SYDNEY (Reuters) – Hong Kong’s Cathay Pacific Airways Ltd 0293.HK said on Wednesday it welcomed all employee ideas to get it through the pandemic after pilots pushing to be included in restructuring talks ran a newspaper advertisement to drum up public support.
The Hong Kong Aircrew Officers Association (HKAOA) is facing a loss of relevance as its key agreements with Cathay expire next month, meaning the airline would no longer recognise the union’s representation.
HKAOA General Secretary Chris Beebe told Reuters the union had been served with termination notices in July that took effect in three months, confirming an earlier report in the South China Morning Post. Cathay declined to comment.
The airline this month declined to apply for more government employment subsidies for its main business units, freeing it from the condition to retain jobs tied to the grants and fuelling worries of layoffs.
HKAOA ran an advertisement in the South China Morning Post on Wednesday in its push for a seat at the table for talks on restructuring. A plan is due to be announced in the fourth quarter.
“What we want is to make sure if there is some sort of decision with regards to the future of the pilots, that we will be involved in discussions on what the structure looks like,” Beebe said on Tuesday.
He declined to comment on whether pilots would offer concessions like temporary salary cuts or unpaid leave as have been agreed at other airlines amid crumbling demand.
Many Cathay pilots had already participated in company-wide voluntary unpaid leave, Beebe said.
The carrier, which received a $5 billion government rescue package, has refrained from large-scale job cuts but has warned it is reviewing all aspects of its business model.
Cathay said on Wednesday it had been talking with different employee groups and had met with the HKAOA at least four times since July.
“We appreciate all ideas presented to us for consideration in our planning, and our door remains open,” the airline said in a statement.
Beebe said the recent talks had centred on an already announced voluntary early retirement programme for pilots, not the ongoing review.
HKAOA represents pilots at the main brand, Cathay Pacific. Pilots at regional brand Cathay Dragon and low-cost carrier HK Express are represented by other unions.
Several employees have told Reuters on condition of anonymity that they are bracing for major job losses.
Rival Singapore Airlines Ltd has announced plans to cut about 20% of positions, while Australia’s Qantas Airways Ltd has said it will cut nearly 30% of its pre-pandemic staff.
Reporting by Jamie Freed; Editing by Himani Sarkar and Gerry Doyle.
MISSOULA — They were the first to deploy jet aircraft as large tankers to fight wildfires. But that decision a decade ago looks absolutely prophetic, as Neptune Aviation’s competitors followed the same path.
Yet the company continues to thrive, helping to tackle the growing wildfire threat.
It’s a number staggering to imagine. Last week, a Neptune Aviation tanker delivered the one-millionth gallon of retardant during this explosive 2020 fire season.
Aerial firefighting has been going through changes in the past few seasons and although demand remains high, the way of doing business is different, with the US Forest Service using more “call when needed” aircraft.
“So there’s two types of contracts for these airplanes. We have call when needed contract and exclusive use,” explained Neptune Aviation Senior Vice President Dan Snyder.
“Exclusive use contracts are contracts that we know have a start date and have an end date and its definitive time,” he added. “Call, when needed, is really when the need arises, we get called up.”
That’s a fundamental shift from a decade ago when Neptune led the industry in deploying the jet-powered, “next-gen” air tankers. Then, it was all about firm, “exclusive use” contracts the company could count on.
“It does create some challenges for us as a company. From a planning standpoint, because realistically we still need to invest in our training and maintenance for the airplanes, irrespective of what kind of fire season we’re going to have,” Snyder said.
“Last year, was a perfect example. A very quiet fire season. We still had to produce everything necessary to go out and perform for a much shorter time.”
Another challenge, Neptune has lots of competition.
“We were the first one to bring on the Jets for firefighting. 2010 is when we did it. Now we’re one of seven vendors that have some type of turbine-powered aircraft. So we’re right in the mix,” Snyder said.
“And what does that mean for the future? We’re always looking for what’s next and how do we continue to have that sharpening edge to just be a little bit more competitive.”
But as with other aspects of the fire protection industry, Snyder says the hardworking team at Neptune, whether it’s the pilots and maintenance team or the administrative staff, all recognize it’s a cyclical business. And they’re continuing to adapt and appreciate the support they receive from Missoula.
“We have roughly 230 employees out here, and the majority of them live in Missoula. We do have a few of our pilots that live elsewhere,” Snyder said. “But from a family standpoint, they understand the business. Some years it’s normal and some years it’s very lean.”
It’s not just Neptune’s jets that have helped change aerial firefighting. The company had to design and develop its own Active Response tank, which uses a computerized system to control the delivery of retardant.
Seven airlines to get loans at below-market interest rates
Credit line to help carriers avert layoffs, revive tourism
The Thai government is set to offer 24 billion baht ($769 million) in loans to seven local airlines to help them counter the blow from the coronavirus outbreak as authorities firm up plans to revive tourism by gradually easing travel restrictions.
The so-called soft loans should be enough to help the airlines survive the pandemic and avoid laying off 20,000 workers, Thai AirAsia Co. Chairman Tassapon Bijleveld told reporters after a meeting with Prime Minister Prayuth Chan-Ocha in Bangkok Friday. The carriers may get loans from state banks, led by the Export-Import Bank of Thailand, for a five-year period, he said.
Thailand is throwing a financial lifeline to its carriers as airlines worldwide have asked for bailouts, cut salaries and furloughed staff amid a near shutdown in global travel. Prayuth’s government is also intensifying efforts to revive the tourism and trade reliant economy that’s on course for its worst crisis ever.
“The government is considering many relief measures and looking to find ways to ease flight restrictions, as well as measures to allow tourism in the country,” Prayuth said in a statement following a meeting with airline operators. “I ask the airline sector to cooperate more during this time, stop competing with prices but with services instead, and don’t increase debt and conduct layoffs.”
Tourism Collapse The collapse in Thailand’s tourism industry due to international border restrictions and global lockdowns widened losses at Thai Airways International Pcl and budget carrier Nok Airlines Pcl, prompting them to seek restructuring under the country’s bankruptcy law. Foreign tourist arrivals into Thailand is forecast to plunge to 8 million this year from about 40 million a year earlier.
The seven airlines set to receive financial aid from the government include AirAsia Group Bhd.’s Thai AirAsia and its long-haul unit, Thai AirAsia X, Bangkok Airways Pcl, Nok Airlines, Thai Smile Airways Co. Ltd., Thai Lion Air and Thai Vietjet Air.
The airlines have also requested an extension in reduction of excise taxes for jet fuel, Thai AirAsia’s Tassapon said. The government agreed to extend the lower airline-related fees, which includes parking and landing charges, to March 2022, he said.
RAWALPINDI/KARACHI: A designated safety audit team of the International Air Transport Association (IATA) is expected to visit Pakistan in the middle of September to assess the operational management and control systems of the Pakistan International Airlines (PIA).
The operational safety audit (IOSA) is carried out after every two years. The last such audit was carried out in 2018. The audit programme was designed by the IATA in 2003 to access the operational management and control systems of airlines.
According to the IATA, safely connecting people and business is its top priority as it works with airlines to raise standards and implement best practices.
Meanwhile, a pilots’ body on Wednesday urged Prime Minister Imran Khan to play his role in saving the PIA by replacing its incumbent management with those having knowledge of the aviation sector. It claimed that the national flag carrier had lost around Rs90 billion in just two months due to a ban imposed by the European Union Aviation Safety Agency (EASA).
The EU agency had suspended PIA’s authorisation to operate to EU member states for a period of six months from July 1 due to safety concerns after the aviation minister had made public a preliminary report on the May 22 plane crash in Karachi and said that over 260 pilots had dubious licences. It, however, gave the PIA right to appeal against its decision.
The PIA is set to file a formal appeal soon.
A spokesman for the Pakistan Airline Pilots Association (Palpa) said that taking advantage of the EASA’s six-month ban, foreign airlines had expanded their operations to major cities in Pakistan to capitalise the market share. “It is feared that the time is not far away when most of the local routes will be eaten up by other airlines, triggered by the poor policy of PIA management,” he warned.
He said the British Airways announced that it would start operating flights from Heathrow to Islamabad from September – two months earlier than its scheduled plan. Holding PIA chief Air Marshal Arshad Malik and his team responsible, Palpa demanded that the PIA management be replaced by the “persons who have substantial knowledge of the aviation sector and operational experience”.
“If foreign airlines start taking more business by offering their services to a large number of passengers then identity of the PIA would be lost,” the spokesman feared.
He alleged that the PIA management was taking “draconian measures” against pilots. He said the prime minister acknowledged that the issue of fake licences was created unnecessarily.
LONDON (Reuters) – Britain’s Rolls-Royce will carry out extra inspections on some of its Trent XWB engines which power the Airbus A350 airliner.
Rolls-Royce said on Tuesday that the issue would not cause significant customer disruption or material cost, as it affected a small number of XWBs of a certain age.
The Trent XWB-84 engine is set to be subject to an Airworthiness Directive from regulator EASA, Rolls said, because of wear on a small number of Intermediate Pressure Compressor blades found on a minority of engines which have been in service for four to five years.
None of those engines have experienced abnormal in-flight operation, it said, adding that it would carry out inspections on all Trent XWB-84s of a similar service life as a precaution. There are just over 100 of them.
“Given the limited scale of additional work which we anticipate will be required at existing shop visits to address this wear, together with the availability of replacement parts and spare engines, we do not expect this issue to create significant customer disruption or material annual cost,” Rolls said in a statement.
Problems with its Trent 1000 engine which powers the Boeing 787 airliner are expected to cost Rolls-Royce 2.4 billion pounds ($3.1 billion) to fix over a 2017-2023 period.
Rolls recently said it was considering strengthening its finances to help it withstand the pandemic.
It burned through 3 billion pounds in the first half of the year as planes stopped flying, cutting the revenue it receives from flying hours.
NEW DELHI: Air safety regulator plans to conduct special audits of airports across the country affected by heavy rain, the watchdog’s chief told Reuters, days after an air crash killed 18 people and raised questions about safety.
An Air India Express plane with 190 people on board, overshot the rain-soaked runway at an airport near the southern city of Kozhikode on Friday. The Boeing 737 landed in tailwind, skid off the runway and broke in half.
“We will conduct additional checks at major, busy airports across India that are affected by the monsoon rains,” Arun Kumar, head of the Directorate General of Civil Aviation (DGCA) said in an interview late on Monday.
“We will review everything – the condition of the runway, its incline, the lighting as well as drainage.”
Kumar said the special audit was over and above the DGCA’s routine checks and could cover a dozen airports including those in Chennai, Kochi, Trivandrum as well as Mumbai, all of which get heavy annual rains.
Air India Express is the low cost arm of state carrier Air India. The flight was repatriating Indians stranded in Dubai due to the novel coronavirus pandemic. The black boxes have been recovered and their data is being examined.
India’s Aircraft Accident Investigation Bureau is leading the probe into the crash. Boeing and the US National Transportation Safety Board are also taking part in the effort, Kumar said.
“Once the findings are finalised, and if something is amiss we will take action to rectify it,” he said.
The crash was the worst in India in a decade, and the second fatal accident on a “table-top” runway which is typically found in high-altitude areas.
Table-top runways are built by excavating the peaks of hills and have steep drops at one or both ends, increasing the danger if pilots under- or over-shoot their approach.
At Calicut airport, where the plane crashed on Friday, the pilot landed a third of the way along the runway, Kumar said on Sunday, leaving less room to bring the plane to a halt. Airports with table-top runways are subject to the same rigorous regulatory requirements and are periodically audited for safety, Kumar said.
In 2010, an Air India Express plane overshot a similar runway in the southern city of Mangalore. It fell down a hillside and burst into flames, killing 158 people.
A government-led committee looking into that crash had suggested installing an Engineered Material Arresting System (EMAS) on table-top airports. EMAS is a special surface usually installed at the end of the runway to quickly stop an aircraft.
However, a second committee suggested that if the runway safety area was increased at Calicut airport, the EMAS would not be needed, Kumar said.
Subsequently, the runway safety area was increased to 240 metres, more than the 90 metres prescribed by the International Civil Aviation Organisation, he said.
The airline industry is battling to recover from the impact of the pandemic. One way it can be more efficient is increasing the technology it uses
Aviation is at an unprecedented crossroads. The global shutdown required to halt the spread of coronavirus largely grounded the airline industry, and it faces a long road to full recovery. As the industry examines the options to aid its route forward, digital solutions are expected to come to the fore.1 In 2017, a flight from London Gatwick to Barbados was delayed by more than five hours because the plane didn’t have enough toilet paper.
The incident also delayed the return flight by six hours, with a potential cost to the airline of up to £290,000 in compensation for passengers.2 That’s far from the only incident. Other flights have been held up by malfunctioning coffee makers, blocked toilets and faulty baggage loaders. Delays of this sort are expensive: according to surveys conducted with airlines, every extra minute a plane stays on the ground between flights can lead to up to $40 in additional costs. And, in such an interconnected industry, one late flight can have a serious knock-on effect.
Research from Boston Consulting Group has found that one late aircraft in the early morning can cause as many as 70 delayed flights by the end of the day.3 Small technical problems and delays are estimated to cost airlines $8.3 billion a year in the US alone, according to a report commissioned by the Federal Aviation Administration – but digital technology can help. Airline passengers have experienced huge changes in recent years, from quick and easy online ticket purchases, through to mobile boarding passes that let them sail through to the departure gate with just their smartphone. But behind the scenes, the airline industry has been much slower to adopt digital innovations, in part due to safety concerns and the investment required.
According to Shell Aviation’s head of operations Thomas de Boer, the aviation industry still relies on “antiquated processes and technology” – an observation that is even more noticeable in the current environment. “More than ever, the industry needs efficiency. It seems counterintuitive that, in a touchscreen world, aspects of a process as essential to air travel as refuelling still involve a pen and paper,” he says. That’s finally changing, however, and new digital technologies can help more flights run on time, improving efficiency and creating a better experience for flyers. Shell invested $962m in research and development in 2019 and is one of the few energy companies with a dedicated R&D centre for aviation. This can help it keep ahead of the curve when it comes to technological developments in ground operations for aviation.
Clipboards and paper are being replaced by cloud-based computer systems and tablets for a paperless future where important information can be transferred instantly and securely, minimising unnecessary journeys and saving time for airport staff – and for passengers. These remote, contactless processes also cater to the greater social distancing measures that will be required in the new reality of airport operations. For example, staff on the “apron” – the area of the airport where planes are refuelled, parked and boarded – are being equipped with tablets such as Shell’s SkyPad, which replaces paper-based systems with real-time cloud computing to eliminate human error and wasted time during refuelling.
The technology is being used by refuelling operators at 141 airports in 23 countries. Instead of receiving paper instructions about how much fuel to supply to a particular flight, and having to manually get approval or follow up on any discrepancies, teams on the ground can now get accurate, up to date and secure information from a tablet. “By harnessing technology at the most pivotal point of refuelling and replacing manual, paper-based systems and processes, this helps us to tap into the unlocked potential to maximise efficiency and accuracy across all aspects, from refuelling to billing,” says de Boer. Switching refuelling from being paper-based to the cloud also allows data about the process to be collected, analysed and improved.
Shell Aviation’s OTP Analytics (OTP stands for “On Time Performance”) collects data on airline arrival, refuelling and departure times, and compares them to the schedule, combining external flight databases with information about refuelling performance. By analysing the data, Shell Aviation – which manages refuelling on thousands of flights a day – can better allocate its resources on the apron, and work with other organisations to make sure that more flights are refuelled on time. “This advanced data analytics tool enables us to track every single flight versus schedule and to understand and improve our refuelling performance, and adjust where necessary,” explains de Boer. In an industry where every second counts, this can have a huge impact on performance.
Digital technologies such as OTP Analytics can also help airlines by mitigating the knock-on effect of delays. This is referred to by airlines as their “catch-up rate” – the percentage of the time they’re able to turn around a late-arriving aircraft in time for the next flight to depart as scheduled. As aircraft return to the skies, this measurement will become more important than ever for airlines. Ultimately, making flying more efficient is going to be vital to the industry’s recovery. “Digital technologies can play a key role in the path to greater efficiency for the industry,” says de Boer. “As we continue to respond to the unprecedented challenges that the industry faces, this will be enabled by both digitalisation and collaboration.”
The decline in traffic during the COVID-19 pandemic has negatively impacted the skills and knowledge of some aviation professional due to a period of inactivity or not having the chance to work at all. This article will help you to do the following:
Understand the different aspects of skills and knowledge degradation.
Consider how this might impact yourself or your organisations.
Integrate the industry best practices to reduce the risks and help your return to operations.
This 3-4 minute read is a collaborative safety article developed by colleagues and experts from AESA Spain, Bologna Airport, Eurocontol, FAA, NLR and Thales.
Understanding the contributory factors
Regardless of where you work in aviation or the people whose safety you are responsible for, the COVID-19 pandemic has undoubtedly had an impact on the skills and knowledge of personnel working in the aviation industry. An EASA collaborative group involving NAAs and industry have been working to help understand the problem and provide some best practices that can help reduce the risks.
The group identified the main contributory factors to be:
Lack of Recency: The drastic reduction in traffic means that most aviation professionals are not performing their normal tasks, sometimes they are doing a substantially different job, and sometimes not working at all or at a substantially reduced frequency. The extended period of low recency is both long and affects far more people and organisations at the same time than ever before, which means it is not comparable with more familiar low-recency situations, such as individual sick leave, maternity leave, and extended holidays.
Lack of Training: With widespread lockdown restrictions, simulator and classroom based training ground to a halt during the shutdown period. While organisations are making the effort to ramp up training activity, they face a multitude of challenges ranging from the closure of training centres, lack of simulators, and lack of available instructors and trainers whose instructional knowledge may have also eroded during this period. As a result, refresher and/or recurrent training that has been identified as necessary is taking place at a pace which is insufficient to cope with the predicted traffic increase for this summer season. Furthermore, new or updated procedures have been developed to cope with the changes in operations. With the aforementioned training constraints, aviation professionals may not be effectively trained in the updated systems and procedures upon their return to work.
Review and update your procedures based on the new situation – train accordingly
Leaving existing training programmes as they are is not an effective way to cope with the skills and knowledge degradation during this exceptional period. Not only have staff potentially spent a considerable period of time away from the operation but there are also many new or updated procedures that have been introduced as a result of the pandemic.
Regardless of the domain you work in or the type of activity that you are doing, it is important that you review your existing procedures and update them based on the latest situation if you have not done so already.
Of course when you change something you need to train your staff in the new/updated procedures. This should be followed up with periodic safety performance checks to verify how things are working in the real world of your operation and backed up by internal audits to ensure that the procedures are fit for purpose and are actually being carried out by your staff. The more you explain the need for any changes you have implemented the more likely they are to be adopted – even better, make sure to involve operational staff in developing any new procedures and training material as early as possible.
Proposed best practices which are applicable to all aviation domains
The EASA-led Task Team comprising safety experts from different aviation domains have proposed the following best practices which you can consider to address proficiency decay and lack of recent experience within a workforce.
These best practices may not be applicable to all organisations, thus it is important to take your organisation’s nature of operations and key challenges into account when considering which best practices to adopt.
When personnel are on furlough or long-term leave
Communicate changes to furloughed personnel or personal on long-term leave, to avoid overwhelming personnel with information immediately before they return to work.
Maintain training activities during lockdown and low traffic levels when possible.
Promote digital/remote training and use webinars to update staff on critical training areas.
Introduce periodic refresher training and integrate new or changed operations early in refresher training.
When preparing personnel to return to work
Ensure gradual return to normal operations to allow for re-familiarisation.
Identify which skills and job functions are most at risk, and provide tailored training where possible.
Stimulate and facilitate mental rehearsal, in formal training, self-training and operations briefings/preparation.
Introduce self-reflection and -assessment programs to detect/prevent over- and under-confidence.
Introduce mandatory pre-shift briefings to update personnel of recent and on-going changes.
Increase supervision and support staff as much as possible.
Other best practices for organisations and National Aviation Authorities (NAAs)/National Supervisory Authorities (NSAs)
Postpone planned changes to equipment and procedures which are not critical or relevant to the pandemic.
Risk-based assessment should be conducted for deviations from existing training programmes. It is also important to ensure that the deviations are still in line with existing regulations and/or exemptions.
NAAs/NSAs to ensure that exemptions are issued only after risk assessments have been conducted.
The task team is now working on additional information to help you understand safety issue further by developing more information on the following areas:
Risk mechanism of proficiency decay
Factors affecting proficiency decay
Sector-specific proficiency decay considerations
We will shortly add more information for each of the different domains and aviation professional groups:
Aerodrome Operator and Ground Handling Staff
Air Traffic Control Officers
Commercial Flight Crew
It is important to be aware of the compounding effect of the degradation of skills across the different types operations. Although each type of operation must address its unique proficiency decay risks, they must also consider how risk may affect adjacent operations. The interaction of risk from the different domains inevitably contributes to the weakening of safety barriers of the European aviation industry as a whole when viewed from a systems perspective. Thus, it is in aviation community’s interest to address this safety issue across the different domains in a concerted manner to manage the risk factors stemming from the respective domains.
ATLANTA, Aug. 5, 2020 /PRNewswire/ — For decades, aerospace companies and their customers have drowned in cumbersome documentation processes and storage mechanisms. Honeywell (NYSE: HON) is solving those problems by fully integrating aircraft record generation into its digital blockchain ledger. This provides Honeywell’s customers with an easy way to search and retrieve scattered data through a simple user interface, creating a level of speed and efficiency never before available in the aerospace industry. Quick and easy access to this data is critical for airlines because most use dozens of repair facilities, and the paperwork from each is not integrated. Additionally, airlines and operators commonly deal with lost, printed paperwork associated with a part.
This paperwork, or “trace documents,” are critical to maintaining the value of a part’s worth. Honeywell’s blockchain is a secure, decentralized database crowd-sourced by all its authorized users. Each user that Honeywell allows has a copy of the database and knows its contents in real time. Instead of storing only PDF documents or a reference to the digital aircraft record, Honeywell now stores the actual form data “on chain.” This data is used to re-construct aircraft records, including records that prove the U.S.
Federal Aviation Administration has certified that aircraft parts are safe to fly. These records can be accessed by customers, and in the case where paperwork is missing, customers can simply input the part number and serial number and the user interface will retrieve the data from the blockchain and “rebuild” the missing document. “Honeywell’s offering is like a search engine, but it works for anything and everything related to aircraft parts and service,” said Lisa Butters, general manager for Honeywell’s GoDirect Trade and applications owner for blockchain technologies. “Honeywell manufactures and repairs thousands of aerospace parts each day, and now all of those events, including the generated air worthiness certificates, go on chain. In aerospace, this is a game-changing technology that will simplify and transform recordkeeping for aircraft owners and airlines around the world.” In its purest form, blockchain technology creates trust between all parties on the chain through digital transparency.
The goal of the company is not to be the only aerospace company creating unified aircraft records on chain, but rather to collaborate and be an implementation partner so others can leverage the same technology. “Blockchain is unique because it’s a team sport,” said Butters. “This isn’t just about Honeywell data. In fact, this is not just about aerospace data. Whether you are in aerospace, automotive, electronics or consumer products, I envision all manufacturing OEMs and repair shops pushing quality documentation and part provenance data to the blockchain, so customers have easy access.” Adding data to the blockchain ledger does not replace regulatory authorities’ current document requirements, but rather supplements them more efficiently.
Honeywell now unpacks all that parts and repair data and makes it immutable, searchable and accessible to everyone in its permissions-based ecosystem. Honeywell first implemented blockchain technology with the launch of GoDirect Trade in late 2018. This online marketplace for buying and selling new and used aircraft parts leverages blockchain to include images and quality documents for the exact part being offered for sale, giving the buyer more confidence about purchasing the part. More than 2,700 companies and 7,000 users are active on GoDirect Trade today, and more than 80 storefronts have combined to process more than $8 million in transactions since the marketplace’s launch.
About Honeywell Honeywell ([url=”]www.honeywell.com[/url]) is a Fortune 100 technology company that delivers industry-specific solutions that include aerospace products and services; control technologies for buildings and industry; and performance materials globally. Our technologies help aircraft, buildings, manufacturing plants, supply chains, and workers become more connected to make our world smarter, safer, and more sustainable.
Korean Air Lines Co. provided some rare positive news for the devastated global aviation industry Thursday, reporting a quarterly profit after flying planes loaded with products from South Korean technology giants to homebound consumers around the world.
The carrier’s operating profit was 148.5 billion won ($125 million) for the April-June period. Cargo sales climbed 95% from a year earlier to 1.23 trillion won. Asiana Airlines Inc. could follow suit with an operating profit of 43.7 billion won when it reports next week, according to the average estimate of analysts tracked by Bloomberg.
The profit comes as other airlines are reporting record losses; slashing routes, jobs and salaries; or collapsing altogether because of the impact Covid-19 has had on travel. The crisis has forced some carriers to retrofit their planes to haul more cargo and generate much-needed cash from surging airfreight rates.
“The cargo business has come to the rescue yet again when things are going bad,” said Um Kyung-a, an analyst at Shinyoung Securities Co. “Countries will be in need of goods to restart their economies as many emerge from shutdowns due to the outbreak.”
Hedge-fund manager David Einhorn is on board, telling investors he bought a stake in Atlas Air Worldwide Holdings Inc. in the second quarter because he expects the cargo carrier to benefit from a shortage of airfreight capacity.
Korean Air and Asiana benefit from enormous demand for smartphones, TVs and components from Samsung Electronics Co. and memory chips from SK Hynix Inc., said Bang Min-jin, an analyst at Eugene Investment & Securities Co. in Seoul. South Korea’s overseas shipments of semiconductors, its biggest export, rose 2.9% in June from May, while mobile equipment jumped 20%, according to the Ministry of Trade, Energy and Industry.
Samsung and LG Electronics Inc. both beat earnings estimates for the quarter ending June, as did Hynix, which said profit tripled after clients snapped up its products to meet demand from people locked down at home. Online commerce is booming: United Parcel Service Inc. posted its biggest one-day share gain in 20 years last week after beating earnings estimates, while Amazon.com Inc. posted a record profit and 40% jump in sales.
Korean Air and Asiana have strengthened cargo networks from Vietnam to transport gadgets made at Samsung and LG factories there, Um said. There’s also been strong demand for medical supplies, fresh fruit and seafood, she said.
Falling fuel prices helped drive down expenses, with every dollar adjustment impacting earnings by $33 million, according to Korean Air.
The increase in airfreight rates came as capacity was squeezed by the grounding of thousands of passenger planes, which carry cargo in their bellies. At the end of July, about 35% of the world’s passenger aircraft were still parked in storage, aviation analytics company Cirium said.