Global airlines appeal for urgent government aid in wake of US travel ban
‘Without a lifeline from governments we will have a sectoral financial crisis piled on top of the public health emergency,’ Iata head warns
Geneva — Airlines on Thursday appealed for urgent government financial support as transatlantic carriers rushed to cut flights in the wake of new US travel restrictions on Europeans aimed at combating the coronavirus outbreak.
The International Air Transport Association (IATA), a global industry group representing airlines, called on governments to consider extending lines of credit, reducing infrastructure costs and cutting taxes. US travel curbs on much of continental Europe announced by US President Donald Trump on Wednesday evening deepened the sector's misery that began after the virus emerged in China late in 2019 and reduced traffic.
“Without a lifeline from governments we will have a sectoral financial crisis piled on top of the public health emergency,” said IATA director-general Alexandre de Juniac.
Stock markets battered airlines amid growing concerns about the sector's financial viability.
Norwegian Air said it would cut 4,000 flights and temporarily lay off up to half of its employees due to the coronavirus outbreak, while Delta Air Lines said it would cancel flights on eight US routes to Europe after Friday.
US airports told the White House they expected to lose at least $3.7bn in 2020 — an estimate made before the latest European restrictions. Global airline losses were estimated at $100bn, reports said.
The 30-day US restrictions will badly disrupt transatlantic traffic important to the earnings of major European carriers and their US airline partners, analysts warned.
Those routes account for 20%-30% of large European operators' revenue and a majority of profit, Credit Suisse analyst Neil Glynn warned, “highlighting the damage to revenue lines for the coming weeks and potentially well into the summer”.
Shares in European and US airlines slumped to new lows, with Delta falling 15% and United Airlines 18%, while American Airlines was 9% lower.
Air France-KLM closed down 12.7%, British Airways parent IAG down 16% and Lufthansa 14% lower. Troubled Norwegian Air fell 33% and US-dependent Icelandair fell 23%
Icelandair said it would cancel some flights but pledged to continuing flying between Europe and the US.
US airlines had already cut flight schedules to Italy and will take another hit from lower demand for flights from major destinations such as France and Germany.
American Airlines could be relatively spared by its alliance with British Airways (BA) and higher share of UK traffic, while Air France-KLM partner Delta and Lufthansa ally United Airlines are likely to suffer more, analysts say.
US Vice-President Mike Pence defended the travel curbs on Thursday, after the European Union complained they had been imposed “unilaterally and without consultation”.
The global travel slump looks increasingly likely to require government aid to avoid widespread insolvencies. The European Union will publish new state-aid guidelines on Friday.
In other developments:
• The Vatican on Thursday took the unprecedented step of closing all Catholic churches across Rome to stem the spread of the pandemic that has killed more than 1,000 people across Italy. The papal vicar for Rome said the churches would reopen when a broader Italian government crackdown on public gatherings expires on April 3.
• New York governor Andrew Cuomo banned gatherings of more than 500 people and ordered reductions in smaller groups, as positive cases jumped 52% in a day. Cuomo reported 112 new cases of Covid-19 since Wednesday, bringing the total to 328. No deaths have been reported. The ban takes effect from 5pm on Friday. Broadway must adhere to the new rules beginning Thursday night.
• UK authorities abandoned efforts to contain the spread of coronavirus and will focus on delaying the worst of the outbreak, as officials said as many as 10,000 Britons may be infected. Prime Minister Boris Johnson warned “many more” families will lose loved ones and advised those with symptoms of the virus to stay at home for seven days. Schools will not yet be ordered to close. Johnson said the true scale of the outbreak may be “much higher” than the 590 confirmed cases in the UK so far. The peak of the outbreak could be in 10-14 weeks, the government said.
• Ireland, which has had 43 cases and one death, announced that schools, galleries and museums would shut from Friday until March 29. All mass gatherings would be cancelled, Prime Minister Leo Varadkar said.
• Senegal announced five new cases on Thursday, bringing the West African state's total number to ten, and making it the worst affected country in the region.
• France ordered the closing of nurseries, schools and universities from the beginning of next week. Citizens were urged to work from home, limit travel and keep the most fragile citizens and people over 70 in their houses. Municipal elections will go ahead on Sunday, President Emmanuel Macron said in a prime-time address from the Elysee Palace in Paris on Thursday.
• Sudan suspended flights and closed its land border with Egypt on Thursday, the government said in a statement. Flights from China, Iran, Italy, Spain, Japan and Egypt were halted. Sudan would also stop granting visas to nationals of these countries.
• Chinese foreign ministry spokesperson Zhao Lijian suggested on Thursday the US military might have brought the coronavirus to the Chinese city of Wuhan, doubling down on a war of words with Washington. In response to the US's accusation that China lost two months before acting against the virus, Zhao said it was the US that lacked transparency. "When did patient zero begin in US? How many people are infected? It might be the US army who brought the epidemic to Wuhan,” he wrote.
• Iran’s Ayatollah Ali Khamenei said on Thursday the country’s coronavirus outbreak could be part of a biological attack on the Islamic Republic, according to a statement published by the semi-official Fars News agency. He ordered the military to work closely with Iran’s health ministry and establish a base dedicated to countering the virus, which has already claimed 429 lives in the county. “Given that there’s evidence that raises the possibility of this event being a biological attack, this initiative can also be an exercise in biological defence,” Khamenei said in the statement.