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Tuesday, March 17, 2020

ANALYSIS: Virus-stricken airlines face bailout or bust, as coronavirus explodes around globally

Issued on: 17/03/2020 - 09:12Modified: 17/03/2020 - 13:11 GMT/ZULU

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by Louise Healy and Biodun Iginla, France24 News Analysts

Airlines worldwide face an unprecedented existential threat as the coronavirus shuts down global travel, leaving governments with controversial and costly decisions about which carriers to bail out.

A toxic mix of fear, crippling travel bans and investor panic have pummelled the sector, with demand collapsing and carriers cutting flight capacity by up to 90 percent.

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One troubled airline, Britain's Flybe, has already gone to the wall and market analysts believe many more could follow.

"By the end of May 2020, most airlines in the world will be bankrupt," market intelligence firm CAPA has warned.

Even before US President Donald Trump effectively barred trans-Atlantic travel, the International Air Transport Association (IATA) estimated the crisis would cost the industry $113 billion, or nearly 20 percent of its revenue this year.

The true figure now looks like being much higher.

Brendan Sobie, an independent aviation analyst based in Singapore, said the global situation was "unprecedented".

"You can compare it to things like SARS or the global financial crisis, but I think it goes beyond that. No one really knows how long it will last and what the full impact will be."

Airlines are now sprinting to slash costs and bolster company war chests where possible -- laying off staff, cutting routes, renegotiating deals with suppliers and flying smaller, cheaper-to-run planes.

Australian carrier Qantas has cut international flight capacity by 90 percent and domestic routes by 60 percent. Similarly, British Airways is slashing capacity by 75 percent.

Meanwhile, Dutch national airline KLM plans to cut up to 2,000 jobs, the CEO of Delta Air Lines has seen his salary cut to zero, and Lufthansa suspended dividends.

In an internal memo, Malaysia Airlines admitted the company was already in a "critical situation" and urged staff to take voluntary unpaid leave.

"Many airlines are now at risk of going bankrupt and Malaysia Airlines is no different," chief financial officer Boo Hui Yee wrote.

- Enter the taxpayer? -

Against this bleak backdrop, previously hushed whispers about government bailouts have become panicked screams for help.

British airlines are said to have asked the government for more than $9 billion in support.

Trade group Airlines for America has called for a $50 billion bailout, more than triple the aid provided after the 9/11 attacks.

US Treasury Secretary Steven Mnuchin said the sector would come "top of the list" for relief.

But such substantial government help could prove deeply unpopular.

Many taxpayers are still bitter about Wall Street bailouts during the 2008 global financial crisis and a perceived "heads I win, tails you lose" corporate culture.

"The biggest US airlines spent 96 percent of free cash flow over the last decade to buy back shares of their own stock in order to boost executive bonuses and please wealthy investors," complained former US labour secretary Robert Reich.

"Now, they expect taxpayers to bail them out to the tune of $50 billion. It's the same old story."

Airlines are already under the spotlight over their carbon emissions and sustainability.

And after years of shrinking legroom and charging for blankets, they frequently rank among consumers' most hated companies.

With major western economies heading for recession, governments may also struggle to triage requests for assistance.

"Airlines might be at the top of the list for directed fiscal help, but virtually every global industry is facing pressure without a government bailout," said Stephen Innes, a strategist at AxiCorp.

These companies are normally considered a vital strategic asset, underpinning tourism, trade, business contacts and large manufacturers such as Boeing, Airbus or Rolls-Royce.

In countries like Australia or South Africa -- which has repeatedly bailed out South African Airways -- flagship carriers are also seen as national champions, promoting the country in the world.

Repeated calls for rules to be loosened to encourage transborder mergers have been rebuffed on the grounds that foreign firms should not own such sensitive assets.

Airlines and airports are also large employers, accounting for around four million jobs worldwide and many tens of millions more in associated industries.

Staff have already taken a hit with reduced hours and the threat of job cuts.

One Cathay Dragon flight attendant based in Hong Kong, who asked not to be named, told us at France24 that he had not been on duty since February 6 and faced another couple of weeks off at the very least.

He has lost 60 to 70 percent of his normal monthly income and is relying on savings, in one of the world's most expensive cities.

For consumers, there could be big changes in store when the coronavirus restrictions lift.

For the brave, there are some deals to be had for now, but in the longer term "airfares may rise as airlines try to recoup losses", according to Endau Analytics analyst Shukor Yusof.

A rash of market consolidation and mergers could reduce competition and put upward pressure on prices.

Wednesday, March 11, 2020

ANALYSIS AND BREAKING: Coronavirus: UK Health minister Nadine Dorries tests positive

by Emily Straton and Biodun Iginla, BBC News Analysts, London

Health minister and Conservative MP Nadine Dorries has been diagnosed with coronavirus.

Ms Dorries, the first MP to test positive, said she had taken all the advised precautions after finding out and has been self-isolating at home.

This comes as a sixth person died from the virus in the UK, which has a total of 382 cases.

The latest person to die was a man in his early 80s who had underlying health conditions.

The Bank of England has announced an emergency cut in interest rates in response to the economic impact of the coronavirus outbreak.

Rates have been cut from 0.75% to 0.25%, taking the cost of borrowing back down to the lowest level in history.

Meanwhile, Manchester City's Premier League match against Arsenal on Wednesday has been postponed as "a precautionary measure" because of the outbreak.

A number of Arsenal players are in self-isolation after coming into contact with Olympiakos owner Evangelos Marinakis, who tested positive for the virus.

The government will unveil its first Budget later, amid growing fears about the impact the outbreak will have on the UK economy.

Chancellor Rishi Sunak has pledged the NHS will get "whatever resources it needs" during the crisis, while he is also expected to unveil measures to boost the self-employed and small businesses who are left out of pocket.

Meanwhile, NHS England said it was scaling up its capacity for testing people for the infection, with the number of cases set to rise.

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Ms Dorries, the MP for Mid Bedfordshire, said in a statement that Public Health England had started tracing people she had been in contact with, and the department and her parliamentary office were closely following its advice.

The 62-year-old, who began her career as a nurse, later tweeted that it had been "pretty rubbish but I hope I'm over the worst of it now".

But she added she was worried about her 84-year-old mother who was staying with her and began to cough on Tuesday.

It is not known how many meetings Ms Dorries had attended at Westminster or in her constituency in recent days.

The Department of Health said she first showed symptoms on Thursday of last week - the same day she attended a Downing Street event hosted by the prime minister - and had been self-isolating since Friday.

No 10 did not comment on whether Boris Johnson had undergone testing, or whether he will now be tested.

Public Health England will advise those who have had recent contact with Ms Dorries, including ministers and officials, as to whether they need to self-isolate and report any symptoms.

Media captionSteps the NHS says you should take to protect yourself from Covid-19

Health Secretary Matt Hancock tweeted that Ms Dorries had "done the right thing" by self-isolating at home and wished "her well as she recovers".

Public Health England, which has already carried out more than 25,000 coronavirus tests across the UK, is set to expand the number of people it can test a day to 10,000 - currently 1,500 are being carried out.

Confirmation of any positive test results will also be accelerated with most people getting a result back within 24 hours.

NHS chief scientific officer Prof Dame Sue Hill said the health service was preparing to cope with more cases.

"Every hospital across the country, and the healthcare professionals who run them, are now actively planning to respond flexibly to manage new demand."

Scotland, Wales and Northern Ireland will be expected to roll out their own testing services, but there will be some shared capacity between nations, depending on need.

The number of total cases for the UK include 324 cases in England, 27 in Scotland, 16 in Northern Ireland and 15 in Wales.

There are 91 in London, with the next highest infected area being the south-east, with 51 cases. Cases by local council area in England can be viewed here.

The latest person to die, on Monday, was a man in his 80s, with underlying health conditions, who was being treated at Watford General Hospital.

He caught the virus in the UK and officials are trying to trace who he had been in contact with.

Media caption"I never thought I'd say this but I'd probably rather be in school," says Oliver Fox.

The Foreign Office has warned Britons against all but essential travel to Italy, which is experiencing the worst outbreak outside China.

Italy has introduced strict travel restrictions, with people being told to stay home, seek permission for essential travel, and give justification if they want to leave the country.

The Foreign Office is advising anyone arriving in the UK from Italy since Monday evening to self-isolate for 14 days.

The government says it has facilities to accommodate Italian visitors to the UK should they need to self-isolate.

British Airways has cancelled all of its flights to and from Italy until 4 April, and has asked staff to take voluntary unpaid leave.

Easyjet, Ryanair and Jet2 are also cancelling their flights on Italian routes, though EasyJet will operate "rescue flights" to bring British travellers home in the coming days.

'Enter shops one at a time'

Hannah Butcher and her husband Sean on holiday to Rome — Image caption"We know we'll have to go into quarantine when we get home."

"It's the weirdest holiday I think I've ever been on," said Hannah Butcher, from Newbury, Berkshire, who is in Rome with her husband for their first holiday alone since having a child.

"We arrived on Sunday. The advice then was as long as you're not going into Italy's red zone, you're OK.

"We're currently sitting in a restaurant and everyone here is in staggered rows because they have to sit one metre apart. It's quite weird seeing families spread across multiple tables."

Media captionWhat life looks like under Italy's coronavirus lockdown

She added that people are "only allowed to enter shops one at a time".

"All the attractions are closed; there are queues out the door of supermarkets and the butchers. There are police driving round making sure the rules are enforced and a noticeable armed police presence, presumably to keep order."

She said they were due to fly home with Ryanair on Wednesday morning and had not been informed of any flight updates.

In other developments:

The government is considering a policy of "cocooning" groups of people who are most vulnerable, such as older people in care homes, who may be kept apart from the wider population
Great Ormond Street children's hospital cancelled some non-essential cardiac operations for two weeks after a health worker in its cardiology department tested positive for the virus
Royal Bank of Scotland, Lloyds and TSB banks said they would allow customers to defer mortgage payments if needed
One of the UK's biggest insurers, Aviva, has cut back on the cover available in new travel insurance policies because of coronavirus, with people not able to add cover for "travel disruption"
The Church of England has urged parishes to stop contact during services - including sharing the chalice and shaking hands for the sign of the peace.
The Catholic Church of England and Wales has issued similar advice - advising parishes to remove holy water stoups; ban worshippers touching or kissing the Cross on Good Friday; and stop using shared hymn books and missals..
British nationals who were on board the virus-hit Grand Princess cruise ship are being flown back to the UK where they will go into self-isolation