New cash calls for airlines to survive

BRITAIN’S biggest airlines are heading for yet more cash calls and cost-cutting to survive the winter, industry experts are warning.

Airlines are facing their weakest trading season after a fragmented summer of changing restrictions for short-haul travel and with lucrative US routes remaining closed to UK travellers.

Aviation consultant John Strickland said: ‘I think a number of large airlines will have to secure additional liquidity by means including rights issues, equity raises and loans. If they can convince the Government to extend the furlough scheme beyond September, that will also help. But it’s going to be a second challenging winter after two emaciated summers.’

All the big airlines have raised funds since the pandemic began. British Airways and Ryanair are among major aviation firms in talks with unions over cutting costs by moving staff to flexible seasonal contracts or part-time working.

Restructuring lawyer Andrew Wilkinson, a senior partner at Weil, Gotshal & Manges, said airlines may cut the number of routes they operate due to a decline in business trips. Consulting giant BCG has banned flights for company jollies and PwC expects staff business travel to fall by about two-thirds.

Wilkinson said: ‘Until you can write a business plan around the future of business travel, companies have to play for time. This will mean controlling costs as best they can and then either tapping their shareholders for a rights issue or increasing the liquidity lines provided by banks.’

Strickland added: ‘We haven’t had major out-and-out failures but I think it’s still possible that could happen.’