“Biggest single shock”: Aviation is fighting the money crisis in the corona virus

SYDNEY / PARIS (Reuters) – Boeing and other U.S. carriers are seeking billions of dollars in aid to cope with a drop in demand caused by the coronavirus pandemic as Airbus shuts down production at two locations to strengthen health and safety measures .

The rapid spread of the virus around the world has affected airlines as governments have introduced travel restrictions and consumers are no longer making bookings, which jeopardizes the survival of several companies.

To save money, airlines cut flights, lay off employees, pay dividends, sell planes, and fly cargo on empty passenger jets.

“It is now fair to call this the biggest shock global aviation has ever experienced,” said Alan Joyce, CEO of Qantas Airways Ltd, in a memo to the airline’s 30,000 employees Tuesday that Reuters had seen.

Boeing Co said Monday it was in talks with high-ranking White House officials and congressional leaders about short-term aid to the entire U.S. aviation sector.

U.S. airlines and carriers have announced that they will apply for at least $ 58 billion in loans and grants, as well as additional tax changes, while airports will apply for $ 10 billion.

European airlines have also increased the demand for emergency government aid. Passenger traffic in the region has declined by more than half on average last week and the situation will worsen if the borders are closed, said airports Council International Europe, a trade organization.

The industry consultancy Tourism Economics predicts that international travel will decrease by at least 10.5% this year. This is the largest decrease compared to the previous year.

Planemaker Airbus SE announced on Tuesday that it would suspend production and assembly at its French and Spanish locations for the next four days to introduce strict health and safety regulations.

The British infrastructure and aviation group Stobart said he is likely to need additional liquidity due to the business interruption, particularly at London Southend Airport.

Airbus shares fell more than 7% on Monday at 9:30 a.m. GMT after heavy losses. Boeing shares closed 24% on Monday.

In Asia, Qantas, which plans to raise a few hundred million dollars by refinancing some aircraft, announced on Tuesday that it would reduce international capacity by 90% and domestic capacity by 60% by at least the end of May.

“Our goal is to protect as many jobs as possible and to ensure that we stay strong enough to prevent this from happening,” Joyce told employees in the memo seen by Reuters.

New Zealand’s Auckland International Airport said Monday that it would cut its interim dividend after the freeze and discretionary spending ceased.

Air New Zealand announced plans to cut capacity to Australia by 80% from March 30 through June 30 after both countries announced at the weekend that all travelers would have to isolate themselves for 14 days after their arrival.

According to the Australian Airports Association, Australian airports will lose more than AUD 500 million (USD 307 million) in take-off and landing fees.

A man with a protective mask sits on a fence around Beijing Capital International when an airplane lands in Beijing when the country is hit by an outbreak of the novel corona virus in China on March 13, 2020. REUTERS / Thomas Peter

Avinor, a state-owned Norwegian company, said Tuesday that the number of passengers traveling from the country’s airports fell 40% year over year in the week ending March 15.

The only bright spot for airlines is the freight market, where prices rise due to the loss of capacity in the belly of passenger planes when these flights are cut. Due to high demand, airlines fly some planes without passengers to transport cargo.

(Graphic: Global Travel, Here)

Raise cash

Simon Birmingham, Australia’s Minister of Tourism, said Tuesday that neither Qantas nor the smaller rival Virgin Australia Holdings Ltd had asked for a bailout, but the government had not ruled out aid.

“They believe they are viable and have strong cash positions … but we want to make sure we maintain confidence in the airlines,” Birmingham told reporters.

Hong Kong’s Cathay Pacific Airways announced Monday that it had signed a $ 703.8 million contract with BOC Aviation to sell and lease six Boeing 777-300ER aircraft for cash.

The airline, one of the earliest and most affected by the outbreak due to its proximity to the mainland China where the virus originated, said its full-service airlines Cathay Pacific and Cathay Dragon had an unchecked loss of HKD 2 billion ( $ 257.5 million) made in February alone.

FILE PHOTO: An Air New Zealand plane passes a tanker truck on the tarmac of Auckland Airport during a fuel shortage in New Zealand on September 20, 2017. REUTERS / Nigel Marple

Cathay Pacific plans to reduce up to 90% of its capacity in April.

“If we do not see any easing of travel restrictions in the near future, we expect the same agreement to continue into May,” said Ronald Lam, Cathay Pacific Group’s chief customer and commercial officer, in a statement.

Japan’s ANA Holdings announced that it would cut 2,630 additional international flights on 58 routes between March 29 and April 24.

Cebu Pacific in the Philippines has announced that it will cancel all flights from March 19 through April 14 according to strict quarantine instructions.

Reporting by Jamie Freed and Tim Hepher; additional reporting by Colin Packham in Sydney, David Shepardson in Washington, Sayantani Ghosh in Singapore; Edited by Lincoln Feast, Gerry Doyle and Mark Potter

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