboard that flight on March 10, 2019. “If safety is not prioritized, then these companies should not be in business.”
In a letter to employees, Boeing’s chief executive, David Calhoun, welcomed the lifting of the ban, promising to proceed deliberately with the plane’s return to service and to “never forget” the victims of the crashes.
“We will honor them by holding close the hard lessons learned from this chapter in our history to ensure accidents like these never happen again,” he said.
Now that the F.A.A. has lifted its grounding order, regulators around the world are expected to follow suit, though some may take their time in wrapping up their own in-depth reviews. The agency has worked with its counterparts in Canada, the European Union and Brazil on revised pilot training requirements for the Max.
Even in the United States, it could be months before the Max starts carrying passengers again. The F.A.A. must still approve pilot training procedures for each U.S. airline operating the Max, planes need to be updated, and airlines suffering from a huge decline in traffic during the pandemic may feel little urgency to act quickly.
On an investor call last month, the American Airlines chief executive, Doug Parker, predicted that the carrier would not resume Max flights before late December if the order came in November.
United Airlines said Wednesday that it expected to start flying the Max in the first quarter of next year after 1,000 hours of work on every plane and “meticulous technical analysis.” Southwest Airlines said it did not expect to resume flights until the second quarter.
The Air Line Pilots Association, which represents nearly 60,000 pilots in North America, including those at United and Delta, said in a statement that it was still reviewing changes to training procedures, but that the proposed engineering fixes “are sound and will be an effective component that leads to the safe return to service.”
The F.A.A. decision removes some uncertainty as Boeing seeks to rehabilitate its reputation, start fulfilling longstanding orders for the Max and manage the sharp slowdown in business caused by the pandemic.
The company has lost more than 1,000 orders this year, mostly for the Max, after accounting for orders that either were canceled or are likely to fall through. Aircraft contracts typically allow buyers to cancel or renegotiate terms if deliveries are delayed, adding to the urgency for Boeing to resume delivering the planes. Still, the company has more than 4,200 orders in its backlog, most of them for the Max.
The single-aisle plane is the latest in Boeing’s 737 line, an industry workhorse widely used by airlines around the world for short to intermediate distances. Southwest, for example, has more than 730 planes, all of them versions of the 737, including 34 Max jets. The airline has more on order, but its chief executive, Gary Kelly, said this week that Southwest was in no rush to expand its fleet.
For decades, Boeing had taken an incremental approach to the 737, choosing to update the plane rather than conceive a new model. That strategy had benefits, including reducing the need for costly pilot retraining. But it also resulted in a patchwork design that sometimes required workarounds. When larger, more efficient engines were added to the plane, they caused the Max to tilt up during certain maneuvers. MCAS — for maneuvering characteristics augmentation system — was programmed to counter that.
The Emotional Wreckage of a Deadly Boeing Crash
One year after a second 737 Max jet went down, the victims’ families press on in memory of their loved ones. “They were an extraordinary group of people.”
In both crashes, faulty sensors activated the software, sending the planes toward the ground as the pilots struggled to pull them back up. In a September report, Democrats on the House Transportation and Infrastructure Committee said internal Boeing documents showed that concerns raised by employees about MCAS had been dismissed or insufficiently addressed. That report and one from the Transportation Department’s inspector general accused Boeing of misleading the F.A.A. by playing down the complexity of MCAS, perhaps to avoid costly pilot training.
The House committee also faulted the agency’s practice of outsourcing some certification functions to employees of the companies it oversees.
On Tuesday, the House passed a bipartisan bill aimed at changing F.A.A. certification procedures and requiring an expert panel to review Boeing’s safety culture. The Air Line Pilots Association applauded the legislation, saying that it included much-needed changes to the certification process.
Boeing is nearing the end of a dreadful year. The pandemic has bruised its airline clients, leading to layoffs across the industry. Boeing expects to start 2021 with a global work force of about 130,000, nearly 19 percent fewer than it had at the start of this year. Also, quality concerns have slowed deliveries of its wide-body 787 Dreamliner.
Still, despite the twin crises of the Max grounding and the pandemic, there is hope. Orders for the Max may be difficult to cancel; some airlines, like Southwest, rely exclusively on Boeing planes, making it difficult to switch to the other major manufacturer, Airbus; and the Max offers savings on maintenance and fuel that may be difficult for some to pass up, especially as corporate clients pressure airlines to cut carbon footprints.
Boeing’s stock has risen more than 40 percent this month, with investors encouraged by news from Pfizer and Moderna that coronavirus vaccines under development appear to be highly effective.