Airlines In EU Face $76B Losses From Coronavirus, Says IATA. The U.K. And Spain Hardest Hit

During a special briefing on the state of the European airline market today, Rafael Schvartzman, IATA’s Regional Vice President for Europe repeated the call for urgent action needed to support the region’s airlines. IATA projects that Europe’s airlines will lose $76 billion because of the coronavirus pandemic, with a 46% drop in passenger revenue.

The losses are heaviest in the U.K. where 113.5 million fewer passengers are expected to fly resulting in $21.7 billion in lost revenue. Spain will see the next largest impact in passenger numbers, with 93.7 million fewer passengers flying and $13 billion in lost revenue.

This is particularly significant to IAG Group airlines—Aer Lingus, British Airways, Iberia, LEVEL and Vueling— which are based in both markets. It will also impact low-cost airline leaders Ryanair and easyJet, which serve holiday traffic between the U.K. and Spain.

However, the coronavirus will strain all of Europe’s airlines.

Though Germany is expected to lose fewer (84.4 million) passengers than Spain, it is expected to experience higher revenue loses of $15 billion.

France will see 65 million fewer passengers resulting in a $12 billion revenue loss, and the Netherlands is expected to lose 23.4 million passengers resulting in $4.4 billion revenue loss.

Italy will lose around 67.7 million fewer passengers which will result in $9.5 billion in lost revenues.

“The air transport industry is an economic engine, supporting up to 12.2 million jobs across Europe and $823 billion in GDP. Every job created in the aviation industry supports another 24 jobs in the wider economy,” said Schvartzman. “Governments must recognize the vital importance of the air transport industry, and that support is urgently needed. First, this will keep airlines financially viable during the present lockdown, preserving jobs, maintaining essential connections to repatriate citizens, and carrying life-saving air cargo supplies. Secondly, this would avoid broad economic damage by ensuring that airlines can rapidly scale-up operations when travel restrictions are lifted, jump-starting the European and global economies.”

Schvartzman acknowledged that some governments have acted to support their aviation sectors, naming the Nordic countries of Denmark, Finland, Norway and Sweden during the briefing. However, he said that the extent of loses may require additional support from all governments.

IATA is asking for a combination of direct financial support, loans, loan guarantees and support for the corporate bond market as well as tax relief and a temporary amendment to the EU261 passenger rights regulation. This last request is likely to be more controversial. Airlines are asking for permission to issue travel vouchers for cancelled flights instead of refunding passengers directly, as having to issue all cash refunds will strain their limited capital reserve. They have also requested a full-season waiver on slot rules.

Europe’s airlines are turning to rescue flights and cargo to keep their bare-bones operations going. Alexis von Hoensbroech, CEO of Austrian Airlines, shared a video of a recent rapid conversion of a passenger aircraft which was used to transport urgently needed medical supplies from China to Vienna.

IATA has also asked for support to ease cargo carriage, including lifting any regulatory restrictions on commercial airline pilots flying commercial planes as cargo aircraft.

Even when the crisis passes in Europe, the speed of Europe’s recovery will also be driven by the level of containment of the coronavirus pandemic in the U.S., Schvartzman confirmed.

“The EU and the U.S. is one of the biggest trading sectors in the world,” he said. “The North Atlantic is one of the biggest markets in the world. So it would have a huge impact on the airline industry and on the economy on the whole.”