Another difficult week for aviation
April 01 2020 07:24 PM
Alex Macheras
Alex Macheras

By Alex Macheras

It’s been another extremely turbulent week for aviation around the world. Here’s a run-down of the news you need to know. Oman Air has permanently terminated hundreds of cabin crew with immediate effect, amid the Covid-19 crisis.

Several Oman Air cabin crew were abroad on a layover (a night stop in between flights) when they were informed by management that their employment would be ended ‘due to exceptional circumstances’ — the cabin crew will be paid 26 days in lieu. A number of Oman Air pilots, mostly First Officers, have also been given a notice (a period of 3 months) of the end of their employment with the airline.

In addition to this, Oman’s aviation industry is now completely grounded, bringing Oman Air and SalamAir to a halt in the country’s fight against the coronavirus.

In Australia, Qantas and Virgin Australia are in ugly feud over government financial support. Qantas thinks Virgin Australia should be left to ‘go bust’. Qantas argues that Virgin Australia, an airline unprofitable for the last seven years, shouldn’t be rewarded with a bailout, while Virgin has accused Qantas of spreading false rumours about Virgin’s cash position. The dispute intensified yesterday after Australia’s corporate regulator said it’s investigating allegations against Qantas, which may have influenced the share prices of both airlines. Qantas said the claims “are categorically wrong.”

In Britain, over 30 flights yesterday arrived from the US (where Covid-19 cases are higher than any other country in world), plus Italy, and Spain. Must to the astonishment of much of the British public, there has never been, and continues to be no extra measures for these incoming flights, no passenger temperature checks, no quarantine, nothing.

In Doha, Qatar Airways has banned all flights to Spain, and New York City (as part of its already reduced, transit-only operations).

Furthermore, the State of Qatar has formally requested ICAO open the airspace of blockading Gulf states (Saudi, the UAE and Bahrain) in order to allow urgent humanitarian, medical/pharmaceutical cargo & trade to be transported as quickly and efficiently as possible amid this Covid-19 pandemic. Huge demand for medical equipment to fight Covid-19 has significantly increased the need for worldwide air cargo — but nearby airspace bans due to the ongoing blockade unnecessarily increases the flight time on several routes, especially to African nations.

IATA has praised Norway, Finland, Singapore, among others have already secured urgent government funding for their respective aviation sectors.

Airbus has suspended the majority of production in Spain until April 9 (at the earliest).

Emirates, currently grounded amid the crisis, will receive a bailout from the government. This was a new, but much expected announcement. As I mentioned in last week’s column, the only way for the majority of the world’s airlines (including those previously financially healthy) to survive the crisis is with government support.

Back in Europe, IAG (British Airways, Iberia, Aer Lingus, Vueling & Level) “continues to have strong liquidity” — with cash equivalents and interest-bearing deposits of €7.2bn.

Further North, Finnair’s President, Topi Manner this week said, “We will be seeing a worldwide phenomenon of government bailouts in various forms taking place" Finland has already secured €600mn in financial support from its majority shareholder, the government.

Meanwhile in Britain, Stelios Haji-Ioannou, easyJet’s founder and largest shareholder, sent a letter to the board with a list of demands, including that it addresses the "elephant in the room" and cancels a 4.5bn pound Airbus order. The Airbus order, which he described as the “main risk to survival of the company” as the liability limits the company’s current market cap of 2.4bn pound, should be scrapped using ‘force majeure’.

Stelios said, “If we don’t pay Airbus we don’t need government loans. It would be an abuse of taxpayers’ money to obtain loans to pay Airbus for an unprofitable investment in 107 aircraft. We should raise equity”. He added that if the board does not engage with him he will call a series of emergency shareholder meetings where he would propose ousting the group’s non-executive directors one by one every seven weeks.

Elsehwere, two of the world’s biggest aerospace manufacturers are lobbying the UK government on behalf of Virgin Atlantic as the airline seeks a 500m pound bailout package of commercial loans and guarantees to survive the fallout from the coronavirus pandemic. Both Rolls-Royce and Airbus have sent letters to the UK’s transport secretary, highlighting the importance of Virgin Atlantic to the UK’s manufacturing supply chain.

The UK chancellor last week warned they would not offer an industry-wide bailout to airlines and airports, unlike several other nations around the world. Instead the government expects the industry to explore options to bolster cash before asking for state aid, which would be considered on a case-by-case basis. Richard Branson, the billionaire founder of the carrier, has already pledged to inject $250mn into the Virgin Group — a portion of which will go to the airline.

In the meantime, stay safe, and stay home!

*The author is an aviation analyst.

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