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US, European airlines in government talks over coronavirus support

US, European airlines in government talks over coronavirus support

Lufthansa Airlines Boeing 747-8 lands at O'Hare International Airport in Chicago, Illinois, on March 13, 2020. (Photo: AFP/Kamil Krzacynski)

WASHINGTON/CHICAGO: Major US and European airlines said on Friday (Mar 13) they had begun discussions with governments on obtaining financial assistance to weather a crippling travel slump brought on by the coronavirus, which has cobbled global travel and threatens thousands of industry jobs.

Airlines are reeling from a plunge in bookings and traffic, as the fast-spreading coronavirus pandemic prompts travel restrictions and event cancellations around the world.

The three largest US airlines - Delta Air Lines American Air Lines and United Airlines - have sound balance sheets but are raising alarm bells with government officials about potentially having to furlough tens of thousands of employees.

The conversations are in the early stages and no specific proposals have been exchanged, people said.

In Europe, the situation is more dire.

Heavily indebted Norwegian Air said it had "weeks not months" to avert collapse. 

KLM, the Dutch subsidiary of Air France-KLM, plans to slash up to 2,000 jobs, cut working hours by one-third for its entire staff and ask for government support.

German flagship carrier Lufthansa also said on Friday it was considering a request for state aid.

In a Friday message to staff entitled "the survival of British Airways," Chief Executive Alex Cruz said jobs would be cut "perhaps for a short period, perhaps longer-term." Talks have begun with unions, he said.

Airlines have significantly slashed their flying schedules, parked jets, frozen hiring and suspended investments and share buybacks, with many executives forgoing or reducing their salaries in an effort to save costs.

READ: United Airlines in talks with US officials about financial support

In the United States, Delta CEO Ed Bastian told employees in a memo that "the speed of the demand fall-off is unlike anything we've seen."

US airlines and their trade association met with senior White House aides on Thursday to discuss the mounting crisis, three people briefed on the matter said.

"We will be helping the airline industry if we have to," US President Donald Trump said on Friday. "So far people haven't been asking but if they should be asking we want to make sure our airlines are very strong."

France and Germany have also said they stand ready to help their carriers.

READ: Business jet operators see demand surge on US travel restrictions, coronavirus

Delta's Bastian was "optimistic" about receiving US government support but said the "form and value is unpredictable."

Delta, United and American have all raised capital in recent weeks, even as share prices have fallen by between 40 per cent and 56 per cent over the past month.

Alexandre de Juniac, head of global industry body IATA, told Reuters revenue losses internationally would be probably more than the US$113 billion the group forecast a week ago, before the Trump administration's announcement of US travel curbs on much of continental Europe. 

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Source: AFP/ec


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