With a slew of airline results beginning to reveal just how much financial pain the sector suffered in 2020, the wonder is that more carriers have not gone out of business as a result of the pandemic. Despite 12 continuous months of drastically reduced operations, there have been remarkably few bankruptcies.
There are several reasons for this. Direct government financial help or schemes to pay salaries of furloughed staff have certainly helped. Banks and investors have been ready to support well-run carriers through what they see as a temporary crisis. And many airlines had the sense, and fortune, to strengthen their balance sheets in the good times.
State support will stop. Lenders and creditors will lose patience. And many airlines, which may have to ramp up quickly after more than a year in near-hibernation, will have to keep a watchful eye on cash flow, as payments – for salaries, airport fees, fuel, training, and aircraft leases – start pouring out again.
British Airways and Iberia owner IAG is the latest airline group to report eye-watering losses, ending the previous financial year €7.4 billion in the red. With lockdowns and travel bans still in force in most of Europe, the business expects to operate just a fifth of its 2019 capacity in the first quarter of this year.
New Zealand has led the world in containing the virus, and continuing normal life, but the effect of its border shut-down has been calamitous for its national carrier. Reporting a hefty loss for the second half of 2020, Air New Zealand also hints at having to adjust its future widebody fleet by reducing its Boeing 777-300ERs and delaying 787 deliveries.
Scandinavian airline group SAS said this week that it will re-open 180 routes for the season, with its chief executive Rickard Gustafson crediting a “pent-up need to travel” once restrictions are eased.
The grounding of the Boeing 737 Max – the biggest aviation drama of 2019 – was overshadowed by Covid-19 in 2020. However, the narrowbody continues its slow journey back to the skies. Australia this week became the first nation in Asia-Pacific to clear the Max to return to flight. Although no local carrier operates the type, Virgin Australia has 25 on order for delivery from 2023.
At a conference this week, an environmentalist warned Europe’s airlines that, unless they made speedy progress towards a reduction in CO2 emissions, concerned consumers might vote with their pockets and fly less. But that significant progress may be achievable. French aerospace company Safran – along with its partner in the CFM International joint venture, GE Aviation – is targeting the mid-2030s for the launch of a new commercial aircraft engine that would cut fuel burn by more than a fifth compared with contemporary powerplants.
Another route to cutting aviation’s climate impact could be replacing carbon burning with alternative fuel sources. Safran also this week revealed it is studying, with Airbus, the potential of hydrogen to power aircraft. Many technical challenges remain, however, not least that liquid hydrogen must be kept at around -253°C, in tanks up to five times larger than those for kerosene.
Airlines have done a little better in the so-called C-suite, with just under one in seven senior executive jobs held by women, according to a survey last year by FlightGlobal, although there are only a handful of female heads of airlines.
The announcement this week of the appointment of Lynne Embleton to run Aer Lingus is a step in the right direction. An IAG veteran, who previously ran the Irish carrier’s freight business, she is the permanent replacement for Sean Doyle, who took over from Alex Cruz in the top job at British Airways last year.
welcome aboard the new airside
We took our community to the next level with an elevated look, innovative features, and new tools.