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When COVID-19 shut down economies around the world last spring, it also stopped all those trips business executives make to customers, suppliers, conventions, trade shows, and their company offices, according to commentary published by Forbes. Almost overnight, millions of people globally began working from home and using video-conferencing technology to transport themselves to meetings and negotiate deals. Eight months later, the situation hasn’t changed dramatically when it comes to business travel. And, there’s mounting evidence that the category — the most profitable for airlines and other hospitality companies — may never fully reconstitute itself. At the very least, business travel is anticipated to remain depressed through 2023. The biggest disruption is expected in the internal travel category that makes up 40 percent of business travel. This includes trips between offices within a company or to conventions and trade shows. Long-term contraction may amount to as much as 10% in business travel overall as employers and employees become increasingly comfortable with doing business over video-conferencing apps. Another factor holding down business travel is the reluctance to fly internationally and recent lockdowns in major cities in Europe. In Oliver Wyman’s second Traveler Sentiment Survey, 43 percent of the more than 2,500 business travelers questioned said they expected to travel less for business even after COVID subsides. That response was 16 percentage points higher than the 27 percent who told the survey in May they expected to travel less — a clearly troubling increase from the point of view of anyone who depends on that revenue. Respondents cited two reasons for the anticipated change in behavior: 34 percent had safety and health concerns, and 31 percent said teleconferencing and remote working arrangements were as effective as being in the office and traveling. While health anxieties over travel would presumably dissipate with the development and dissemination of a vaccine, the respondents’ desire to work from home and use video conferencing suggest that a downturn in business travel may persist long after COVID is conquered.

Mexican carrier Grupo Aeromexico will continue to reactivate travel destinations throughout next year, an executive told Reuters yesterday, adding that there is still much uncertainty stemming from the coronavirus pandemic. The country’s largest carrier filed for chapter 11 bankruptcy protection in a U.S. court earlier this year and has since tried to shore up its finances. “We’ll continue to reactivate but a lot will depend on possible resurgences of the virus as well as on the vaccine,” Giancarlo Mulinelli, the carrier’s vice president of global sales, said in an interview. Mulinelli forecast that the industry, one of the worst-hit by the coronavirus pandemic, would probably not make a full recovery before 2022. Read more.

With the COVID-19 pandemic grinding international travel to a halt, experts on an online panel at ABI’s International Insolvency Forum set for Nov. 18-20 will provide their insights into distressed non-U.S. airlines filing for chapter 11 protection, and how their cases may differ from domestic carriers. Click here to register. 

Azul SA, one of Brazil’s largest airlines, is tapping the local debt market for about $325 million of convertible debt with the backing of U.S.-based investment funds Knighthead Capital Management and Certares Management, Bloomberg reported. The five-year bonds are denominated in Brazilian reais but indexed to the dollar. Knighthead and Certares are supplying $300 million, which comes from a $1 billion joint fund they created this year to invest in the travel industry, a sector that’s been decimated by the COVID-19 pandemic. The remaining $25 million is being absorbed by the local market. The sale gives low-cost carrier Azul an added cushion as it navigates a drop in air travel that’s prompted Chapter 11 bankruptcies for three of the region’s largest airlines — Latam Airlines Group SA, Avianca Holdings SA and Grupo Aeromexico SA.

With the COVID-19 pandemic grinding international travel to a halt, experts on an online panel at ABI’s International Insolvency Forum set for Nov. 18-20 will provide their insights into distressed non-U.S. airlines filing for chapter 11 protection, and how their cases may differ from domestic carriers. Click here to register. 

Money owed to aircraft lessors and some creditors of South African Airways (SAA) is not covered by a 10.5 billion rand ($665 million) government bailout, SAA’s administrators said, Reuters reported. South Africa’s government allocated the latest cash injection for SAA in last month’s mid-term budget, but says it will not put further money into the airline. SAA’s administrators told Reuters on Thursday that 1.7 billion rand owed to lessors and 600 million rand that it owes to creditors from before the airline went into administration nearly a year ago would not be covered. That could complicate government talks with prospective investors in SAA, which has not made a profit since 2011. They said that the additional debts are “only payable from next July and will be paid over a three-year period,” so the bailout money only covers “initial commitments.” The administrators forecast in June that SAA would lose more than 6 billion rand over the next three years. Some analysts expect greater losses given the damaging impact on air travel of the COVID-19 pandemic. Click here.

With the COVID-19 pandemic grinding international travel to a halt, experts on an online panel at ABI’s International Insolvency Forum set for Nov. 18-20 will provide their insights into distressed non-U.S. airlines filing for chapter 11 protection, and how their cases may differ from domestic carriers. Click here to register. 

Mexican airline Aeromexico has requested permission from U.S. bankruptcy court to dismiss 1,830 employees in a cost-saving measure to weather the economic shocks of the coronavirus crisis, according to court filings filed yesterday, Reuters reported. The proposed layoffs, of 855 unionized workers and another 975 who do not belong to a union, would save the company $44 million on a recurring annual basis, Aeromexico said. Although the cuts will first cost the company $31 million in severance benefits, Aeromexico said the expected outcome “significantly outweighs the program’s one-time cost.” Aeromexico sought approval from the court to carry out the layoffs by the end of the month, according to the court filings. The company did not specify which positions would be eliminated. Aeromexico in June began a chapter 11 restructuring process in the U.S., becoming the third Latin American airline to file for bankruptcy protection, and has since received approval for up to $1 billion in financing. Read more. 

With the COVID-19 pandemic grinding international travel to a halt, experts on an online panel at ABI’s International Insolvency Forum set for Nov. 18-20 will provide their insights into distressed non-U.S. airlines filing for chapter 11 protection, and how their cases may differ from domestic carriers. Click here to register. 

Delta Air Lines Inc. and the union that represents its pilots have reached a preliminary cost-cutting deal that will prevent furloughs until Jan. 1, 2022, the union said yesterday, Reuters reported. Delta MEC, a unit of the Air Line Pilots Association, said that the agreement — which still needs approval from Delta’s nearly 13,000 pilots — will cut monthly minimum guaranteed hours by 5 percent. In September, Delta reached a tentative agreement with the negotiating committee of its pilots’ union to reduce the number of furloughs by 220, bringing the new total number of job reductions to 1,721. The airline industry has been hit hard by the coronavirus outbreak as travel has been restricted amid the pandemic, with Delta and other airlines focusing on cutting costs, boosting liquidity and restoring customer confidence.

The chances of Congress passing a pre-election stimulus are all but gone, as Treasury Secretary Steven Mnuchin yesterday blamed politics for undermining the months-long negotiations, Bloomberg News reported. “At this point getting something done before the election and executing on that would be difficult, just given where we are in the level of details,” Mnuchin said. With a deal out of reach, the two sides in the talks faulted each other for the breakdown. The Treasury chief, who is scheduled to be in the Middle East next week, made his remarks after another in a long series of calls with Pelosi that have failed to seal a deal. While Mnuchin said he hoped for bipartisan support for Senate Majority Leader Mitch McConnell’s latest idea -- a vote on a narrow bill next week to help small businesses -- Democratic leaders have no appetite for piecemeal measures now. The inability to bring months of negotiations to conclusion has sparked increasing tensions, with each camp seeing internal strains rise as it becomes clear there won’t be a spending bill to take to the public.

United Airlines said yesterday that it cut operating costs by 59 percent in the third quarter and had nearly $20 billion of liquidity to position it for an eventual recovery from the COVID-19 crisis that has hammered the travel industry, Reuters reported. Airline executives have signaled a slow but steady improvement in leisure demand but do not foresee a recovery to 2019 levels for at least two years, with business and international travel particularly slow to bounce back amid ongoing travel restrictions. When the rebound finally arrives, airlines want to have a cost structure and network in place. “We’re ready to turn the page on seven months that have been dedicated to developing and implementing extraordinary and often painful measures, like furloughing 13,000 team members, to survive the worst financial crisis in aviation history,” said United CEO Scott Kirby. He acknowledged, however, that the “negative impact of COVID-19 will persist in the near term.”

Senate Majority Leader Mitch McConnell (R-Ky.) announced yesterday that the Senate will take up a narrow economic relief bill when it comes back in session next week, the Washington Post reported. President Trump immediately undermined the move, writing on Twitter: “STIMULUS! Go big or go home!!!” Senate Republicans have balked at a $1.8 trillion relief package Treasury Secretary Steven Mnuchin has offered to House Speaker Nancy Pelosi (D-Calif.). Trump, though, has suggested Republicans should agree to an even bigger deal than what Democrats have offered. Pelosi has already rejected Mnuchin’s offer as completely inadequate, criticism she repeated Tuesday in a letter to House Democrats where she wrote, “Tragically, the Trump proposal falls significantly short of what this pandemic and deep recession demand.” Meanwhile McConnell will try again to pass a much more limited proposal, something he already attempted last month. Democrats blocked it at the time and may do so again with the new bill, which seems like it will be similar to the last one. The new bill will cost roughly $500 billion and will include provisions to extend enhanced unemployment insurance and the small business Paycheck Protection Program, as well as money for hospitals and schools, among other things.