SYDNEY (March 17): As Boeing and other US aviation companies angle for billions in assistance, airlines and airport operators globally are suspending dividends, selling airplanes and flying cargo on passenger jets amid plunging demand caused by the pandemic.
Boeing Co confirmed it is in talks with senior White House officials and congressional leaders about short-term assistance for the entire US aviation sector, including suppliers, airlines and airports.
US airlines and cargo carriers have said they are seeking at least US$58 billion in loans and grants along with additional tax changes, while airports have sought US$10 billion. European airlines have also stepped up calls for emergency government aid.
"It's now fair to call this the single biggest shock that global aviation has ever experienced," Qantas Airways Ltd Chief Executive Alan Joyce said in a memo to the airline's 30,000 staff on Tuesday.
Joyce has worked in the industry for more than 30 years, including during the 9/11 attacks, and led Qantas through the global financial crisis in 2008-2009.
The Australian carrier announced plans to cut international capacity by 90% and domestic capacity by 60% until at least the end of May, grounding the equivalent of 150 planes in response to new travel restrictions.
"Our goal is to protect as many jobs as possible and to make sure we remain strong enough to ride this out," Joyce told staff in the memo seen by Reuters.
New Zealand's Auckland International Airport Ltd said it would scrap its interim dividend on top of cost-cutting measures that include a hiring freeze and a halt to discretionary spending.
Air New Zealand Ltd announced on Monday it would cut capacity to Australia by 80% from March 30 to June 30 after both countries said over the weekend that all travellers would need to self-isolate for 14 days after arrival.
Australian airports are set to lose more than A$500 million (US$306.45 million) in take-off and landing fees this year as capacity plunges, the Australian Airports Association said.
Qantas last week told analysts it was looking to raise a few hundred million dollars by refinancing some of its aircraft.
Simon Birmingham, Australia's Minister for Tourism said on Tuesday that neither Qantas nor smaller rival Virgin Australia Holdings Ltd have asked for a bailout but the government had not ruled out providing assistance.
"They believe they are viable and have strong cash positions... but we want to make sure we maintain that confidence in the airlines," Birmingham told reporters.
Hong Kong's Cathay Pacific Airways Ltd said on Monday it had agreed a US$703.8 million deal with lessor BOC Aviation Ltd to sell and lease back six Boeing Co 777-300ER airplanes to raise much-needed cash.
The carrier, one of the earliest and hardest hit by the outbreak due to its proximity to mainland China, said its full-service airlines, Cathay Pacific and Cathay Dragon, had made an unaudited loss of HK$2 billion (US$257.5 million) in the month of February alone.
Cathay Pacific will cut up to 90% of its capacity in April, up from an earlier plan of 65% announced alongside its annual results last week.
"If we do not see a relaxation of travel restrictions in the near future, we expect the same arrangement will have to continue into May," Cathay Pacific Group Chief Customer and Commercial Officer Ronald Lam said in a statement.
"Our advance passenger bookings show no clear signs of recovery at this stage, and the gap in bookings compared to 2019 continues to widen," he said.
CARGO BRIGHT SPOT
The only bright spot for the airline is the cargo market, where rates are surging as a result of the loss of capacity in the belly of passenger aircraft as those flights are cut.
Cathay Pacific and Korean Air Lines Co Ltd are both flying some planes without passengers to transport cargo due to high demand.
Qantas said it would use some domestic passenger aircraft for freight-only flights to replace lost capacity from regular scheduled services and its fleet of freighters would continue to be fully utilised.
Freight Investor Services on Monday reported a surge in prices across all Asia-Pacific routes. "2020 is fast becoming year of the freighter," it told clients.
Singapore Airlines Ltd reported a higher cargo load factor in February than the prior year, but said on the passenger side, market conditions had continued to deteriorate in March.
(US$1 = 7.7659 Hong Kong dollars)
(US$1 = 1.6316 Australian dollars)