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Tuesday, August 9, 2022

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Airlines are feeling the pinch as coronavirus takes hold

Published Mar 16, 2020


Sydney/Chicago - Airlines around the world announced they would make more drastic reductions to their flying schedules, cut jobs and seek government aid after countries further tightened border restrictions due to the coronavirus.

United Airlines booked $1.5-billion less revenue in March than the same time last year and warned employees that planes could be flying nearly empty into the summer, even after severe flight cuts.

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United said it would cut corporate officers' salaries by 50 percent and reduce flight capacity by about 50 percent in April and May, with deep capacity cuts also expected into the summer travel period.

"This crisis is moving really quickly," United Chief Executive Oscar Munoz and President Scott Kirby said in a memo to employees on Sunday.

Things worsened over the weekend as Spain declared a state of emergency, the Trump administration added Britain and Ireland to its list of countries facing travel curbs and Australia and New Zealand said all travellers would have to self-isolate for 14 days.

UK airlines called on the British government to help ensure their survival, while Germany's Tui AG and Scandinavian carrier SAS said they would temporarily suspend the vast majority of operations due to the COVID-19 outbreak and apply for government support.

Icelandair Group said it was cutting capacity and working with labour unions to reduce its salary cost "significantly".

Air New Zealand said job losses would be necessary as it cut long-haul capacity by 85 percent over the coming months.

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"We are now accepting that for the coming months at least Air New Zealand will be a smaller airline requiring fewer resources, including people," Air New Zealand Chief Executive Greg Foran said in a statement.

The airline has halted trading in its shares until Wednesday.

Qantas Airways said it would be making fresh cuts to its flying schedule beyond the 25 percent reduction in international capacity announced last week due to the new travel restrictions.

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UBS analysts said the latest travel restrictions would have a significant effect on Qantas' international traffic, which historically accounted for around 45 percent of revenue and 25 percent of earnings before interest and tax.

"A downside scenario where international traffic is down 50 percent for a whole year and domestic down 30 percent could result in cash burn of up to A$200-million ($123.60-million) per month after incorporating changes to the business," UBS said of Qantas.

Smaller rival Virgin Australia, which has a weaker balance sheet but a heavier domestic focus, said it was assessing its response to the new travel restrictions.

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Virgin said it would make deeper capacity cuts, suspend financial guidance, freeze hiring and offer leave without pay to staff. 


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