Airlines plan furloughs; Air New Zealand sees smaller carrier in a year

SYDNEY/BENGALURU (Reuters) – Major global airlines projected layoffs, furloughs and capacity cuts over the next few months, with Air New Zealand on Tuesday warning it expected staffing levels to be 30% lower than it is now, due to the coronavirus pandemic.

Airlines have been rushing to shore up liquidity, reduce capital expenditure and cut costs to stay afloat amid the worst crisis to hit the global aviation industry.

Data firm OAG said the aviation industry was less than half the size it was in mid-January due to the rapid capacity cuts implemented by airlines around the world. Around 40% of the world’s passenger jet fleet is now in storage, according to data from aviation firm Cirium.

Air New Zealand (AIR.NZ) said it will lay off about 3,500 employees, nearly a third of its workforce, in the coming months, as the outbreak forced it to cancel nearly all flights.

The virus “has seen us go from having revenue of $5.8 billion to what is shaping up to be less than $500 million annually,” Chief Executive Officer Greg Foran told staff in an email. “We expect that even in a year’s time we will be at least 30% smaller than we are today.”

New Zealand’s national carrier, which employs 12,500 people, warned the layoffs estimate was a “conservative” assumption and the numbers could rise if the domestic lockdown and border restrictions were extended.

Air Canada (AC.TO) will cut second-quarter capacity by 85%-90%, place about 15,200 unionized employees off duty and furlough about 1,300 managers, beginning on or about April 3.

Canada’s largest airline said it is drawing down about C$1 billion ($706 million) in credit to bolster liquidity, while senior executives will forgo between 25%-50% of their salary and board members agreed to a 25% cut.

Low-cost U.S. carrier Spirit Airlines Inc (SAVE.N) is cancelling all flights to and from the New York region after U.S. officials warned against travel to the area because of the pandemic.

On Monday, Germany’s Lufthansa (LHAG.DE) said 27,000 of its staff would reduce hours, Britain’s EasyJet PLC (EZJ.L) said it would lay off 4,000 UK-based cabin crew for two months, and low-cost carrier flydubai said it would reduce staff pay for three months.

U.S. airlines have been pushing the Treasury to release up to $58 billion in government grants and loans and had threatened to quickly start laying off tens of thousands of workers within days if they did not get a bailout.

The $2.2 trillion stimulus and assistance legislation signed into law last week by President Donald Trump gives passenger airlines $25 billion in cash assistance to cover payroll costs and $25 billion in loans, while cargo carriers are eligible for $4 billion in grants and $4 billion in loans.

Treasury said airlines should apply for grants by April 3.

American Airlines Holdings Inc (AAL.O) intends to apply for up to $12 billion government aid, ensuring no involuntary layoffs or pay cuts in the next six months, executives said in a memo to employees.

“We certainly hope and expect that by that time, the virus will be contained, Americans will be flying again and we will be back to flying a full schedule,” Chief Executive Doug Parker and President Robert Isom said in the memo.

In Australia, Virgin Australia Holdings Ltd (VAH.AX) said it was seeking a possible government loan of A$1.4 billion ($864 million) which could convert to equity under certain circumstances to help it weather the coronavirus crisis.

Virgin’s shares are tightly controlled by foreign airlines including Singapore Airlines Ltd (SIAL.SI), Etihad Airways and Chinese conglomerate HNA Group that have also seen a sharp deterioration in revenues.

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U.S. Senate offers $58 billion aid to airlines as they struggle to stay airborne

SYDNEY/SINGAPORE (Reuters) – The U.S. Senate offered struggling airlines unprecedented aid worth $58 billion that will helping cover their staff wages, as carriers around the world seek state support and turn passenger planes into cargo liners in their desperate bid for revenues.

The coronavirus crisis has ravaged the travel industry and grounded many of the world’s planes, prompting governments to take previously unthinkable steps to prevent bankruptcies, ranging from state handouts to temporarily halting competition rules.

“For airlines, it’s apocalypse now,” said Alexandre de Juniac, director general of the International Air Transport Association (IATA), which represents carriers around the world.

“Travel restrictions and evaporating demand mean that, aside from cargo, there is almost no passenger business,” he said.

IATA, which estimates the pandemic will cost the global industry $252 billion in lost revenues this year, said it had written to 18 countries in the Asia-Pacific region, including India, Japan and South Korea for emergency support for carriers.

Airlines UK, representing carriers in Britain, asked the government for tax and air traffic fee holidays.

The U.S. Senate passed an industry aid package, half in the form of grants to cover some 750,000 employees’ paychecks. Companies receiving funds cannot lay off employees before Sept. 30 or change collective bargaining agreements.

The bill has restrictions on stock buybacks, dividends and executive pay, and allows the government to take equity, warrants or other compensation as part of the rescue package.

The U.S. House of Representatives is expected to back the move on Friday. President Donald Trump has promised to sign it.

United Airlines Holdings said capacity would drop by 68% in April and Alaska Air Group said it would cut its schedule by 70% in April and May. American Airlines suspended its dividend, drew down a $400 million credit line and secured an additional loan.

CUTTING JOBS

In Asian countries, Singapore, Australia and New Zealand have announced some financial relief for airlines, but this has not stopped carriers from putting staff on leave and grounding planes.

Singapore’s finance minister Heng Swee Keat said Singapore Airlines Ltd would soon announce “corporate action” supported by state investor Temasek Holdings to tackle the crisis. Share trading in the carrier, which said this week it was seeking extra funds, was halted on Thursday.

Virgin Australia plans to permanently cut more than 1,000 jobs among the 8,000 staff that have already been stood down. Australia’s Flight Centre Travel Group said it would cut 6,000 travel agent roles globally.

In a move unthinkable under normal conditions, Australia’s competition regulator said it would allow Virgin, Qantas Airways and Regional Express to coordinate flight schedules and share revenue on 10 regional routes.

“We hope that this temporary measure will also support airlines’ ability to again compete with each other on these routes once the pandemic crisis has passed,” Australian Competition and Consumer Commission Chairman Rod Sims said.

In bid to raise revenue and keep some planes flying, Delta Air Lines and Air New Zealand joined others in offering cargo flights and charters on passenger planes.

About half of the world’s air cargo normally travels in the bellies of passenger planes, so the cancellation of passenger flights has led to a sharp reduction in cargo capacity.

“We’ve shared these options with our global cargo customer base and are getting some strong interest from customers wanting to ship to and from Shanghai, Hong Kong, San Francisco, Los Angeles, Sydney and Melbourne,” said Rick Nelson, Air New Zealand’s general manager for cargo.

Abu Dhabi’s Etihad Airways said it would operate 34 weekly cargo-only flights with Boeing 787 Dreamliner passenger jets to India, Thailand, Singapore, Philippines, Indonesia and South Korea.

Hawaiian Airlines said it had added more cargo-only turboprop flights between the state’s islands.

Roughly 1,800 planes had been grounded globally on Monday and Tuesday, according to aviation research firm Cirium.

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Parking pain: Airlines, airports hunt for storage space as pandemic idles planes

SYDNEY (Reuters) – As airlines idle thousands of aircraft for which there are no passengers, they are hitting an unprecedented problem: finding a place to park them.

Taxiways, maintenance hangars and even runways at major airports are being transformed into giant parking lots for more than 2,500 airliners, the biggest of which takes up about as much room as an eight-story building with a footprint 3/4 the size of an American football field.

The number of planes in storage has doubled to more than 5,000 since the start of the year, according to Cirium data, with more expected to be parked in the coming weeks as carriers like Australia’s Qantas Airways Ltd (QAN.AX) and Singapore Airlines Ltd (SIAL.SI) proceed with further announced cuts to flight schedules.

In Frankfurt, Germany’s biggest airport is a ghost town of silent airliners. Its northwest landing runway, including taxiways and bridges, has been converted to an aircraft parking lot for Lufthansa (LHAG.DE), Condor and other airlines. Lufthansa brand Swiss has rented parking spots at a military airport close to Zurich.

Similar crowds of planes are parked at other major airports, including Hong Kong, Seoul, Berlin and Vienna as well as traditional desert parking lots in Victorville, California, and Marana, Arizona, according to data from flight tracking website FlightRadar24.

In Manila, some Philippines Airlines (PAL.PS) jets are parked in the Lufthansa Technik Philippines hangar, an airline official said.

Even some smaller airports have been converted to parking lots. Avalon Airport west of Melbourne expects to take 50 planes from Qantas and its low-cost offshoot, Jetstar, according to the airport’s chief executive, Justin Giddings.

“It is sad for everyone, the whole industry,” he told Reuters of the groundings, which have led Qantas to put 20,000 staff members on leave.

Qantas is sending 30 engineers to Avalon help maintain the planes so they can re-enter service in three to seven days when demand returns, according to a source with knowledge of the matter. The carrier is also parking about 100 other aircraft at major airports around Australia and its five aging 747s at a desert storage facility in Alice Springs, the source said.

Qantas declined to comment.

Asia Pacific Aircraft Storage (APAS) in Alice Springs is also home to SilkAir and Fiji Airways 737 MAX jets as part of a year-long global grounding that has placed further pressure on the ability to find spots to put other jets.

“Things are extremely busy,” APAS managing director Tom Vincent said. “There are further aircraft deliveries this week and into the coming weeks.”

Some airports, such as Melbourne and Brisbane, said they are providing parking for free. Brisbane Airport said that some international airlines had expressed interest in using its facilities, which can house up to 101 planes, but that no deals had yet been reached. Qantas and Virgin Australia Holdings Ltd (VAH.AX) will use some of the Brisbane spots.

Cathay Pacific Airways Ltd (0293.HK), one of the first and hardest hit by the coronavirus, has been using remote bays, taxiways and other operational areas at Hong Kong International Airport.

In the United States, United Airlines Holdings Inc (UAL.O) and American Airlines Group Inc (AAL.O) said they are parking planes at maintenance facilities for now, while Delta Air Lines Inc (DAL.N) said it was still looking into the issue.

FlightRadar24 data showed Delta had moved a dozen planes to Marana in mid-March and even more to Victorville over the last week.

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United Airlines warns of job cuts without government aid

CHICAGO/WASHINGTON (Reuters) – United Airlines Holdings Inc (UAL.O) warned on Friday it will begin taking steps to reduce its payroll to match a 60% schedule reduction planned for April “if Congress does not act on sufficient government support by the end of March.”

A letter to employees signed by leaders of United and four of its unions said: “While many in Washington, D.C. now realize the gravity of this situation, time is running out.”

The letter was part of a last-minute push by airlines on Friday for a $50 billion government stimulus package to include cash, arguing tens of thousands of jobs will otherwise be lost.

A Republican proposal introduced in the U.S. Senate on Thursday would grant up to $50 billion in secured loans to help passenger airlines hit by the coronavirus crisis, but bars cash grants and could result in the government getting equity stakes.

Senate Majority Leader Mitch McConnell wants a deal signed by the end of the day, spurring intense discussions between airlines and congressional aides, people familiar with the matter said.

American Airlines Group Inc (AAL.O) also joined forces with its main union groups to send a letter to Washington leaders, pleading for help amid what they called an extraordinary erosion in demand for air travel.

“Together, we implore our country’s leadership to act quickly to ensure our livelihoods are protected and our country’s air system remains intact,” American said in the letter signed by Chief Executive Doug Parker and the leaders of seven work groups including pilots and flight attendants.

American has 130,000 employees and is 85% unionized.

American and other large airlines have already raised capital and taken steps to reduce costs to a bare minimum in an effort to preserve cash as bookings continue to decline, but they have warned of furloughs without government relief.

U.S. President Donald Trump has said he stands ready to support the industry, but the idea of a bailout has met with a backlash from some critics who argue the airlines should have saved more cash for a rainy day, rather than rewarding shareholders.

“Whatever they ask for will be very controversial,” said Al Koch, vice chairman of AlixPartners, who was involved in the restructuring of General Motors in 2008-09. “It’s one thing for Trump to say we’ll stand behind airlines, and another thing for Congress to enact something into law.”

Meanwhile, some union groups were lobbying hard for any stimulus package to guarantee protections for frontline employees.

Larry Willis, president of the AFL-CIO’s Transportation Trades Department, said a focus on workers was “one of the main things that was missing from Senator McConnell’s proposal.”

To protect workers, Association of Flight Attendants-CWA President Sara Nelson is pushing for direct payroll subsidies for employees, ranging from wheelchair assistants and gate agents to mechanics and flight attendants.

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Airlines suspend China flights due to coronavirus outbreak

(Reuters) – Airlines are suspending flights to China in the wake of the new coronavirus outbreak.

Below are details (in alphabetical order):

AIRLINES THAT HAVE CANCELLED ALL CHINA FLIGHTS

-American Airlines – extends suspension of China and Hong Kong flights through April 24 from March 27 earlier

-Air France – Said on Feb.6 it would suspend flights to and from mainland China for much of March

-Air Seoul – The South Korean budget carrier suspended China flights from Jan. 28 until further notice.

-Air Tanzania – Tanzania’s state-owned carrier, which had planned to begin charter flights to China in February, postponed its maiden flights.

-Air Mauritius – Suspended all flights to China and Hong Kong

-Austrian Airlines – until end-February.

-British Airways – Jan. 29-March 31.

-Delta Airlines – Feb. 2-April 30

-Egyptair – Feb. 1 until further notice.

-El Al Israel Airlines – Said on Feb. 12 it would suspend its Hong Kong flights until March 20 and reduce its daily flights to Bangkok. It suspended flights to Beijing from Jan. 30 to March 25 following a health ministry directive.

-Iberia Airlines – The Spanish carrier extended its suspension of flights from Madrid to Shanghai, its only route, from Feb. 29 until the end of April.

-JejuAir Co Ltd – Korean airline to suspend all China routes starting March 1

-Kenya Airways – Jan. 31 until further notice.

-KLM – Will extend its ban up to March 15

-Lion Air – All of February.

-LOT – Extends flight suspension until March 28

-Oman and Saudia, Saudi Arabia’s state airline, both suspended flights on Feb. 2 until further notice.

-Qatar Airways – Feb. 1 until further notice.

-Rwandair – Jan. 31 until further notice.

-Scoot, Singapore Airlines’ low-cost carrier – Feb. 8 until further notice.

-United Airlines – Feb. 5-April 23. Service to Hong Kong suspended Feb. 8-April 23.

-Vietjet and Vietnam Airlines – Suspended flights to the mainland as well as Hong Kong and Macau Feb. 1-April 30, in line with its aviation authority’s directive.

AIRLINES THAT HAVE CANCELLED SOME CHINA FLIGHTS/ROUTES

-Air Canada – Extended the suspension of its flights to Beijing and Shanghai until March 27. It also suspended its Toronto to Hong Kong flights from March 1 to March 27, but its Vancouver to Hong Kong route remains active. [bit.ly/39zgmI0]

-Air China – Said on Feb. 12 it will cancel flights to Athens, Greece, from Feb. 17 to March 18

-Air China – State carrier said on Feb. 9 it will “adjust” flights between China and the United States.

-Air New Zealand – Suspended Auckland-Shanghai service Feb. 9-March 29. Reduced capacity on Shanghai route throughout April and Hong Kong route throughout April and May.

-ANA Holdings – Suspended routes including Shanghai and Hong Kong from Feb. 10 until further notice.

-Cathay Pacific Airways – Plans to cut a third of its capacity over the next two months, including 90% of flights to mainland China. It has encouraged its 27,000 employees to take three weeks of unpaid leave in a bid to preserve cash.

-Emirates and Etihad – The United Arab Emirates, a major international transit hub, suspended flights to and from China, except for Beijing.

-Finnair – Cancelled all flights to mainland China and decreased the number of flights to Hong Kong until March 28.

-Hainan Airlines – Suspended flights between Budapest, Hungary, and Chongqing Feb. 7-March 27.

-Korean Air Lines Co. – The national flag carrier suspended eight routes to China and reduced services on nine Chinese routes between Feb. 7 and 22.

-Philippine Airlines – Cut the number of flights between Manila and China by over half.

-Qantas Airways – Suspended direct flights to China from Feb. 1. The Australian national carrier halted flights from Sydney to Beijing and Sydney to Shanghai between Feb. 9-March 29.

-Royal Air Maroc – The Moroccan airline suspended direct flights to China Jan. 31-Feb. 29. On Jan. 16, it had launched a direct air route with three flights weekly between its Casablanca hub and Beijing.

-Russia – All Russian airlines, with the exception of national airline Aeroflot, stopped flying to China from Jan. 31. Small airline Ikar will also continue flights between Moscow and China. All planes arriving from China will be sent to a separate terminal in the Moscow Sheremetyevo airport. Aeroflot reduced the frequency of flights to Beijing, Shanghai and Guangzhou until Feb. 29.

-Nordic airline SAS – Extended its suspension of flights to Shanghai and Beijing until March 29.

-Singapore Airlines – Suspended or cut capacity on flights to Beijing, Shanghai, Guangzhou, Shenzhen, Chengdu, Xiamen and Chongqing, some of which are flown by regional arm SilkAir.

-UPS – Cancelled 22 flights to China because of the virus and normal manufacturing closures due to the Lunar New Year holiday.

-Virgin Atlantic – Extended its suspension of daily operations to Shanghai until March 28.

-Virgin Australia – Said it will withdraw from the Sydney-Hong Kong route from March 2 because it was “no longer a viable commercial route” due to growing concerns over the virus and civil unrest in Hong Kong.

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