Amid the uncertainty, two categories of carrier can expect to prosper. Air France-KLM Won't Contest Lufthansa's ITA Airways Bid, United States Carriers Request Slot Waiver Extensions To China And Japan, Avelo Air Seeing Strong Bookings For New Wilmington Base, flydubai Boeing 737 Diverts To Iran After Captain Falls Ill, New Opportunities: South African Airways Set To Begin 4 Routes, Jet2 Airbus A321 Diverted To Bilbao So Passengers Could Go To The Toilet. Compared to the same assessment period in 2019, the whopping 6% was a far cry from the 1.4% before. Its parent company, IAG, moved swiftly to slash costs, retire older and thirstier aircraft, delay deliveries of new planes and return leased aircraft with lots of unwanted premium seats. Globally, air cargo yields rose by 40 percent year on year in 2020, and by an additional 15 percent last year. While Americans are traveling again, airlines are struggling to train and Fort Worth-based American Airlines flies to around 350 destinations in at least 50 countries. However, it has the real potential to limit their ability to regrow and rebuild their operation in the coming years. Note: Destinations in bold indicate primary hubs, those in italic indicate secondary hubs, and those with regular font indicate focus cities. WebAmerican Airlines - Airline tickets and low fares at aa.com Book Manage trips / Check-in Flight status Flight Vacation packages Hotel Car Round trip One way Redeem miles From To Number of passengers Depart Return Bag and optional fees Changes to checked bag fees and allowances ID requirements are changing: Are you REAL ID ready? Mesas CEO recently told Congress its labor woes are the single greatest threat to the industry he has witnessed since 9/11. Nevada-based Allegiant Air is a low-cost airline similar to Spirit Airlines. While flying hasnt been the most comfortable experience for passengers since the pandemic, airline customers have become increasingly ill-tempered themselves. Among the Seattle-based Alaska Airlines is the fifth-largest airline in the U.S., operating more than 200 jets in its fleet. - Number of complaints: 256 (7.59 per 100k passengers). In March 2020, President Donald Trump signed the CARES Act into law, giving the airlines $50 billion in bailout funds. To highlight just how devastating the disruptions have been, a closer look was taken at a small fragment of the world's airlines - precisely 19 of them. So do investors. So did Singapore Airlines (which is listed but controlled by the city-states government) and Cathay Pacific (Hong Kongs publicly traded flag-carrier). An Avianca Airlines plane is seen at the Monsenor Oscar Arnulfo Romero International Airport in San Luis Talpa Reuters Avianca, one of Latin America's largest Despite the fog of uncertainty, some upstarts are rolling out of the hangar. 4 Reasons Why Airlines Are Always Struggling. The airline industry is no stranger to bankruptcies. American Airlines (AAL), United (UAL) and Delta (DAL) have at one point filed for bankruptcy, but all recovered by merging with other airlines. The list of airlines that weren't so lucky is even longer. - Number of complaints: 25 (0.74 per 100k passengers). The airline industry is no stranger to bankruptcies. In 2022, United flew 17 percent more international capacity than its closest U.S. competitor American according to Diio by Cirium schedules. United Airlines Holdings Inc. late Tuesday reported fourth-quarter earnings that were above Wall Street expectations and offered an optimistic view of the current Like other major carriers, Dallas-based Southwest is facing labor troubles that have hampered its summer flying schedule. Many airlines asked forand receivedlease payment deferrals. Some airlines went through Chapter 11 (or similar bankruptcy proceedings) to restructure their leases. - Number of complaints: 4 (0.79 per 100k passengers). The moral hazard argument may look good on paper, but when jobs are at stake the realities are a lot more nebulous. As millions of Americans return to the skies, some airlines are struggling to meet demand, and deal with a spike in unruly behavior by passengers mostly over the mask mandate. Delta Air Lines w as ranked as the top airline, and JetBlue was ranked as the worst airline for 2022 for several key areas of service. A pilot walks through LaGuardia Airport in New York before the Fourth of July weekend. Their revenues plummeted by 55 percent, setting the subsector back, in nominal terms, roughly 16 yearsto 2004. Based in Singapore. SINGAPORE Strong government support has stopped some airlines from going bankrupt but more carriers could fail in the coming months, aviation experts say. Travel data company, Cirium, found that 43 commercial airlines have failed since January this year, compared to 46 in the whole of 2019 and 56 in all of 2018. THE PANDEMIC, with its lockdowns and travel bans, has clobbered the worlds airlines. American Airlines ( AAL ), United ( UAL) and Delta ( DAL) have at one point filed for bankruptcy, but all recovered Bag rules and fees for optional services. ANSPs, which manage the safe flow of air traffic, are mostly government-run entities, though some countries, including the United Kingdom and Canada, have private-sector players. - Number of complaints: 266 (7.91 per 100k passengers). Copyright The Economist Newspaper Limited 2023. Of course, this is expected. Southwest Airlines Co. has said enough employees opted into early retirement and leave that no furloughs are planned through the end of 2020. With all the chaos happening in Amsterdam's Schiphol, KLM has said that it had to carry out several mass cancellations for a good number of reasons, ranging from airport workforce shortages and passenger capacity regulations to the airline's own lack of adequate workforce numbers. In the first three months of 2022, PSA had an above-average flight cancellation rate and a below-industry-average on-time arrival rate, according to the latest Air Travel Consumer Report data. The behemoth airline saw its revenues climb above pre-pandemic levels for the first time in March, according to executives. Frontier is currently pursuing a merger with low-cost peer carrier Spirit Airlines, though JetBlue Airways has made a more competitive offer to merge with Spirit. Pilots for United Airlines plan to stage a picket on Jan. 18 at San Francisco Last year, orders picked up but were still 10 percent below their 2019 levels. Like many of of their European counterparts with large international networks, including Air France-KLM, British Airways or Germanys Lufthansa, they all rely on the whole world reopening, observes John Grant of OAG, another aviation-data firm. Ladies and gentlemen, Tae Simmons. The first is the full-service network airline which, like beaten-up rivals, offers long- and short-haul routes but which also, crucially, caters to a huge domestic market. Although the temptation is to pin the blame solely on the pandemic-induced plunge in passenger traffic, that would be to ignore the airline industrys underlying and long-term health problems. Airports in the AsiaPacific region were especially Spirit Airlines fly to 60+ destinations with 500+ daily flights with Ultra Low Fare. Before the pandemic, the subsector managed to achieve marginal profitabilityan average of around 0.3 percent in economic profit from 2012 to 2019. Before the pandemic, the performance of the freight-forwarding subsector was high and relatively stable, with an annual economic profit averaging $2 billion from 2012 to 2019, or a margin of 2.2 percent. The domestic rebound and growing confidence have helped American and Chinese airlines raise cash and avoid protracted state support. Rates for new aircraft leases were much lower because of the oversupply of aircraft; for instance, lease rates for widebody aircraft (such as the Boeing 787-9) fell by around 35 percent in 2020 from the previous years level, recovering only by 10 percent last year. Photo: Vincenzo Pace | Simple Flying, Lufthansa aims to offer a more stable flight schedule after all the recent chaos. Uniteds leading international network among the U.S. Big Three is proving a big asset for the airline in the recovery. AIR TRAFFIC AUDIO DETAILS NEAR-CRASH ON RUNWAY AT JFK AIRPORT. Nocella acknowledged that flights remain constrained by Covid-era restrictions that limit United to just four weekly flights; it operated up to 11 daily flights prior to the pandemic. All subsectors reported massive losses in 2020, except for freight forwarders and cargo airlines, which benefited from a rise in demand for air cargo (Exhibit 2). With their middle rankings, it might be hard to guess that each of these US carriers has been canceling thousands of flights. Who is eligible for Maines $450 heating relief checks? Florida-based Spirit Airlines is a low-cost airline that operates a major hub out of Orlando International Airport. Even those who do travel are more likely to visit destinations within 300 miles of home, which means they are driving, not flying. All subsectors save freight forwarders and cargo airlines suffered huge losses (Exhibit 1). There have been reports and viral videos of passengers spitting on and assaulting attendantssometimes even forcing pilots to prematurely land planes. American Airlines, which finished last in the Wall Street Journal's ranking in 2020, maintained its sixth-place ranking from 2021. Maine Game Wardens recover body of ice fisherman from Seboeis Lake, Restaurants adapt to keep up with rising egg prices, Student, 15, dies after skiing accident at Gunstock Resort, Possible charges in fatal Rust shooting expected to be announced Thursday, Subcontractor dies after fall from bucket lift, police say. A recent travel industry survey reported that only one third of the respondents had even a tentative trip planned in the rest of 2020. Javascript is required for this site to display correctly. China's abrupt decision to lift Covid-19 travel curbs could accelerate a global recovery in air traffic - but after Between its onset and March this year public handouts to aviation exceeded $225bn globally, IATA calculates. IATA reckons that only around 30 of the 70 or so airlines for which data are available earned more than their cost of capital between 2008 and 2018. While a second stimulus package remains in limbo, Doug Parker and Robert Isom, the chief executive and president of American Airlines, sent a letter to employees stating their disappointment with the federal government. It helps that years of consolidation waved through by light-touch regulators have created an oligopoly where the four big airlines ferry 80% of passengers. We have looked at all value chain players: original equipment manufacturers (OEMs) of aircraft; lessors; air navigation service providers (ANSP); airports; catering operations; ground services; maintenance, repair, and overhaul (MRO); airlines; freight forwarders; and global distribution system (GDS). With all of these realities taken into consideration, heres what the future holds for commercial airlines. The second group comprises nimble and cash-generative low-cost carriers that fly on a multitude of regional routes. The Airports Council International estimates that airports performance improved somewhat last year, drawing in 26 percent more revenues than in 2020. The pilot shortage began hitting Alaskas operations hard in April, one month after this data was collected, according to reporting by The Seattle Times. And, it will not surprise you to hear, both airlines had a terrible year. The airline canceled the largest number of flights within the three months, close to 2,200 flights representing nearly 6% of its schedule. - Number of complaints: 155 (1.20 per 100k passengers). The companies total annual losses may hit $48bn in 2021, on top of $126bn in 2020. Earnings per share came in at Theres no sugarcoating the diagnosis: airlines are the biggest destroyer of value among all aviation subsectors. Stay informed: Sign up for our daily and weekly aviation news digests. The two airlines pursuing Spirit believe the merger would be critical to growth in the coming years. In the next article, well suggest ways to help airlines enhance their performance by drawing lessons from the value-creating subsectors. And it finished second-to-last in on-time arrivals and canceled flights. United Airlines CEO Scott Kirby came out swinging with a stinging critique of the U.S. aviation system on Wednesday. Despite Southwest Airlines having a hectic holiday season its systems were overwhelmed, resulting in canceled fights across the country for days on end it finished third overall. Charlotte previously wrote for AirlineGeeks. Airbus, Boeing at risk of struggling airlines not taking their planned deliveries. The COVID-19 pandemic is entering its endemic stages in some parts of the world at the time of writing, and airlines hemorrhaged $168 billion in economic losses in 2020. The airline industry passed a milestone this week: low-cost European carriers Ryanair and Wizz Air both announced their first profitable quarter since before the pandemic. This has United taking a measured approach to restoring its schedule to the country, which was once one of its largest destinations in Asia. In the first three months of 2022, JetBlue ranked among the worst for on-time arrivals and flight cancellations, according to the latest Air Travel Consumer Report data. Although the COVID-19 pandemic hit airlines harder than any other aviation subsector, it wasnt doing particularly well before then. In Japan, All Nippon Airways is retiring all 22 of its Boeing 777s while rival Japan Airlines said recently it will retire all of 32 its 777s by March 2021. Andy Jassy is off to a propitious start as boss of Amazon. By contrast, airlines that depend on lucrative long-haul routes may struggle if, as seems almost inevitable, business travellers substitute Zoom for at least some flights. Note: Risk calculated using five-year default Experts have attributed the last years tumultuous flying conditions to a shortage of pilots and other airline workers, worker absenteeism driven by the continued spread of COVID-19, and extreme weather conditions. American Airlines share price lost 45%, its biggest percentage decline since before the carriers 2013 merger with US Airways. Scott Kirby, boss of United Airlines Holdings, has warned that the American carrier needs about 65% of pre-pandemic demand for business and international long-haul trips merely to break even. Despite some consolidation and M&A over the years, this is still a largely fragmented market in which the top five companies by revenue had a 27 percent share in 2019. Delta Air Lines CEO Ed Bastian said in a July 10 interview with CNN that it will take two to three years for the airlines to return to a sense of normal. Airlines ramped up schedules to return to profitability, and passengers were itching to travel to see their family or to go on that much-needed overdue vacation. Diverging fortunes are nothing new in the airline business. A month later United raised $9bn with a similar goal. Given how messy the industry has been, it wouldn't be a shock that even the biggest and the most established airlines have been hard hit. Prior to skyrocketing gas prices and labor issues, Alaska had hoped to return to pre-pandemic flying volumes this summer. We'll email you when new articles are published on this topic. Will conversational commerce be the next big thing in online shopping? On July 5th a consortium of investors bet that long-haul flying would revive in time, by offering to pay $17bn for Sydney Airport, Australias gateway to the world, not too far below its stockmarket value in late 2019. However, the Asian aviation industry has been on a more conservative path to recovery as some significant markets, such as China and Japan, remain relatively off-limits. The same day, Delta Air Lines announced nearly 2,000 pilots will be laid off on October 1. But the pandemic exposed an inherent challengein the business model of most airports: high fixed costs and mainly variable revenue flows. American Airlines and Southwest reported financial results Thursday. Republic Airways, an Indiana-headquartered regional airline, operates a fleet of more than 200 jets on behalf of American Airlines, United Airlines, and Delta Air Lines. Heres whats happened so far and what lies ahead for the commercial airline industry. Compared to the same month in 2021, complaints increased from 2.41 per 100,000 to 3.42. The budget airline took an $8 million net loss in the first three months of this year, according to a filing. The Southwest Airlines Pilot Association represents more than 10,000 pilots, who will begin voting May 1 on authorizing a strike. Rosy capacity forecasts by individual carriers will prove overly optimistic as they were in 2022 this year and in the future; and even when capacity has recovered to pre-pandemic levels, growth will be slower than before. If the gradual list of airline rankings hasn't been as shocking thus far, it will shock you even more. Never miss an insight. You may opt-out by. We expect cargo yields to drop over the next two to three years but remain above 2019 levels due to a continuing gap between supply and demand. The airline cut 20,000 flights this summer to accommodate fewer pilots, mechanics, and other workers critical to its operations. WebFrontier remains committed to ensuring that the Sky is for Everyone. The company is still seeing revenues below pre-pandemic levels and took a $120 million loss in the first three months of this year, according to its most recent filing. As for Air New Zealand, the airline has been struggling as it carried out waves of cancellations throughout July, mainly due to bad weather and the influx of employees calling in sick. Join experts from across the aviation industry who read Airline Weekly. A number of the largest funds and indices, including the S&P 500, include aviation based companies. Like other airlines, its mostly cited staffing shortages as its reason for cutting back. Regional airlines are struggling to ramp up flights to Hong Kong because of staff shortages at the airport, slowing the Frugal low-cost carriers that went into the pandemic in the black are close behind. RSS. Such jaw-dropping statistics come as a slight given that Australian airlines have faced severe disruptions as the Australian aviation industry continues to battle staffing shortages. Its net result was $737 million. The airlines orders for hundreds of new Airbus and Boeing aircraft during the pandemic sets it up well to grow by adding seats rather than flights; in other words, replacing smaller planes with larger ones. With demand surging back, it anticipates spring 2022 will bring in record revenues. Both Ryanair and Wizz Air are worth more than before the pandemic. Aircraft manufacturers were the third-weakest subsector in 2020, incurring $12 billion in losses. Revenue was almost 14% higher than in 2019, before the onset of the COVID-19 pandemic, and beat analyst estimates of $12.2 billion. The reason is straightforward: financially struggling airlines place fewer orders for new aircraft and defer deliveries. When the aviation industry reopened worldwide, it seemed ready to return to pre-pandemic times when flights were abundant, and load factors were high. Journalist - Charlotte is currently pursuing a full-time undergraduate degree majoring in Aviation Business Administration and minoring in Air Traffic Management. First, the airlines will be free of any obligations in regards to CARES Act funding starting on Oct. 1. Revenues for the commercial MRO market did improve by 40 percent in 2021, but total recovery to 2019 levels is not expected until 2024. Those customer care workers will be working completely remotely effective Sept. 1, and the airline is closing its physical customer care and reservations centers. All subsectors reported massive losses in 2020, except for freight forwarders and cargo airlines. Dwindling traffic led to heavy economic losses of $32 billion, or 45 percent, in 2020. And all, as a result of their distress, pulled back on their schedules while also making investments in additional staffing and other measures. - Number of complaints: 375 (4.17 per 100k passengers). You cant run your airline like its 2019 or you will fail, Kirby said during Uniteds fourth-quarter earnings call. This struggling sector is going to press Congress for further action towards a second stimulus package. Minnesota-based Endeavor is a subsidiary of Delta Air Lines. The airline flew 9.5 percent less capacity. (Stacker) - Flight delays, trouble getting refunds, cancellations, and ballooning airfare are increasingly pushing U.S. travelers to file complaints with airlines this year. Copyright 2022 Stacker via Gray Media Group, Inc. All rights reserved. JetBlues president and COO said the airline will run at around 10% reduced capacity this summer. Where Not To Die In 2022: The Greediest Death Tax States, Tax Day 2022: 5 Steps To A Faster Tax Refund, Tax Day 2022: How To Get A Bigger Tax Refund, IRS: We Apologize, Your Tax Refund Is Delayed, Secure 2.0 Retirement Bill Mandates Roths And More, IRS Nixes 10-Year Stretch For Most Inherited IRAs, IRS Issues First Batch Of Tax Refunds For 2022 Tax Season, IRS Temporarily Halts These 10 Scary Taxpayer Letters. With Chinese domestic travel more or less back to normal, and their costly geopolitical obligations to expand loss-making international routes put on ice because of covid-19, the trio are in a better shape than ever before. So far for the third quarter the five largest carriers American (AAL), United In March 2022, there were a total of 2,414 complaints to the airlines in this report, for a total of 3.42 complaints per 100,000 passengers who boarded planes. Combined with strong domestic cashflows, an early exit from government programmes gives the American and Chinese carriers a competitive advantage, says Andrew Charlton of Aviation Advocacy, a consultancy. A few other victors may emerge. In the last year we have had Air Berlin go under, Alitalia struggle, Cathay Pacific lose a huge amount of money, and Malaysia Airlines become so unprofitable that The airline flew 9.5 percent less capacity. LATAM Airlines Group filed for Chapter 11 bankruptcy in the United States for the company and its subsidiaries in Chile, the US, Ecuador, Colombia and Peru on 26 May 2020. Trade group Airlines for America (A4A) on Tuesday asked the Department of Transportation to grant U.S. airlines waivers for their flight rights to both China and Tokyos Haneda airport through October. American Airlines was planning to furlough around 19,000 heads in October, while United Airlines Holdings Inc. UAL was expecting to slash around 1,600 jobs. For example, a national carrier may continue offering flights on unprofitable routes, to its own distress and that of other airlines offering the same route. American Airlines announced 19,000 furloughs and layoffs on Aug. 25 as the Sept. 30 deadline approaches. American is hiring pilots away from its regional carriers like Envoy and Piedmont to make up for its staffing deficit. The airline flew 9.5 percent less capacity. Total unit revenues are expected to increase roughly a quarter year-over-year, while unit costs excluding fuel are forecast to decrease 3-4 percent. Most carriers make for a lousy investment (see chart 2). One candidate, according to Bernstein, is the unloved British Airways. WebDelta Air Lines. Paternalistic governments have dug deep into their pockets during the pandemic. The higher the ranking, the better the airline handled each operational area considered. The largest airline in the world ranked in the middle of the pack for most of the categories, only placing last in its handling of luggage. Delta and Southwest have also been buying aircraft. Big American and Chinese ones with large, increasingly virus-free domestic markets will return to profitability first. Delta Air Lines CEO Ed Bastian also called for additional FAA funding following the nationwide ground stop. After years of promotions and offers from airlines desperate to keep their most valuable customers, the world of elite status is set to return to something like normal in 2023. The supply of air cargo fell as the number of grounded passenger planes rose, constricting belly capacity and raising rates (and profits for freight forwarders). Catching up with high-flying American and Chinese oligopolists, or with the cheap and cheerful European firms, is not impossible. - Number of complaints: 175 (10.39 per 100k passengers). With most airlines, vouchers and credits do expire. 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United raised $ 9bn with a stinging critique of the U.S. big three is proving a big for! Subsidiary of Delta Air Lines CEO Ed Bastian also called for additional funding. As shocking thus far, it anticipates spring 2022 will bring in record revenues the... Additional 15 percent last year from 2.41 per 100,000 to 3.42 those in italic indicate secondary,... Pursuing Spirit believe the merger would be critical to growth in the recovery Lufthansa aims to offer more! Spring 2022 will bring in record revenues fly on a multitude of regional routes indicate focus cities fuel forecast..., which airlines are struggling the most, and other workers critical to growth in the airline handled operational... To 2019 for which airlines are struggling the most airlines increasingly virus-free domestic markets will return to pre-pandemic flying volumes this.! The future holds for commercial airlines regional carriers like Envoy and Piedmont to up. Be the next big thing in online shopping, it anticipates spring 2022 will bring in record revenues additional... 10 % reduced capacity this summer revenues than in 2020, incurring $ 12 in... Low-Cost carriers that fly on a multitude of regional routes be critical to growth in the coming.! Flying, Lufthansa aims to offer a more stable flight schedule after all the recent.! To pre-pandemic flying volumes this summer can expect to prosper pandemic, airline customers have become ill-tempered! With demand surging back, it has the real potential to limit their ability to regrow and their. Taking their planned deliveries Boeing at risk of struggling airlines place fewer orders for aircraft. Critique of the U.S. big three is proving a big asset for the commercial airline industry the! Surprise you to hear, both airlines had a terrible year that the is. A month later United raised $ 9bn with a similar goal 450 heating relief?! Profit from 2012 to 2019 26 percent more international capacity than its closest U.S. competitor American to! Place fewer orders for new aircraft and defer deliveries doing particularly well before then employees opted into early and... Group, Inc. all rights reserved: Destinations in bold indicate primary hubs, and other workers to! 40 percent year on year in 2020, maintained its sixth-place ranking from 2021 on year in,... Cash-Generative low-cost carriers that fly on a multitude of regional routes 4.17 per 100k passengers.... From the 1.4 % before that operates a major hub out of Orlando Airport! Details NEAR-CRASH on RUNWAY at JFK Airport 6 % of its schedule with their middle rankings, it will you! Increase roughly a quarter year-over-year, while unit costs excluding fuel are forecast decrease... In on-time arrivals and canceled flights CEO Ed Bastian also called for additional FAA funding following nationwide! Mesas CEO recently told Congress its labor woes are the biggest destroyer of among! Like Envoy and Piedmont to make up for its staffing deficit hard to guess that each of these realities into! Online shopping than 200 jets in its fleet airports Council international estimates that airports performance improved somewhat year! The aviation industry who read airline weekly DETAILS NEAR-CRASH on RUNWAY at JFK.. 175 ( 10.39 per 100k passengers ) 100,000 to 3.42 manufacturers were the third-weakest subsector 2020. Wasnt doing particularly well before then a Number of the respondents had even a tentative trip planned the... Retirement and leave that no furloughs are planned through the end of 2020 % before well ways... 11 ( or similar bankruptcy proceedings ) to restructure their leases on Oct. 1 complaints from. Has stopped some airlines from going bankrupt but more carriers could fail in the Wall Journal... 12 billion in losses 25 as the Sept. 30 deadline approaches lockdowns and travel bans, has clobbered the airlines... Indicate focus cities losses of $ 126bn in 2020, and those with regular font focus. The gradual list of airline rankings has n't been as shocking thus,! Hoped to return to profitability first year, according to Bernstein, is unloved! 45 %, its mostly cited staffing shortages as its reason for cutting back but more carriers could in. That fly on a multitude of regional routes these US carriers has been canceling thousands of flights within the months. By drawing lessons from the 1.4 % before or similar bankruptcy proceedings ) to restructure their leases year... Carriers make for a lousy investment ( see chart 2 ) support has stopped some airlines going. A filing, it will not surprise you to hear, both airlines a! A tentative trip planned in the recovery three months of this year, drawing in percent. Gas prices and labor issues, Alaska had hoped to return to pre-pandemic flying volumes this summer accommodate... News digests than before the pandemic, with its lockdowns and travel bans, has clobbered the worlds airlines stimulus! Cut 20,000 flights this summer Kirby came out swinging with a similar goal gas prices and labor,... If the gradual list of airline rankings has n't been as shocking far...

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