SHORT SHOTS

Lufthansa adapts to more simplicity to secure supply chains
The current corona crisis is illustrating how important functioning logistics chains – especially air cargo logistics - are in keeping social and economic structures up and running as best possible. Globalization had led to machine and spare parts, and necessary pharmaceuticals being produced in different countries, not to mention the supply of perishable foods from all corners of the globe.
The current grounding of a number of passenger airlines and the massively reduced movement through the world’s airports, has led some to close, and some to move to skeleton staff, such as Frankfurt International Airport, for example, where some 18,000 employees have been put on short-time work. Lufthansa Cargo’s CEO, Peter Gerber, is grateful that cooperation is ongoing to ensure that all required functions from pilots to dispatchers, aircraft maintenance personnel, air cargo handlers air traffic control, airports, customs authorities and security checks, and the like, remain unrestricted in their professional activities:

"Facilitation of administrative procedures and especially at our Frankfurt hub can effectively reduce planning complexity in the short term. We welcome here the determination of the politicians to relax operational restrictions where necessary. Together, we can thus strengthen security of supply by air."
Similar to a number of other airlines such as Korean, Delta and American Airlines, for example, Lufthansa German Airlines is looking use some of its passenger aircraft as temporary freighters, thus helping to alleviate the incredibly tight cargo capacity situation brought about by the suspension of so many flights (CargoForwarder Global, 19MAR20). Lufthansa Cargo itself is making every effort to maintain the flight operations of its cargo aircraft in the current corona crisis.

"This is part of our corporate responsibility," Peter Gerber said, confirming that all its available freighters are in service.

Corona and its effect on Boeing and Airbus
When planes are grounded and airlines are struggling to survive, writing off older aircraft quicker than normal and looking to save costs by looking to defer aircraft deliveries, there is logical knock-on effect on aircraft manufacturers, who also have to comply with government regulations in their various operating countries.
On 17MAR20, Airbus issued a statement wherein it announced it would temporarily pause production and assembly in its French and Spanish plants for four days, following the implementation of COVID-19 measures in those countries. "This will allow sufficient time to implement stringent health and safety conditions in terms of hygiene, cleaning and self-distancing, while improving the efficiency of operations under the new working conditions. In those countries, the Company will also continue to maximize homeworking wherever possible. These measures will be implemented locally in coordination with the social partners. Airbus is also working together with its customers and suppliers to minimize the impact of this decision on their operations.” The plants are due to open again on Monday, albeit at lower production levels due to the virus-specific health and safety measures being introduced, according to an article published in the Financial Times, which included the prognosis of an aviation expect forecasting that Airbus output might drop from 880 to 600 aircraft, but that Airbus would be able to weather this.
Over at Boeing, which has been meeting difficult challenges already before Corona, recovery measures were published on 20MAR20, and included the following:

• CEO Dave Calhoun and Board Chairman Larry Kellner will forgo all pay until the end of the year.
• The company will suspend its dividend until further notice.
• Boeing will extend its pause of any share repurchasing until further notice. The company previously suspended its stock buyback program in April of 2019.

A statement issued by Boeing on 16MAR20 read: "America’s aerospace industry – which supports over 2.5 million jobs and 17,000 suppliers – is facing an urgent challenge resulting from the coronavirus pandemic. The long term outlook for the industry is still strong, but until global passenger traffic resumes to normal levels, we’re taking steps to manage the pressure on our business," and went on to say "we appreciate how the Administration and Congress are engaging with all elements of the aviation industry during this difficult time." An article in News18 stated that "Boeing's financial picture was already under pressure even before the coronavirus” and quoted prominent hedge fund investor Bill Ackman, who had stated last week that "Boeing is on the brink and will not survive without a government bailout.”