Welcome to London Air Travel’s Monday Briefing for the week beginning 6 April 2020.
As scheduled air travel all but grinds to halt, the UK Government is now enlisting airlines to operate charter flights to bring British nations back home.
The first charter flights from India were announced yesterday and registration for these flights is now open. Special charter flights will operate from Goa, Mumbai and New Delhi this week. More details are available from the British High Commission India.
In terms of scheduled airline operations:
Heathrow confirmed last week that it intends to temporarily close Terminals 3 and 4, with flights consolidated in Terminals 2 and 5. However, the airport is yet to confirm which airlines are moving where. Heathrow will also begin single runway operations from today.
International Airlines Group also confirmed that its airlines will continue to reduce capacity by 90% up until the end of May. Though, BA has not yet processed any substantial cancellations from 1 May 2020.
American Airlines has set out tentative plans to reinstate its network from London Heathrow, which is currently limited to Dallas / Fort Worth. American plans to resume flights to London Heathrow from Chicago O’Hare, Los Angeles, New York JFK, Philadelphia and Raleigh-Durham on 4 June 2020. Charlotte will resume on 7 July. Phoenix will resume on 7 October. American’s inaugural flight from Boston to London Heathrow is delayed until 25 October.
Virgin Atlantic & Virgin Australia Seek State Support
Virgin Atlantic and Virgin Australia, the last two Virgin branded airlines in existence, are both actively seeking state support.
Virgin Australia has formally asked the Australian Federal Government for support of AU$1.4 billion.
Virgin Atlantic is reported to be in talks for UK Government support of £500m which would include loans to cover operating expenses and credit guarantees to prevent credit card companies.
There are parallels in both requests in that there is a history of corporate and personal animosity between both Virgin airlines and their main incumbent competitors.
Virgin Australia’s request prompted a response from Qantas that should Virgin’s request be authorised (there are no signs yet that it will), Qantas should receive a proportionally larger bail out to “level the playing field”. Qantas CEO Alan Joyce has also given warning against state support for businesses that have been “badly managed”.
According to ABC Australia Credit Suisse has estimated that Virgin Australia could burn through its remaining cash reserves by the end of June.
The Sunday Times estimates that Virgin Atlantic is burning approximately £20 million of cash a week. IAG’s reported cash balance fell from €7.35 billion to €7.2 billion between 12 and 27 March.
There are appears to be no prospect of any of Virgin Australia’s shareholders which include Etihad and Singapore Airlines, contributing to a recapitalisation of the airline. In the UK there is an expectation that Virgin Atlantic’s shareholders, Delta and Virgin Group, should foot the bill.
At a UK Government press conference yesterday, Health Secretary Matt Hancock declined to answer a question from Jim Pickard of the Financial Times as to whether Virgin Atlantic should receive a bailout because its majority shareholder is not tax resident in the UK and has previously sued the National Health Service.
Whatever the economic and competitive merits of state support for Virgin Atlantic, “optics” and politics are unavoidable. The Treasury will, as it always does in Government, call the shots. Virgin Group will have to be seen to pay a price.Continue reading “London Air Travel’s Monday Briefing – 6 April 2020”