Coronavirus Hits Airline Capacity

MATTHEW FEARGRIEVE explains how the coronavirus is already impacting airline capacity, just days after its arrival in Europe.

IAG and easyJet have each reported a substantial hit to their capacity, within mere days after the arrival of coronavirus into mainland Europe.

Capacity impact IAG, parent company of British Airways and Iberia, has indicated that it expects capacity to be hit up to 2% in terms of available seat kilometres. The group has suspended all of its flights to mainland China, and significantly reduced flights to Italy for the rest of February. EasyJet, key competitor of IAG in the European short-haul sector, has reported a “significant softening of demand” from northern Italy and other European countries. It is cancelling some flights out of Italy, but has said that it is “too early” to quantify the impact on its results. EasyJet’s hub is in Geneva (GVA), where the internationally-famous car show was cancelled this week because of the virus.

Stock market impact Airlines have suffered severe disruption from the spread of the disease, because of government travel restrictions and the public’s unwillingness to travel. Both touristic and business travel have been severely impacted, and this within one or two days of first reports of the virus’ outbreak in mainland Europe. The drop-off in capacity has had a knock-on impact on operators’ market valuations. Shares in IAG and easyJet have tumbled by 25% since this time last month (January 2020): a massive drop in such a short period. In an attempt to offset some of the economic impact of the virus, IAG has said that British Airways had redeployed some of the surplus long-haul capacity from the Asian hubs into operating extra services to destinations with stronger demand: India, South Africa and the US.

EasyJet hub at GVA

Jobs impact IAG and Iberia have announced measures ranging from hiring freezes to aircraft redeployment as they seek to cushion the blow.

EasyJet said it was looking to offset the effects by freezing recruitment, cutting administrative costs, offering unpaid leave to employees and redeploying aircraft.

European short-haul impact Dutch carrier KLM, part of the Air France-KLM group, is delaying scheduled infrastructural investments, scaling-back travel expenditure and slashing recruitment. German airline group Lufthansa have announced plans for a hiring freeze, offering unpaid leave to employees and more part-time work.

Check back with this blog to keep in touch with latest airline and aviation developments as we monitor the threat of coronavirus to travel in and out of Europe: https://medium.com/@matthewfeargrieve

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© 2020 by Matthew Feargrieve. 

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