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Bloomberg
Airlines in the US and Europe cut flights, idled planes and drafted plans to eliminate jobs, while seeking government support to weather the roughest downturn in the industry’s history caused by the coronavirus.
American Airlines Group Inc, Delta Air Lines Inc, United Airlines Holdings Inc and Southwest Airlines Co said they’re discussing potential aid from the government, without providing details.
Germany and France are weighing financial aid to help get Deutsche Lufthansa AG and Air France-KLM through the crisis. The head of Norwegian Air Shuttle ASA acknowledged that the discount carrier is at the brink and pleaded for help. The Italian government is considering pumping 300 million euros ($333 million) into struggling Alitalia SpA and may take over the airline, people familiar with the matter told Bloomberg.
In the UK, the airline industry will need as much as $9.2 billion in government aid, Peter Norris, chairman of Virgin Atlantic Airways, will say in a letter to Prime Minister Boris Johnson to be sent on Monday, Sky News reported.
The economic effects of the viral outbreak have slammed the airline industry as people scrap travel and countries place restrictions on flights from nations with the highest levels of infection. President Donald Trump’s decision to set curbs on European flights capped a tumultuous week and is expected to upend a trans-Atlantic market that’s usually the world’s most lucrative.
Trump added bans on the UK and Ireland to the initial list of continental European countries facing temporary restrictions. The existing travel curbs on Europe affect about 7,300 flights to the US, or more than 2 million one-way passenger tickets over the one-month period, according to Cirium, which tracks traffic. Adding in the UK and Ireland adds about 4,300 more flights to the total.
“It is a crisis of global proportions like no other we have known,†British Airways chief Alex Cruz said. It’s worse than the Sars outbreak in the early 2000s, 9/11 in 2001 and the financial meltdown of 2008-2009, he said.
Jobs will be lost as the airline idles planes, cuts back on flights and moves to protect its balance sheet, Cruz said. The airline, owned by IAG SA, has held talks with multiple banks on its urgent financing need, the Financial Times reported.
The virus first swept through Asia, decimating air traffic and leading to a Chinese government decision to take charge of the parent of Hainan Airlines. Now the epicenter of the pandemic has moved to Europe, with countries locking down travel and confirmed cases topping 140,000 across the globe. Measures taken by states could cost the tourism industry 50 million jobs, according to the World Travel & Tourism Council. In the US, where Trump declared a state of emergency, the situation has quickly turned grim for airlines.
White House officials are discussing temporarily allowing cash-strapped carriers to keep some taxes and fees they collect from passengers, people familiar with the matter told Bloomberg News.
Germany’s Lufthansa is expected to seek a loan from the state-run Kreditanstalt fuer Wiederaufbau bank to weather the fallout, while as a last resort the government could also purchase a stake, according to a person familiar with the plan. The airline is also considering a temporary halt to most of its business and suspending its dividend. In a statement, the carrier acknowledged it’s seeking additional funds and will use aircraft financing to help with the effort. The company, with bases in Germany, Austria, Switzerland and Belgium, owns about 86% of its fleet.
“We have decided to talk to the governments of our home countries not just about reducing the burden on us, but about active support as soon as that becomes necessary,†Lufthansa CEO Carsten Spohr said.