Coronavirus: Future of aviation 'cannot be guaranteed without state aid'
Aviation is one of the sectors worst-hit by the coronavirus pandemic, which has infected almost 220,000 people worldwide.
Thursday 19 March 2020 12:37, UK
Lufthansa has warned that airlines might not survive a prolonged coronavirus pandemic without government help.
German-owned Lufthansa, like most of its rivals around the world, has slashed capacity as travel restrictions and falling demand make many commercial routes unviable.
The airline has also proposed different working patterns but has said it is impossible to forecast the impact of coronavirus on its profitability.
Chief executive Carsten Spohr said: "The longer this crisis lasts, the more likely it is that the future of aviation cannot be guaranteed without state aid."
He added: "The spread of the coronavirus has placed the entire global economy and our company as well in an unprecedented state of emergency.
"At present, no one can foresee the consequences."
Lufthansa, like many airlines, has been focused on repatriating citizens struggling to return home as commercial flight options dwindle.
Mr Spohr added that they were also trying to ensure that supply chains for "many thousands of businesses do not break down by mobilising additional capacity for air freight transport".
Lufthansa has reduced its passenger flights by 95%, also axing all flights from Munich, now offering them only from Frankfurt.
Including cuts to capacity by Lufthansa-owned Austrian Airlines, around 700 of the group's 763 aircraft will be temporarily grounded. The group's executive board will also take a 20% pay cut.
Lufthansa has been in talks with the German government on providing liquidity, including special loans from the state development bank.
:: Listen to the Daily podcast on , , , .
It has also raised an additional €600m (£566m) in recent weeks, giving it liquidity of around €4.3bn (£4bn).
Earlier in the week, carriers including British Airways, Virgin Atlantic, Ryanair and easyJet all announced cuts in capacity and cost-cutting measures.
Virgin Atlantic also asked staff to take eight weeks of unpaid leave to help the airline survive the pandemic.
In other airline news on Thursday:
- Qantas told most of its 30,000 employees to take leave (paid or unpaid) as it cut all international flights. Chief executive Alan Joyce said demand for travel had "evaporated"
- Australia and New Zealand said their borders will close to all except citizens and residents from Friday
- Delta Airlines in the US has parked more than 600 planes and cut corporate pay by as much as 50%
- The United Nations' Civil Aviation Organisation called on governments to ensure cargo operations continue, as they are needed to transport medicine, ventilators and other health items needed to fight the pandemic
- American Airlines denied it had given shareholders too many dividends in better times, leaving it without enough to survive the virus. One of its senior vice presidents Nate Gatten said: "This is no ordinary rainy day"
- EasyJet has launched its winter schedule early so passengers with existing bookings can change to a flight for travel up until February 2021
- EasyJet's UK pilot union has agreed to a pay freeze and asked crew to take unpaid leave to minimise the risk of job losses, according to Reuters
India is preparing a £1.4bn aviation rescue package, sources told Reuters news agency, after the US proposed a package of $50bn (£43bn) to help its airlines cope.
US airline stocks fell, however, as the Trump administration's package was based on loans rather than grants. Airlines would have to maintain a certain level of service and limit pay increases for executives until the loans are repaid.
India's package reportedly includes temporary suspension of taxes on the sector.
Meanwhile, China has seen a slight recovery in its domestic aviation market as people there return to work.
China had the bulk of the world's coronavirus cases and deaths but it appears to have brought the disease's spread under control.
But, according to Variflight, domestic capacity is still 60% down from a year earlier and international flight cancellations are rising - hitting 2,938 on average daily, compared with 2,460 in February and 387 in January.