Air Canada's COVID-19 actions


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Air Canada strikes deal with union to furlough up to 600 pilots

News provided by The Globe and Mail – link to full story and updates

JEFF LEWIS AND ALLISON LAMPERT, TORONTO AND MONTREAL, REUTERS – PUBLISHED MARCH 24, 2020

Air Canada has reached an agreement that would allow the airline to furlough up to 600 pilots because of plummeting traffic due to coronavirus, according to a letter from the union reviewed by Reuters on Tuesday.

Air Canada, the country’s largest carrier, is slashing capacity due to the collapse in travel demand from the coronavirus outbreak which has forced many governments to impose travel restrictions.

The agreement covers six months from April through the end of September, according to the letter dated March 23.

Air Canada did not immediately respond to requests for comment.

Carriers are making unprecedented cuts to flights, costs and staffing while stepping up calls for emergency aid from governments to save jobs.

Canada is working on a financial aid package for the country’s struggling airlines.

Global passenger capacity fell by 35% last week, the worst since the start of the crisis, according to data from airline schedules firm OAG, which said deeper cuts were likely in the coming weeks.

Air Canada reached the agreement as its April schedule was reduced by 80% and the carrier has suspended its leisure service Rouge, the union letter said.

The deal “represents our best efforts to balance our responsibility to our members, alongside the requirement for the company to reduce its costs as quickly as possible in line with the schedule reduction and for its long-term viability.”

Pilots on furlough continue to accrue seniority and would be later recalled in order of seniority.

Air Canada shares were up about 17% in late morning trade, but still down about 70% this year.

Air Canada Pilots Association, which represents 4,400 members, said in a statement on Tuesday that the agreement would reduce pay across the group, simplify contract language to allow pilots to retire earlier and provide “for orderly redundancies” up to a maximum of 600 positions in the coming months.

“Due to the complexity of pilot training, the precise number of positions immediately affected is still unclear and we will be working with Air Canada in the coming days and weeks to better understand the situation,” said Captain Michael McKay, Chair, Air Canada Pilots Association, in the statement.

 

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For those directly affected by these very difficult decisions as well as those now looking over their shoulder... Having seen a bit of this in a previous life, this too, shall eventually pass to

After reading this thread my thoughts went back 20 years to a recorded telephone message, from Robert Milton, to all employees explaining the Canadian Merger.  His explanation to employees was the Fed

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I know these are largely unprecedented times, but will all of this stimulus activity lead to free trade challenges in the future? I wouldn't put it past Trump to try it.

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For those directly affected by these very difficult decisions as well as those now looking over their shoulder...

Having seen a bit of this in a previous life, this too, shall eventually pass to become a distant memory.

Keep hope strong, keep optimism alive and most of all keep in "touch" with one another using the usual electronic means.

Don

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15 hours ago, neverminds said:

And Rouge pilots get paid at mainline rates even though the majority of their aircraft(maybe all) are parked.

Between Idle Rouge pilots  being paid at 55 hours a month at mainline rates and Idle Max pilots being paid at 70 hours, Air Canada must have the most expensive inactive rosters in the history of aviation 

737 MOA is gone, ALL pilots will be paid 55 hours.

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7 minutes ago, AIP said:

737 MOA is gone, ALL pilots will be paid 55 hours.

I think what is lost on some that are not familiar with the pay system for pilots is that the MMG reduction combined with no opportunity to add flying above MMG is equal to a 30-35% pay reduction. But yes, there will be a lot of AC pilots sitting around doing nothing.

Meanwhile, in the US they are on the cusp of finishing legislation that will see US carriers receive $25B in non-repayable grants on the condition of NO LAYOFFS until August 31st. Not sure if there will even be a requirement for job sharing.

Alaska Airlines flying around with a load factor of 17%....

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10 hours ago, rudder said:

The US situation is going to be BS heaped on BS. There is no appetite to give the airlines money without strings. Boeing - supposedly heading for Chapter 11 if it doesn't get a bailout - said today it wouldn't accept one if it comes with significant strings.

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7 hours ago, dagger said:

Boeing - supposedly heading for Chapter 11 if it doesn't get a bailout - said today it wouldn't accept one if it comes with significant strings.

That's rich.  Quite the high opinion of themselves.

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From AW&ST

https://aviationweek.com/defense-space/supply-chain/nearly-50-years-apart-lockheed-bailout-resonates-during-boeing-

Nearly 50 Years Apart, Lockheed Bailout Resonates During Boeing Crisis

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Credit: U.S. Air Force

An unexpected problem plunges a promising new airliner program into crisis mode, potentially dragging the world’s largest aerospace company down along with it.

Billions of losses, meanwhile, pile up on another new aircraft created for the U.S. Air Force’s mobility fleet, thanks to the company’s risky strategy to bid low on a fixed-price development contract. In desperation, the firm’s executives come begging to Congress for a controversial loan guarantee, as whisperers on Wall Street wonder whether the company can survive. 

 The company: Lockheed. 

 The year: 1971. 

Over a century ago, Mark Twain observed that history doesn’t repeat, but it does rhyme. Many details divide the troubled stories of the L-1011, C-5A and Lockheed from over 49 years ago and today’s headlines about the 737 MAX, KC-46 and Boeing. With the request by Boeing for loan guarantees, the two sagas now uniquely converge. 

 Last week, Boeing sought Congressional support for $60 billion in loan guarantees as a bailout for itself and its suppliers. Likewise, in 1971, a cash-strapped Lockheed pleaded to Congress to approve $250 million ($1.6 billion today) in loan guarantees.

The main difference dividing the stories, of course, is a global health scare. The COVID-19 pandemic spread by the novel coronavirus has collapsed demand for air travel, jolting a formerly healthy airline industry into a sudden economic crisis. As airlines park fleets, the economic crisis expands to formerly thriving production lines of new aircraft, threatening manufacturers of commercial aircraft, engines and other subsystems. 

The COVID-19 crisis adds to mounting financial pressures on Boeing. The year-long grounding of the 737 MAX fleet to fix fatal design flaws added nearly $20 billion in unexpected costs. That comes on top of a four-year series of financial charges totaling nearly $4 billion related to errors and delays on the KC-46, a tanker aircraft designed and produced under fixed-price contracts awarded by the Air Force since 2011.

Similar, self-inflicted errors 50 years ago had weakened Lockheed’s financial position, leading up to its bailout request. On Jan. 7, 1971, Aerospace DAILY described the company’s grim situation. Lockheed had underbid Boeing and Douglas in 1965 to claim a fixed-price, $1.9 billion contract from the Air Force to develop and produce the entire C-5A fleet. The terms of the contract shifted all of the financial risk to the contractor, and the C-5A proved significantly costlier than anticipated by Lockheed’s winning price. By early 1971, Lockheed faced a $1.8 billion cost overrun on the C-5A program, Aerospace DAILY reported. Adjusted for inflation, the equivalent amount today is $11.5 billion.

Senior defense officials decided to intervene to spare Lockheed from insolvency and preserve the C-5A production line for the Air Force. Deputy Defense Secretary David Packard proposed to have the Pentagon cover Lockheed’s entire $1.8 billion cost overrun on the C-5A, with Lockheed required to repay only $200 million in installments. The agreement was finalized on Feb. 1, Aerospace DAILY reported the following day.

Another financial crisis, however, was already brewing for Lockheed as the ink dried on the Pentagon agreement, and this time their top military customer would be powerless to help.

On Feb. 4, 1971, Lockheed CEO Dan Haughton arrived in London. He was joined on the trip by Clarence “Kelly” Johnson, the founder of Lockheed’s already legendary Skunk Works. They had come to the UK for a scheduled quarterly update by Rolls-Royce, the engine supplier for the Lockheed L-1011 TriStar. Such routine progress reports seldom required the attendance of Lockheed’s top executives, but Haughton knew Rolls-Royce was in trouble. Three months earlier, Rolls-Royce reported serious technical problems with the development of the RB.211-22 engine for the L-1011. The financial cost to resolve the problems pushed Rolls-Royce to the brink of insolvency, but the UK government had agreed in November on a financial bailout, with £42 million advanced directly to the engine manufacturer and £18 million provided from a syndicate of 24 banks, Aerospace DAILY reported. 

In Feb. 1971, Lockheed’s UK-based liaison with Rolls-Royce was Alan Brown, who would later manage development of the F-117. In an oral history interview recorded in 2010 by the Huntington Library, Brown recalled the moment when he, Haughton and Johnson settled into a Rolls-Royce conference room in Derby. A Rolls-Royce engineer started delivering a routine update on the redesign of a turbine blade. Then, precisely as the clock struck 10 a.m., a man in a dark blue suit entered the conference room.

“As of this moment Rolls-Royce is calling in the receivers,” the unidentified man announced to the room.

“Our Lockheed people, Dan Haughton and Kelly [Johnson] and Willis Hawkins, turned around and looked at us with that, ‘Why the hell didn’t you know?’ expression on their faces. Because that was a part of our job—to know what was going on [at Rolls-Royce]—and we hadn’t a clue,” Brown recalled nearly 40 years later.

The alarmed reaction by Lockheed’s senior executives was sensible. If the engine supplier for the L-1011 was bankrupt, the contract for the RB.211-22 engine would be nullified.

Lockheed released a statement the following day: “We are now carefully studying the statement of the Rolls company which would repudiate the Rolls contract with Lockheed and the announcements of the withdrawal of government and outside financial support,” Aerospace DAILY reported on Feb. 5.

The L-1011 had flown for the first time on Nov. 16, 1970, but it wasn’t scheduled to be introduced into service until later in 1971. Lockheed couldn’t afford to start over with a new engine supplier. The company already had $652 million tied up in development and production costs for the L-1011. Even receiving the C-5A bailout from the Pentagon, Lockheed’s liabilities still exceeded current assets by $38.5 million in mid-1971, according a 1972 report by the General Accounting Office (now called the Government Accountability Office, or GAO). Needing an emergency supply of cash, the company turned to the financial community. A consortium of U.S. banks considered Lockheed’s loan application, but decided it was too risky without a government backstop.

That’s when Congress got involved. In 1971, Lockheed was already the Pentagon’s most significant supplier, with contractual commitments totaling $1.5 billion annually. In addition to the troubled C-5A, Lockheed also was supplying the armed services with C-130, P-3 and S-3A aircraft, plus the Poseidon, Polaris and Trident ballistic missiles. Tens of thousands of employees spread over congressional districts across the country also could lose their jobs.

On Aug. 9, 1971, Congress passed the Emergency Loan Guarantee Act, which authorized a newly created Emergency Loan Guarantee Board to backstop up to $250 million in private loans to major businesses. Although the law allowed any large company to apply for loan guarantees, the legislators understood that the authority was created to support Lockheed, which, in fact, became the board’s only applicant. On Sept. 14, 1971, the Board agreed to guarantee up to $250 million in loans for Lockheed, according to the GAO report. As a result, the consortium of banks agreed to expand an existing credit line for Lockheed by that amount.

In the end, the bailout proved to be a profitable investment for the government. In addition to preserving the company’s production lines and jobs, the loan guarantees generated $30 million in fees paid by Lockheed to the Treasury over the next six years. In 1977, Aviation Week reported the program had backstopped $245 million in loans to Lockheed, with a $60 million balance remaining.

The Lockheed bailout of the 1970s proves a point learned later during the automotive company bailouts of the 2008 financial crisis and Great Recession: government bailouts, when properly designed, can be both lucrative for taxpayers and maintain critical manufacturing capability.

Better yet, if you assume the innovations the companies achieved much later—Lockheed’s many leading-edge products today such as hypersonics, or Detroit’s push into electric cars—it is reasonable to draw a line back to the bailouts. The key, of course, is making sure the bailouts are properly applied—somehow, the bailout must be tied to the companies moving forward, not just paying off over-due bills. If Washington can again strike this balance with Boeing, another round of loan guarantees for the world’s largest aerospace company could be worth it.

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Steve Trimble

Steve covers military aviation, missiles and space for the Aviation Week Network, based in Washington DC.

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Big  fear if Boeing files Chapter 11, sticking all the proud owners of the Max with the bill.  Personally I think the 162 Pilot layoffs is just optics to appease the other employee groups that Flt Ops is feeling some pain.  These Pilots combined salary is pocket change, if we do hit 600 layoffs that is a different story.

Here's hoping the 55 hours mitigates any further layoffs.

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I think the ERIP subscription will be the ultimate lay-off determinant. 600 already factored in MMG 55.

As for Boeing - strategically a CH11 filing would likely be a get out of jail free card for the MAX liability, grounding, and delivery non-performance claims. But it would also wipe out current shareholders. Is the Boeing BOD really willing to go there?

What is likely to ensue is a significant and confrontational discourse between Boeing and the US government delegates on the terms and conditions of any financial aid.

The money is on the table. The question is whether Boeing is willing to accept terms rather than dictate terms.

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8 minutes ago, Johnny said:

Big  fear if Boeing files Chapter 11, sticking all the proud owners of the Max with the bill.  Personally I think the 162 Pilot layoffs is just optics to appease the other employee groups that Flt Ops is feeling some pain.  These Pilots combined salary is pocket change, if we do hit 600 layoffs that is a different story.

Here's hoping the 55 hours mitigates any further layoffs.

I suppose a Chapter 11 could stick MAX owners with the bill, but would, say, Air Canada buy another Boeing plane without being compensated. Boeing would end up with a list of captive US customers, forced to support the domestic airframer. Otherwise, the world will be buying Airbus almost exclusively. Ergo, I don't expect Boeing to foist the bill on its customers. It might try to get them to convert compensation claims into deep discounts on other planes.

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10 minutes ago, dagger said:

I suppose a Chapter 11 could stick MAX owners with the bill, but would, say, Air Canada buy another Boeing plane without being compensated. Boeing would end up with a list of captive US customers, forced to support the domestic airframer. Otherwise, the world will be buying Airbus almost exclusively. Ergo, I don't expect Boeing to foist the bill on its customers. It might try to get them to convert compensation claims into deep discounts on other planes.

Regardless of what Boeing decides to do, AC would be wise to use this as an opportunity to evaluate/simplify fleet.

AC has achieved phenomenal discounts in certain aircraft purchases but the result is too many fleet types vs total fleet size.

Any NEO model and the A350 are outstanding aircraft that would create greater fleet commonality for parts and training. The current crisis may create delivery positions that were previously not available. 

And the potential for an A220-500 derivative should be enticing for AC.

The 767’s, 777’s, and the MAX are all aircraft worthy of consideration for replacement if desirable alternatives come available, including the used aircraft market. Only problem is that with a capital expenditure embargo in the near term there may be no ability to make such commitments.

 

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9 minutes ago, dagger said:

Ahem.....Delta is saying 49 Tons

49 tonnes would put they really over weight (i tonne - 2205 lbs)

It is confusing because AC uses LBS , KG, TONNES, and TONS

Lot of double checking the weigh bills because there are still some that remember the Gimli Glider

 

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I'm gonna post this here because I believe this forum has been overloaded with right wing extremist nutbars.

Some folks south of Canada have voiced an opinion that folks over 60 ought to be willing to dive on the fire pit to save the economy. Am I repeating something you've all talked about elsewhere? Sorry if I missed it. I guess my question has to somehow relate to aviation, so I'll ask, do the conservative pilots in Canada agree with that point of view? ...and if so, would they be willing to come to a bonfire in my backyard to tell me all about it? 

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1 hour ago, Mitch Cronin said:

I'm gonna post this here because I believe this forum has been overloaded with right wing extremist nutbars.

Some folks south of Canada have voiced an opinion that folks over 60 ought to be willing to dive on the fire pit to save the economy. Am I repeating something you've all talked about elsewhere? Sorry if I missed it. I guess my question has to somehow relate to aviation, so I'll ask, do the conservative pilots in Canada agree with that point of view? ...and if so, would they be willing to come to a bonfire in my backyard to tell me all about it? 

Source?  How come you are only asking the question of Conservative Pilots, is it a given that Liberal Pilots would be in agreement with giving up their hospital beds? ?

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Order No. 2020-A-36

March 25, 2020
 

APPLICATION by Air Canada also carrying on business as Air Canada rouge and as Air Canada Cargo (Air Canada), pursuant to subsection 80(1) of the Canada Transportation Act, S.C. 1996, c. 10, as amended (CTA), for a temporary exemption from the advance notice requirements of section 64 of the CTA.

 
Case number: 
20-02973
 

BACKGROUND

On March 11, 2020, the World Health Organization assessed the outbreak of COVID-19 as a pandemic. Since the outbreak of the virus, a number of countries, including Canada, have issued travel bans, restrictions, or advisories.
On March 18, Air Canada applied to the Canadian Transportation Agency (Agency) for a temporary exemption from the provisions of section 64 of the CTA to permit it to suspend the operation of air services between points in Canada, as it considers necessary, without having to provide the normal 120 days of notice and engage in the consultations required by the CTA and the Air Transportation Regulations, SOR/88-58, as amended (ATR).

LEGISLATIVE FRAMEWORK

Section 64 of the CTA requires, in part, that a licensee not implement a proposal to discontinue a domestic service referred to in subsection 64(1) of the CTA until the expiry of 120 days, or any shorter notice period that the Agency may specify by order, and that the licensee provide elected officials of the relevant municipal or local government with an opportunity to meet with the licensee to discuss the impacts of the proposed reduction or discontinuation of service.

Subsection 14(1) of the ATR provides that, for the purposes of subsection 64(1) of the CTA, a licensee proposing to discontinue or to reduce the frequency of a domestic service shall give notice of the proposal to the Agency, the Minister of Transport and the minister responsible for transportation in the province or territory where the area to be affected is located. Additionally, the licensee is required to advise holders of domestic licences operating in the area to be affected by the proposal and the persons resident therein, by publishing a notice in newspapers with the largest circulation in that area in each official language.

SUBMISSIONS BY AIR CANADA

Air Canada states that as a result of the magnitude of the COVID-19 crisis, it must manage the financial viability of its network, and that doing so may require suspension or cancellation of routes between two points in Canada.

Air Canada further states that, because of the fluidity of the COVID-19 crisis, it seeks a blanket exemption from the provisions of section 64 of the CTA because there is simply no time to publish the prescribed public notices and undertake the associated consultations.

Air Canada submits that in the current circumstances, it is impossible and impractical to comply with the notice and consultation provisions.

Air Canada requests that the authorization remain in effect until the end of the COVID-19 crisis or until such time as the Agency sees fit.

In light of the urgent nature of the situation, Air Canada requests expedited treatment of the present application.

ANALYSIS AND DETERMINATION

The exemption request, if granted, would temporarily permit Air Canada to reduce or discontinue domestic air services immediately on routes where it would normally be required to provide a 120‑day advance notice and engage with local officials.

The notice provisions required by the CTA are intended to ensure that communities with limited air service, including remote communities, are made aware enough in advance of any proposed reductions in or discontinuances of air services to their community, in order to permit them to plan for the event, including potentially seeking alternative air carriers to provide air services. Carriers operating in the area are also made aware and can consider whether to provide replacement air services.

The impact of the COVID-19 pandemic is significant and continues to evolve as air carriers try to adjust to travel restrictions and rapidly dropping passenger volumes and revenues.

The Agency finds that in light of the extraordinary circumstances related to the COVID‑19 pandemic and the urgency of the situation, compliance by Air Canada and other air carriers with section 64 is impractical at the present time. That said, the Agency also finds that it would not be desirable to permit the permanent, as opposed to temporary, discontinuation of domestic air services without advance notice and consultation.

CONCLUSION

Pursuant to section 28 and paragraph 80(1)(c) of the CTA, the Agency exempts all air carriers who hold a domestic licence from the provisions of section 64 of the CTA until April 30, 2020, on the condition that once the exemption ends, air carriers who have taken advantage of the exemption to temporarily reduce or suspend services on certain routes will immediately resume those services and follow all of the requirements of section 64 of the CTA if they wish to reduce or eliminate any services on a permanent basis.

In addition, the exemption may be lifted by the Agency in respect of a particular route or community, should the Agency find that as a result of the exemption, the cessation of service on a certain route has caused or is likely to cause a community to become so isolated that it does not have access to critical services and goods. In such an instance, service would have to resume and the carrier providing the service would be required to comply with section 64 before discontinuing it.

On or before April 30, 2020, the Agency will determine if the exemption should end on that date or be extended to a later date.

 

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5 hours ago, Mitch Cronin said:

I'm gonna post this here because I believe this forum has been overloaded with right wing extremist nutbars.

Some folks south of Canada have voiced an opinion that folks over 60 ought to be willing to dive on the fire pit to save the economy. Am I repeating something you've all talked about elsewhere? Sorry if I missed it. I guess my question has to somehow relate to aviation, so I'll ask, do the conservative pilots in Canada agree with that point of view? ...and if so, would they be willing to come to a bonfire in my backyard to tell me all about it? 

Mitch....ask yourself...where does the notion of self-sacrifice originate? Actually, it is quite simple. Those over 55 ( a LOT) or health-compromised self -isolate. YOU are in control of your destiny. Stay at home. There are many who will provide services delivering food/supplies as necessary.

Everyone else carries on contributing to the economical cycle. Remember that over 70% of infected experience nil or minimal symptoms. We survive and more importantly, so also do the younger, more productive who sustain the basic economy.

 

And....the curve is flattened!!

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49 minutes ago, UpperDeck said:

Mitch....ask yourself...where does the notion of self-sacrifice originate? Actually, it is quite simple. Those over 55 ( a LOT) or health-compromised self -isolate. YOU are in control of your destiny. Stay at home. There are many who will provide services delivering food/supplies as necessary.

Everyone else carries on contributing to the economical cycle. Remember that over 70% of infected experience nil or minimal symptoms. We survive and more importantly, so also do the younger, more productive who sustain the basic economy.

 

And....the curve is flattened!!

I don't know that you can make blanket statements like that. While fatalities are heavily concentrated among seniors, the CDC reported Wednesday that 38% of people hospitalized with the virus in the US are aged 20-54. And nearly have of the patients in ICUs are under 65. That doesn't take into account those people who recover at home but whose symptoms are those of a nasty persistent flu. I emphasize "nasty, persistent". It can take two weeks to shake off all the symptoms. Also, people are working longer and are not so easily replaced in some professions and trades, and sensors perform services like child care in many households to permit their children to work two jobs to enjoy a decent standard of living. I know a 70+ year old working construction cranes because there is a shortage of crane operators. He had retired, but was tempted out of retirement to resume his old trade. As you likely know, young people haven't been entering the trades in sufficient numbers to replace retiring baby boomers, which has caused some of the latter to fill gaps as consultants or part time specialists.

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16 hours ago, dagger said:

38% of people hospitalized with the virus in the US are aged 20-54

and yet they are 40% of the population

 

16 hours ago, dagger said:

And nearly have of the patients in ICUs are under 65

and under 65 is 80% of the population

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21 hours ago, Marshall said:

Source?  How come you are only asking the question of Conservative Pilots, is it a given that Liberal Pilots would be in agreement with giving up their hospital beds? ?

it was a Republican Lt. Governor from Some state speaking to Hannity.  The jist is similar to the plot of Logans Run where we sacrifice the over 60 crowd to save the economy for the younguns.

Relaity imitating art I suppose.  The inmates are in charge of the asylum.

 

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Quote

Almost two thirds of critically ill coronavirus patients are overweight and 37% are under 60, NHS audit reveals

Almost two thirds of patients who fall seriously ill from coronavirus are obese and nearly 40 per cent are under the age of 60, an NHS audit has revealed. 

Sixty-three per cent of patients in intensive care in UK hospitals because of the killer virus are overweight, obese or morbidly obese. 

While the average age of people suffering the most serious symptoms of coronavirus is 64, 37 per cent are under the age of 60. 

The Intensive Care National Audit and Research Centre analysed all admissions to critical care units in the UK up until midnight last Thursday. 

At that time, there were 194 coronavirus patients in ICU. That number is thought to have soared in the last four days.

The document provided the first in-depth look at patients who have needed round-the-clock care and boosted medics' understanding of the virus that has crippled society.  

Its finding that obese people are at risk of serious complications from COVID-19 will be concerning for health bosses, as two thirds of adults in the country fall into the category. 

The report also found that most coronavirus patients in intensive care were male

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