At a Glance: European Airlines Response to COVID-19

As the effects of the global pandemic take full effect across the world, the bosses of major airlines across Europe have begun to announce what measures they will take to help protect their airlines for future operations. Some have decided to defer orders, others have decided to expedite the retirements of some airframes. Most have already announced job cuts, with many more expected in the near future.

Last updated May 7.

Air France/KLM

The flag carriers representing France and the Netherlands merged in 2004 to form the Air France-KLM Group in what was arguably the beginning of airline consolidation across the European Union. Including all subsidiary airlines, the group accounted for around 550 aircraft at the beginning of the year.

In terms of fleet changes, Air France had planned to phase out the ten Airbus A380 aircraft by the end of 2022. So far, the airline has ferried two of the type to Teruel Airport in Spain for long term storage. The Spanish airport has quickly become a hub to many airlines storing aircraft away from operational airports. Another Air France quad-jet, the Airbus A340-300, was due to be phased out by the beginning of 2021. The airline has already retired one of the four that it still had on its books.

Regarding KLM, the Dutch carrier expedited the retirement of its Boeing 747-400 for passenger services, bringing an end to almost 50 years of flying for the airline. Prior to the spread of Coronavirus, the airline operated ten of them with a number of the airframes being of the “M” variant, allowing a combination of passenger and cargo payloads. Although the chance to fly on a KLM 747 has now passed, the airline has decided to continue to operate a few airframes to assist the transportation of cargo in and out of the country.

In total, the group is looking to receive up to 10 billion euros ($10.98 billion) in funding from both the French and Dutch governments.

According to Ryanair, the French government is looking to refund all airport taxes to any French carriers, but will not offer the same to any international airlines that operate in and out of the country.

It is understood that any pilots on a French contract will receive 84 percent of their net basic salary paid for by the state furlough scheme up to a maximum of 5,400 euros with Air France paying the difference so all pilots receive their basic salary.

Air Baltic

The flag carrier of Latvia has a fleet size of 37 aircraft comprised of the Airbus A220-300, Boeing 737-300 and Bombardier Dash 8 Q400. According to Bloomberg, Air Baltic CEO Martin Gauss revealed in an interview that the airline has recently held talks with Airbus to accelerate the handover of future A220 deliveries.

Air Baltic is 80 percent owned by the Latvian government. The country expects to ease the travel lockdown on May 13, and Air Baltic anticipates to resume flying the following day.

Although the airline has created the image of a bright outlook, it has reduced its workforce by 700 employees, leaving only 1,000 workers still on the payroll. According to Gauss, anyone who was laid off will be allowed to return to the airline in the future once the demand returns. He will not receive any of his 1.3 million Euro salary throughout the crisis.

Alitalia

A flag carrier that has had a history of financial problems would have gone bust following the decline in air travel this year, had it not been for the Italian government stepping in again. Since 2017, Alitalia has had state-appointed administrators involved in the operation of the airline, but from June the government will take full control with 600 million euros to turn things around.

From June, the government will create a new company and will begin with a fleet of 90 aircraft, compared to the 113 that are currently on the Alitalia books. There are around 12,000 pilot and cabin crew employees at Alitalia, and the government has said it will work with all unions to make sure as many remain employed as possible keeping in mind the reduction in aircraft.

This is certainly one airline to keep an eye on in the future.

Condor

The German leisure airline has fallen foul of bad luck over the last year. After the collapse of parent company Thomas Cook in September 2019, the airline was expecting a takeover by Polish flag carrier LOT Polish Airlines. The Polish Aviation Group, the owner of LOT, pulled out of the deal at the beginning of April following the outbreak of the virus, leaving Condor without an owner and without a financial future.

The airline had begun operations in 1953 and a recent count indicated a fleet size of 53 made up of Airbus A320, A321 and Boeing 757 aircraft serving 126 worldwide destinations. The airline has now received a German state loan of 550 million euros.

easyJet

The low-cost carrier currently has a fleet of around 340 Airbus A319, A320 and A321 family aircraft with more than 100 on order. So far, the airline has managed to agree on a deferment of deliveries with Airbus for around 24 new aircraft that were due to be delivered from August 2020 to 2022. However, this isn’t the biggest problem for the board running the European airline.

easyJet was founded in 1995 by Sir Stelios Haji-Ioannou, who — with two other family members — now owns around 33 percent of the company. Haji-Ioannou has for many years been against the expansion of the airline he no longer runs and has ramped up his public campaign against the bosses of the airline with the latest Airbus order that is due to be paid for.

The airline has been forced to hold a shareholders meeting on May 22 in response to the founder calling for the removal of the CEO, CFO, the Chairman and a non-executive director if the airline does not cancel an order that will cost the airline around 4.5 billion pounds ($5.6 billion) in payments until 2023.

The airline has furloughed the majority of its 15,000 workers across Europe, taking up the offer by individual governments to support those salaries. Apart from re-positioning aircraft to other airports for parking and maintenance reasons, the airline has not operated any commercial services since March 30 after assisting the U.K. government by operating 650 repatriation flights.

In terms of job cuts, the airline is yet to announce any changes to its workforce. Prior to the shutdown of flights, easyJet had around £1.7 billion ($1.8 billion) in cash liquidity but the airline took advantage of the U.K. government Covid Corporate Financing Facility (CCFF) and secured a loan of £600 million ($750 million)

Finnair

Finland’s largest airline operates a fleet of 84 aircraft across both domestic, European and worldwide routes out of its Helsinki Airpot hub. Right now, the airline is losing around 2 million euros a day and announced this week its intention to raise 500 million euros on top of the 833 million euros the airline has in liquid cash funds.

The Finnish government owns 56 percent of Finnair shares and has furloughed the airline’s employees whilst the fleet is grounded.

Icelandair

Icelandair recently announced it will lay off 2,000 employees, including 900 flight attendants and 421 pilots. This will leave only 900 workers to run the airline, most notably only 40 flight attendants and 26 pilots.

This is the second round of job cuts at the Icelandic carrier, which offloaded 240 employees at the end of March. With Iceland having a population of only around 360,000 people, this will significantly impact the income tax revenues that would’ve been paid to the government and will also add a large number of workers to the future job market for the Nordic island.

Commenting on the job cuts, Icelandair CEO Bogi Nils Bogason said the airline does hope to re-hire those that were let go in the future once the market improves, but he has made no promises as to how and when that will occur.

With a fleet size of 36 aircraft, Icelandair operated to 48 cities in 16 countries utilizing a fleet of Boeing 757 and 767 aircraft. Already the airline has five Boeing 737 MAX aircraft, all in storage, with another 11 on order.

The Icelandic government has made a contract with the airline to keep a number of flights to London, Stockholm and Boston, which are due to finish on May 5.

International Airlines Group (IAG)

The parent company of Aer Lingus, British Airways, Iberia, LEVEL and Vueling announced this week the intention of reducing the British Airways workforce by 30 percent, the equivalent of 12,000 employees. As part of these job cuts, the airline has informed the pilot union BALPA of its intention to reduce its pilot workforce by 1,130 of 4,346 pilots and introduce sweeping changes to terms and conditions to those that remain.

Already the airline had moved 22,000 employees onto the government furlough scheme while some pilots accepted unpaid leave instead of the furlough option.

Also, the airline has indicated the potential closure of its Gatwick Airport hub, which operates a mix of short- and long-haul routes with around 40 aircraft based there. In an email to staff and unions, British Airways said, “there is no certainty as to when service can return” to London City or Gatwick Airports.

For years, British Airways has actively campaigned against any U.K. airline receiving government money to save itself from collapse, most recently Flybe, which had been working on an agreement with the government before the drop in passenger travel sealed its fate. British Airways has also been vocal against Virgin Atlantic’s call for government help, a feature of the long-running rivalry between the two long-haul carriers.

In terms of fleet strategy, British Airways had a total of 277 aircraft. Including around 30 B747s that were in the process of all being slowly retired by 2024. That is most likely going to be expedited, with most being moved out of Heathrow to Cardiff, Wales and to multiple destinations in Spain for storage.

The airline also has 12 A380 aircraft on its books and has flown most of them to northern France for storage. Unlike many other A380 operators, the Oneworld Alliance member has no intention of removing any from its future fleet plans, and instead vocally insisted it would buy more if the price was right. Now, this might not be the way forward for some years with most airlines looking to ditch any quad-jets from their fleets.

Aer Lingus, another member of IAG, has reduced their pilots’ pay by 50 percent and could potentially make 700 employees redundant across the airline.

Contrary to what British Airways has said, IAG has recently confirmed that Iberia and Vueling have taken advantage of the Spanish government’s business assistance programs and have signed loans worth up to 1.1 billion euros. No job cuts have been announced so far for either Spanish airline.

On May 7 International Airlines Group announced its Q1 results and highlighted the impact the coronavirus pandemic has made on its airlines. “IAG does not expect the level of passenger demand in 2019 to recover before 2023, making further Group-wide restructuring measures essential; as a result, IAG expects to defer deliveries of 68 aircraft”

“IAG is planning a meaningful return to service in July with a planning scenario that could see an overall reduction in passenger capacity of 50 percent in 2020.”

LOT Polish Airlines

As already mentioned, the state-run airline had intended on bringing in German carrier Condor into the Polish Aviation Group until the takeover was canceled last month. So far, the airline has grounded all aircraft and will operate no flights until at least May 15.

Reuters recently reported that the airline had held talks with Boeing regarding the modification of its Boeing 787 fleet to operate cargo flights and help to stem the loss of revenue. Polish Minister of State Jacek Sasin did say the airline is likely to need state aid as part of a rescue plan for the largest state-owned airline in Europe.

No news of job cuts yet from the Polish airline, however.

Lufthansa Group

The largest airline in Europe by fleet numbers, Lufthansa Group controls a number of national airlines across Austria, Belgium, Germany and Switzerland with a combined fleet of more than 750 aircraft. The airline has said it is losing around 1 million euros per hour.

Focusing on Lufthansa, the airline has a fleet size of just under 300 aircraft. Already the airline has confirmed it is retiring 29 airplanes from its fleet — 11 A320s, seven A340-600s, six A380s and five B747-400s. The airline has over 200 aircraft on order over the next decade, and it is likely the German flag carrier will speak to both Airbus and Boeing in terms of deferring aircraft that were due to be delivered in the next 12 to 18 months.

With a future restructure of the fleet planned, Lufthansa said that they will probably have too many employees, 10,000 to be exact, and so the airline cannot rule out and job losses. Lufthansa pilots have offered to take a salary pay cut of 45 percent for the next two years which be part of a €350 million ($374 million) cost-saving initiative to assist the airline’s finances.

Across the whole Lufthansa Group, a total of €12 billion ($13.1 billion) is being requested from the various countries the group operates from.

Norwegian Air

Very complicated, mainly because of the structure of its airlines and companies. But the Norwegian situation is still ongoing with meetings being held between airline and bondholders. There was a deadline set for May 1, in which bondholders had to vote on a rescue package for the budget airline. The plan was to convert up to 4 billion euros of debt into shares to raise equity. The airline currently has debts and liabilities totaling to more than 8 billion euros.

What is known for certain is that should the Norwegian brand pull through, then any future operation will be a lot smaller compared to what has existed in the past. Already, 7,300 workers have been laid off with the intention to restart European and long-haul flights from April 2021. Only seven airplanes are planned to operate this year out of Norway on a short-haul operation.

Ryanair

The boss of one of the most profitable airlines in Europe, if not the world, has been extremely vocal this week regarding the amount of state aid individual airlines are set to receive from their local governments.

Speaking to various news outlets, CEO Michael O’Leary has said Ryanair will challenge the state aid that carriers have received via the European courts.

To the BBC, O’Leary said, “Air France and Lufthansa are subsidy junkies hoovering up state aid. We support transparent non-discriminatory schemes like payroll support. Why does Lufthansa need another €12 billion on top of that? It means that for the next three to five years they can engage in below-cost selling. We face unfair competition against legacy airlines in Europe getting unfair state aid.”

Ryanair itself has grown a group comprising of a few airlines over the years, made up of Lauda, Buzz Ryanair U.K. and Malta Air. But the airline has now announced it will make up to 3,000 of its workers redundant, mainly pilots and cabin crew, and cut salaries by 20 percent as it battles to keep in a good financial state through the pandemic. The airline has been historically notorious with its employee relations and this is unlikely to change in relation to changing contracts and working conditions.

The announcement of cutting 15 percent of its 22,000 workforces came with the warning that the airline does not expect passenger numbers or pricing to return to pre-coronavirus levels until at least the summer of 2022. Last year Ryanair flew 142 million passengers.

According to a Ryanair market statement, “The airline will review its fleet plans and are now in active negotiations with both Boeing and Laudamotion’s A320 lessors to cut the number of planned aircraft deliveries over the next 24 months.”

With one of the best balance sheets in the industry, the airline had almost 4 billion euros in cash before the virus.

SAS Scandinavian Airlines

SAS is the official flag carrier of Denmark, Norway and Sweden with hubs at Copenhagen, Oslo and Stockholm airports. The airline has a growing fleet and has recently taken delivery of three out of eight Airbus A350-900s that were ordered.

However, the impact of the Coronavirus has led the airline to the decision to remove up to 5,000 full-time jobs, the airline employs 11,000 across the region. The airline announced the job cuts would result in 1,300 positions in Norway, 1,700 in Denmark and 1,900 in Sweden being made redundant.

Like other airlines, the boss of SAS, Rickard Gustafson said, “they remain ready to quickly ramp up operations and reduce the number of affect positions if demand recovers more quickly.”

Virgin Atlantic

The U.K. long-haul carrier had big plans pre-coronavirus with the intention of setting up a second flag carrier. As part of their plan, the takeover of U.K domestic carrier Flybe having been completed in 2019, but the airline effectively walked away from the Dash 8 airline back in February when the financial impact of the pandemic became clearer, aiding the collapse of the 40-year-old airline.

Virgin itself was in the middle of its fleet upgrade program, removing older A340 and 747 aircraft whilst bringing in A350-100s and 787-9s. Before the virus, the airline had already taken delivery of four A350s out of an order for 12. From 2021 the airline planned on receiving 14 A330-900neos until 2024.

Currently, the airline will operate 90 cargo flights a week throughout May to help global supply chains around the world delivering essential supplies utilizing its A350 and 787 fleets. During this time, the bosses at Virgin look to find a solution to its finances that now threaten the very existence of the airline.

Last week, Virgin founder Sir Richard Branson offered to put his private Caribbean island against a loan to the airline. But talks between the government and Virgin are still ongoing. Delta Air Lines, which owns 49 percent, is unable to support the airline further while it receives state support from the U.S government.

In terms of staff, all non-flying workers voluntarily took 2 months unpaid leave and all flight crew accepted a 47 percent reduction in pay. However, the decision made by its employees as well as the assistance from the U.K. government in terms of the furlough payment scheme will not remove any possibilities of job cuts in the future, which is yet to be decided.

Although the airline has suffered some loss-making years, out of the last 31 financial years, the airline reported a profit for 22 of them.

On May 6 Virgin announced it will have to make 3,150 job cuts across the airline, including 426 pilots and over 1500 cabin crew. The airline will also retire the seven Boeing 747 that it currently operates and move operations out of its London Gatwick hub and consolidate in Heathrow and Manchester. The airline revised the number of pilots that will be made redundant to 385 after 41 pilots had already applied for the Enhanced Managed Exit Pathway before the crisis.

Wizz Air

The eastern European carrier, based in Budapest, Hungary, has the largest order book in Europe with more than 250 Airbus aircraft on order to add to the 120 A320s it already operates. However, recent events haven’t stopped any disruption occurring within the airline.

Last week, the company announced it had made 1,000 workers redundant, equal to around 19 percent of its workforce. 235 pilots were included in the job losses, the remaining pilots and cabin crew take a 14 percent pay cut. Its chief executive, board members and senior staff will also take a pay cut but 22 percent.

Like easyJet, Wizz Air also has access to U.K. government funds owing to the airline having a small U.K.-registered airline based at London Luton, should the carrier require additional funds on top of its 1.5 billion euros it already has in cash.

Today, the airline has restarted some flights out of its London Luton hub to Budapest, Burgas, Lisbon, Sofia, Tenerife, Tel Aviv and Varna.

For the future, the airline has announced it will open another base in Ukraine in July. Initially, with just one A320, Wizz Air has scheduled to operate 5 new routes out of Danylo Haltskyi International Airport in Lviv, Ukraine, to Denmark, Estonia, Germany, Poland and Portugal.

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