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Coronavirus ruins airlines: many will not reach summer without help

The unprecedented crisis in aviation is developing rapidly, and the industry no longer believes that airlines will survive the outbreak of the coronavirus without the help of the authorities and taxpayer money. Writes about it with the BBC.

Photo: Shutterstock

First, Asia, followed by Europe and the United States, closed the air gates in the hope of stopping the epidemic. Most airlines were forced to reduce flights to a minimum. Airplanes are on the ground, tickets are not for sale. But salaries and debts still have to be paid.

At this rate, aviation will not last long - the first bankruptcies can be expected by the summer, experts and airline executives warn. On Monday, March 16, the three alliances, which account for half of the world's fleet, in a joint statement asked for support from authorities and airports.

“This exceptional time requires extraordinary action,” the executives of oneworld, SkyTeam and Star Alliance were generous with epithets. "The unprecedented situation caused by the outbreak of the coronavirus poses a deadly threat to the aviation industry."

Some believe that the current restrictions on flights in the world will cause serious damage only if they last more than two to three months. Others are in a panicky mood.

“By the end of May, most of the world's airlines will be bankrupt. The authorities and the industry must act in concert and without delay if we want to avoid disaster, ”wrote the industry portal Center for Aviation (CAPA).

How can I help you?

The authorities of the USA, France, Germany, Great Britain, Norway, the Netherlands, Brazil and Russia, among others, have already promised to help the aviators, but have not yet decided which way.

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The airlines themselves asked the governments for tax holidays and concessions: a reduction in passenger charges or for flights. And at the airports - discounts on the parking of forcedly idle aircraft.

So far, they have achieved only suspension of the rules for the allocation of slots at airports, which oblige them to use 80%. To save them, the airlines drove half-empty planes, and global warming fighters gradually joined their protests. The authorities went forward.

The American FAA exempted from this rule slots at seven airports until May 31. The EU suspended it until June for flights to Asia, but promised to do the same for other routes. Now the EU authorities are drawing up this decision.

They have not yet heard another request from European carriers: to postpone the introduction of new fuel surcharges and other taxes designed to stimulate the transition of Europe to a green future.

“European airlines are facing very difficult times and it is clear that the industry will need concerted support from the authorities to survive,” said Johan Lundgren, head of EasyJet, one of the five largest carriers in the Old World.

His colleagues are vying to share their concerns. That's what they said in the last days.

Finnair chief Topi Manner: "It is now clear that the coronavirus is the most serious crisis in aviation history."

British Airways CEO Alex Cruz: “Aviation is facing a global crisis, worse than Sars and 9/11 (the 11 September 2001 attacks in the United States). We are no longer able to maintain the current level of hiring, and we will have to cut jobs: maybe not for long, maybe not. "

Delta Chief Ed Bastian: "Never before have we witnessed such a rapid decline in demand."

IAG CEO (owner of British Airways, Iberia, Vueling and Aer Lingus) Willie Walsh: “We have a serious drop in bookings across all destinations and across all airlines, and we expect demand to remain sluggish until at least mid-summer.”

Head of IATA (International Air Transport Association) Alexandre de Junac: “Whether bankruptcies will follow depends on the duration and intensity of the crisis. If the decline is as significant as it is now and lasts more than two to three months, then the airlines will face difficulties. ”

Richard Moriarty, head of the British Civil Aviation Authority: “The aviation and tourism industry has never faced such challenges. And the longer it goes on, the lower the chances of survival for some companies. ”

Who will survive?

Not everyone is begging for help.

First of all, the problems arose with heavily loaned companies. Some of them found the crisis in the stage of active expansion of the business, and the competitors whom they wanted to move would lobby against carpet irrigation of the industry with taxpayer money.

Richard Branson, who owns the Virgin Atlantic, has proposed to the British government to support the airline with privileges and loans of almost $ 10 billion.

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However, IAG, which owns rival British Airways, immediately opposed the subsidies - it has a solid airbag in the form of $ 11 billion in cash, and it has already successfully dissuaded the authorities from rescuing the first victim of the crisis - regional Flybe.

“Cash is the trump card in this crisis,” says Michael Dough of The Airline Analyst.

In his opinion, the largest airlines flying on profitable transatlantic routes will survive the crisis if it lasts from three months to six months.

“But the minor players, as well as regional airlines and national carriers in Europe, are facing the threat of extinction,” he said.

Western countries must act as a united front and support airlines, otherwise the industry will rise from the ashes of the current crisis in a completely different configuration, Center for Aviation analysts write.

The winners will be the airlines, behind which there are states, weighed down by geopolitical ambitions. Like China or Arab countries. Americans with the support of influential unions are likely to get subsidies. Some countries in Europe will support their own.

“But the prospects for private airlines are far from rosy,” add Center for Aviation experts and warn that a world in which only large and national airlines will remain is dangerous for competition, consumer rights and the tourism industry.

The International Air Transport Association (IATA) estimates the reduction in airline turnover due to the outbreak of the virus at $ 113 billion in 2020. But just a couple of months ago, she promised them revenue growth of 4% to $ 870 billion dollars and a profit of $ 30 billion.

No one remembers income anymore, just to survive.

Not only airlines suffer. The Association of European Airports reported that last week, passenger traffic halved after falling a quarter a week earlier. In January-March, they missed more than 100 million passengers and 2 billion euros ($ 2,2 billion) in revenue.

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