In today’s update, the aviation industry warns the government that emergency measures to save the industry must be put in place now, Airbus increases liquidity through a number of financial measures, Edinburgh Airport implements consolidation measures and United Airlines commences freight operations through its Boeing 777 and 787 fleet.
Aviation associations warn government that time is running out for industry
Airlines and airports have said that the UK government needs to step in now with promised measures to help aviation survive the coronavirus crisis.
With normal passenger numbers recorded at less than 5 per cent than usual at major airports, EasyJet and Ryanair have announced they will halt the majority of flights after today. Staff wages at Ryanair staff have been cut by 50 per cent. EasyJet has asked pilots and cabin crew to agree to changes in their terms and conditions to protect jobs, including a freeze on planned pay rises and a requirement to take three months of unpaid leave. The airline would also no longer provide food for crew during their shifts.
EasyJet’s chief executive Johan Lundgren has come under fire for a payment of £170m in dividends to shareholders, while at the same time, seeking financial help from the government.
Discussions between industry and government due to take place today
Further discussions between the industry and government are expected to take place today. The Guardian reports that Treasury measures could include the government taking a direct stake in carriers and that ongoing discussions are not expected to reach a conclusion until at least the middle of this week. Airlines including British Airways have already warned that they face a fight for survival.
Chief Executive of the Airport Operators Association Karen Dee said: “Following the Chancellor’s commitment to an aviation support package on Tuesday, airports have worked hard with the Department for Transport to set out their needs and held off taking further drastic steps pending the promised Government support. While Government has been receptive, it has not led to clear next steps and airports will now face making extremely difficult decisions.
“We urge the Government in the strongest possible terms, given the scale of disruption faced, to set out as soon as possible how they will support the UK aviation sector, including airports and the vital companies that ensure an airport can operate such as ground handling agents, air traffic controllers and airport retailers.”
“The Chancellor’s measures to support employers through the COVID-19 pandemic are very welcome, particularly for airport staff who are concerned about their jobs.”
Airports at the forefront of COVID-19 impact
“However, airports are at the forefront of the impacts of COVID-19, as domestic and international air travel has all but come to a halt. Airports are expecting up to 95 per cent fewer passengers than normal next week, continuing the steep decline of the past few days and weeks.”
The British Airline Pilots Association (BALPA) has also called for the swift release of details of a Government support package for aviation. The pilots union says support needs to be announced quickly to protect workers and jobs.
BALPA General Secretary, Brian Strutton said: “It is an important step to know the Government is recognising the dire impact this crisis is having on aviation and the importance of supporting the industry so that it is there when recovery comes. But we need details and we need to ensure the measures are targeted correctly and urgently.”
Airlines taking “unprecedented measures”
“Airlines are having to take unprecedented measures in their fight for survival and pilots and others in the aviation industry are suffering a huge threat to their incomes.
“We must ensure that any package of measures to help the industry will be used to help workers in the industry, to avoid job cuts and harmful reductions in livelihoods.”
Chancellor Rishi Sunak announced a package of emergency support measures on Friday evening, including a pledge to pay up to 80 per cent of workers’ salary during the crisis.
Airbus announces new €15 billion credit facility
Airbus has announced a number of financial measures today in a bid to bolster its position as it faces up to a change in market conditions due to the coronavirus pandemic.
The measures comprise a new €15 billion ($16.1 billion) credit facility, withdrawal of its 2019 dividend proposal and suspension of top-up pension funding. The new credit facility will be in addition to an existing €3 billion revolving credit facility.
The withdrawal of the 2019 dividend proposal has a cash value of €1.4 billion. The manufacturer is withdrawing its 2020 guidance, and said it will maintain a “strong focus on support to customers and delivery.”
Airbus and sector will “overcome this critical period”
Chief executive Guillaume Faury explained: “Our first priority is protecting people while supporting efforts globally to curb the spread of the coronavirus. We are also safeguarding our business to protect the future of Airbus and to ensure we can return to efficient operations once the situation recovers. We have withdrawn our 2020 guidance due to the volatility of the situation. At the same time, we are committed to securing the liquidity of the company at all times through a prudent balance sheet policy. I am convinced that Airbus and the broader aerospace sector will overcome this critical period.”
Airbus has said it has also identified further measures that may could be taken as the pandemic runs its course. The company has stated that the measures will enable “significant liquidity” available to cope with additional cash requirements related to the coronavirus.
Production and assembly to partially resume in France and Spain
Airbus SE also announced that production and assembly work would partially resume in France and Spain today following health and safety checks. The continuation of work in the plants followed the implementation of stringent measures.
The implementation of the measures required a temporary halt in production and assembly activities at both the French and Spanish sites for four days. Work stations will only be re-opened if they are found to comply with new health and safety measures in terms of hygiene, cleaning and self-distancing while improving the efficiency of operations under new working conditions.
Edinburgh Airport puts consolidation measures in place
Edinburgh Airport has put consolidation measures in place due to close to zero passenger demand due to the drastic reduction in scheduled flights to Scotland.
The airport recorded a small drop on passenger numbers in February with 935,455 passengers passing through the airport, 0.4 per cent behind February 2019.
The airport has announced the implementation of a consolidation plan which forms part of our recovery plan to ensure the airport is ready to return to full operations at the end of the outbreak. The aim of the plan is to protect as many jobs possible and ensure the airport is open throughout. The plan includes closure of certain areas of the terminal and a centralisation of operations, deferring expenditure on some capital projects, powering down high consuming energy items like elements of the baggage system and heating and cooling systems on closed areas of the airport and suspension of some retail and food and beverage outlets.
Gordon Dewar, Chief Executive of Edinburgh Airport said: “This is an unprecedented time not only for the aviation industry but for everyone as we all do what we can to ensure the health of ourselves and of those around us. For us, that includes the health of our airport. Our plan is based on keeping the airport open throughout and being there for those people who are still travelling and those staff members who are making that travel possible.”
United Airlines announces operation of dedicated cargo charter flights
United Airlines is offering its passenger aircraft up for cargo charter flights.
The airline announced that it will be flying a number of Boeing 777 and 787 fleet as dedicated cargo charter aircraft transferring freight to and from US hubs, as well as key international business locations.
The first freight-only flights departed on March 19 from Chicago O’Hare International Airport (ORD) to Frankfurt International Airport (FRA) with the cargo hold completely full — carrying more than 29,000 lbs of goods.
A statement by United read: “Getting critical goods into the hands of the businesses and people who need them most is extremely important right now. To support customers, employees and the global economy, we will initially operate a schedule of 40 cargo charters each week targeting international destinations and will continue to seek additional opportunities.”
“With coronavirus (COVID-19) creating an increased need to keep the global supply chain moving, we are utilising our network capabilities and personnel to get vital shipments, such as medical supplies, to areas that need them most.”