Page 35 - World Airnews Magazine October Edition 2020

NEWS

WHAT COMES

AFTER LIFELINES

By Graham Dunn

airlines will also require further funding retain minimal levels of services during this
solutions as the northern hemisphere period - it averted the wholesale job cuts a

ews that Virgin Atlantic has winter draws on. And the question of smaller US airline market would require.

Nsecured court approval for its how much funding is enough hinges on But the flip side of having acted quickly is

planned recapitalisation marks the latest how quickly and to what extent air travel that US policymakers are already facing up

in series of rescue deals that have been demand recovers. to what happens next. Because if the hope

struck to ensure airlines around the world But these are questions which airlines was that by the time the CARES act expires

can stay airborne. neither possess a clear answer, nor have at the end of September there would be

Some have simply secured protection many tools to influence. some semblance of a recovery in air travel,

from creditors while they re-organise. Oth- Normal route-development practic- that is far from evident.
ers have secured fresh capital – be it from es around revenue management, price Data from trade body Airlines for

private investors or the state – and almost stimulation or identifying growth markets America shows that for the week ending

all have brokered some level of cost-savings are trumped by travel restrictions - which 30 August, US carrier passenger volumes
from staff or from aircraft cuts or deferrals. can make or break a market at a stroke. remain 70% down on the same week last

Many have tapped all these. And these restrictions are guided by the year. International traffic is down 86%.

But the stuttering opening up of passenger evolution of the virus and the states’ ability Little wonder then that the talk of what

markets – in which an increasing number of to contain it, rather than network planners. comes after the rescue in the US centres

travel restrictions have clipped the hoped- In essence airlines and their backers have around a possible sequel to the first act.

for pace of a recovery in international air so far bought themselves breathing space. A so-called CARES-2 package is being dis-
travel – begs the question for airlines of Some have secured more than others. But cussed in Washington - against a backdrop

what comes after the initial rescue. all need to see a confident reopening of that US passenger airlines are preparing

In the case of Norwegian, which carried air markets before they can start to feel to shed up to 100,000 jobs in the coming
out its own lifeline restructuring in May comfortable they have enough to come out weeks unless there is an extension to the

to unlock critical state aid, the answer is a on the other side of the crisis. financial relief that kept workers employed

quest for more funding. So far, that confidence is in short supply. until now.

“We have secured cash through the rest Few countries acted more quickly to pro- And, in the absence of a transformative

of this year,” said chief executive Jacob vide a financial lifeline to its airlines than medical breakthrough, expect many more
Schram. the USA. Before the end of March the US airlines, investors and governments to
“But” he said, ‘’I have been very clear; we Congress had passed the CARES act, which face the same challenge before this crisis

will need more if Covid continues – which provided airlines with up to (US) $58 billion is over. Q

it has done. We will need more financing to in grants and loans.

come through the winter.” While the financial lifeline came with its Article courtesy:

It remains to be seen how many other own caveats - notably requiring airlines to https://www.flightglobal.com/
World Airnews | October 2020
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