Welcome to London Air Travel’s Monday Briefing for the week beginning 30 March 2020.
Cash Is King
With airlines now facing a minimum of six months’ disruption, their overwhelming priority is the preservation and raising of additional cash.
Some airlines have already taken steps to raise additional capital:
Norwegian has completed the first step to meet the criteria to obtain a loan guarantee of NOK300 million (~£23 million) from the Norwegian Government by securing a contribution of 10% from financial institutions. Up to NOK3 billion (~£230 million) is available to Norwegian in loan guarantees. However, the criterion for these is considerably more stringent.
Qantas has raised AU$1.05 billion (~£507 million) in additional liquidity, secured against 7 Boeing 787-9 aircraft.
Qatar Airways has warned that it only has enough cash to sustain operations for a “very short period” and “We will surely go to our government eventually.” (Reuters)
Singapore Airlines plans to raise S$5.3 billion (~£3 billion) in new equity from its shareholders and up to S$9.7 billion (~£9.7 billion) through Mandatory Convertible Bonds, which will be progressively raised in the coming months.
Tui has secured an €1.8 billion loan from the German Government.
Virgin Atlantic is reported to be close to formally asking the UK Government for a package of loans and guarantees in the sum of hundreds of millions pounds.
Last week in a letter to airlines, no doubt written in the knowledge it would enter the public domain, the Government said it would not introduce sector specific measures to support the aviation industry. This does not preclude Government support. However, airlines are expected to pursue all available means from lenders and shareholders first.
In the case of Virgin Atlantic, this inevitably places focus on Sir Richard Branson. Additional support from Delta, a 49% shareholder is unlikely, given it has reached its maximum shareholding and it and other US airlines are receiving direct financial support from the US Government.
Airport Coordination Ltd, which oversees the allocation of slots at London airports, has granted an extended waiver of “use it lose it” rules until the end of October 2020. It had, just two weeks ago, granted a waiver until 30 June 2020. This was originally due to be reviewed in May.
The Civil Aviation Authority has published traffic data for domestic and international routes for February 2020. Unsurprisingly, traffic on routes between Heathrow and mainland China fell by 70-100%. Traffic between Heathrow and Hong Kong fell by 40%.
Gatwick Airport is to close the North Terminal from Wednesday 1 April 2020. All remaining flights will operate from the South Terminal. The airport’s sole runway will also only be operational for scheduled flights between 14:00 and 22:00. Virgin Atlantic has already transferred what few flights remain operating to London Heathrow.
London City Airport has closed for scheduled flights until the end of April earliest. BA has temporarily transferred its route to the Isle of Man (operated by Loganair) to London Heathrow.
Finnair has confirmed it will continue to operate a skeleton schedule until 30 June at the earliest. This will include two flights a day between London Heathrow and Helsinki, operated with an Airbus 319 aircraft. Finnair’s sole intercontinental route will be Tokyo Haneda. Full details are available from Finnair.
KLM will, until 3 May, serve 25 intercontinental destinations and 32 destinations in Europe with 69 return flights a week. This represents a capacity cut of around 90%. Most intercontinental destinations will have 2-3 flights a week, with only New York JFK being served with a daily flight.Continue reading “London Air Travel’s Monday Briefing – 30 March 2020”