Airline industry turmoil deepens as coronavirus pain spreads

Sydney/Washington, Airline industry turmoil deepened on Thursday as Qantas Airways Ltd (QAN.AX) told most of its 30,000 employees to take leave and India prepared a rescue package of up to $1.6 billion to aid carriers battered by coronavirus, government sources said.

The U.N.’s International Civil Aviation Organization called on governments to ensure cargo operations were not disrupted to maintain the availability of critical medicine and equipment such as ventilators, masks, and other health and hygiene items that will help reduce the spread of the coronavirus pandemic.

Passenger operations have collapsed at an unprecedented rate as the virus spreads around the world, with Delta Air Lines Inc (DAL.N) parking more than 600 jets, cutting corporate pay by as much as 50%, and scaling back its flying by more than 70% until demand begins to recover, Reuters reported.

Shares in U.S. airlines fell sharply on Wednesday after Washington proposed a rescue package of $50 billion in loans, but no grants as the industry had requested, to help address the financial impact from the deepening coronavirus crisis.

The Trump administration’s lending proposal would require airlines to maintain a certain amount of service and limit increases in executive compensation until the loans are repaid.

American Airlines Group Inc (AAL.O) in a memo to staff rebuffed criticism that it had rewarded its shareholders with too many dividends and stock buybacks in better times, leaving it with less cash to manage the crisis.

“Unfortunately, this is no ordinary rainy day,” said Nate Gatten, American’s senior vice president global government affairs. “These are extraordinary circumstances, and additional support is necessary to protect jobs and ensure that the flying public can continue to rely on our industry after the crisis ends.”

According to Reuters, in Australia, Qantas said it would cut all international flights and two-thirds of its 30,000 workers would need to take paid or unpaid leave. The Australian government has warned citizens not to travel overseas and said it would ban the arrival of non-citizens and residents starting Friday.

“The sad fact is that due to circumstances beyond our control, travel demand has evaporated,” Qantas Chief Executive Alan Joyce said in a memo to staff seen by Reuters. “We have no work for most of our people.”

In China, the epicenter of the outbreak, international flight cancellations are rising this month, hitting 2,938 on average daily so far, Reuters calculations based on data from aviation data provider Variflight showed. That compared with 2,460 daily flights canceled in February and 387 in January.

Domestic capacity in China has been recovering since the second half of February, when workers started to return, but it is still down about 60% from a year earlier, according to Variflight.

India is poised to join a growing list of governments offering aid to its aviation industry. The Finance Ministry is considering a proposal worth up to $1.6 billion that includes temporary suspension of most taxes levied on the sector, according to two government sources who have direct knowledge of the matter.

Taiwan’s Transport ministry said on Thursday it was inviting its airlines to submit capital requirements and financial plans with the view to giving them assistance, such as rolling over loans and providing operating funds.

New Zealand on Thursday outlined the first tranche of a NZ$600 million ($344 million) aviation relief package, including financial support for airlines to pay government passenger charges and cover air traffic control fees.

The New Zealand government on Thursday advised citizens not to travel overseas because of the risks posed by the coronavirus and said it would shut its borders to those who were not citizens or residents.

Air New Zealand Ltd (AIR.NZ), which on Monday announced plans to maintain a bare-bones international flying schedule, expects to make further changes now, chief revenue officer Cam Wallace said on Twitter. The airline is also closing its cabin crew base in London earlier than initially planned, leading to the loss of 130 jobs.

Budget carrier easyJet PLC (EZJ.L) and its U.K. pilot union signed an agreement to minimize the risk of pilot layoffs in Britain over the next 18 months, including a pay freeze and asking all crew to take unpaid leave from March 23 to June 22, according to a memo seen by Reuters.

Source: Bahrain News Agency