The holding company of British Airways (BA) warned on Friday that the growing impact of the new coronavirus outbreak on international air travel could force some troubled airlines out of business. The global impact of the virus is likely to be severe enough to push some airlines over the edge, Willie Walsh, the chief executive of International Consolidated Airline Group (IAG), told the press.
“We are well able to adjust to this situation because our business is in great shape,” Walsh said as he presented IAG’s annual results. “It’s the failing airlines who will be most affected by this,” he said, adding that he expected more market consolidation as a result.
IAG, which also owns Iberia and Aer Lingus, said its weaker demand because of the coronavirus outbreak was driven mainly by fewer passengers on Asian and European routes.
BA has suspended flights to China and reduced its services to Hong Kong.
Alitalia, which has been under Italian government administration since May 2017 and is based in the country facing Europe’s worst coronavirus crisis, is one of the airlines in trouble.
“I am certainly and logically worried, Italian Economic Development Minister Stefano Patuanelli told reporters, confirming that Alitalia had been hit with many cancellations.
“There is certainly more concern for the solution of an issue that was complex already and has certainly not been helped by the coronavirus,’’ he added.
In January, Alitalia received a 400-million-euro (440-million-dollar) state loan to keep it going until May 31.
It is unclear what will happen to it after that deadline.
The Philippines’ flag carrier Philippine Airlines (PAL) has also announced that it has laid off 300 workers in a bid to manage losses due to the COVID-19 outbreak.
“The streamlining will strengthen the company in the wake of losses sustained in 2019, aggravated by the ongoing travel restrictions and flight suspensions to areas affected by COVID-19,’’ the airline said in a statement.
British carrier easyJet said on Friday that it is also cancelling flights and introducing wider cost-cutting measures in response to the spread of the coronavirus.
Connections to and from northern Italy, where hundreds of infections have been reported, are particularly affected, easyJet said.
It said company-wide hiring and promotions are being postponed and second-tier projects and expenditure are being put off, while employees will be offered unpaid leave.
Brussels Airlines also announced cuts in flights to northern Italy by 30 per cent for the next two weeks due to a decline in demand following the coronavirus outbreak.
The decision affects flights to Milan, Rome, Venice and Bologna, the airline said in a statement.
To limit the impact, it is looking into economic measures, such as temporary technical unemployment and extending a hiring freeze to the entire company, said the Belgian national carrier, which is almost exclusively owned by Germany’s Lufthansa.
Felix Dappah with agency report