Airline suffers weak demand
British Airways cancels flights and warns of hit over virus
BA suffering ‘weak demand’
British Airways is cancelling trips to northern Italy, Korea and Singapore as its owner said its earnings will suffer from the coronavirus.
EasyJet is also cancelling some flights – mainly in and out of Italy after seeing a “significant” softening of demand into and out of its northern Italian bases and across its other European markets due to the virus outbreak.
International Airlines Group, BA’s parent group, said it is experiencing “demand weakness” on Asian and European routes and a weakening of business travel across its network resulting from the cancellation of industry events and corporate travel restrictions.
In Asia, flights to mainland China have been suspended. On 29 January British Airways suspended its daily flight to both Beijing and Shanghai and Iberia suspended its three times weekly service to Shanghai on 31 January.
Some services on other Asian routes have been reduced. From 13 February British Airways reduced its daily Hong Kong service from two to one. From 13 March it will reduce its daily service to Seoul to 3-4 times weekly.
Some of the freed-up longhaul capacity is being redeployed to routes with stronger demand. British Airways has announced additional flights to India, South Africa and the US, while Iberia is increasing capacity on US and domestic routes.
Capacity on Italian routes for March has been significantly reduced through a combination of cancellations and change of aircraft gauge and further capacity reductions will be activated over the coming days.
The airline also expects to make some capacity reductions across its wider shorthaul network. Shorthaul capacity is not being redeployed at this stage.
The net impact of current flight cancellations and redeployed capacity is to lower IAG’s planned capacity this year. Cost and revenue initiatives are being implemented across the business.
IAG said it is resilient with a strong balance sheet and substantial cash liquidity to withstand the current weakness.
“We have a management team experienced in similar situations and have demonstrated that we can respond quickly to changing market conditions. We are strongly positioned for the expected recovery in demand,” it said.
“Given the ongoing uncertainty on the potential impact and duration of COVID-19, it is not possible to give accurate profit guidance for FY 2020 at this stage.”
The airline carrier said it would cancel:
- 56 roundtrip flights from Heathrow and Gatwick airports to several destinations in Italy, including Milan, Bologna, Venice and Turin, between 14 – 28 March
- Flights to Seoul will now be every other day
- BA will cancel six return flights from Heathrow to Singapore every other day until 15 March – there will still be one daily flight
Operating profit before exceptional items for the year to 31 December 31 came in 5.7% lower at €3.285 billion.
Geneva Motor Show off
The Geneva Motor Show – one of the most important gatherings of the year – is the latest big event to be cancelled.
The decision was prompted by an order from the Swiss federal government, banning gatherings of more than 1000 people, in an effort to restrict the spread of the virus.
Hyundai pulls staff
Hyundai Motors – one of the world’s largest car manufacturers – has partially suspended operations at one of its Korean plants after an employee tested positive for the coronavirus. It has sent home around 4,000 workers.
Cycle tour scrapped
The United Arab Emirates has scrapped the final two stages of the 2020 UAE cycling tour after two Italian team participants tested positive for the virus.
Participants, organisers and staff members who were part of the event are now being screened for the virus. Others who came into contact with the two Italians will be placed under observation.
Tokyo torch review
The organisers of the Tokyo Olympic games in July say they will announce next week how they are planning to hold the torch relay amid the coronavirus outbreak.
The flame will be lit in the Greek town of Olympia – where the original Olympic Games were held – before making its way to Japan, where it is due to pass through 859 municipalities over 121 days. The relay is due to begin in Japan on 26 March.