Lufthansa Group is implementing a hiring freeze and offering staff unpaid leave as part of cost-cutting measures amid the impact on air travel demand from the coronavirus outbreak. While the airline group says it is too early to estimate the earnings impact of the coronavirus outbreak, its network operators have cancelled all flights to mainland China until the end of March and adjusted capacity to Hong Kong. Lufthansa says this is the equivalent of having 13 aircraft grounded. ”In order to counteract the economic impact of the coronavirus at an early stage, Lufthansa is implementing several measures to lower costs,” the group says. “Among other things, all new hires planned for the airline with the crane will be reassessed, suspended or deferred to a later date." <br/>
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Lufthansa and United Airlines are considering taking over TAP-Air Portugal, a German newspaper reported Wednesday. Sueddeutsche Zeitung, citing unidentified corporate sources, said talks were not close to a conclusion and the process could take some time. The 3 airlines declined to comment. TAP, which was partly privatised in 2015, is 50%-owned by the Portuguese state. Private consortium Atlantic Gateway, led by Brazilian-US airline mogul David Neeleman, has a 45% stake. TAP employees hold the remaining 5%. Lufthansa earlier Wednesday announced a cost savings programme, including a suspension of new recruitment, to counter the business impact of the coronavirus outbreak. <br/>
SAS said Wednesday that its net loss widened for Q1 of fiscal 2020 after booking higher costs and backed its guidance subject to the effects of the coronavirus epidemic. The airline said that for the quarter ended Jan 31 its net loss was SEK861m (US$88.5m) compared with a net loss of SEK469m for Q1 2019. Analysts polled by FactSet had expected a net loss for the period of SEK679.7m, based on 4 analysts’ projections. Revenue was SEK9.71b, compared with SEK9.41b the year before and consensus of SEK9.79b, taken from FactSet and based on 3 analysts’ forecasts. “We can affirm our fiscal year outlook of an earnings before interest and tax margin before items affecting comparability of 3% to 5%, given a marginal impact of COVID-19 that allows us to resume normal operations before the summer season,” the company said. <br/>
SAS has outlined the preconditions for placing an order to renew the mid-sized fleet of single-aisle jets serving its regional network. It says that some 20% of its network uses Airbus A319s and Boeing 737-700s and that using aircraft of the appropriate size is important for both financial and sustainability reasons. “However, these aircraft will need to be replaced in the next few years,” says SAS chief Rickard Gustafson. He says there are “several prerequisites” to be met before a new order can emerge. SAS must ensure that each entity within its operating model is based on a single-type fleet, to minimise complexity and costs, and it also needs to have crew agreements “tailored” to regional operations in Scandinavia, he says. <br/>
Air NZ has reported a net profit after tax of NZ$101m (US$97m) for the 6 months to Dec 31, driven down 33% from the prior period by slower demand, a weak cargo market, one-off costs and civil unrest in Hong Kong. On an underlying basis, pre-tax basis profit was down 8.8% to $198m - the company’s lowest first-half result in 5 years. Air NZ's new CE Greg Foran said he would spend his first 100 days in the job conducting a review of operations. The carrier has been rattled by the coronavirus outbreak, and earlier this week said it expected a financial hit of up to $75m from the health crisis. Air NZ, like Qantas and Virgin Australia, has cut capacity to Asia and on the trans-Tasman routes, and suspended services to Shanghai and Seoul to limit the damage. <br/>
South Africa’s govt has set aside R16.4b (US$1.1b) over the medium term for South African Airways to repay guaranteed debt and to cover debt-service costs. The national treasury has disclosed the figure in its newly-released 2020 budget review. It states that the govt also anticipates that additional funding will be required to cover restructuring costs, following SAA’s placement under business rescue. The govt will need to “assess its appetite” for continued ownership of SA Express, says the review, given its “limited role” in the local aviation market. In an effort to progress towards fiscal sustainability the govt has cut the baseline of budget expenditure by R156.1b over the next 3 years – the equivalent of about 1% of GDP per year – compared with 2019 budget projections. <br/>
China’s airline industry could be showing the first signs of recovery after dramatically shrinking over the past month as the spreading coronavirus led to thousands of flight cancellations. Scheduled airline capacity within China is up more than 25% -- by 1.3m seats -- week-on-week thanks to a rebound in domestic capacity. Air China appears the most optimistic as it has added back 306,000 seats, almost double its capacity from the previous week, analyst John Grant wrote. In total, 7,923 flights will be reintroduced this week, but there could be last minute capacity adjustments and cancellations, according to Grant. Scheduled international capacity continues to decline, however, and China now ranks as only the 28th biggest international aviation market, behind Austria, Grant wrote. <br/>