Welcome to London Air Travel’s Monday Briefing for the week beginning 16 March 2020.
“To be honest we’ve gone through all of this before. We’ve all seen it before.”
“We know what to do in a time like this. We know how to respond.”
The comments of IAG CEO Wille Walsh a little over two weeks ago.
Last Friday, British Airways CEO Alex Cruz sent a video message, ostensibly to employees only, which referred to BA as being in “a fight for survival”.
There is a kernel of truth that many airlines have been at pains to emphasise they have learned the lessons of 11 September 2001 and the 2008 financial crisis. Some airlines have claimed they could now be profitable in perpetuity, no matter what.
Arguably, no-one could have anticipated that many airlines could now be close to shutting down all international operations for a minimum of two months.
This is the most unprecedented situation for civil aviation since the Second World War.
Some of the tools airlines such as BA have used to get through downturns in the past, such as aggressive marketing activity in certain geographic markets or passenger segments, are simply not available now.
The “known unknown” is whether this is a period of significantly reduced demand for a few months which will soon rebound, or a fundamental reordering of global aviation.
The scale of capacity cuts and route suspensions is unprecedented:
airBaltic is to suspend all scheduled flights from 17 March to 14 April 2020, save for potential repatriation flights.
Air New Zealand is to cut long-haul capacity by 85%. London Heathrow – Los Angeles is suspended from 21 March to 30 June. Other suspended long-haul routes are Chicago O’Hare, San Francisco, Houston, Buenos Aires, Vancouver, Tokyo Narita, Honolulu, Denpasar and Taipei
Alitalia has asked all passengers to wear masks on board its aircraft in case passengers cannot be kept one metre apart.
American Airlines is to suspend virtually all long-haul flights outside of Central & North America. The airline will operate a skeleton service of one flight a day from London Heathrow to Dallas / Fort Worth and Miami and three flights a week between Dallas / Fort Worth and Tokyo Narita.
Delta is to suspend virtually all transatlantic flights. This is save for one daily flight to Atlanta from London Heathrow, Amsterdam and Paris Charles de Gaulle; one flight from Amsterdam to Detroit; and flight from London Heathrow to New York JFK.
Lufthansa now expects its group airlines to reduce capacity by up to 70%. The airline has drawn additional credit facilities of €600m. The group is also looking to secure financing against its aircraft which it claims have a book value of €10 billion.
Norwegian has issued an outright plea for state support and has admitted it will not be able to raise funds through conventional means. Even before the extension of the US travel ban to the UK & Ireland, the airline had announced it was to ground 40% of its long-haul fleet and cancel 4,000 flights to the end of May.
Qantas has made substantial cuts to its international network, including the grounding of all part two Airbus A380 aircraft until September.
SAS Scandinavian Airlines is to suspend almost all operations from today.
Singapore Airlines has suspended services from Barcelona, Dusseldorf, Frankfurt, Milan, Munich, Paris and Rome to Singapore until the end of May.
Shai Weiz, CEO of Virgin Atlantic and Peter Norris, Chairman of Virgin Group, a 51% shareholder in Virgin Atlantic, are reported to be writing to UK Prime Minister Boris Johnson this week to ask for liquidity support of up to £7.5bn for the entire industry.Continue reading “London Air Travel’s Monday Briefing – 16 March 2020”