Major world airlines on Monday announced further deep cuts to service as the worsening COVID-19 crisis ravages demand, accentuating talk of government support with US carriers formally releasing a plea for a bailout of about 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,” A4A president and chief executive officer Nicholas Calio said.
The group said that the industry was on track to suffer a drop of US$23 billion in liquidity at the end of this year 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.
White House officials have highlighted airlines as a major concern and signaled broad support for a federal plan to fortify the industry.
“We have to back the airlines,” US President Donald Trump told a briefing. “It’s not their fault. In fact, they were having a record season.”
Earlier, European carriers announced additional cutbacks in service due to the crisis.
International Airlines Group (IAG), owner of British Airways PLC and Spanish carrier Iberia SA, announced that it would slash flight capacity by 75 percent during next month and May owing to the COVID-19 outbreak, while Germany’s Deutsche Lufthansa AG said it would trim seating capacity on long-haul flights by up to 90 percent, affecting mainly routes to Africa, the Middle East and South America.
Britain’s Virgin Atlantic Airways Ltd added that it has decided to park 75 percent of its total fleet, and in April this would rise to as high as 85 percent.
Virgin has reportedly called upon the UK government to inject emergency support totaling ￡7.5 billion (US$9.2 billion) to help keep Britain’s aviation industry flying.
“Last week saw a rapid acceleration of the impact of COVID-19 on global aviation and tourism,” Virgin Atlantic said 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 PLC said that it might have to ground “the majority” of its fleet, urging governments across Europe to help their airlines maintain access to liquidity.
EasyJet chief executive officer Johan Lundgren said that “European aviation faces a precarious future,” and called for government backing if the industry is to survive.
Irish budget carrier Ryanair Holdings PLC did not rule out a full grounding as it unveiled stinging flight cutbacks.
IAG said that it was taking measures including cuts to nonessential spending, a freeze on recruitment and reducing work hours.
A management shake-up had also been put on hold, and Willie Walsh, who was due to step down on March 26, would remain as IAG’s chief executive officer, the company said.
Air France would slash flight capacity by 70 to 90 percent over the next two months, while Austrian Airlines AG would suspend all flights from tomorrow, and Finnair Oyj is cutting 90 percent of capacity until the situation improves.
The German government on Monday said that it was 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 AG said that it was applying for state aid to keep it afloat, as it suspended the “majority” of its operations.
In London, a spokesman for British Prime Minister Boris Johnson signaled 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 said.
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