American Airlines has agreed to a $5.5 billion loan from the US Treasury as it aims to ride out the downturn caused by the coronavirus, the carrier announced Friday.
The airline, which has said it could lay off as many as 19,000 employees next month without another relief package from Congress, said the financing will “help us shore up our longer-term liquidity until demand returns,” according to a message to employees.
The loan, authorized as part of the massive CARES Act federal relief package passed this spring, adds to American’s mounting debt level, which is higher than that of other leading US carriers.
The Treasury Department told the carrier that the loan could be boosted to as much as $7.5 billion, “although such amount is subject to final approval by the Treasury,” American said in a securities filing.
The CARES Act also provided $25 billion in Payroll Support Program (PSP) funds for US carriers, including $5.8 billion to American.
US airlines that took PSP funds committed to not undertaking any involuntary job cuts through the end of September. American has said it could lay off 19,000 workers starting in October if there is not a new relief package.
Airline CEOs visited the White House on September 17 to lobby for such legislation, but talks in Congress have stalled amid intensifying partisanship ahead of the November presidential election.
Belgium’s biggest airline, Lufthansa subsidiary Brussels Airlines, said Thursday it had lost 182 million euros in the first six months of 2020 because of the coronavirus crisis.
First-half revenues fell to 252 million euros, 63 percent below the same period last year. Brussels Airlines transported two thirds fewer passengers between January and June as much of the world imposed anti-virus lockdowns.
Brussels Airlines suspended all scheduled flights from 21 March, running only special flights to repatriate Belgian and German citizens, transport medical equipment to Africa, and import medical masks from China.
Commercial flying resumed on June 15 as European countries began to ease their social and economic lockdowns, but the airline’s network remains limited.
“Due to the still volatile and highly unpredictable situation worldwide, it is not possible to make forecasts for 2020 as a whole,” the company warned.
Last month the Belgian state and the German flag-carrier Lufthansa struck a deal to rescue its struggling partner.
A Belgian government loan of 290 million euros ($337 million) and a capital injection of 170 million euros from Lufthansa will cover some of the airline’s losses.
But Brussels Airlines plans to use the money for restructuring that will see it shed around a quarter of its workforce — affecting around 1,000 people.
Lufthansa, the leading European transport group, was itself handed a nine billion euro bailout last month from the German government.
Beijing cancelled at least 1,255 inbound and outbound flights on Wednesday, representing nearly 70 per cent of all services, the state-run People’s Daily reported, as fears grow over a new coronavirus outbreak.
City officials have urged residents not to leave the city, and several provinces have quarantined travellers from Beijing after more than 130 new cases were confirmed in the capital in recent days.
Cabin crews on standby with destinations revealed only hours before the flight, pilots put on simulators to keep up to date — an airline restarting after the pandemic is a far cry from the clockwork precision of the pre-coronavirus world.
“Flexibility” is the top priority, Lufthansa chief executive Carsten Spohr said last week, as the airline has “developed completely new procedures in flight and route planning”.
As borders slammed shut to halt virus transmission, about 90 percent of passenger connections at the German airline fell away, leaving an “emergency” timetable comparable to the 1950s.
Daily passengers dwindled to 3,000 from the usual 350,000.
With the peak of the crisis over in Europe, the airline is plotting its restart — and the entire operation has been forced to act more nimbly to cope.
For Lufthansa crews, the inch-by-inch progress means “they have almost no fixed shifts any more, only on-call periods”, Spohr said.
“They know how quickly they have to make it to the airport and that they should be nearby, and then they get a few hours’ notice about where they’re going.”
“Methods we’ve always used to patch over problems have become the standard,” he added.
Some flights, like the first India-bound service, have been dropped almost at the last moment for lack of landing authorisation.
– High hurdles –
At the same time, “demand is far less predictable than usual”, a spokesman for Abu Dhabi-based Etihad Airways said.
At Lufthansa, there have been cases where “colleagues all at once had to add a second flight in parallel” to meet high demand — including on a busy May holiday weekend when “I myself and our family” were on a waiting list, Spohr said.
“Historic data we’ve gathered over decades are useless for flight planning in the near future,” said chief financial officer Thorsten Dirks, explaining that Lufthansa’s “artificial intelligence has to be re-trained” to address the altered situation.
“In these cases, human beings are faster and more flexible.”
Flight and cabin crew on standby through the period must also be kept up to date.
Some pilots have been flying simulators to stay in touch, with Etihad running courses every 45 days as 80 percent of its fleet was grounded in April.
Meanwhile other airlines like Senegal’s Transair have been operating empty flights to maintain pilots’ licences.
Around 700 of Lufthansa’s 763 aircraft were grounded at the peak of the lockdowns, parked in orderly rows on the apron of Frankfurt airport — and even taking up one of the runways.
After up to three months of inactivity, planes “can be reactivated in one or two days”, Lufthansa spokeswoman Lara Matuschek said.
Any longer time out means placing them into “deep storage”, with steps like antibacterial treatments for the empty fuel tanks.
“There are much higher hurdles to reactivation” from deep storage, and “it can take up to four weeks” as more extensive maintenance work may be needed, Matuschek explained.
– Refunds –
From early June, the German juggernaut has been offering more routes, aiming to serve 90 percent of short-haul and 70 percent of long-haul destinations by September.
But it will only offer around 40 percent of its usual capacity and has been forced to turn to Berlin for a nine-billion-euro ($10.1 billion) bailout.
In Asia, Singapore Airlines expects “two days to a week” to reactivate aircraft.
The carrier will offer 12 additional destinations in June and July, but its network remains pared back with just 32 of its normal 135 routes and six percent of pre-pandemic capacity.
In Japan, a gradual journey back to normal has begun for JAL and ANA, with the latter offering 30 percent of normal flights in June after 15 percent in May.
Emirates, the biggest Middle Eastern carrier, expects a return to normal traffic levels to take up to four years.
Meanwhile, Lufthansa’s call centres have been burdened with cancellations and re-bookings, with reimbursements alone running into hundreds of millions of euros per month.
“The more we bring the system back online, the more efficient we have to become,” Spohr said.
“But you can’t work this way long-term in a company our size and hope to make money.”
The Minister of Aviation, Hadi Sirika, has stated that the sector has been the worst hit since the COVID-19 pandemic ravaged the country.
According to him, airlines have lost nearly N17 billion monthly since their operations were grounded, as part of efforts to curb the spread of the virus.
“We are in very difficult moments like everyone else. All of this started because someone travelled and unfortunately came back home with it and the consequence is what we’ve been going through.
“We are the worst hit, than any other sector. Some N17 billion monthly is being lost by the airlines, thanks to COVID-19,” the minister said during the Presidential Task Force briefing on COVID-19 in Abuja on Wednesday.
Speaking further, Sirika noted that the sector is highly regulated and very co-ordinated and has set standards that must be followed at all times, regardless, because it speaks to safety.
This, according to him, would mean that “we will not be able to open up after closing for several weeks and perhaps for some months”.
“There are safety issues and concerns. Those airplanes have been kept and when we are going to bring them back into service, we will have to ensure that they are airworthy and that they can make those flights safely,” he added.
“So also, for the flight crew, they have certain standards they must conform with. They have licencing issues which will fall due for recurrency to be done within this period, so what do you do with them.
“Certainly they won’t just pick up their bags and continue where they left. They must conform to those standards and ensure that they are safe to operate both in terms of their health and their proficiency to be able to conduct a very safe flight”.
South Africa’s cash-strapped national carrier will be replaced by a new airline after years of mismanagement and debt, the government said Friday, as plans for its rescue have been marred by the coronavirus outbreak.
South African Airways (SAA) was placed under a state-approved turnaround plan in December as a last-ditch resort to save the company from total collapse.
All its flights have been grounded since South Africa closed its borders and went into a five-week nationwide lockdown in March to curb the spread of COVID-19.
Last month, the government turned down a request for 10 billion rand ($531 million) of extra funding by SAA’s business administrators, claiming resources had been stretched by the pandemic.
The ministry of public enterprises on Friday said a “new and bold approach” would be required for South Africa to maintain a competitive airlift capacity after the “fog of economic uncertainty” caused by coronavirus.
“The creation of a new, dynamic airline, with the correct corporate structure… will allow for the new SAA to compete in the post-COVID-19 world,” said the ministry in a statement.
“The new national carrier will be well-positioned to take to the skies again and contribute to the South African and African economy.”
No clear timeline was given for the creation of the “new restructured airline” that will involve both public and private participation.
According to the ministry, it will be funded by a range of parties that will allow the state to “continue to play a key role”.
SAA employs more than 5,000 workers and is Africa’s second-largest airline after Ethiopian Airlines.
Like most South African state-owned enterprises (SOEs), it has failed to make a profit for more than a decade and survives on government bailouts.
“The transition to the new airline may require sacrifices,” the statement said, adding that employees “may be displaced”.
To date South Africa has recorded at least 5,647 coronavirus cases — the highest in Africa — including 103 deaths.
Some confinement measures were lifted on Friday and economic activity is slowly beginning to resume in certain sectors.
But Transport Minister Fikile Mbalula on Friday said it was still too early to think of ending air travel restrictions.
India will ground all domestic passenger flights from Wednesday to combat the spread of the novel coronavirus, the government said, as more states ordered lockdowns.
India has already banned incoming international flights and sealed most of its land borders.
The government information bureau said only cargo flights will be allowed.
Domestic Indian carriers carried some 144 million passengers last year.
“Covid-19 pandemic is crippling the global economy and aviation including India’s once-booming aviation sector for years to come,” Devesh Agarwal, the editor of the Bangalore Aviation website, told AFP.
“This is not a short-term pandemic and the outlook for Indian aviation looks tragic. The aviation sector in India is decimated right now. This is similar worldwide.”
Dubai carrier Emirates announced on Sunday it will suspend all passenger flights from March 25 amid the novel coronavirus outbreak.
“By Wednesday 25 March, although we will still operate cargo flights, which remain busy, Emirates will have temporarily suspended all its passenger operations,” the airline’s chairman and CEO Sheikh Ahmed bin Saeed Al-Maktoum said in a statement.
“We continue to watch the situation closely, and as soon as things allow, we will reinstate our services.”
The United Arab Emirates on Friday announced its first two deaths from the COVID-19 disease, having reported 153 infections so far, of which 38 people have recovered.
Maktoum said that, until January this year, the Emirates Group was “doing well” against current financial year targets, but “COVID-19 has brought all that to a sudden and painful halt over the past six weeks”.
Up to $200 billion is needed to rescue the world’s airlines during the coronavirus crisis, the global aviation association said Thursday, appealing especially to African and Middle Eastern countries to provide emergency assistance.
“Support measures are urgently needed,” the International Air Transport Association said in a statement, adding that “on a global basis, IATA estimates that emergency aid of up to $200 billion is required”.
Airlines worldwide face an unprecedented existential threat as the COVID-19 pandemic, which has killed more than 9,000 people around the world, shuts down global travel.
“Stopping the spread of COVID-19 is the top priority of governments,” IATA chief Alexandre de Juniac said in the statement.
“But they must be aware that the public health emergency has now become a catastrophe for economies and for aviation,” he said, pointing out that “the scale of the current industry crisis is much worse and far more widespread than 9/11, SARS or the 2008 global financial crisis.”
“Airlines are fighting for survival,” he said, warning that “millions of jobs are at stake.”
IATA expressed particular concern for the situation in Africa and the Middle East, where many routes have been suspended, and where demand has fallen by as much of 60 percent on the remaining routes.
It pointed out that the air transport industry’s economic contribution in Africa alone is estimated at $55.8 billion, supporting 6.2 million jobs and contributing 2.6 percent of the continent’s gross domestic product (GDP).
In the Middle East, the contribution stands at $130 billion, some 4.4 percent of GDP, supporting 2.4 million jobs, it said.
“Airlines need urgent government action if they are to emerge from this in a fit state to help the world recover, once COVID-19 is beaten,” Juniac said.
Carriers across Africa and the Middle East had begun implementing extensive cost-cutting measures to mitigate the financial impact of the pandemic, IATA said, but warned that airlines in the regions on average held enough cash reserves for approximately two months.
“Due to flight bans as well as international and regional travel restrictions, airlines’ revenues are plummeting (and) outstripping the scope of even the most drastic cost containment measures,” it said.
IATA called on governments to provide support in various ways, including through direct financial aid to passenger and cargo carriers, loans and loan guarantees and tax relief.
Major world airlines on Monday axed almost all flights on a temporary basis as the worsening coronavirus crisis sparks travel bans, ravages demand and sends shares into freefall, triggering pleas to help carriers survive.
IAG, owner of British Airways and Spanish carrier Iberia, announced it would slash flight capacity by 75 percent during April and May owing to the COVID-19 outbreak.
The London-based carrier’s share price crashed nearly 27 percent in mid-afternoon deals.
Other airlines tumbled, with Germany’s Lufthansa erasing almost 11 percent in value and Air France wiping out 17 percent on similar announcements.
Britain’s Virgin Atlantic added that it has decided to park 75 percent of its total fleet — and in April this will rise as high as 85 percent.
Virgin has reportedly called upon the UK government to inject emergency support totalling 7.5 billion pounds ($9.2 billion, 8.3 billion euros) to help keep Britain’s aviation industry flying.
In Germany, Lufthansa has been forced to scrap around two thirds of its flights in coming weeks as several countries including the United States ban travellers from Europe.
– ‘Deteriorating at pace’ –
“Last week saw a rapid acceleration of the impact of COVID-19 on global aviation and tourism,” Virgin Atlantic warned in a statement.
“The situation is deteriorating at pace and the airline has seen several days of negative bookings, driven by a huge volume of cancellations as customers choose to stay at home.”
British no-frills carrier EasyJet warned it may have to ground “the majority” of its fleet, urging governments across Europe to help their airlines maintain access to liquidity.
EasyJet CEO Johan Lundgren added: “European aviation faces a precarious future and it is clear that coordinated government backing will be required to ensure the industry survives and is able to continue to operate when the crisis is over.”
Irish budget carrier Ryanair meanwhile did not rule out a full grounding as it unveiled stinging flight cutbacks.
As part of its drastic action, IAG said it was “cutting non-essential and non-cyber related IT spend, freezing recruitment and discretionary spending, implementing voluntary leave options, temporarily suspending employment contracts and reducing working hours”.
IAG added that a management shake-up had been put on hold, noting that Willie Walsh would remain as chief executive.
Walsh had been due to step down on March 26, to be replaced by Iberia CEO Luis Gallego.
Air France will meanwhile slash flight capacity by 70-90 percent over the next two months, while Austrian Airlines will suspend all flights from Thursday, and Finnair is cutting 90 percent of capacity until the situation improves.
The German government on Monday said it is planning to shield companies from going under because of the pandemic, by suspending legal obligations for firms facing acute liquidity problems to file for bankruptcy.
German tourism and hotel group TUI said it was applying for state aid to keep it afloat, as it suspended the “majority” of its operations.
– ‘This is not 2008’ –
Back in London, a spokesman for British Prime Minister Boris Johnson signalled that the government would examine help for affected businesses, not just airlines, via Her Majesty’s Revenue and Customs (HMRC) — which is Britain’s tax authority.
“HMRC is ready to help all businesses including airlines experiencing temporary financial difficulties due to coronavirus,” Johnson’s spokesman told AFP.
Stephen Innes, markets strategist at AxiCorp, drew a contrast with the global financial crisis which sparked bank bailouts.
However, as G7 finance ministers prepare to discuss the crisis later Monday, Innes argued that airlines were not the only strategic companies calling for assistance this time.
“This is not 2008. Back then it was the banks, this time the banks’ balance sheets are fine,” Innes said.
“But this is a global economic crisis which needs swap lines to airline companies, oil companies and retailers .
“Airlines might be at the top of the list for directed fiscal help, but virtually every global industry is facing pressure without a government bailout,” he added.
– US cutbacks –
US airlines have also announced drastic reductions in flights after President Donald Trump’s administration banned foreign travellers arriving from Europe.
United Airlines said it would announce a cut in capacity of around 50 percent for April and May, as the United States ramps up restrictions to try and contain the spread of the coronavirus.
“We also now expect these deep cuts to extend into the summer travel period,” said United chief executive Oscar Munoz in a letter to employees published Sunday.
American Airlines said it would reduce all international capacity by 75 percent, while competitors Delta and Southwest Airlines plan to strip back flights.
The Nigerian Civil Aviation Authority (NCAA) has asked all airlines operating international and regional flights into the country to issue health declaration forms to their passengers, including crew members before arriving at Nigerian airports.
NCAA’s General Manager (Public Relations), Sam Adurogboye, disclosed this in a statement on Thursday.
This comes on the heels of the failure of some airlines operating international and regional flights into Nigeria to provide health declaration forms, also known as passengers’ self-reporting forms, to their customers.
Adurogboye stated that the NCAA has issued a letter to that effect to all airlines and other stakeholders.
“In view of the above, airlines are to remind passengers to provide factual address and phone numbers to enhance contact tracing in case there is a need to do so,” he said.
The agency’s spokesman explained that the health declaration forms would be collected and evaluated by the personnel of the Port Health Services on the arrival of the passengers and crew members.
He added that the collected health forms would be returned to the airlines by the Port Health Services at the various international airports of the country.
Adurogboye warned that failure to comply with the directive of the NCAA by any airline would attract severe sanctions.
Delta Airlines and American Airlines are temporarily suspending some flights between US airports and Milan because of the spread of the novel coronavirus in parts of Italy, the two carriers announced.
Delta is suspending flights between New York’s busy John F. Kennedy International Airport and Milan Malpensa, the largest airport in northern Italy and a major hub for Alitalia, the airline said in a statement Sunday.
Delta’s last New York-to-Milan flight will take off Monday, while the last flight in the opposite direction is scheduled for Tuesday. Service is set to resume on May 1 or 2.
Delta added that flights between Rome and Atlanta were not affected.
American Airlines said late Saturday that it was suspending service between New York and Milan as well as between Miami and Milan until April 25, citing a “reduction in demand.”
Both airlines said passengers will have a choice of rebooking on a later flight or being reimbursed.
US authorities on Saturday asked Americans not to travel to the areas in Italy and South Korea hardest-hit by the virus.
Both Delta and American, as well as the third big US carrier, United Airlines, had previously reduced or suspended service to China, where the epidemic broke out in late December, as well as to several other Asian countries.
As of Sunday at 17h00 GMT, the number of cases of coronavirus in the world stood at 88,257, including 2,996 deaths, in 66 countries and territories, according to a tally compiled by AFP from official sources.
Italy has reported 1,694 cases and 34 deaths. The biggest cluster of cases is in the Lombardy region in the country’s north.