Airlines will burn through as much as $61b worldwide in Q2, industry group IATA predicted, warning that carriers could run out of cash as travel hits a low point in the coronavirus crisis. Airline revenue is set to crater by 68% during the period, the IATA, which represents some 290 carriers, said Tuesday. It urged governments to relax rules that could force the industry to fork out cash refunds for canceled trips totaling as much as $35b. “Airlines cannot cut costs fast enough to stay ahead of the impact of this crisis,” Director General Alexandre de Juniac said. “Without relief, the industry’s cash position could deteriorate by $61b in the second quarter.” In all, IATA expects the airline industry to post a net loss of as much as $39b in Q2. The projection is based on its forecast last week that airlines worldwide could lose $252b in revenue this year. Airlines are scrambling to line up bailouts after grounding entire fleets in some cases to minimize costs and preserve cash while the coronavirus pandemic makes travel impossible. Most carriers will go bankrupt by the end of May if they can’t find support, the Sydney-based CAPA Centre for Aviation said this month.<br/>
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The global airline industry is operating with less than half the capacity it had in mid-January after slashing another 20m seats from scheduled services last week, according to OAG Aviation Worldwide. The single biggest weekly percentage drop ever recorded by OAG on a global level came as the US and India accelerated their cuts by 4.4m seats and 3.5m seats, respectively, equating to 21% and 70% reductions in capacity. Carriers worldwide are grounding jets as demand slumps because of the coronavirus, which has infected over 785,000 people globally and killed 37,600. “It took the airline industry some eight weeks for global capacity to fall from 106m to 90m,” OAG senior analyst John Grant wrote in a weekly blog. “It took a further two weeks for that to fall to 49m.” The number could drop closer to 40m given deeper cuts coming in major markets, though that level could mark a turning point where signs of recovery might emerge, Grant said.<br/>
For 15 years, the US government has been pressing airlines to prepare for a possible pandemic by collecting passengers’ contact information so that public-health authorities could track down people exposed to a contagious virus. The airlines have repeatedly refused, even this month as the coronavirus proliferated across the US. Now the country is paying a price. As the coronavirus spread into the US this year, the federal government was not able to get in touch with or monitor airline passengers who might have been exposed to the disease or were carrying it into new communities. Officials at the CDC have spent years warning airlines that they have complete contact information for only about half of their passengers, those who book flights directly through the airlines as opposed to third-party ticketing websites like Travelocity. During the Ebola outbreak in 2014, for example, the scarcity of contact information handicapped the CDC as it tried to reach Americans who might have been exposed to the virus, according to three government officials. But airline executives and lobbyists have protested that it would be expensive and time-consuming for them to start collecting basic information like email addresses and phone numbers for all passengers. The lobbying has worked. Over the past 15 years, the industry has beaten back proposed rules and legislation that would have compelled airlines to collect contact information before passengers board flights. Story has more background.<br/>
Airlines will be required to propose up-front how the federal government could retain financial stakes in their companies in exchange for a share of $61b in coronavirus aid designated for the industry, according to guidelines released by the Treasury Department. The assistance is aimed at helping US carriers stay afloat and continue to pay workers, as companies struggle with a near 90% drop in passenger traffic because of the widening pandemic. Instructions for applying for aid were posted by the Treasury late Monday, just days after President Donald Trump signed the $2.2t stimulus package into law. The legislation negotiated by Treasury Secretary Steven Mnuchin with top US lawmakers includes as much as $32b in payments for airlines to keep employees on their payrolls. Under the guidelines, recipients must refrain from making any furloughs or layoffs before Sept. 30 of this year. The measure also offers $29b in loans to carriers to help fund their operations. The guidelines say applicants should submit details of existing debt and credit lines with outstanding balances, scheduled debt service for three years and employment levels. “Each borrower will be required to identify the financial instruments it proposes to issue to the Treasury Department,” the agency says in preliminary guidelines.<br/>
US passenger airlines would be required to maintain minimum service levels to American cities in exchange for taxpayer financial support, but could dramatically cut their flights under a plan proposed by the DoT Tuesday. Airlines would be permitted to consolidate flights to a single airport in cities with more than one under the proposal. In addition, airlines that fly to one city from multiple hubs would be allowed to fly to that city from a single hub under the plan. The document outlines how the DoT would approach the tricky task of ensuring airlines continue flying to American cities in exchange for a share of $50b in taxpayer aid even as they slash flights to cope with plummeting demand. The department has asked for public comments by April 2. While airlines will have significant leeway to continue operations if they choose, it appears to give wide latitude to dramatic cuts in service. Carriers wouldn’t be able to coordinate in a way that would run afoul of antitrust laws, however. In one example, the DOT said a carrier flying to a city 49 times a week -- seven times a day, seven days a week -- could fulfill its requirement with just five flights per week. That would be a 90% drop in service, which is close to the decrease in passenger traffic.<br/>
Airlines in the Philippines are asking for credit relief and a longer reprieve from fees, saying government intervention is needed as the industry faces an “existential threat.” Philippine Airlines, Cebu Air, the local unit of AirAsia Group and other members of the nation’s Air Carriers Association or ACAP halted all passenger operations for a month until April 14 on the government’s lockdown order. This translates to 30,000 cancelled flights affecting 5m passengers. “Given these extraordinary times where the survival of the domestic airline industry is at stake, ACAP member airlines urgently appeal for timely government intervention,” it said in a letter to government officials including Finance Secretary Carlos Dominguez. Airlines have “enormous fixed costs” for their aircraft and equipment and have “no revenue flow seen for the next several weeks or even months,” it said. Airlines are seeking a credit guarantee from the government to back their loans to remove banks’ aversion to the risks of the industry, an emergency credit line for 6 months and a longer-term facility to ensure recovery. Banks have tightened credit and cut off access to undrawn lines even without defaults, the group said.<br/>
France’s tax deferrals for airlines won EU approval, the first state subsidies for carriers to be cleared under looser EU rules to help companies survive the coronavirus downturn. France can now defer payments of some aeronautical taxes due between March and December this year, allowing payments to be made after Jan. 1, 2021 over a period of up to 24 months, the EC said Tuesday. It didn’t say how much the deferred taxes would be. The EU said it could authorize the programme because it compensates for financial harm directly linked to the virus outbreak and “does not exceed what is necessary to make good the damage.”<br/>
Paris’s Orly airport will shut down on Tuesday in light of the collapse in air traffic amid the coronavirus crisis. France’s biggest airport for domestic flights, Orly will be closed until further notice at midnight – after hosting just ten flights and around 1000 passengers on Tuesday, as the number of people taking flights has plunged. Under normal circumstances, Orly hosts 600 flights and 90,000 passengers. After its closure, the four companies still operating there (compared to more than 100 before the coronavirus pandemic) will move to France’s biggest airport Charles de Gaulle. Charles de Gaulle is also reeling from the coronavirus crisis, with around 10,000 passengers a day compared to 200,000 before the pandemic struck. The situation for French airlines is “simply catastrophic”, France’s National Commercial Aviation Federation warned on Tuesday, adding that the government’s proposals to help out distressed airlines are “necessary but not sufficient”.<br/>