Airlines slash flights across the globe as demand keeps evaporating. The warning comes after many countries around the world closed boarders or placed extra restrictions on arrivals.
British Airways owner IAG SA said on Monday that the outbreak and associated travel restrictions were “having a significant and increasing negative impact ” on demand on almost all of its routes. And that they will slash capacity for April and May by at least 75%amid the collapse in demand and government restrictions aimed at slowing the disease .
United’s top management executives will have a 50% cut in their pay, according to a letter from United CEO Oscar Munoz and President Scott Kirby to the company’s 100,000 employees — which was made public Sunday night.
United and all the other airlines have suffered from a severe cut in passenger demand in the face of the coronavirus outbreak. The airline has already carried one million fewer passengers in the first two weeks of March than a year ago and it expects to suffer a $1.5 billion reduction in revenue for the month, according to the letter.
“The bad news is that it’s getting worse. We expect both the number of customers and revenue to decline sharply in the days and weeks ahead,” the letter said. The letter said the reduced schedule could even extend into the summer travel season, a key period of air travel and airline profitability.The cut disclosed Sunday includes the reductions in flights already announced at United. United was the first US airline to announce a reduction in its domestic schedule.
The 50% cut is a comparison to what United had scheduled for the two months before the coronavirus outbreak.United said even with the deep cuts in its schedule, it expects to fill only 20% to 30% of seats on the planes. In 2019, United filled 84% of its seats with paying passengers over the course of the entire year.
There is growing fear that President Donald Trump will indicate a possibility of imposing restrictions on domestic air travel, although no restrictions of that type have been announced.
EasyJet says it has undertaken “further significant cancellations” which could result in the majority of its fleet being grounded as governments impose travel restrictions in response to the COVID-19 pandemic.
Ryanair Holdings Plc and Air France-KLM announced even deeper cuts at 80% and 90% respectively, and the Irish company said its entire fleet may be grounded. Paris’s two biggest airports plan to shutter terminals as major travel hubs around the world stand almost empty, while TUI AG, the largest vacation firm, will suspend the bulk of its package holiday, cruise and hotel operations.
Ryanair said it expected the majority of its fleet in Europe to be grounded over the next seven to 10 days and, in countries where they were not grounded, growing restrictions could make flying “impractical if not impossible”.
Chief executive 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.
“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”.
Ryanair said it has 4 billion euros ($4.5 billion) in cash and will also defer capital spending and share buybacks to bolster reserves.