Air travel could beat pre-pandemic level by 2023, says air transport body

Global air passenger numbers could rebound from the coronavirus pandemic to top 2019 levels by 2023, the International Air Transport Association predicted on Wednesday.

With much of the world still suffering from the spread of the virus and travel restrictions, travelers are expected to number just 52 percent of the pre-crisis level this year, IATA forecast, rising to 88 percent next year.

But after surging past pre-pandemic numbers in 2023, the end of the decade could see annual levels of 5.6 billion air passengers, the industry body said.

At 1.8 billion, the number for 2020 was around the same as in 2003, according to the International Civil Aviation Organization (ICAO).

"We are in the deepest and gravest crisis in our history. But the rapidly growing vaccinated population and advancements in testing will return the freedom to fly in the months ahead," said IATA director general Willie Walsh.

"When that happens, people are going to want to travel."

Walsh pressed governments to move faster on measures to help air travel reopen.

In total the passenger shortfall from the coronavirus crisis will have cost the industry two to three years of growth over the decade, IATA added.

The industry body expects average annual growth in passenger numbers of 3.2 percent between 2019 and 2039.

Agence France-Presse

Airlines headed for $84-B net loss in 2020: IATA

PARIS - International airlines are in line to make a combined net loss of more than $84 billion this year in the wake of the coronavirus crisis which has decimated air travel, the International Air Transport Association said Tuesday.

"After $84 billion net losses this year we forecast supplementary losses of $15 billion in 2021," the IATA said at a new conference, revealing the extent to which its 290 member carriers have been affected by the virus and the ensuing global lockdown designed to limit its spread.

"The losses this year will be the biggest in aviation history, over $84 billion in 2020 and nearly $16 billion in 2021," said IATA director general Alexandre de Juniac.

"By comparison, airlines lost $31 billion with the Global Financial Crisis and oil price spike in 2008 and 2009. There is no comparison for the dimension of this crisis."

De Juniac said IATA research "shows that people will return to flying as soon as borders open" and carriers had to be prepared for an orderly resumption once demand returns in line with health guidelines.

"The outlook is challenging to say the least. But aviation is a resilient industry," De Juniac added. "With a globally harmonized and mutually recognized approach to the re-start measures, we can rebuild the confidence of travelers and kick-start the recovery in aviation and more broadly.

He added the sector hoped that a range of safety measures including more effective mass testing would "give governments the confidence to re-open borders without quarantine measures" as "if quarantine is introduced economies are effectively kept in lockdown for the purposes of travel."

But De Juniac warned of a growing debt burden as despite government relief measures that had grown by $120 billion to $550 billion -- equivalent to some 92 percent of expected 2021 revenues.

The IATA warned in April that airlines faced an "apocalypse" without state aid and forecast that revenues would fall by some 55 percent amid the sharpest falloff in passenger demand since the 9/11 attacks in the United States in 2001. 

De Juniac said he hopes to see a more orderly resumption of service than on that occasion "when everybody essentially did their own thing and we have spent 20 years sorting out the differences."

Agence France-Presse

Airlines double estimated hit from coronavirus to $250 billion

LONDON/PARIS - Global airlines urged governments on Tuesday to speed up bailouts to rescue the air transport industry as they doubled their estimate of 2020 revenue losses from the coronavirus crisis to more than $250 billion.

"We clearly need massive action very quickly and urgently," Alexandre de Juniac, director general of the International Air Transport Association (IATA), told reporters on a conference call.

Airlines worldwide have grounded the majority of their fleets to preserve cash amid mounting travel restrictions designed to slow the spread of the epidemic.

The result has been huge pressure on the liquidity of airlines, up to half of which face possible bankruptcy in coming weeks if nothing is done to support the industry, IATA said.

"We have a liquidity crisis coming at full speed - no revenues and costs still on our (books), so we desperately need some cash," de Juniac said.

His warning came after Ryanair, Europe's largest budget airline, told customers it had effectively written off the next two months, while European air traffic management body Eurocontrol said volumes on Monday were down more than 75% from the same day last year.

De Juniac, a former Air France-KLM boss, brushed aside a growing debate about whether relief for airlines should come with strings attached, such as new commitments on climate goals.

But he said the airline industry would continue efforts already under way to curb emissions once the crisis recedes.

"We are in an emergency situation. It's no time for requirements. I'm sorry for that. We need a full speed massive rescue package now," de Juniac said.

With airlines at the front of bailout queues, green advocates fear climate action may lose momentum.

In the United States, Republicans have opposed providing bailouts to passenger and cargo carriers, proposing help in the form of $58 billion in loans and saying the government could demand stock, options or other equity in return.

IATA, which groups some 280 airlines including most of the world's largest network carriers, said signs of a deep recession could delay a recovery in airline travel - in contrast with the fast rebound seen after previous epidemics.

That could mean "more of a U-shaped than V-shaped recovery," Chief Economist Brian Pearce said, referring in the latter instance to the shape of the graph of air travel indicators seen after the SARS outbreak in 2003.

IATA says 2.7 million jobs are supported by the airline industry, with tens of thousands already being furloughed.

"There are a very large number of airlines that are more or less breaking even and ... facing losses. Those airlines are very fragile," Pearce said. (Reporting by Sarah Young, Laurence Frost; writing by Costas Pitas, Tim Hepher; Editing by Paul Sandle, Mark Potter)

source: news.abs-cbn.com

Airline stocks nosedive as US travel ban hits EU travel sector

PARIS - Europe's travel sector reacted with dismay Thursday to a US-imposed trans-Atlantic travel ban that sent the share price of major airlines into free fall.

The International Air Transport Association (IATA) warned that airlines needed "emergency measures" after President Donald Trump imposed the ban to stem the spread of coronavirus.

Air France stock lost almost 18 percent at the Paris opening bell, before recovering to trade five percent lower in mid-afternoon exchanges.

Lufthansa shares, quoted in Frankfurt, were off by almost nine percent.

The US is not banning passengers from Britain, but shares in British Airways' parent company IAG still slumped more than 10 percent, while EasyJet lost over nine percent.

'KICKNG A MAN'

"Trump is simply kicking a man when he's down," according to an EU diplomat in Brussels who called the ban "erratic."

Trump said the US would not allow travelers from the EU's Schengen border-free zone into the country for 30 days, calling the move an "aggressive" effort to contain the spread of COVID-19, the disease caused by the new coronavirus.

The decision does not affect visitors from Britain and Ireland, or US citizens returning from Europe.

Key US companies were hit even harder than their European counterparts, with the sector suffering its worst downturn since the September 11, 2001 attacks.

Boeing, already reeling from problems with the 737 MAX jet, lost 14 percent by the time trading was suspended Thursday, which added to its 18 percent drop a day earlier.

Shares in United Airlines shed nearly 15 percent on Wall Street before trading was suspended after the S&P 500 index lost seven percent.

Global markets have lost a combined $11.3 trillion in value since a peak on February 19, and $4.5 trillion this week alone.

American Airlines and Delta plunged by double-digit percentages.

'HAMMER BLOW'

"The travel ban is another hammer blow for the airlines" that "were getting crucified by the reduction in tourism and business travel in the last month," said economist Charlie Robertson at Renaissance Capital in London.

Peter Elbers, chief executive of the Dutch carrier KLM, told public television NOS: "It is undeniable that the consequences are extremely heavy."

Fears that other countries might follow the US example "are paralyzing the market," said Timo Emden of Emden Research.

French Finance Minister Bruno Le Maire told a news conference: "Trump's announcement is bad news for all airlines."

Le Maire "regretted" a decision "which will have a very strong impact on tourism and a very strong impact on companies in general."

INEFFECTIVE?

European leaders argue that travel restrictions are ineffective because the virus has now spread almost worldwide, and lament that Trump had not consulted them first.

After speaking with Air France chief executive Benjamin Smith, Le Maire said they would look for ways to "ensure Air France comes through this difficult moment... in the best possible conditions."

Airlines are especially vulnerable to a sharp drop in tourism and business travel.

Italy, the worst hit country in Europe so far, has quarantined its entire population of 60 million, the US has advised citizens against all foreign travel, and tourist magnets like Paris are bracing for hard times.

Service sector businesses have been pummelled and industrial supply lines are also under pressure, further dampening economic activity.

The ban "will create enormous cash-flow pressures for airlines," IATA head Alexandre de Juniac said. "Airlines will need emergency measures to get through this crisis."

On March 5, IATA estimated that the crisis could wipe out some $113 billion in airline industry, but the organization stressed that that estimate did not include the severe measures the US and other governments, including Israel, Kuwait and Spain, have since put in place.

Amsterdam-Schiphol Airport, one of Europe's biggest hubs, reported Thursday a 20-percent drop in passengers in the first week in March and prepared to work at reduced capacity.

"If all flights to and from the United States were canceled, this percentage would rise to 30 percent," the airport statement said.

Agence France-Presse

Trump victory shocks global firms reliant on open trade

HONG KONG/SHANGHAI - Donald Trump's victory in the U.S. election sent shockwaves through industries that rely on open trade, from airlines to cars and IT outsourcing, although shares of some companies rebounded in afternoon trading.

Throughout his presidential campaign, Trump has vowed to revive the U.S. economy by slashing taxes, preventing companies from making products overseas, renegotiating trade accords and imposing tariffs on imports from countries like China.

"This is part of a much broader problem that we've seen in the world, in which countries are turning inwards and reacting against globalization and open borders," said aerospace analyst Richard Aboulafia, vice president of Virginia-based Teal Group.

In Asia, shares in airlines with significant exposure to global trade, such as cargo giant Korean Airlines (003490.KS), fell as much as 5 percent as Trump closed in on the White House. Air China's (0753.HK) Hong Kong-listed shares tumbled to their lowest level since June, and automakers like Toyota (7203.T), for whom the United States is a top market, fell 6.5 percent.

Many executives remain unsure what Trump's protectionist rhetoric will mean in practice.

Shares of the three largest U.S. airlines - American (AAL.O), Delta (DAL.N) and United (UAL.N) - rose more than 1 percent in afternoon trade.

"We would think they would be down today, but I’m thinking that it’s a play on more economic growth" from new policies, said Jim Corridore, analyst at CFRA Research. Protectionism "would be a longer term (outcome) that would hang over the industry but it's going to take a long time to get to that point."

Investors at a major Airline Economics finance gathering in Hong Kong last week expressed alarm at a surge in unconventional politics from Britain to Washington and the Philippines - a trend that many expect will leave its mark regardless of how it translates into real policies.

That comes as an industry that depends entirely on the flow of goods and people faces doubts over its own economic cycle.

POPULIST POLITICIANS
"We have seen a large section of the population that has not benefited in the past decade and we are seeing support for populist politicians with simple answers," Brian Pearce, chief economist of the International Air Transport Association told Reuters ahead of the election.

"Unfortunately, a lot of those answers are for protectionist policy solutions and air transport flourishes with open borders, so that is quite a dangerous development."

International trips make up 64 percent of global air traffic, according to IATA.

Executives at U.S. auto companies said they were concerned about Trump’s stance on free trade, especially his tough talk on the North American Free Trade Agreement. They all have production sites in Mexico.

But industry executives and analysts said aviation had a history of riding out economic and political shocks. On average, plane makers insist, air traffic doubles every 15 years.

"If there are brakes on trade, there could be some impact on international travel. But you have seen more or less 5 percent annual growth in traffic for decades," said veteran U.S. aerospace consultant Jerrold Lundquist, managing director of The Lundquist Group.

And the defense industry could benefit, as a Trump administration spends more on the military and encourages even allies to shoulder more of the security cost. Defence stocks, including listed land mine manufacturer Ishikawa Seisaku (6208.T), jumped.

REALITY BITES?

After a bitter election campaign, trade experts said it remained unclear how Trump's statements in favor of protectionist trade measures and tough immigration controls would translate into policy.

"The honest answer is that no one knows; even Trump himself doesn't know," said Bertrand Grabowski, a managing director at Germany's DVB Bank which specializes in financing trade.

"He campaigned not on ideas but on anger and frustration."

Tighter rules could impact Indian IT services firms supporting companies in the United States. Shares in companies like Infosys (INFY.NS) and Tata Consultancy Services (TCS.NS) were sharply down as Trump closed in on the White House.

ALSO IN AEROSPACE & DEFENSE

But Narayana Murthy, co-founder of Infosys and a key figure in India's outsourcing industry, said realism would prevail.

"They may fine tune it here and there, but let’s remember that he is the president of 300 million U.S. people and I’m sure he’ll do what is in the best interest of America. And what is in the best interest of America is for its corporations to succeed, for its corporations to create more jobs," he said.

For now, acquisitions at least will cool off, especially Chinese purchases of U.S. companies, as a Trump presidency pushes up regulatory scrutiny.

"If he now requires a certain percentage of manufacturing parts to be made in America, it's going to be protectionist... and that increases the risk and cost of doing business," said Stephanie Yuen, an M&A lawyer in Singapore.

"He's not just building a Mexican wall, he builds an economic wall around America."

And for key sectors, competition will heat up. Europe's Airbus and U.S. rival Boeing (BA.N) in the $100 billion annual jet market could become even fiercer with more government lobbying support, adding stridency to efforts to compete for jobs.

Trump's victory may also raise questions over plans to sell over 200 Western airplanes to Iran under a deal to lift sanctions that the president-elect has severely criticized.

Airbus (AIR.PA) is seen close to finalizing a tranche of 17 jets, but needs U.S. approval to complete plans for another 80 or so because the jets are built with many U.S. parts.

Boeing has U.S. approval to finalize a deal for some 100 jets but Middle East sources say progress has been slow so far.

"It further reduces the prospect of the deals going ahead," Aboulafia said.

(Additional reporting by Adam Jourdan in SHANGHAI, Norihiko Shirouzu in TOKYO, Euan Rocha in MUMBAI, Anshuman Daga in SINGAPORE, and Jeffrey Dastin in NEW YORK; Editing by Bill Tarrant and Bill Trott)

source: www.abs-cbnnews.com

US regulator tells air passengers not to turn on Galaxy Note 7 phones

WASHINGTON/SYDNEY - Airline passengers should not turn on or charge their Samsung Electronics Co. Ltd. Galaxy Note 7 smartphones during flights or stow them in checked baggage due to concerns over the phone's fire-prone batteries, the U.S. Federal Aviation Administration said.

The FAA said on Thursday it "strongly advises" passengers to follow its guidance "in light of recent incidents and concerns raised by Samsung about its Galaxy Note 7 devices."

The South Korean manufacturer announced last week it was recalling all Galaxy Note 7 smartphones equipped with batteries it has found to be prone to catch fire.

On Friday, Singapore Airlines Ltd. became the latest carrier to ban use of the phones during flights, following an identical move by three Australian airlines.

"The powering up and charging of Samsung Galaxy Note 7 mobile phones is prohibited on all our flights," Singapore Airlines said in a statement.

On Thursday, Australia's Qantas Airways Ltd., Jetstar Airways and Virgin Australia Holdings Ltd. announced they had banned passengers from using or charging the phones in response to the recall.

Although customers will still be able to bring the phones on flights, the bans extend to the phones being plugged into flight entertainment systems where USB ports are available.

Australia's aviation regulator said on Friday it was working with airlines and foreign aviation safety regulators "to ensure that recalled devices are treated and carried safely."

Delta Air Lines Inc, the No. 2 U.S. airline by passenger traffic, said it is still studying the issue.

"Delta is in constant contact with the FAA and other bodies in its run of business as a global airline. We will comply with any directive and are studying this matter. Safety and security is always Delta's top priority," spokesman Morgan Durrant said in a statement.

United Continental Holdings Inc and American Airlines Group Inc did not immediately respond to requests for comment on the FAA advisory.

Vaughn Jennings, a spokesman for Washington-based trade group Airlines for America, said the organization was "closely monitoring any developments as this issue evolves."

"Each individual carrier makes determinations, in compliance with FAA safety rules and regulations, as to what is permitted to be carried on board and in the cargo hold," Jennings said in a statement.

The FAA statement does not order U.S. airlines to take action.

The International Air Transportation Association said airlines have conducted risk assessments and noted that other phones have been recalled for battery issues.

"Although Samsung is the most recent company advising of faulty devices, others have issued similar recalls and warnings regarding lithium batteries in laptops over the last 12 months, so the industry is familiar with and equipped to manage such situations," the IATA said.

source: www.abs-cbnnews.com