Grim Summer Turns to Long Cold Winter for European Airlines as Passenger Traffic Dives Again

A struggle for basic survival and for new money to burn. By Nick Corbishley, for WOLF STREET: The summer of 2020 may have been unexpectedly grim for Europe’s airlines, but winter could be worse. The slow recovery in passenger air traffic that began in early June is already over. At the high point of that recovery, in late August, air traffic was still down 51%. But by then, covid cases were once again surging in many countries, prompting the governments of other countries to reintroduce travel restrictions and impose quarantine measures. In the first two weeks of September, air traffic was down 53% compared to the same period in 2019. Intra-Europe flow remains 50% down compared to 2019 while all other flows are down 70%. Passenger traffic has also started to fall from the dismally low levels in mid-August, with almost all major airports reporting a decrease: Madrid was down 16% from mid-August, Barcelona and Paris 14%, Athens 13%, Paris CDG 12%, Amsterdam 9%, London/Heathrow 7%, Frankfurt 6%, and Munich 5% from mid-August. They are many reasons why this is happening. As the International Air Travel Association (IATA) says, “stop-start quarantines are having much the same effect as lockdowns”, dissuading potential travelers from boarding a plane. Many people are choosing not to fly anyway, often out of fear of catching the virus. According to the U.S. Center for Disease Control, as many as 11,000 people may have been infected with the coronavirus on flights. Weak consumer confidence, unemployment, and surging business closures are also taking their toll. Another major problem for the industry is the collapse of the premium market (first and business class combined), which last year generated 30% of airlines’ international revenues. Many businesses right now will not send workers half way across the globe for a meeting that can be done remotely, at a tiny fraction of the cost and with none of the risk attached. Also, premium travel has lost some of its allure as many of its perks have been traded away for safety. Commercial airlines’ big loss has been a big boon for private aviation companies, which offer comfort, flexibility, and most importantly isolation — for those who can afford it. The rapid recovery of private aviation in recent months clearly suggests that some customers are willing and able to splash out to be travel more safely. According to the Times of London, one operator, PrivateFly – which charges £10,000 for flights between France and the UK – saw its bookings triple in August. Meanwhile, commercial airlines have had to ground a large part of their fleets. Revenues, cash flows and earnings have all been obliterated, while costs, particularly for maintenance, remain high. Most airlines are in a struggle for basic survival. On Tuesday, a broad alliance of airlines and airport management companies exhorted governments to introduce airport COVID-19 tests for all departing international passengers, to replace the quarantines that continue to proliferate across the continent. But rapid antigen tests are unlikely to be a panacea since they are more likely to miss positive cases of the virus than laboratory-based tests; and there are other issues, such as the 14-day incubation period of the virus. In the continued absence of cut-and-dry solutions, airlines are cutting back capacity even more. EUROCONTROL now expects the number of flights in Europe to be down 60% year over year by January, compared to its prior estimate of a 20% shortfall. In its revised air traffic scenarios, it projects total flights this year of around 6 million — 55% below 2019’s total and a 1 million-trip reduction from its April forecast, resulting in total revenue losses for the industry of around €140 billion. “We’re going backwards now and it’s really worrying for the entire industry,” said Eamonn Brennan, Director General of EUROCONTROL. “There’s a lack of coordination between States on how to manage air travel despite good guidance from EASA and ECDC; there’s a lot of confusion and very little passenger confidence; and of course outbreaks of COVID-19 are picking up across Europe.” Ryanair, the continent’s biggest airline by passengers, on Friday unveiled plans to cut a further 20% of its flights from its October capacity, meaning it will operate at roughly 40% of October 2019 levels. It is also considering leaving its capacity below 50% for the whole of the winter. German travel operator TUI on Tuesday said it is weighing up balance sheet options amid further cuts to winter capacity and expectations of increased cash outflows. The company, whose shares have plunged 71% this year, has already launched a new restructuring program that will affect up to 8,000 jobs. It has cut winter capacity by a further 20%, on top of the 40% cut announced last month. To tide it over, TUI was given a €1.2-billion funding package from the German government in August. As bookings plunge, cancellations are rising. For October, Lufthansa seat reservations stand at less than 10% of year-ago levels. The UK-based and partly Qatari-owned International Airlines Group (IAG), whose holdings include British Airways (BA), Iberia and Vueling, is facing a similarly bleak winter. It’s already cut capacity for the Fall to 60% below 2019 levels. “Last week we flew 187,000 passengers. The same week in the previous year we flew almost a million,” said BA chief executive Alex Cruz last week. “We remain worried about the virus in the winter season. People are still afraid of traveling.” To shore up its finances, IAG is seeking to raise €2.75 billion of fresh capital in the capital markets. It makes a refreshing change from the tactic favored by Air France-KLM and Lufthansa — hitting up their respective national governments for €10.4 billion and €9 billion of bailout funds, respectively. It may not be enough to get the company through this kind of winter, but it’s a start. As of the close on Wednesday in London, IAG’s stock has plunged 61% this year. Before the rights offering was announced earlier in September, shares traded at 78 pence. With the announcement of the rights offering, shares nearly doubled the next day to 134 pence, but have since given up half of those gains, and today closed at 100.6 pence. By Nick Corbishley, for WOLF STREET. 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Iran, Azerbaijan to Boost Transportation, Rail Cooperation

Iran and the Azerbaijan Republic are to work together closely to further enhance mutual trade, transportation and rail cooperation. That was discussed in a videoconference meeting between Iranian Minister of Roads and Urban Development Ahmad Eslami and Minister of Roads, Communications and Advanced Technologies of the Republic of Azerbaijan Ramin Gholizadeh. During the discussions, the two sides underlined the need to further develop infrastructure and rail links in the region. The two sides recalled the determination of both presidents to increase transit and transportation cooperation, expressing hope the two countries will expand their cooperation by implementing joint ventures. The also underlined the need to construct a joint bridge for cars on the Astarachai river in Astara as well as to complete and put into service the Astara-Astara rail terminal. Subscribe Facebook Twitter ReddIt Pinterest WhatsApp Viber VK Email Telegram Print LINE The IFP Editorial Staff is composed of dozens of skilled journalists, news-writers, and analysts whose works are edited and published by experienced editors specialized in Iran News. The editor of each IFP Service is responsible for the report published by the Iran Front Page (IFP) news website, and can be contacted through the ways mentioned in the "IFP Editorial Staff" section.

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Iran, Turkey Convene Transportation Commission

Ministry officials have held the ninth meeting of Iran-Turkey Joint Transportation Commission via videoconference in an effort to promote cooperation in the international transport industry. The online meeting of Iran-Turkey Joint Transportation Commission was co-chaired by Iran’s Deputy Minister of Roads and Urban Development Shahram Adamnejad and Turkey’s Deputy Minister of Transportation and Infrastructure Selim Dursun. Iranian and Turkish ministerial officials in charge of air, rail, road and sea transport also took part in the videoconference. In the online conference, which followed the negotiations that Iran’s Minister of Roads and Urban Development and Turkey’s Minister of Transportation and Infrastructure held earlier this year, the two sides discussed the ways to enhance cooperation between the two neighbors in the transport sector. The videoconference was held in a friendly atmosphere with mutual understanding and involved negotiations on air, rail, road and sea transport, as well as combined transport. Participants in the webinar also agreed to convene the tenth meeting of Iran-Turkey Joint Transportation Commission in 2021. Iranian and Turkish diplomatic channels are going to decide how and when the next meeting will be held. Subscribe Facebook Twitter ReddIt Pinterest WhatsApp Viber VK Email Telegram Print LINE The IFP Editorial Staff is composed of dozens of skilled journalists, news-writers, and analysts whose works are edited and published by experienced editors specialized in Iran News. The editor of each IFP Service is responsible for the report published by the Iran Front Page (IFP) news website, and can be contacted through the ways mentioned in the "IFP Editorial Staff" section.

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