SEOUL • Airlines around the world are sinking deeper into crisis as the worsening coronavirus epidemic and Italy's lockdown hammered passenger numbers, forcing the cancellation of thousands of flights.
Hong Kong's Cathay Pacific Airways said yesterday it expects to report a substantial loss in the first half of this year and slash more capacity as the Covid-19 outbreak erodes travel demand. It also posted a 28 per cent drop in net profit to HK$1.69 billion (S$302 million) for last year after anti-government protests in Hong Kong.
Some carriers face calamity, with Korean Air warning on Tuesday that the outbreak could threaten its survival after it scrapped more than 80 per cent of its international capacity, grounding 100 of its 145 passenger aircraft.
"The situation can get worse at any time and we cannot even predict how long it will last," the president of South Korea's biggest airline, Mr Woo Kee-hong, said on Monday in a memo to employees that summed up the turmoil facing the industry. "But if the situation continues for a longer period, we may reach the threshold where we cannot guarantee the company's survival."
Should Korean Air fall, it would not be the first airline engulfed by the fallout of the outbreak; Britain's already struggling Flybe collapsed last week as bookings faltered.
United States carriers Delta and American have ditched 2020 forecasts and unveiled more sweeping capacity cuts and cost-saving measures.
United Airlines president Scott Kirby said at an investor conference that it could take 18 months before demand recovers, with public concern about the virus potentially worsening before improving. The American carrier also slashed its 2020 capital expenditure in a move that will defer aircraft deliveries - a potential issue for planemakers Boeing and Airbus.
Australia's Qantas Airways delayed an order for A-350 planes, suspended forecasts and slashed capacity due to a plunge in demand that industry chiefs estimate could hit airlines' revenue by up to US$113 billion (S$157 billion) this year. Its chief executive and chairman will take no salary, managers will receive no bonuses and all staff are being encouraged to take paid or unpaid leave. United Airlines has announced similar steps.
Delta Air Lines, which is also freezing hiring and offering voluntary unpaid leave, said it had seen net bookings fall by as much as 25 per cent to 30 per cent, and expected the situation to deteriorate further. United Airlines said its dire scenario planning sees revenues falling 70 per cent in April and May.
The unprecedented lockdown of the whole of Italy, which is convulsed by Europe's worst coronavirus outbreak, has heaped fresh disaster on global airlines.
Norwegian Air, British Airways, easyJet, Wizz Air and El Al Israel Airlines were among carriers to axe flights to and from Italy, where there have been more than 10,000 virus infections and over 630 deaths.
Irish airline Ryanair said on Tuesday it was cutting its passenger forecast for the year ending March by three million as a direct result of suspending almost all flights to and from its most important market for the next month.
Air France said it expected to make a total of 3,600 flight cancellations this month, including cutting 25 per cent of its European capacity.
The global airline industry has been among the sectors hardest hit by the coronavirus outbreak. It has lost almost a third of its value - US$70 billion - this year, according to Reuters calculations based on the 20 top listed global carriers.
The Italian cancellations added to an already difficult financial situation at Norwegian Air, which has lost 70 per cent of its market value this year and scrapped its 2020 outlook. The airline said on Tuesday it would cut around 3,000 flights between mid-March and mid-June and temporarily lay off a "significant share" of its workforce.
In an effort to give the industry some breathing space, European Commission President Ursula von der Leyen said the bloc would suspend a rule requiring airlines to run most of their scheduled services or else forfeit valuable airport landing slots. This will do away with "ghost flights", where airlines fly almost empty planes simply to keep slots, she added.