Flying low: Virus-hit airlines slash more flights and jobs

The biggest international carriers are also asking for government help as sales plunge due to the virus.

Travellers coronavirus
Travel demand has plunged because of the coronavirus outbreak as countries enforce travel restrictions to control the spread of the virus [File: Chris Helgren/Reuters]

Airlines around the world have announced they will make more drastic reductions to their flying schedules, cut jobs and seek government aid after countries further tightened border restrictions due to the coronavirus.

United States-based United Airlines Holdings booked $1.5bn less revenue in March than the same time last year and warned employees that planes could be flying nearly empty into the middle of the year, even after severe flight cuts.

United said it would cut corporate officers’ salaries by 50 percent and reduce flight capacity by about 50 percent in April and May, with deep capacity cuts also expected into the mid-year travel period.

“This crisis is moving really quickly,” United Chief Executive Officer Oscar Munoz and President Scott Kirby said in a memo to employees on Sunday.

Things worsened over the weekend as Spain declared a state of emergency, the Trump administration added the United Kingdom and Ireland to its list of countries facing travel curbs and Australia and New Zealand said all travellers would have to self-isolate for 14 days.

“We call on Congress and the White House to take all measures available to protect the health and payroll of American workers,” said Sara Nelson, president of the Association of Flight Attendants-CWA, which represents 50,000 US flight attendants at 20 airlines, including United.

In the UK, airlines called on the government to help ensure their survival, while Germany’s Tui AG and Scandinavian carrier SAS said they would temporarily suspend most operations due to the COVID-19 pandemic and apply for government support.

Icelandair Group hf said it was cutting capacity and working with labour unions to reduce its salary cost “significantly”.

Air New Zealand Ltd said job losses would be necessary as it cut long-haul capacity by 85 percent over the coming months.

“We are now accepting that for the coming months at least Air New Zealand will be a smaller airline requiring fewer resources, including people,” Air New Zealand Chief Executive Greg Foran said in a statement.

The airline has halted trading in its shares until Wednesday.

Qantas Airways Ltd, which is based in Australia, said it would be making fresh cuts to its flying schedule beyond the 25 percent reduction in international capacity announced last week due to the new travel restrictions.

UBS analysts said the latest travel restrictions would have a significant effect on Qantas’s international traffic, which historically accounted for about 45 percent of revenue and 25 percent of earnings before interest and tax.

“A downside scenario where international traffic is down 50 percent for a whole year and domestic down 30 percent could result in cash burn of up to A$200 million ($123.60m) per month after incorporating changes to the business,” UBS said of Qantas.

Smaller rival Virgin Australia Holdings Ltd, which has a weaker balance sheet but a heavier domestic focus, said it was assessing its response to the new travel restrictions.

Virgin said on Friday it would make deeper capacity cuts, suspend financial guidance, freeze hiring and offer leave without pay to staff.

Source: Reuters