Airline bosses say worst is yet to come as more flights cancelled on coronavirus fears
Airline bosses have warned that the worst is yet to come for the industry after coronavirus fears saw passenger demand slump, with carriers cutting flights to locations round the world.
Speaking at an industry conference in Brussels, outgoing IAG boss Willie Walsh said that there had been “a very significant fall-off in demand” in Italian markets, while Ryanair’s Michael O’Leary said he was expecting two to three weeks of a “very deflated booking environment”.
Both however agreed that there would be a “rapid return to normal” if the outbreak stabilises and follows the pattern in Asia.
O’Leary was speaking after budget carrier Ryanair revealed year-on-year passenger growth for February, increasing 10 per cent from 9.6m to 10.5m passengers.
However, after last night’s warning over the cancellation of 25 per cent of its Italian short haul programme for the three weeks from 17 March, it added that traffic and load factor were “likely to be lower than normal due to the fall in bookings during that period in response to the Covid-19 virus”.
IAG-owned British Airways also warned that it will cut more than 400 flights, including at least one a day to New York’s JFK airport, in response to outbreak, between 16 and 28 March.
Airlines did at least have a better day on the world’s markets, having led the way in the record falls posted over the last week.
IAG, which fell as low as 420p yesterday, rallied during the morning’s trading to post a five per cent rise, making it the FTSE 100’s best performing stock.
Tour operator Tui, which is widely tipped to fall out of London’s blue-chip index on Thursday’s reshuffle, also rose 4.7 per cent, whilst Ryanair and Easyjet rose 4.1 per cent and 2.3 per cent respectively.
Sign up to Morning Wire’s Midday Update newsletter, delivered to your inbox every lunchtime
State aid ‘not appropriate’
Walsh also used the conference to say that struggling airlines should not be given state aid to help them through the slump in demand the virus has caused.
He said: “I don’t believe it’s appropriate for governments to provide state aid to airlines that were not sustainable before the coronavirus”.
The comments echo Walsh’s position on embattled regional airline Flybe, which the UK government said it would bailout to prevent the firm from going under.
At the time, Walsh called the measures to aid the struggling business, including a reduction in air passenger duty (APD), a “blatant misuse of public funds”.
The IAG boss, who is retiring from his role imminently, also submitted a formal complaint to the European Commission on the matter.
Former chancellor Sajid Javid had promised reforms to the APD system in next week’s budget, but his departure and subsequent replacement by Rishi Sunak raises the question of whether the policy will make it through to 11 March.
Michael Hewson, chief markets analyst at CMC Markets, said that “current events could make Flybe’s current predicament much more acute in the coming weeks”.
Air France’s boss Ben Smith called on EU member states to waive rules on lucrative landing and take-off slots if airlines are forced to cancel flights for a long period due to the outbreak.
International aviation body IATA called for the rules to be suspended yesterday.