Free article: Most airlines are desperately trying to preserve cash. Besides cutting flights, many are asking or forcing staff to take unpaid leave
IT IS NO surprise that the industry clobbered hardest by the covid-19 pandemic is the one responsible for helping spread it to the four corners of the Earth. But the speed and depth of the nosedive which airlines have taken is nevertheless breathtaking. In a memo to staff on March 13th, entitled “The Survival of British Airways”, the carrier’s boss, Alex Cruz, spoke of “a crisis of global proportions like no other we have known” .
Many airline bosses cling to the hope that global passenger numbers will follow the same trajectory as in the wake of previous disruptions, such as the terrorist attacks of September 11th 2001 or the global financial crisis of 2007-09 . After a few months of disarray, travel patterns then reverted to normal and growth resumed.
Chinese airlines can also count on generous government support. Most of the big ones are state-owned or could be . Beijing has already promised bail-outs to make up for their losses, estimated to be around $3bn in February alone. Governments are offering some assistance. To help Norwegian its home government has removed aviation taxes. In an effort to prevent wasteful ghost flights with no passengers, which some carriers have been flying to preserve valuable take-off and landing slots at busy airports, regulators around the world have temporarily waived rules that require slots to be used at least 80% of the time.
Carriers which do make it through will enjoy less crowded skies—and more pricing power. A shake-out in Europe, long plagued by overcapacity, would benefit companies with strong balance-sheets. These include EasyJet, Ryanair and—despite Mr Cruz’s warnings—BA’s parent, IAG. On March 13th thereported that two non-executive board members at IAG have loaded up on the group’s cheap shares, suggesting a modicum of confidence in its prospects.
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