Tag Archives: Airline

Airlines look past slow recovery to post-pandemic travel

By Laurence Frost

PARIS (Reuters) – Even as new setbacks cloud their path to recovery, airline bosses are focusing on the lasting impact of COVID-19 on premium travel, technology and other pillars of their business.

Aviation leaders, forced to gather virtually by the pandemic, have been gauging its longer-term fallout at the World Aviation Festival, after more than a year of lockdowns.

Drawing many top executives and thousands of participants, this week’s event comes as doubts over the northern summer vacation season renew scrutiny of airlines’ cash and their ability to withstand another washout.

The addition of France, Britain and 114 other states to the U.S. “Do Not Travel” list has also cast a pall.

“There will be a lot of carriers that will not make it through,” Air France-KLM Chief Executive Ben Smith said, citing nameless rivals that were “not viable prior to the crisis”.

For survivors like state-backed Air France-KLM, market consolidation would be welcome, Smith said, adding: “Even if it takes longer than planned for traffic to return, with a reduction in capacity that’s a good balance for us”.

Air France-KLM expects to need more capital following a 10.4 billion euro ($12.5 billion) bailout in 2020 and 1 billion-euro share issue this week. Long-haul juggernaut Emirates may also need to raise more cash within months, the Gulf carrier’s President Tim Clark said during the event.

BUSINESS DECLINE

Despite the deep uncertainties, executives are looking beyond the pandemic to anticipate underlying shifts.

High on the list is a structural slump in business travel as many future meetings – if not airline conferences – stay online.

“A large percentage of this traffic will not come back on long-haul,” aviation consultant John Strickland predicted, as companies curb travel costs and carbon emissions.

“You can’t beat face-to-face in many business situations,” he said. “However a big amount can be cut.”

That will hit yields, or fare levels, Clark and his Virgin Atlantic counterpart Shai Weiss acknowledged, although the Emirates boss expects leisure customers to fill business cabins.

“If you drop (fares) by 15% or 20% they will come to business,” Clark said. Such customers are “not quite as good as the corporate segments were, but hey ho, you take what you can get and you fill your aircraft.”

The pandemic has sped efforts by airlines and airports to integrate digital passenger services, information and document checks, while the race is on to deploy “contactless” processes and digital health passes with COVID-19 vaccination and test certificates.

DIGITAL DRIVE

EasyJet CEO Johan Lundgren said digital platform upgrades hurriedly deployed to cope with last year’s flood of flight cancellations and refund claims were now among post-crisis “silver linings”.

“Cost bases have been reset” after the low-cost carrier invested in “self-service” capabilities for its booking system, he said. Airlines that have used the crisis for digital upgrades “will come out of this in a more efficient way.”

Even with traffic around 10% of pre-crisis levels, airports have warned that COVID-19 paperwork and test results are already clogging “pinch points” in check-in and boarding, despite full staffing.

Without swift digitization of processes including test and vaccine checks, airports could be overwhelmed by a traffic uptick as soon as May, said Emiliano Sorrenti, chief information and technology officer at Aeroporti di Roma, which operates the Italian capital’s Fiumicino and Ciampino airports.

“When we reach just 50% of (pre-crisis) passengers, will we be able to cope with those numbers given the new regulations?” he said. Fully seamless services that now seem far off will rapidly become a “mandatory level of automation”, he expects.

Vaccination setbacks and concern over COVID-19 variants suggest airports may have a little longer to prepare.

Global airline body IATA this week cut its traffic forecast to reflect a weaker international travel outlook, despite domestic rebounds in U.S. and China.

But Clark, who has put off his retirement to pilot Emirates through the crisis, remained upbeat about the recovery opportunities awaiting his eventual successor.

“We are, dare I say it, on the threshold of something really good here,” he said. “Once this pandemic is over.”

(Reporting by Laurence Frost; Additional reporting by Sarah Young in London and Conor Humphries in Dublin; Editing by Alexander Smith)

Airline outlook dims again as new travel curbs threaten summer

By Laurence Frost and Sarah Young

LONDON (Reuters) – Recovery prospects for Europe’s coronavirus-stricken airlines are slipping from bad to worse, as a British minister warned on Tuesday against booking summer holidays and Germany mulled a drastic new clampdown on travel even within the EU.

UK consumers should “absolutely” hold off from booking holidays, said Nadhim Zahawi, the minister responsible for vaccinations. “There’s still 37,000 people in hospital with COVID at the moment – it’s far too early for us to even speculate about the summer.”

Airline shares, which had gained ground since November’s vaccine breakthroughs, have come under pressure this week amid concern that new coronavirus variants and resulting lockdowns now threaten the all-important summer season.

While major carriers have secured liquidity to survive the slump for many more months, analysts say, the latest setbacks mean some may need fresh funds to survive the following winter – tough at the best of times – and weaker airlines may fail.

Mounting restrictions and testing demands threaten more “stress and friction” throughout the summer, as well as “a more truncated recovery in demand than investors currently envisage,” Citi analyst Mark Manduca warned in a note.

The travel outlook for the Easter break – this year falling in early April – already seems almost hopeless.

German Chancellor Angela Merkel told party lawmakers on Tuesday that “no tourist travel should be taking place,” as her government weighed tougher measures.

Throughout the crisis, governments have tried to maintain travel links among EU and European Free Trade Association (EFTA) states. Over the weekend, however, Sweden barred travel from neighbor Norway in an attempt to stem the spread of new COVID-19 variants, and Belgium banned non-essential travel.

Britain is also considering mandatory confinement in “quarantine hotels” for some international arrivals, following the example of some Asian countries.

Shares in UK-exposed easyJet and British Airways parent IAG have both fallen 14% over five days amid the resurgent gloom, wiping out some of their gains since November. Ryanair has lost 6% in the same period.

And while aircraft manufacturers have been cushioned by their large pre-crisis order books, some suppliers and engine makers are feeling the heat.

Rolls-Royce further lowered its financial forecasts on Tuesday, predicting a 2 billion-pound ($2.7 billion) cash outflow this year as the collapse in flying hours hit so-called power-by-the-hour contracts as well as maintenance.

British airlines and airports warned that further travel restrictions would prove “catastrophic,” calling for a bespoke support package to help them survive the prolonged crisis.

The new curbs also threaten jobs and cargo shipments including medical equipment, industry body Airlines UK said.

Airlines’ key role in vaccine distribution is also helping some to push back against restrictions affecting staff.

KLM, part of Air France-KLM, won a partial reprieve from Dutch plans to require rapid COVID-19 tests of returning crew, after warning of cargo disruption.

(Reporting by Laurence Frost in Paris and Sarah Young in London. Editing by Mark Potter)

U.S. agency screened 1.18 million airline passengers on Sunday

WASHINGTON (Reuters) – The Transportation Security Administration said it screened 1.18 million airline passengers on Sunday, the highest number since mid-March but still about 60% lower than the comparable day last year.

The number of passengers screened on the Sunday after Thanksgiving last year was 2.88 million, the highest ever recorded by the agency.

The Centers for Disease Control and Prevention earlier this month urged Americans not to travel during this week’s Thanksgiving holiday to mitigate the spread of the coronavirus as cases of COVID-19 spike around the United States.

(Reporting by David Shepardson; Editing by Toby Chopra)

Caribbean resorts get starring role in U.S airlines’ COVID-19 holiday playbook

By Tracy Rucinski

CHICAGO (Reuters) – U.S. airlines are adding flights, and in some cases COVID-19 testing programs, for travel to Mexico and the Caribbean, a region central to carriers’ strategies to tap into pockets of holiday demand before a vaccine makes its way around the world.

Beachside resort destinations in areas like Cancun are the only spots that now have more flights from U.S. cities scheduled for November and December than last year, numbers from aviation data firm Cirium show.

Overall, U.S. airlines are flying about 50% less than 2019, with flights to traditional European vacation hotspots like Paris down by as much as 82% due to travel bans and quarantines.

While new revenue streams from destinations like the Caribbean will help, they won’t be enough to put airlines in the black for the year, analysts have said.

The holiday period is traditionally when airlines thrive ahead of slow months in January and February. But this year they have said they will continue to burn millions of dollars daily through the fourth quarter as they wrestle with slashed demand.

Ahead of Thanksgiving, U.S. airports saw their busiest weekend since mid-March, even after the Centers for Disease Control and Prevention (CDC) urged Americans not to travel amid a spike in COVID-19 cases. Still, demand is down by around 60% and airlines say it’s too soon to know how Christmas travel will play out.

Still, airlines are hoping to build up a base of customers who feel comfortable about flying before a COVID-19 vaccine becomes widely available, eyeing the typically lucrative summer travel season.

More studies, including from the Harvard School of Public Health and the U.S. Department of Defense, have said the risk of COVID-19 transmission in flight is low if people wear masks.

Recent positive vaccine developments have helped reassure investors that U.S. airlines can make it through the crisis. Sector shares rose 4% on Monday and are up 23% for the month.

But the speed and depth of their recovery, particularly from higher-margin business and international travel, will determine how they cut piles of debt they took on to weather the crisis.

Airlines are trying to reboot overseas travel through bilateral bubbles – deals between countries on COVID-19 testing protocols that would replace or reduce quarantines – though programs have been slow to take off.

United Airlines last week launched a free rapid COVID-19 testing program between Newark Liberty International and London Heathrow airports, and on Monday said it was rolling out a test program for flights from U.S. energy capital Houston, Texas to 10 places in Latin America and the Caribbean.

Starting Dec. 7, passengers can take the self-collected, mail-in test 72 hours before departure for $119 to meet entry requirements at their destination.

(Reporting by Tracy Rucinski; Editing by Kenneth Maxwell)

Airlines set to lose $157 billion amid worsening slump: IATA

By Laurence Frost

PARIS (Reuters) – Airlines are on course to lose a total $157 billion this year and next, their main global body warned on Tuesday, further downgrading its industry outlook in response to a second wave of coronavirus infections and shutdowns afflicting major markets.

The International Air Transport Association (IATA), which in June had forecast $100 billion in losses for the two-year period, said it now projects a $118.5 billion deficit this year alone, and a further $38.7 billion for 2021.

The bleak outlook underscores challenges still facing the sector despite upbeat news on development of COVID-19 vaccines, whose global deployment will continue throughout next year.

“The positive impact it will have on the economy and air traffic will not happen massively before mid-2021,” IATA Director General Alexandre de Juniac told Reuters.

Passenger numbers are expected to drop to 1.8 billion this year from 4.5 billion in 2019, IATA estimates, and will recover only partially to 2.8 billion next year. Passenger revenue for 2020 is expected to have plunged 69% to $191 billion.

“That’s by far the biggest shock the industry has experienced in the post-World War Two years,” IATA Chief Economist Brian Pearce said.

The forecasts assume significant re-opening of borders by the middle of next year, helped by some combination of COVID-19 testing and vaccine deployment.

IATA reiterated its call for governments to replace travel-stifling quarantine regimes with widespread testing programs.

“We are seeing states progressively coming to listen to us,” de Juniac said, citing testing initiatives underway in France, Germany, Italy, Britain, the United States and Singapore.

While some governments and airlines such as Australia’s Qantas say passengers are likely to require vaccination for long-haul travel, the approach is unlikely to work everywhere, de Juniac said.

“It would prevent people who are refusing (the vaccine) from travelling,” the IATA chief said. “Systematic testing is even more critical to reopen borders than the vaccine.”

Air cargo, a rare bright spot for the industry as the grounding of flights pushes freight prices higher, will likely see global revenue rise 15% to $117.7 billion this year despite an 11.6% decline in volume to 54.2 million tonnes, IATA said.

Some $173 billion in government aid has left recipients with debts that threaten to hobble future investment, it warned, and more bankruptcies are likely. Norwegian Air became the latest casualty on Nov. 18, when it filed for bankruptcy protection in Ireland.

The average airline now has enough liquidity to survive another 8.5 months, while some have just weeks, Pearce said. “I think we will get consolidation through some airline failures.”

(Reporting by Laurence Frost; Additional reporting by Johnny Cotton; Editing by Mark Potter and David Evans)

White House says ‘not optimistic’ about COVID-19 aid, talks with Congress are off

WASHINGTON (Reuters) – White House chief of staff Mark Meadows on Wednesday said he was not optimistic that a comprehensive deal could be reached on further COVID-19 financial aid and that the Trump administration backed a more piecemeal approach, even as he said negotiations with Congress were over.

“We’re still willing to be engaged, but I’m not optimistic for a comprehensive deal. I am optimistic that there’s about 10 things that we can do on a piecemeal basis,” Meadows told Fox News in an interview.

Meadows did not say what 10 items the administration wanted to tackle, but reiterated President Donald Trump’s position tweeted late Tuesday night that he would back separate legislation addressing airlines, small businesses and stimulus checks for individuals.

Trump called off talks with lawmakers on pandemic aid in a tweet on Tuesday, rattling Wall Street as U.S. stocks sank. He later pulled back saying he would support a few stand-alone bills.

U.S. stock indexes appeared set to open higher on Wednesday, and airline stocks were also higher.

“The stimulus negotiations are off,” Meadows later told reporters at the White House on Tuesday. “Obviously we’re looking at the potential for stand-alone bills. There’s abut 10 things that we agree on and if the Speaker is willing to look at it on a piece-by-piece basis then we’re willing to look at it,” he said referring to U.S. House Speaker Nancy Pelosi.

The Democratic-led House has already passed full legislation seeking a wide range of aid as the novel coronavirus continues to spread, infecting an estimated 7.5 million Americans and killing more than 210,600 — the highest in the world.

Pelosi on Tuesday said lawmakers would pass more aid, despite Trump’s refusal to negotiate.

(Reporting by Lisa Lambert and Susan Heavey; Editing by Alex Richardson and Chizu Nomiyama)

Pelosi says agreement on U.S. airline payroll assistance ‘imminent’

By David Shepardson and Tracy Rucinski

WASHINGTON/CHICAGO (Reuters) – House Speaker Nancy Pelosi said Friday that agreement was “imminent” on a deal to provide another $25 billion in government assistance to keep tens of thousands of airline workers on the job for another six months.

Pelosi said the House will either pass “bipartisan stand-alone legislation or achieve this as part of a comprehensive negotiated relief bill.” She called on airlines to hold off on furloughs and firings “as an agreement for relief for airline workers is being reached.”

Airline stocks jumped on the news.

Congressional aides expected the House to pass a standalone measure to aid airlines later on Friday that the Senate could take up next week if a broader coronavirus deal is not reached.

Senate aides said Thursday that only a single Republican senator had been holding up the new bailout from being approved in the U.S. Senate.

Congress in March approved a $50 billion bailout for the passenger airline industry, with $25 billion in mostly cash grants to fund payroll costs with the condition that they not eliminate jobs before Oct. 1. It also included $25 billion in government loans.

American Airlines and United Airlines began laying off 32,000 workers on Wednesday after a deadline passed with no new help from Washington, but told staff they would reverse this if lawmakers reach a deal on COVID-19 relief.

U.S. airlines are collectively burning about $5 billion of cash a month as passenger traffic has stalled at around 30% of 2019 levels. After tapping capital markets, they say they have enough liquidity to last them at least 12 months at that rate.

They have argued for another $25 billion in federal payroll aid to maintain their workforce and meet demand as the economy rebounds. Without the money, flight networks could further shrink, hampering their revenue power and shortening their liquidity runway.

(Reporting by David Shepardson and Tracy Rucinski; Editing by David Gregorio)

U.S. House Speaker Pelosi to meet with top U.S. airline CEOs

By David Shepardson and Tracy Rucinski

WASHINGTON/CHICAGO (Reuters) – House of Representatives Speaker Nancy Pelosi will speak on Friday afternoon with the chief executives of top U.S. airlines, who are urging Congress to approve another $25 billion in assistance to keep tens of thousands of U.S. workers on the payroll past Sept. 30, sources said.

Pelosi and House Transportation Committee Chairman Peter DeFazio are expected to hold a 2:45 p.m. EDT (1845 GMT) call with the chief executives of United Airlines, American Airlines, Delta Air Lines, Southwest Airlines, JetBlue Airways, Hawaiian Airlines, Alaska Airlines and others, a Democratic aide told Reuters.

In an interview with NBC’s “Today Show” on Friday, American Chief Executive Doug Parker urged lawmakers to “come together and get it done. … We just need people to do what’s right. I know we’re better than this, and our people deserve better.”

At the end of this month, the $25 billion in federal payroll assistance airlines received when the coronavirus first began spreading around the world is set to expire.

Airlines and unions are now pleading for a six-month extension as part of a bipartisan proposal for another $1.5 trillion in coronavirus relief, while simultaneously negotiating with employees to minimize thousands of job cuts that are expected without another round of aid.

White House Chief of Staff Mark Meadows met with major airline chief executives on Thursday. He said President Donald Trump is also open to a stand-alone measure to aid airlines, though congressional aides say that is unlikely to win support given aid requests from so many other struggling industries.

American has said it plans to end service to 15 small communities without additional government assistance and furlough about 19,000 workers.

Air travel has plummeted over the last six months as the coronavirus pandemic has claimed nearly 196,000 American lives and prompted many to avoid airports and planes, seriously depressing airline revenues.

Congress also set aside another $25 billion in government loans for airlines, but many have opted not to tap that funding source.

(Reporting by David Shepardson and Tracy Rucinski; editing by Jonathan Oatis)

Airline CEOs plead with White House to avert looming U.S. job cuts

By Jeff Mason and David Shepardson

WASHINGTON (Reuters) – White House Chief of Staff Mark Meadows met with major airline chief executives on Thursday as the industry braces for thousands of job cuts in two weeks, and urged lawmakers to embrace a $1.5 trillion coronavirus aid package proposed by a bipartisan congressional group and endorsed by President Donald Trump.

Meadows told reporters said that if House of Representatives Speaker Nancy Pelosi was willing to move a bill that would support airline workers and prevent layoffs, Trump would support it, noting the looming layoffs of thousands of workers set for Oct 1.

American Airlines Chief Executive Doug Parker said airlines would also be working with Pelosi.

​Meadows said the administration had examined executive action options, all of them less than ideal.

Airlines did not offer a new proposal but again made the case that helping avert airline job cuts was one good reason to pass a broad coronavirus relief bill.

After the meeting with Meadows, Parker said it was “not fair” that thousands of airline workers were about to be laid off. “We’re just here to plead with everyone involved to get to a quarterly package before October 1.”

Southwest Airlines Chief Executive Gary Kelly said the initial payroll support plan “didn’t go far enough and long enough.”

American has said it plans to end service to 15 small communities without additional government assistance.

At the end of this month the $25 billion in federal payroll assistance airlines received when the coronavirus first began spreading around the world is set to expire.

Congress also set aside another $25 billion in government loans for airlines, but many have opted not to tap that funding source.

Companies such as American are now pleading for a six-month extension while they simultaneously negotiate with employees to minimize thousands of job cuts that are expected without another round of aid.

Air travel has plummeted over the last six months as the coronavirus pandemic has claimed nearly 196,000 American lives and prompted many to avoid airports and planes, seriously depressing airline revenues.

(Reporting by Lisa Lambert, David Shepardson and Doina Chiacu; Editing by Steve Orlofsky and Jonathan Oatis)

U.S. proposes to waive minimum flight requirements for airlines until March 2021

WASHINGTON (Reuters) – The U.S. Federal Aviation Administration (FAA) said Friday it is proposing extending temporarily waiving minimum flight requirements at some U.S. airports through late March 2021.

Airlines can lose their slots at congested airports if they do not use them at least 80% of the time. The FAA said it proposing extending waving requirements at New York’s JFK and LaGuardia airports and Ronald Reagan Washington National Airport that were set to expire in October.

(Reporting by David Shepardson; Editing by Chizu Nomiyama)