Welcome to London Air Travel’s Monday Briefing for the week beginning 18 May 2020.
Aviation Job Losses
It has been a grim week for anyone employed in the aviation industry.
By the end of the year the number of job losses will be counted in the hundreds of thousands. Air Canada alone last week announced it is to cut around 20,000 jobs out of its 38,000 strong workforce.
Closer to home, BA CityFlyer announced plans to make up to 72 of its 248 pilots redundant. Its pilot base in Edinburgh will also close. This is in addition to 12,000 planned redundancies at BA.
IAG CEO Willie Walsh appeared before the Transport Select Committee last week to answer questions about the planned restructuring of BA.
These hearings are almost always unsatisfying. The format of a large number of MPs, with at best varying levels of knowledge, taking turns to ask a question doesn’t work. When a barrister cross-examines a witness in court their first question is never the one they are seeking an answer to. Nor do they ask a question they don’t already know the answer to.
A further hearing is due to take place this Wednesday with evidence from BALPA, the Civil Aviation Authority and Unite.
If you read the transcript of last week’s hearing on potential job losses at BA, Willie Walsh, who is not actually responsible for leading negotiations at BA, makes reference to a “consultation” with elected trade union representatives nearly 50 times. It won’t be known for some weeks how meaningful this is and what proved to be a fait accompli.
Willie Walsh always been dismissive of what he terms “noise”. It is perhaps convenient for him to play the role of “Mr Nasty” in this as he is due to retire in September (much like his restructuring of BA before he left to head up IAG). However, like all major companies, IAG and BA need to be prepared for considerable continued political scrutiny.
IAG and other UK airlines have criticised plans to introduce a 14 day quarantine regime for passengers arriving in the UK.
Whilst some countries in Europe are beginning to reopen borders, there is no consensus on how a proposed 14 day quarantine period of passengers arriving in the UK will work.
Based on reports in the Sunday papers, there are disagreements between ministers on who should be exempt. One government adviser briefed The Sunday Times that it is a “shit show”. Today’s lead article in The Times suggests that exemptions will be largely limited to lorry drivers.
Speaking to Sky News yesterday, Heathrow CEO John Holland-Kaye has called for flights to restart between the UK and low risk countries.
Heathrow will also deploy thermal imaging technology at Terminal 2 this week to screen arriving passengers, though this not yet part of any official government policy.
Elliott Management Circles Virgin Atlantic
As Virgin Atlantic seeks new investment it is inevitable that names of potential suitors will leak to the press.
Many will come to nothing. However, a report from the Sunday Telegraph that Elliott Management is interested in the airline can’t go unnoticed.
Led by Paul Singer, Elliott Management is the world’s most feared activist investor. It is notorious for taking stakes in companies it considers to be underperforming – recent targets include AT&T and Twitter – publicly documenting at length management failings and demanding significant changes in strategy.
Sir Stelios seeks to oust easyJet Directors
Speaking of activist shareholders, easyJet will hold an Extraordinary General Meeting this Friday morning.
This has been called after its founder Sir Stelios Haji-Ioannou called for four “scoundrel” directors – Chairman John Barton, Chief Executive Johan Lundgren, Finance Director Andrew Findlay, and Independent Non-Executive Director Andreas Bierwirth – to be ousted. This is a proxy vote for the cancellation of easyJet’s order for 107 new aircraft from Airbus.
Stelios is also offering a £5m cash reward to any whistleblowers who provide information that leads to the cancellation of the order. If you have any such information then fire off an e-mail to easyJetfirstname.lastname@example.org
Full details of the meeting and easyJet’s defence can be viewed on the easyJet website.
As an indication of how heated the matter has become, Sir Stelios has issued a pre-action letter against the Telegraph and its City Commentator Ben Marlow over an article, since removed from the Telegraph website.
Also of note this week:
South African Airways has revealed in its long overdue accounts that it has lost R10 billion (~£446 million) over the past two years. (South African Broadcasting Corporation)
The administrators of Virgin Australia have received initial bids for the airline. Deloitte is due to announce a short list of around three prospective bidders this week. Binding second round bids are expected in mid-June. (Sydney Morning Herald)
Late post publication updates:
[Reserved for updates throughout the day]
British Airways has returned to Terminal 7 at New York JFK airport, following a temporary transfer of services to Terminal 8.
Finnair has converted two Airbus A330 aircraft for cargo use by removing all economy seats from the cabin. (Finnair)
Finnair also plans to resume long-haul flights from July. The airline will fly to Beijing, Hong Kong, Shanghai in Greater China; Nagoya, Osaka and Tokyo Narita in Japan; and Singapore, Seoul and Bangkok. Finnair will fly to Delhi and New York JFK in August, and Tokyo Haneda in November. Finnair will also gradually resume short-haul flights throughout the summer. (Finnair)
Ryanair expects to make a loss of €200m in the quarter to 30 June 2020 and will carry no more than 50% of its target number of passengers in the quarter to 30 September 2020. (Ryanair)
The administrators of Virgin Australia have confirmed they have short-listed a number of bidders to go to a second round of bids for the airline. Their identities have not been officially disclosed. However, press reports suggest they are Bain Capital, BGH Capital, Cyrus Capital and Indigo Partners. (Sydney Morning Herald)
London Air Travel’s Monday Briefing is published every Monday morning at 06:00 BST and updated throughout the day. If you have any tips or stories please contact us. You can also follow us on Twitter for breaking news throughout the week.