Air France, Ryanair… The consequences of coronavirus for airlines, from flight cancellations to bankruptcy

Coronavirus spreads geographically and its spread is increasingly affecting business activities. In the front row are the airlines. The COVID-19 virus could cost the sector between $63 billion and $113 billion in total, according to a march 5 release from the International Air Transport Association. Bookings to Europe from the American, Asian and African continents fell by 79% in the last week of February due to the epidemic, according to the specialist company Forwardkeys, which analyses each more than 17 million bookings worldwide.

In general, the activity and finances of air carriers are being undermined by the coronavirus outbreak. This is a situation that investors are concerned about. Publicly traded companies are seeing their prices fall, as is Air France-KLM, whose shares plunged 7% at 12pm on Thursday 5 March. Since February 19, the stock has lost more than 40% of its value.

The announcements have followed since the beginning of March, with the coronavirus weighing on the demand of companies and forcing them to reduce their capacity. On 4 March, due to concerns about the new virus from China, Air France said it was allowing its customers to postpone or cancel all trips booked before 31 March and scheduled between 3 March and 31 May without charge.

 

Air France offers the cancellation of its flight without charge

“If you are in possession of an Air France ticket issued before March 31, 2020 included for a flight scheduled between March 3 and May 31, 2020, you can postpone your free trip to the same destination until May 31, 2020 included in the same booking class” , Air France says on its website. “You can also postpone your trip beyond May 31, 2020, change your destination, or cancel your trip at your point of sale,” the company continues. A non-refundable deposit will then be given to you, “valid for one year on Air France flights” as well as those of its Dutch ally KLM.

Air France hopes that bookings will not be held back by fears of coronavirus, as the airline guarantees that bookings can be changed at no cost. At the end of February, the company estimated the shortfall due to the suspension of flights to China from February to April due to the spread of the virus.

For the time being, however, the company plans to “gradually resume” its operations in and to Shanghai and Beijing “from 29 March 2020”. On the other hand, the service to Wuhan, the starting point of the epidemic, remains suspended. With regard to Italy, where cases of contamination have multiplied, Air France is monitoring “in real time the evolution of the situation”. For the time being, the French carrier maintains service to the entire country.

Lufthansa immobilizes 150 aircraft

Lufthansa Group has announced its intention to stop 150 of its aircraft due to the drop in air traffic generated by the epidemic. The German carrier will leave “25 long-haul aircraft” and “125 short- and medium-haul aircraft” on the ground, a company spokesman told AFP on Wednesday. Lufthansa, which also owns Swiss, Austrian Airlines and Eurowing, owns more than 750 aircraft worldwide.

The company has already stopped serving several destinations such as China and Iran, while some of its flights to Italy have been cancelled.

Virgin Atlantic postpones flights and launches new line

The British airline Virgin Atlantic has announced new flight postponements among other measures to overcome this crisis. It will also delay the launch of its London-Sao Paulo line, originally scheduled for March, to October. “Like other airlines in the world, Virgin Atlantic is feeling the impact of the Covid-19 and is seeing a drop in travel demand,” the carrier said in a statement on Wednesday. In the face of the epidemic, Virgin, like Lufthansa, also plans to freeze its hiring or offer unpaid leave to its employees.

Ryanair cuts short flight schedule

Irish carrier Ryanair said in a statement that it would reduce its short-haul programme, mainly to and from Italy, “up to 25% for three weeks, from 17 March to 8 April, in response to the Covid-19 epidemic”. The airline found that a large number of passengers did not show up for boarding last week, especially for flights to and from the Italian peninsula.

British Airways cancels about 200 flights

British Airways, a subsidiary of the UK’s IAG, warned that in order to “adapt to the decline in demand due to coronavirus” it cancelled about 200 flights between 16 and 28 March, including 12 between London’s Heathrow Airport and JFK Airport in New York. In addition, the airline announced the cancellation of 171 short flights to Italy, France, Austria, Belgium, Ireland and Switzerland from Heathrow.

United Airlines cuts costs and freezes hiring

Across the Atlantic, U.S. carrier United Airlines said in an email to employees that it would cancel 10% of its domestic flights and 20% of its international flights in the coming months, reports Business Insider US. United Chief Executive Oscar Munoz and President Scott Kirby also unveiled a series of cost-cutting measures, including unpaid voluntary leave for employees and a hiring freeze.

Norwegian Air Shuttle returns to its annual forecast

Coronavirus weighs on airline revenues and has serious consequences for the most vulnerable players. Norwegian Air Shuttle, for example, on Thursday (March 5th) returned to its forecast for the current year, due to the COVID-19 which exacerbates the difficulties of the low-cost carrier. On February 13, however, the company announced that it expects to return to the green in 2020, after recording a third consecutive year of losses.

“Given the uncertainty and the continued impact on overall demand for air travel, Norwegian is withdrawing its forecast for 2020,” the airline said. “At this stage, it is premature to assess the total impact (of coronavirus) on our activities,” she added in a statement.

Regional airline Flybe sees bankruptcy precipitated by epidemic

More seriously, the British regional airline Flybe simply announced on Thursday that it was shutting down its operations “with immediate effect”. The coronavirus will have dealt a fatal blow to the cash-strapped company. It had managed to evade bankruptcy in January thanks to a tax boost from the British government. Flybe therefore called on passengers who had booked seats to “not go to the airport” and said they could not find an alternative flight for them.

The airline employs more than 2,000 people and carried about 8 million passengers a year to 170 European destinations.

 

 

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