The fallout of the travel bans continues to bite hard, with three big groups announcing their intentions today
International Airlines Group
First up is International Airlines Group (IAG) who own Aer Lingus, British Airways, Iberia, LEVEL and Vueling. The group is planning to cut capacity by at least 75 per cent compared to the same period in 2019. The group plans to ground surplus aircraft, reducing and deferring capital spending, cutting non-essential and non-cyber related IT spend, freezing recruitment and discretionary spending, implementing voluntary leave options, temporarily suspending employment contracts and reducing working hours.
Meanwhile, Willie Walsh will continue his role as CEO, whilst Luis Gallego will continue in his role as Iberia chief executive for the next few months to lead the response in Spain
Willie Walsh, IAG’s chief executive, said
“We have seen a substantial decline in bookings across our airlines and global network over the past few weeks and we expect demand to remain weak until well into the summer. We are therefore making significant reductions to our flying schedules. We will continue to monitor demand levels and we have the flexibility to make further cuts if necessary. We are also taking actions to reduce operating expenses and improve cash flow at each of our airlines. IAG is resilient with a strong balance sheet and substantial cash liquidity.”
Antonio Vázquez, IAG´s chairman, said
“As we respond to COVID-19, Willie, Luis and the board of IAG have decided that management stability across the Group should be a priority in the near term. We are grateful that Willie has agreed to delay his retirement for a short period at this challenging time.”
Ryanair expects to ground the majority of its aircraft fleet across Europe over the next 7 to 10 days. According to the airline, In those countries where the fleet is not grounded, social distancing restrictions may make flying to all intents and purposes, impractical, if not, impossible.
For April and May, Ryanair now expects to reduce its seat capacity by up to 80%, and a full grounding of the fleet cannot be ruled out.
In terms of costs, Ryanair is taking immediate action to reduce operating expenses, and improve cash flows. This will involve grounding surplus aircraft, deferring all capex and share buybacks, freezing recruitment and discretionary spending, and implementing a series of voluntary leave options, temporarily suspending employment contracts, and significant reductions to working hours and payments
Ryanair’s Michael O’Leary said:
“At the Ryanair Group Airlines, we are doing everything we can to meet the challenge posed by the Covid-19 outbreak, which has over the last week caused extraordinary and unprecedented travel restrictions to be imposed by National Governments, in many cases with minimal or zero notice. We are communicating with all affected passengers by email and SMS, and we are organising rescue flights to repatriate customers, even in those countries where travel bans have been imposed. Our priority remains the health and welfare of our people and our passengers, and we are doing everything we can to ensure that they can be reunited with their friends and families during these difficult times.
Ryanair is taking all actions necessary to cut operating expenses, and improve cash flows at each of our airlines. Ryanair is a resilient airline group, with a very strong balance sheet, and substantial cash liquidity, and we can, and will, with appropriate and timely action, survive through a prolonged period of reduced or even zero flight schedules, so that we are adequately prepared for the return to normality, which will come about sooner rather than later as EU Governments take unprecedented action to restrict the spread of Covid-19”.
Air France-KLM Group
Meanwhile, the next big group – Air France-KLM is planning more cuts of between 70% and 90%. The cuts are schudeld to last two months, with the group adjusting as required.
In regards to grounds, Air France will ground it’s Airbus A380 fleet, whilst KLM will ground its Boeing 747-400 fleet. To guarentee cash-flow, savings of €200million have been identified, reduction in capital spend to save €350 million.
Opinion: Expect more
With airlines finding no passengers and barriers to transport passengers, expect more groundings to take place.
Because there are some airlines that have been near enough totally grounded already..
Welcome to Economy Class and Beyond – Your no-nonsense guide to network news, honest reviews, with in-depth coverage, unique research as well as the humour and madness as I only know how to deliver.