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Welcome to London Air Travel’s Monday Briefing for the week beginning 22 June 2020.
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Aviations’s Slow And Grinding Recovery
The slow and grinding recovery of aviation continues.
London City airport reopened yesterday, albeit for just one scheduled flight operated by Loganair for BA to the Isle of Man.
Many countries in Europe are relaxing travel restrictions – Politico has an excellent country-by-country guide.
In the US, where many are now carrying on as if COVID-19 never happened, 18 states are reporting rising cases. Some states such as California and Florida are reporting record rates of COVID-19 infections.
The UK still has its mandatory quarantine regime for arriving passengers. Speaking to Nick Robinson on yesterday’s edition of Andrew Marr on the BBC, Professor Baron Peter Piot, Director at the London School Of Hygiene & Tropical Medicine, said of the quarantine restriction:
That only would have made sense at the very beginning, before we have cases, when indeed they were important. Today that’s not going to contribute much and the damage it causes to the country to the economy is going to be enormous. So let’s hope that that rule is dropped as soon as possible and let’s concentrate on what works.
Talk of “travel bubbles” being established between the UK and other European countries has yet to come to anything. If the experience of Australia and New Zealand is anything to go by, it is nowhere near simple as it is made out to be.
Transport Secretary Grant Shapps will give evidence to the Transport Select Committee as part of its ongoing review of COVID-19 this Wednesday 24 June at 10:30am.
Lufthansa Awaits Its Fate
This week could be pivotal for the future of Lufthansa.
Lufthansa Group’s shareholders will vote this Thursday on whether to accept a €9 billion bailout package from the German government.
As a condition of the bailout, the government will acquire a 20% stake in Lufthansa.
Lufthansa’s single largest shareholder Heinz-Hermann Thiele, who owns 15% of the company, has not confirmed his support for the package and has indicated that the company should explore alternative options.
If attendance at the virtual general meeting is less than 50%, a two-thirds majority will be needed to approve the bailout package, rather than a simple majority. Lufthansa has said if shareholders do not approve the bailout package, it will be forced to start insolvency proceedings. Lufthansa does not appear to be taking any chances and is doing everything to shore up attendees.
Whilst Austrian and SWISS have agreed bailout packages with their respective governments, there is uncertainty as to the fate of Brussels Airlines.
According to report from Reuters, Lufthansa may seek to sell or liquidate the airline. A €300 million bailout from the Belgian government is possible, if Lufthansa is prepared to secure the future of Brussels Airlines.
Lufthansa has struggled to work out what to do with Brussels Airlines since it took control of the airline. It had previously indicated a much closer integration with Eurowings division after changing its management team.
It is hard to envisage Lufthansa liquidating the airline, given the cost and political implications of this in Belgium. When faced with a choice of either liquidating bmi British Midland or handing BA its biggest growth opportunity at Heathrow in decades, it chose the later.
Bain & Cyrus Capital Vye For Virgin Australia
Bain Capital and Cyrus Capital will today submit final binding offers for Virgin Australia.
Deloitte, administrators of the airline, will select their preferred bidder this month. This will be approved by creditors at the end of August.
Bain Capital is citing its financial firepower whilst Cyrus Capital is placing an emphasis on its aviation experience. Cyrus Capital seems to have Virgin employees on its side, not that it guarantees harmonious industrial relations in the future.
Both bidders seem to envisage a smaller, simplified airline, led by is existing CEO Paul Scurrah. It seems a given that Virgin Australia will retain its name, though the terms of the licensing of the name are subject to commercial negotiation.
According to a report today’s Sydney Morning Herald, Virgin Australia’s bondholders could launch an 11th hour proposal where their AU$2 billion of debt would be swapped for equity in a relaunched airline.
Also of note this week:
Roland Rainer, Head of Maintenance Planning & Control at SWISS answers questions on maintaining the airline’s fleet whilst it is largely rounded. (SWISS)
Wizz Air is one of the few airlines to be having a “good” pandemic. CEO and co-founder József Váradi speaks to Monocle 24’s “The Entrepreneurs”. (Monocle)
Late post publication updates:
[Reserved for updates throughout the day]
London City airport has confirmed that BA CityFlyer will restart routes to Dublin, Edinburgh, Florence, Glasgow, Ibiza, Malaga and Palma de Mallorca this summer.
SA Link has filed a court application to prevent the Business Rescue Practitioners of South African Airways (SAA) from covening a meeting of creditors to approve a Business Rescue Plan. SA Link contends there is no reasonable prospect of rescuing SAA and it should be placed into provisional liquidation. The Department of Public Enterprises says it will oppose the application.
IAG may undertake a rights issue to raise more capital from its shareholders according to the Mail On Sunday. The FT’s Alphaville blog also looks as to whether IAG may use its loyalty programmes as security to raise more funds. (Financial Times)
Virgin Atlantic has confirmed it will reinstate more routes at London Heathrow throughout August with the aim of restoring its London route network by the end of October. (London Air Travel)
Health Secretary Matt Hancock confirmed at the UK Government’s daily Coronavirus briefing that the UK’s quarantine restrictions will be reviewed next Monday, 29 June.
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