Global airlines slash flights as US carriers seek US$50-bn bailout

Business

Global airlines slash flights as US carriers seek US$50-bn bailout

Wednesday, March 18, 2020

Print this page Email A Friend!


NEW YORK, United States (AFP) — Major world airlines on Monday announced further deep cuts to service as the worsening novel coronavirus disease (COVID-19) crisis ravages demand, accentuating talk of government support and with US carriers formally releasing a plea for a bailout of some US$50 billion.

Citing an “unprecedented” drop in demand that is “getting worse by the day” and “much worse than 9/11”, the trade group Airlines for America (A4A)unveiled a wish list including grants, loans and tax relief.

“This is a today problem, not a tomorrow problem. It requires urgent action,” said A4A president and chief executive Nicholas Calio.

Trump Administration officials have highlighted airlines as a major worry point and signalled broad support for a federal plan to fortify the industry.

The group said the industry was on track to suffer a drop of US$23 billion in liquidity at the end of 2020 under an “optimistic” scenario, and a drop of US$53 billion under a “pessimistic” scenario.

“As of the morning of March 16, the pessimistic scenario is looking most likely,” the group said.

Earlier, European carriers announced additional cutbacks in service due to the crisis.

IAG, owner of British Airways and Spanish carrier Iberia, announced it would slash flight capacity by 75 per cent during April and May owing to the COVID-19 outbreak, while Germany's Lufthansa said it would trim seating capacity on long-haul flights by up to 90 per cent, affecting mainly routes to Africa, the Middle East and South America.

Britain's Virgin Atlantic added that it has decided to park 75 per cent of its total fleet, and in April this will rise as high as 85 per cent.

Virgin has reportedly called upon the UK Government to inject emergency support totalling 7.5 billion pounds (US$9.2 billion) to help keep Britain's aviation industry flying.

DETERIORATING AT PACE

Shares of European carriers and most US airlines experienced another bruising session as the economic toll of the coronavirus becomes clearer.

“Last week saw a rapid acceleration of the impact of COVID-19 on global aviation and tourism,” Virgin Atlantic warned in a statement.

“The situation is deteriorating at pace and the airline has seen several days of negative bookings, driven by a huge volume of cancellations as customers choose to stay at home.”

British no-frills carrier EasyJet warned it may have to ground “the majority” of its fleet, urging governments across Europe to help their airlines maintain access to liquidity.

The airline's CEO Johan Lundgren said “European aviation faces a precarious future,” and called for government backing if the industry is to survive.

Irish budget carrier Ryanair meanwhile did not rule out a full grounding as it unveiled stinging flight cutbacks.

IAG said it was taking measures including cuts to non-essential spending, a freeze on recruitment, and a reduction in work hours. A management shake-up had also been put on hold, with IAG noting that Willie Walsh would remain as chief executive.

Walsh had been due to step down on March 26, to be replaced by Iberia CEO Luis Gallego.

Air France will meanwhile slash flight capacity by 70-90 per cent over the next two months and Austrian Airlines will suspend all flights from Thursday, with Finnair cutting 90 per cent of capacity until the situation improves.

The German Government on Monday said it is planning to shield companies from going under because of the pandemic by suspending legal obligations for firms facing acute liquidity problems to file for bankruptcy.

German tourism and hotel group TUI said it was applying for State aid to keep it afloat, as it suspended the “majority” of its operations.

THIS IS NOT 2008

Back in London, a spokesman for British Prime Minister Boris Johnson signalled that the Government would examine help for affected businesses, not just airlines, via tax authority Her Majesty's Revenue and Customs (HMRC).

“HMRC is ready to help all businesses, including airlines experiencing temporary financial difficulties due to coronavirus,” Johnson's spokesman told AFP.

Stephen Innes, market strategist at AxiCorp, drew a contrast with the global financial crisis which sparked bank bailouts.

As G7 finance ministers prepared to discuss the crisis later Monday, Innes argued that airlines were not the only strategic companies calling for assistance this time.

“This is not 2008. Back then it was the banks, this time the banks' balance sheets are fine,” Innes said. “But this is a global economic crisis which needs swap lines to airline companies, oil companies and retailers.

“Airlines might be at the top of the list for directed fiscal help, but virtually every global industry is facing pressure without a government bailout,” he added.


Now you can read the Jamaica Observer ePaper anytime, anywhere. The Jamaica Observer ePaper is available to you at home or at work, and is the same edition as the printed copy available at http://bit.ly/epaperlive


ADVERTISEMENT




POST A COMMENT

HOUSE RULES

1. We welcome reader comments on the top stories of the day. Some comments may be republished on the website or in the newspaper � email addresses will not be published.

2. Please understand that comments are moderated and it is not always possible to publish all that have been submitted. We will, however, try to publish comments that are representative of all received.

3. We ask that comments are civil and free of libellous or hateful material. Also please stick to the topic under discussion.

4. Please do not write in block capitals since this makes your comment hard to read.

5. Please don't use the comments to advertise. However, our advertising department can be more than accommodating if emailed: advertising@jamaicaobserver.com.

6. If readers wish to report offensive comments, suggest a correction or share a story then please email: community@jamaicaobserver.com.

7. Lastly, read our Terms and Conditions and Privacy Policy



comments powered by Disqus
ADVERTISEMENT

Poll

ADVERTISEMENT
ADVERTISEMENT

Today's Cartoon

Click image to view full size editorial cartoon
ADVERTISEMENT