Coronavirus crisis shakes airlines and aircraft manufacturers
DUBLIN / OSLO (Reuters) – The grounding of virtually all flights of Europe’s largest low-cost airline and European air traffic data on Tuesday underscored the enormity of the shock to aviation industries from the coronavirus which now empties the skies of the whole world.
Ryanair RYA.I told customers it had virtually amortized over the next two months, while European air traffic management body Eurocontrol said on Monday volumes were down more than 75% from the same day last year .
“We do not plan to operate flights during the months of April and May at the moment,” Ryanair boss Michael O’Leary said in a message to customers.
The coronavirus pandemic also takes a heavy toll on aerospace manufacturing, with Boeing TO PROHIBIT saying it would stop production of most wide-body aircraft and its European rival Airbus AIR.PA resuming only partial production on Monday after a four-day shutdown as suppliers cut jobs.
With flights stranded due to a collapse in demand over contagion fears and reinforced by air travel restrictions, airlines, aircraft manufacturers and their suppliers are under pressure to save money to overcome the cash shortage .
Rating agency Moody’s slashed its outlook for the aerospace and defense industry from stable to negative and warned that damaged balance sheets of most airlines would hurt demand for new aircraft even after the start of the market recovery.
Global passenger capacity fell 35% last week, the worst since the start of the crisis, according to data from the OAG company, which said larger cuts were likely in the coming weeks.
More than 2,500 planes have been grounded this year, according to Cirium data, with taxiways, maintenance hangars and even runways at major airports turning into giant parking lots.
Asian jet fuel refining margins – the difference in value between crude crude and refined product – turned negative Tuesday for the first time in more than a decade, suggesting there was no recovery time in sight for the aeronautical industry.
Major US carriers have made plans for a possible shutdown of passenger air traffic to the United States, four officials said on condition of anonymity, although no plan has been put in place and US President Donald Trump said on Monday he had no plans to ban domestic travel.
STOPS
Boeing is facing the closure of key assembly lines for the second time in a year after being forced to stop production of its 737 MAX aircraft on the ground in January.
Production of long-haul aircraft such as the 787 and 777 in Washington state will halt for 14 days from Wednesday, plunging the world’s largest industrial building – the Boeing widebody plant in Everett north of Seattle – in silence for the first time in memory.
As the crisis deepens, U.S. Democratic lawmakers have proposed that some of the roughly $ 58 billion in proposed emergency aviation loans be turned into cash grants to cover salary costs.
Embraer EMBR3.SA, meanwhile, will put all non-essential workers on leave in Brazil, where it manufactures regional jets, the world’s third-largest aircraft manufacturer said on Sunday.
Bombardier joins the list of temporary closures BBDb.TO, which suspends Canadian production of business jets, said a source familiar with the matter.
Airbus called for strong government support for airlines and suppliers, but did not ask for direct help from the company, which has secured an additional 15 billion euros ($ 16.14 billion) in lines commercial credit.
However, the aircraft maker has privately told officials it may need help from the European government if the crisis lasts for several months, Reuters reported last week.
Norwegian Air in trouble NWC.OL, which grounded most of its planes and temporarily laid off 90% of its staff, said on Tuesday it had secured an initial injection of NKr 300 million ($ 26.6 million) from the government.
Industry executives said a major source of alarm was the global chain of thousands of suppliers who would be severely affected by sudden shutdowns and starts in aircraft production. Many have already suffered the consequences of the downtime of the 737 MAX which lasted all year.
The International Association of Machinists and Aerospace Workers said on Monday that more than 500,000 aerospace production jobs in the United States could be at risk and called for a back-up plan including provisions to protect against layoffs .
Additional reporting by Jamie Freed in Sydney, Allison Lampert in Montreal, Tim Hepher in Paris, David Shepardson in Washington, Tracy Rucinski in Chicago, Ankit Ajmera in Bengaluru, Marcelo Rochabrun in Sao Paolo and Eric M Johnson in Seattle; Writing by Tim Hepher and Keith Weir; Editing by Gerry Doyle and David Goodman