Another fear threat to the cash flow of another summer lost plane

Sydney Airport Operations Ro Qantas and Airport Earnings

Photographer: Brendon Thorne / Bloomberg

The latest obstacles to the return of air travel raise concerns that a cash crisis is going to affect the airline’s industry.

A second summer is likely to be missed due to a coronavirus crisis arousing a number of airline failures and breakout movies, along with a 2020 rerun, job cuts, and jetliner delays and shutdown, according to IBA Group consulting.

In just the past week, hopes have brought the Bloomberg World Airlines Index to its highest level since the outbreak began.

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Ryanair Holdings Plc passenger planes on the tarmac at London Stansted Airport.

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TUI AG, the world’s largest tour company, has stopped back on its summer schedule to feature a peak season that won’t start until July, at least two months longer than usual. Ryanair Holdings Plc ran a newspaper to reassure holidaymakers that they could change flights for free and urged them not to be picked on. negative.

“The earth is moving from one day to the next,” Stuart Hatcher of IBA said in an interview. Governments are aware that pushing back the reopening of travel will mean more pain for the aviation industry but infectious recovery rates are spewed even as vaccine roll-out continues, he said. .

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European carriers in particular feeling the gloom set as a result of rising issues and new locks. Entertainment companies like TUI and Ryanair typically use the first three months of the year instead of summer, giving them cash stock to work with as they prepare for activity.

Any wiggle room will make a quick deal. TUI, which serves German and British travelers flooding into the Mediterranean in the warmer months, said Thursday that there is enough liquidity to survive “until summer,” to be more precise. . Owner of British Airways IAG SA secured a new loan using the concealed takeoff and landing slots at London Heathrow airport as collateral.

July or Bust

Travel must resume earnestly before July 1 or there is a risk that carriers will miss out on the few months that provide most annual earnings, Ben Smith, CEO of Air France-KLM, said Thursday.

“What is crucial about July is that, for most European carriers, Q3 will be the main quarter it will make during the year,” said Smith in a preparatory meeting lobbying Airlines for Europe. The group is pushing for swift adoption of so-called vaccine licenses and a quarantine ban is said to be in high demand.

While 45 airlines failed in 2020, much more depends on the prospect of a recovery near recreational markets, Hatcher said. That looks as likely as the year will improve, with the International Airports Council on Thursday predicting that global passenger traffic will remain nearly 50% below normal levels this year.

While most carriers could survive the summer with a delay, the cost of releasing them would be considerable. Even before the latest hurdles, the The International Air Transport Association said carriers would need as much as an extra $ 80 billion in government money this year.

More Bailouts

In Europe, Air France-KLM is seeking further assistance in addition to 10.4 billion euros ($ 12 billion) in loans and pledges made last year. TUI, which provided 4.8 billion euros in German government support, gave no financial forecast at its annual meeting on Thursday, promising that cash flow will not move towards disappointment how business normalizes.

The airport sector also needs state support, the ACI agency said, warning that even large hubs are struggling. The industry is “in a precarious position right now,” said trade union economist Patrick Lucas.

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One passenger waits next to the check-in counters at Nice Cote d’Azur Airport.

Photographer: Jeremy Suyker / Bloomberg

Discount carriers like Ryanair, EasyJet Plc and Wizz Air Holdings Plc has a strong liquidity position and easy options for incentivising investors through airline sale-and-lease agreements if necessary.

There could also be a $ 50 billion expansion of Cares Act loans and workers ’payments in the U.S. and a similar continuity to furloughs in Europe and elsewhere. Even then, airlines may have to deepen cost cuts.

More carriers are likely to pursue local breakout protection where possible, following such companies ASA Shuttle On Norway and Virgin Atlantic Airways Ltd.

Leading Latin American carriers including Latam Airlines Group USA, Avianca Holdings USA and Grupo Aeromexico SAB which received U.S. Chapter 11 protection for its core businesses without state support at home is likely to seek expansion if cash flows do not revive, Hatcher said.

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Air France-KLM operated aircraft at Schiphol Airport.

Bloated Orders

IBA expects moves to rationalize supply in Asia, where airline order books are still in full swing, especially in Southeast Asia and India, and airline failure has been limited. Such unions will be between Korean Air Lines Co. Asiana Airlines Inc. may be. becoming more common.

A financial crisis will have another impact on airline fleet plans, encouraging the retirement of old aircraft and delaying new deliveries. It would be more likely to stop a proper order Airbus SE and Boeing Co.

Airlines and travel agents are now waiting for UK Prime Minister Boris Johnson to give his decision on reopening British travel in an update scheduled for April 5. Yes The target date of May 17 is expected to be pushed back.

“The market is there, the buyers want to travel,” said Fritz Joussen, CEO of TUI. “However, the conditions for tourism must be created at a political level.”

– Supported by Charlotte Ryan

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