Airlines face worsening coronavirus impact, European bosses warn

BRUSSELS (Reuters) – The worst is still to come for the airline industry in terms of economic damage from the coronavirus outbreak, European CEOs warned on Tuesday. But they predicted travel demand could stabilize in the coming weeks.

Coronavirus has hit travel demand, forcing airlines to cancel flights and cut costs, and ask governments and regulators for help, as they battle to get to grips with what they hope will be short-term, rather than long-term, disruption.

The heads of Europe’s biggest carriers – including Ryanair CEO Michael O’Leary; Willie Walsh, CEO of British Airways owner IAG; and easyJet CEO Johan Lundgren – said the epidemic was upsetting growth.

“We have seen a drop in demand when you look particularly in the northern part of Italy,” Lundgren said on the sidelines of an annual industry conference. “But that has also spilled over to the other parts of the network.”

Italy has seen the biggest outbreak of the illness in Europe.

Walsh noted a “very significant falloff in demand” in Italian markets in the past week. But he predicted demand would stabilize in coming weeks if bookings followed the pattern seen in Asia.

“I think we will see air traffic recover in due course.”

O’Leary said the next few weeks would be tough. He said he expected a “very deflated booking environment” for the next two to three weeks, but should the crisis stabilize, bookings would recover.

“I think you will see a pretty rapid return to normal,”

O’Leary said.

The bosses acknowledged it could get a lot worse before it gets better.

“If we’re not successful in the containment of it, then there might be a more difficult outcome,” Lundgren said.

Airlines worldwide have been suspending flights or modifying services in response to the coronavirus outbreak.

The crisis has led to a quarter of the short-haul fleet of airlines being grounded.

As part of the European airline lobby group A4E, the airlines called for a relaxation of airport regulations to help them cope with the impact of coronavirus.

That followed a call from global industry body IATA on Monday for a suspension of rules under which airlines can lose lucrative landing and takeoff slots if they cancel flights for a prolonged period.

“We request that a temporary waiver be granted by all [EU] member states,” Air France-KLM CEO Ben Smith said ahead of the conference of the Brussels-based A4E.

Airlines also want a “common set of health requirements for travel to and from the affected regions,” he said.

Walsh said struggling airlines should not be given state aid to enable them to survive the drop-off in demand. But there was a feeling governments could take other action to help all airlines navigate this difficult period.

O’Leary said social media was not helping, but he was confident its impact was small.

“There’s a lot of misinformation out there,” he said. “Social media is a scourge for idiots, but common sense usually wins out in a reasonably short period of time.”