Govts offer billions in aid as airlines reel under virus attack

A woman wheeling her luggage through an empty check-in hall in Franz Josef Strauss airport in Munich, southern Germany, on Tuesday. Many flights have been cancelled by airlines because of the coronavirus and restrictions on travel by governments acro
A woman wheeling her luggage through an empty check-in hall in Franz Josef Strauss airport in Munich, southern Germany, on Tuesday. Many flights have been cancelled by airlines because of the coronavirus and restrictions on travel by governments across the world. PHOTO: AGENCE FRANCE-PRESSE

Travel restrictions and record low demands force many carriers to temporarily ground planes

SYDNEY/CHICAGO • Australia and Taiwan joined governments offering financial aid to airlines as the coronavirus and stricter travel controls forced carriers to deepen cuts to capacity and staffing.

United States airlines have asked Washington for US$50 billion (S$72 billion) in grants and loans, plus tens of billions in tax relief. Sector executives were due to speak to US President Donald Trump by phone yesterday.

Planemaker Boeing has called on the US government to provide at least US$60 billion in access to liquidity, including loan guarantees, for the aerospace manufacturing industry as airlines halt deliveries and new orders to conserve cash.

Airbus has also signalled that some government support may be needed if the coronavirus crisis lasts for several months, three people familiar with the matter said.

The Australian government said it would refund and waive charges to airlines such as domestic air traffic control fees worth A$715 million (S$606 million), including A$159 million upfront, as it advised citizens against all foreign travel.

Taiwan's civil aviation regulator said late on Tuesday that its airlines could apply for subsidies and loans backdated to Jan 15.

Sweden and Denmark on Tuesday announced US$300 million in loan guarantees for Scandinavian carrier SAS.

El Al Israel Airlines said yesterday it had sent 5,500 of its 6,000 workers on unpaid leave until May 31 after it slashed its flight schedule.

The outbreak of the flu-like virus has wiped 41 per cent, or US$157 billion, off the share value of the world's 116 listed airlines, with many using up their cash so fast they can now cover less than two months' expenses, a Reuters analysis showed.

The International Air Transport Association said US$200 billion in government support could be needed worldwide.

INDUSTRY ON THE BRINK OF COLLAPSE

At the risk of being alarmist, the airline industry is on the brink of collapse as governments are quarantining large portions of their populations and closing off borders.

COWEN ANALYST HELANE BECKER

Global passenger numbers are expected to fall by as much as 30 per cent this year with a full recovery not likely until 2022 or 2023, S&P Global Ratings said.

"At the risk of being alarmist, the airline industry is on the brink of collapse as governments are quarantining large portions of their populations and closing off borders," Cowen analyst Helane Becker told clients.

The situation has worsened for airlines this week as governments have tightened travel restrictions.

United Airlines said it would cut 60 per cent of its capacity next month, including 85 per cent of its international flights.

Air New Zealand suspended trading yesterday for another two days to assess the financial implications of deep capacity cuts announced on Monday.

"This is going to be quite tough as we forecast the volumes that we are looking at over the next few months," chief executive officer Greg Foran said in a video sent to reporters.

Up to 30 per cent of the airline's 12,500 staff will not be required, he said, adding that the carrier would offer leave without pay and voluntary redundancies before moving to job cuts.

Qatar Airways laid off around 200 employees, all Filipino nationals based in Qatar, Philippine Labour Secretary Silvestre Bello told Reuters.

Australia's Qantas Airways on Tuesday announced plans to cut 90 per cent of international capacity, and its Singapore-based low-cost airline Jetstar Asia said it would stop flying altogether for three weeks from next Monday until April 15.

Australia's No. 2 carrier, Virgin Australia, said it would suspend all international flying from March 30 to June 14 and cut its domestic capacity in half, in a move that could lead to job losses.

Singapore Airlines plans to halve its capacity through the end of next month, with further cuts possible as it braces itself for a "prolonged" period of difficulty.

"Make no mistake - we expect the pace of this deterioration to accelerate," CEO Goh Choon Phong said in a statement on Tuesday.

REUTERS

A version of this article appeared in the print edition of The Straits Times on March 19, 2020, with the headline 'Govts offer billions in aid as airlines reel under virus attack'. Print Edition | Subscribe