Coronavirus could speed up air transport mergers

Coronavirus could speed up air transport mergers

The spread of the novel Coronavirus (Covid-19) could affect weaker airlines and speed up mergers in the air transport sector, Air France-KLM Director General Benjamin Smith, president of the A4E association of European Airlines, said on Tuesday.

Speaking at the annual conference of the association, which he currently heads as rotating president, Smith noted that there were “quite a few weak carriers” around the world. “I believe this will accelerate the consolidation,” he said, adding that “it is clear that we have yet to see the full effect of Covid-19 on the air transport sector.”

Stressing that the airlines were doing their best to contain the Covid-19 threat, Smith said any move to limit or temporarily lift taxes would be a gesture greatly appreciated by the industry.

A4E represents 16 European carriers, including Air France-KLM, EasyJet, IAG, Lufthansa and Ryanair.

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Since late January, dozens of airlines have stopped flying to China, the epicentre of the Covid-19 epidemic, and since last week, many have also said they are scaling down or cancelling flights to Italy, especially the big cities in the north of the country, which has seen the biggest outbreak of the virus in Europe.

Many European carriers have already announced cost-cutting measures to offset the financial impact of the reduced air traffic, such as freezing jobs, salaries and promotions, reducing administrative spending, sending staff on unpaid leave or non-compulsory training and temporary layoffs.

The International Air Transport Association (IATA) has calculated that airlines stand to close to 30 billion dollars this year due to the impact of the Covid-19 epidemic on air travel. It fears that this year will see the “first global reduction” in bookings since 2008-2009.

IATA Director General Alexandre de Juniac warned in late February that some companies were in danger due to the considerable drop in reservations since the epidemic broke out.

Until now, the deadly SARS (Severe Acute Respiratory Syndrome) epidemic in 2002-2003 has been the outbreak with the strongest impact on air traffic volumes, according to IATA.

The Brussels Times

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