The three biggest global airline alliances, oneworld, SkyTeam and Star Alliance, urged governments to “evaluate all possible means” to assist the industry. They represent more than 58 of the world’s leading carriers. Some European airlines have already issued urgent appeals for help.
According to CAPA Centre for Aviation, a consultancy, most airlines in the world will be bankrupt by the end of May unless governments intervene. “Coordinated government and industry action is needed — now — if catastrophe is to be avoided,” the firm said in a report published Monday. “Cash reserves are running down quickly as fleets are grounded, and what flights there are operate much less than half full,” it added.
“In those countries where the fleet is not grounded, social distancing restrictions may make flying to all intents and purposes, impractical, if not, impossible,” the airline said, adding that it now expected to reduce seat capacity by 80% for April and May, and could not rule out complete grounding of its fleet of 470 planes.
“The demand for international air travel is essentially non-existent,” Scandinavian Airlines said Sunday.
Sweeping capacity cuts
Most of the world’s biggest airlines have announced dramatic reductions to schedules and have idled hundreds of planes. Employees have been asked to take voluntary unpaid leave, while senior executives take pay cuts, in the face of the worst aviation crisis in history.
Governments are now facing calls from airlines for financial assistance.
Virgin Atlantic, which has asked staff to take two months unpaid leave, said in a statement Monday that the United Kingdom’s aviation sector alone will need government support of between £5 billion and £7.5 billion ($6.1 billion and $9.2 billion).
The company said Monday that it will “gradually cancel” most of its flights and temporarily lay off 90% of its workforce, or about 7,300 people.
The International Air Transport Association said last week that airlines will need “emergency measures to get through the crisis,” urging governments to consider extending lines of credit, reducing infrastructure costs and easing taxes.
IATA CEO Alexandre de Juniac has previously raised the possibility of direct government bailouts for airlines, similar to what took place in the United States after the 9/11 terrorist attacks, when the US federal government approved $5 billion in direct support and $10 billion in loan guarantees for the industry.
Labor unions on both sides of the Atlantic are pleading for governments to step in. United’s pilots union said Sunday there will be a “call to action” this week to ask the US administration to help, while Britain’s pilots union said without “significant government support now there may not be a UK aviation industry left.”
There are about 460,000 jobs in the US airline industry, according to the Labor Department, and most of these are well paid with healthy benefits.
Britain’s biggest labor union on Monday appealed to British Prime Minister Boris Johnson to implement an “urgent comprehensive financial package” to cover worker pay and extend loans to airlines and airports, or “tens of thousands of jobs” would be at risk.
When deciding on which carriers to prioritize, governments in Europe will need to consider which airlines play a vital function in the economy, Bernstein analyst Daniel Roeska said Monday. These are more likely to be the legacy carriers than budget airlines, which are focused mostly on leisure travel, he added.
CAPA Centre for Aviation said the nature of the crisis required a global, coordinated response but said it believed that was unlikely to happen.
“It will consist mostly of bailing out selected national airlines. If that is the default position, emerging from the crisis will be like entering a brutal battlefield, littered with casualties,” the firm said.
— Eoin McSweeney and Chris Isidore contributed reporting.