Topline: European airlines are cancelling flights to Italy, which has in recent days become a coronavirus hotspot in Europe, in the latest sign of the strain the aviation industry is under as Covid-19 spreads globally.
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- Budget airline EasyJet says it would be cancelling some flights to Italy amid lower demand, particularly in northern Italy. In a drive to cut costs, the airline said it would also freeze pay rises and recruitment, and offer unpaid leave.
- Budget airline Wizz Air will cut 60% of its flights to northern Italy until April 2, while British Airways has also cut flights to Italy, Singapore and South Korea.
- Lufthansa-owned Brussels Airlines will shed one third of its flights to Italy until March 14, it said on Friday, with flights to Milan, Bologna, Venice and Rome affected.
- One of Europe’s biggest airline groups, IAG, warned on Friday that flight bookings this year will be impacted because of lower demand and travel restrictions in place to combat the spread of Covid-19.
- Chief executive Willie Walsh said that there has been a “significant” drop in demand for flights to Italy, which is at the center of the outbreak in Europe, while flight cancellations to China means its brands would likely carry fewer passengers this year.
- He added that the group, which owns some of Europe’s biggest carriers including Iberia and Vueling, would likely take an earnings hit, although the extent is unclear. IAG shares fell 8% on Friday morning.
- Finnair, Finland’s national airline, warned that its operating profits could fall significantly this year, adding that it will seek to cut costs of up to $54 million, with some jobs at risk.
Crucial comment: Walsh told the BBC on Friday: “Clearly we had announced the suspension of flights to China. We took that decision at the end of January, and we had seen some impact on our other Asian routes, but it had looked like it was stabilising.
“But earlier this week we had the issues in Italy, and that’s clearly led to a significant fall-off in demand in Italy and in some of the surrounding countries as well.”
He later added that the group’s balance sheet is strong. “I’m very confident that we’ll navigate our way through these challenges,” Walsh said.
News peg: The coronavirus impact has taken a toll on airlines as factors including travel restrictions, large-scale quarantines, conference cancellations and lower demand all impact on firms’ earnings. Last week, the International Air Transport Association, the global airlines trade body, warned that carriers could see $30 billion wiped off their revenues this year, while lasting impact of the illness could plunge the industry into its worst decline since the 2009 financial crisis. That assessment was based on the scenario that the illness would be contained within China, but with a new, more global profile, Covid-19’s effect on airlines could now be greater.
Key background: British Airways last month suspended its flights to mainland China, after Britain’s foreign office advised against non-essential travel to China.
Tangent: Delta said this week it is suspending some of its flights to South Korea, as cases there spike. South Korea is the second largest cluster of Covid-19 outside China.