Hospitality Ireland presents a round-up of global airline, travel and aviation news.
Brazil's Azul Backs Off From LATAM Bid, Citing Valuation Concerns
Azul SA confirmed making an offer this month to combine with Chile's LATAM Airlines Group, which is in bankruptcy proceedings, but the Brazilian airline said it had since decided to focus on its own operations.
LATAM shares plunged on Monday November 29 by as much as 85% in Santiago trading, before paring losses to around 45%.
Azul shares rose 2.8% in Sao Paulo after saying in a securities filing late on Sunday November 28 it would consider potential partnerships only in the future.
The Brazilian airline said its non-binding proposal submitted on Nov. 11 had included around $5 billion in equity financing and was backed by some creditors of LATAM.
However, Azul added that LATAM's valuation in the bankruptcy proceedings had become higher than it found acceptable, citing ongoing uncertainty in the aviation industry amid the COVID-19 pandemic, especially in long-haul markets.
LATAM filed a reorganization plan on Friday November 26 in which it proposed an $8.19 billion infusion of capital into the group in a bid to exit its Chapter 11 bankruptcy.
The Chilean company previously said it had received several offers to fund the exit from Chapter 11 bankruptcy, each of which was worth more than $5 billion.
Azul said in its filing that it believed its non-binding proposal would have provided significant increased network growth and generated synergies estimated at more than $4 billion.
It added that "the standalone plan presented by LATAM is, by definition, unable to generate synergies from a combination".
Goldman Sachs analysts warned in a note to clients that any tie-up between the airlines would have held more 60% of Brazil's domestic air travel market, which could have attracted "extensive" scrutiny from antitrust regulator CADE.
Azul said it will continue to focus on the competitive advantages of its own network, while evaluating future partnerships and consolidation opportunities.
The rise in the group's shares on Monday November 29 followed a steep fall last week, when travel-related stocks were dragged down by the detection of a new coronavirus variant in South Africa.
Turkish Airlines Dismisses Media Report It Wants To Buy Portugal's TAP
Turkish Airlines said on Monday November 29 that it has no current plans to invest in a foreign airline, after a Portuguese newspaper reported that the airline was interested in buying a controlling stake in Portugal's ailing flag carrier TAP.
Citing diplomatic sources, Portuguese newspaper Negocios said on Monday November 29 that Turkish Airlines was interested in a controlling stake in TAP and could invest up to €1.9 billion, but would only start negotiations after Portugal's snap general election, due to be held on Jan. 30.
"There are stories in certain national and international media outlets that Turkish Airlines will invest in a foreign airline company," the airline said in a statement.
"However, the stories being published as of today do not reflect the truth. Our (company) does not have any initiative to invest in an international airline," it said.
A spokesperson for Portugal's Infrastructure Ministry, when asked if the government had been approached by Turkish Airlines about a possible investment in state-owned TAP, said the ministry was unaware of any interest:
"The Infrastructure Ministry does not have any information in this regard," the spokesperson said.
TAP declined to comment.
TAP said earlier this month that it expected the European Commission to approve by Christmas its €3.2 billion restructuring plan.
EU antitrust regulators have been examining since mid-July whether the plan, which involves around 2,000 job cuts and pay cuts of up to 25%, is proportionate and complies with state aid rules, and whether it affects competition.
TAP is 72.5% controlled by the Portuguese state.
Infrastructure Minister Pedro Nuno Santos has said TAP is unlikely to succeed alone and must be open to consolidation with other airlines.
TAP's CEO Christine Ourmieres-Widener said two weeks ago the company could in the future be part of the consolidation of the airline industry in Europe, but that it was "not a priority for now".
Companies Still Cautious On Impact Of Omicron
Companies were still cautious on Monday November 29 about the impact of the new Omicron virus on their businesses, with airlines saying they were not yet cancelling flights and automakers saying they were still looking at any potential impact on manufacturing.
The World Health Organization warned on Monday November 29 the Omicron variant of coronavirus carries a very high global risk of surges. Spooked investors wiped roughly $2 trillion off global stocks on Friday, but markets were calmer Monday.
Countries have swiftly imposed bans on travel from southern Africa where the variant was first uncovered. And Japan and Israel went further, announcing bans on all foreign arrivals. Still some airlines said they were not changing schedules.
Ryanair Chief Executive Michael O'Leary saw no reason to cancel flights although he was worried about some countries potentially shutting air travel. Lufthansa, Germany's flagship airline, said its flights were still well booked.
Meanwhile, U.S. President Joe Biden planned to meet with chief executives of major retailers and other companies Monday to discuss how to move good to shelves as the U.S. holiday shopping season begins in the shadow of Omicron.
Commerce Secretary Gina Raimondo said on Monday November 29 it was too soon to tell if Omicron will have any impact on global supply chains.
The prospect of a fast-spreading variant has raised fears of a return of the sort of restrictions that shut down a swathe of industries in 2020.
In the United States, auto plants were closed for two months last year, and even after automakers restarted operations they have curtailed production schedules due to semiconductor chip shortages and other supply-chain constraints. Automakers said it was too soon to predict the impact of Omicron.
"This is new," Nissan Motor Co's U.S. spokeswoman Lloryn love-Carter said. "We're monitoring of course, but we still have a lot of pretty strict COVID protocols in place."
Toyota Motor Corp said its U.S. management team will meet on Tuesday to discuss the Omicron variant and whether the Japanese automaker needs to take additional steps.
"Right now we're in the 'gathering info' mode," Toyota's U.S. spokesman Scott Vazin said. "Since most of our employees are based in plants, we've never stopped COVID protocols such as social distancing, health screenings, masking up."
Volkswagen also said it continues to implement and follow strict safety protocols for employees at all its U.S. facilities.
Pilots Union Asks Britain To Set Up Winter Fund Amid Omicron Concerns
The British Airline Pilots Association (BALPA) on Monday November 29 urged the government to establish a "winter resilience fund" to support the ailing aviation industry, after some travel curbs were brought back to contain the spread of the Omicron coronavirus variant.
"The latest changes have shattered the fledgling confidence in air travel including for Christmas and new year bookings," said BALPA in a statement.
Britain, which has so far reported 11 cases of the variant, has said arrivals from all countries would have to self-isolate until they receive a negative result from a PCR test and that face masks must be worn in retail settings.
The government has also added about 10 African countries to the red list over the last few days after Omicron was first detected in South Africa.
BALPA also asked the government to enforce restrictions based only on sufficient data.
"We call again on government to act with the data and to support a vital UK industry. This includes government funding the expensive PCR tests and actually sequencing traveller's tests so we can have an effective and data driven policy," BALPA said.
United Says Company Has Not Adjusted Flights To Southern Africa After Omicron News
United Airlines said on Monday November 29 it has not made any adjustments to its flight schedule to southern Africa following the discovery of the Omicron coronavirus variant.
The Chicago-based carrier currently operates five flights per week between Newark and Johannesburg and plans to restart service between Newark and Cape Town on Dec. 1 as scheduled.
WHO Flags Omicron Risk, Travel Curbs Tighten, Biden Urges Vaccination
The World Health Organization (WHO) said on Monday November 29 the Omicron coronavirus variant carried a very high risk of infection surges, while border closures by more countries cast a shadow over an economic recovery from the two-year pandemic.
Big airlines acted swiftly to protect their hubs by curbing passenger travel from southern Africa, where the new Omicron variant was first detected, fearing that a spread of the variant would trigger restrictions from other destinations beyond the immediately affected regions, industry sources said.
But shares in carriers bounced back with the rest of the market on Monday November 29 following Friday November 26's rout as hopes grew that the variant might prove to be milder than initially feared.
U.S. Federal Reserve Chair Jerome Powell said the new variant muddies the outlook on inflation because prices could keep rising for longer than earlier thought.
The rise in COVID-19 cases and the emergence of the new variant "pose downside risks to employment and economic activity and increased uncertainty for inflation," Powell said in testimony prepared for delivery on Tuesday November 30 to the U.S. Senate. Health-related concerns could "reduce people's willingness to work in person, which would slow progress in the labor market and intensify supply-chain disruptions."
Credit rating agencies Fitch Ratings and Moody's Investors Service warned that Omicron could hurt global growth prospects and push up prices.
U.S. President Joe Biden urged Americans not to panic and said the government was working with pharmaceutical companies to make contingency plans if new vaccines were needed.
Biden said the country would not go back to lockdowns this winter, but urged people to get vaccinated, get their boosters and wear masks.
"This variant is a cause for concern, not a cause for panic," Biden said in remarks at the White House following a meeting with his COVID-19 team. "We're going to fight and beat this new variant."
The United States has blocked entry for most visitors from eight southern African nations. Biden said the travel restrictions would give the U.S. time to get more people vaccinated.
Vaccine hesitancy in the United States and elsewhere has thwarted public health officials' attempts to control the virus.
On Monday, a federal judge ruled that the Biden administration's vaccine requirement for healthcare workers likely exceeded its authority.
The WHO advised its 194 member nations that any surge in infections could have severe consequences, but said no deaths had yet been linked to the new variant.
"Omicron has an unprecedented number of spike mutations, some of which are concerning for their potential impact on the trajectory of the pandemic," the WHO said. The overall global risk related Omicron is "very high," it said.
Further research was needed to understand Omicron's potential to escape protection against immunity induced by vaccines and previous infections, the WHO said.
An infectious disease expert from South Africa, where scientists first identified Omicron, said it was too early to say whether symptoms were more severe than previous variants, but the variant did appear to be more transmissible.
The expert, Salim Abdool Karim, also a professor at Columbia University's Mailman School of Public Health in New York, said existing vaccines were probably effective at stopping Omicron from causing severe illness. Scientists have said it could take weeks to understand the severity of Omicron.
South African cases were likely to exceed 10,000 a day this week, up from barely 300 a day two weeks ago, Karim added.
South African President Cyril Ramaphosa denounced "unjustified and unscientific" travel bans that damage tourism-reliant economies.
Health ministers from the Group of Seven bloc of wealthy nations praised South Africa for its "exemplary work" in detecting the variant and alerting others.
Fears the new variant might be resistant to vaccines helped wipe roughly $2 trillion off global stock markets on Friday November 26, but markets calmed on Monday November 29, even after Japan said it would close its borders to foreigners, following a similarly wide ban by Israel.
The prospect of a fast-spreading variant has raised fears of a return of the sort of restrictions that shut down a swathe of industries in 2020.
"This is new," said Nissan Motor Co's U.S. spokeswoman, Lloryn Love-Carter. "We're monitoring of course, but we still have a lot of pretty strict COVID protocols in place."
Portugal found 13 cases of the variant at a Lisbon football club. Spain, Sweden, Scotland and Austria also reported their first cases.
U.N. Secretary-General Antonio Guterres expressed concern that restrictions would isolate southern African countries.
"The people of Africa cannot be blamed for the immorally low level of vaccinations available in Africa - and they should not be penalized for identifying and sharing crucial science and health information with the world," he said.
Guterres has long warned about the dangers of vaccine inequality globally and the risk that low immunisation rates are a breeding ground for variants.
More than 261 million people in over 210 countries have been reported to be infected by the coronavirus since the first cases were identified in China in December 2019 and 5,456,515 have died, according to a Reuters tally.
Travel Sector Sees Recovery Slip From Grasp Amid New Coronavirus Scare
Airlines are scrambling to limit the impact of the latest coronavirus variant on their networks, while delays in bookings are threatening an already-fragile recovery for global tourism.
Shares in airlines performed better on Monday November 29 following a sharp sell-off Friday November 26 on the discovery of the Omicron coronavirus variant.
The latest outbreak, first reported in southern Africa, dealt a blow to the industry just as it had recovery in its sights, especially following the easing of U.S.-bound travel.
Multiple countries including Japan, the United States, Britain and Israel have imposed travel curbs in order to slow the spread of the new variant.
"The hope for U.S. and European carriers had been that opening the Atlantic would allow them to operate long-haul routes on a cash-positive basis, but border restrictions make it even harder to get the demand in," said James Halstead, managing partner at consultancy Aviation Strategy.
A pickup in long-haul traffic is seen critical for many carriers, which have been left with severely strained balance sheets following the plunge in air travel last year.
Southern Africa accounts for only a tiny portion of the world's international travel, but sudden border restrictions and route suspensions have left some carriers with an uncertain future.
Spain's Air Europa, caught in a months-long acquisition process by IAG-owned rival Iberia, which British and European regulators have so far been loath to approve, is especially vulnerable to renewed travel curbs.
President Joe Biden said while the restrictions were needed to give the United States time to get more people vaccinated, he did not anticipate the need for additional curbs.
But Willie Walsh, head of global airlines industry body IATA, called the restrictions a "knee-jerk reaction." In an interview with BBC Radio, he urged authorities to institute "sensible" testing regimes and avoid measures that have caused "massive" financial damage to the industry in the past.
"This virus cannot be beaten in the way some of these measures would have people believe," said Walsh. "We have to adjust. We have to take sensible measures."
Rising COVID-19 cases as well as the new border restrictions have prompted analysts to adjust their outlook for the industry. Analysts at HSBC, for example, expect the industry's recovery would be pushed back by a year.
It is a setback for companies including the interconnecting Gulf carriers and Lufthansa, which depends heavily on transit traffic at its Frankfurt base, analysts said.
Big carriers acted swiftly to protect their hubs by curbing passenger travel from southern Africa, fearing that the spread of the new variant would trigger restrictions from other destinations beyond the immediately affected regions, industry sources said.
Singapore deferred plans to open its borders to vaccinated travellers from the United Arab Emirates, Qatar and Saudi Arabia because those countries are transit hubs for African travel.
Singapore Airlines said it had converted some of its flights to Johannesburg and Cape Town to cargo-only.
Qatar Airways said it would no longer accept passengers travelling from five southern African countries, but would fly passengers to those countries in line with current restrictions.
In the United States, United Airlines and Delta Air Lines are the only passenger carriers with direct flights to the region. Both airlines said on Monday they have not made any adjustments to their flight schedules.
Delta said it is offering fare difference waivers to customers looking to change travel to, from or through South Africa, Israel and Japan. Both Israel and Japan have banned the entry of foreign travellers.
Concerns have also been raised about future bookings.
Some Australian travellers booked through Flight Centre Travel Group Ltd have cancelled or delayed trips amid new requirements for arrivals to isolate at home or a hotel for 72 hours while awaiting the results of a COVID-19 test, a spokesperson for the travel agency said.
In Germany, DER Touristik said that after very positive bookings at the beginning of autumn it had seen a reluctance to book, including for southern African destinations.
Some companies seemed exasperated by the latest threat to business-as-usual.
"It's too early to make any predictions," a spokesperson for Spanish carrier Iberia said. "As for contingency plans, do the flexibility and capacity to adapt that we have demonstrated throughout the pandemic seem insignificant to you?"
From Hollywood To Detroit, Pandemic-Weary Companies Cautious On Omicron
Pandemic-weary corporations struggled to assess the impact of the new Omicron variant of the coronavirus on Monday November 29, with industries from Hollywood movie studios to airlines and autos awaiting more details to help determine how it might affect their operations and profits.
The World Health Organization warned on Monday the Omicron variant carries a very high global risk of infection surges. Spooked investors wiped roughly $2 trillion off global stocks on Friday, but markets regained some ground on Monday November 29.
Countries have swiftly imposed bans on travel from southern Africa, where the variant was first uncovered. Japan and Israel went even further, announcing bans on all foreign visitors.
Some airlines said they were not heavily changing schedules, but industry sources said big carriers moved swiftly to protect their hubs by curbing passenger travel from southern Africa.
Ryanair Chief Executive Michael O'Leary saw no reason to cancel flights although he was worried about some countries potentially shutting air travel. Lufthansa, Germany's flagship airline, said its flights were still well booked.
U.S. President Joe Biden met with chief executives of major retailers and other companies on Monday to discuss how to move goods to shelves as the U.S. holiday shopping season begins in the shadow of Omicron.
Before the meeting, Walmart CEO Doug McMillon cited improvement in the supply chain, noting the retailer had seen a 26% increase in shipping containers going through U.S. ports over the past four weeks.
U.S. Commerce Secretary Gina Raimondo said on Monday November 29 it was too soon to tell if Omicron will have any impact on global supply chains.
The prospect of a fast-spreading variant has raised fears of a return of the sort of restrictions that shut down a swathe of industries in 2020.
In Hollywood, where production on film and television shows returned to pre-pandemic levels this summer thanks to stringent health and safety precautions, the studios were waiting to learn more about this latest mutation of the coronavirus.
"With COVID, it keeps shape shifting. It's like mercury -- we can't get our hands around it," said Dr. Neal Baer, a physician who was a longtime producer of "Law & Order: Special Victims Unit."
"It's going to take a couple of weeks for us to know, one, how well vaccinations protect us, two, whether you need a booster and whether a booster helps or three, whether the vaccine needs to be modified to make it effective against this mutation."
Movie theater attendance has been returning in fits and starts since the summer, but a spokesman for the National Association of Theatre Owners said variants remain a concern -- especially after the pullback in attendance that accompanied the Delta variant.
In the United States, auto plants were closed for two months last year. Even after automakers restarted operations, they have curtailed production schedules due to semiconductor chip shortages and other supply-chain constraints. Automakers said it was too soon to predict the impact of Omicron.
"This is new," Nissan Motor Co's U.S. spokeswoman Lloryn love-Carter said. "We're monitoring of course, but we still have a lot of pretty strict COVID protocols in place."
General Motors Co, the largest U.S. automaker, said it was watching closely and its COVID-19 safety protocols remain in place at its plants.
"We continue to strongly encourage our employees to get vaccinated given the broad availability of safe and highly efficacious vaccines," GM spokeswoman Maria Raynal said in an email. "We will continue to review and adjust our protocols as new information regarding this variant becomes available."
Toyota Motor Corp said its U.S. management team will meet on Tuesday to discuss the Omicron variant.
"Right now we're in the 'gathering info' mode," Toyota's U.S. spokesman Scott Vazin said. "Since most of our employees are based in plants, we've never stopped COVID protocols such as social distancing, health screenings, masking up."
Global Jet Fuel Demand Under Pressure From Omicron, Border Curbs
Global jet fuel markets stayed under pressure on Tuesday November 30 as more countries expanded border restrictions to keep the new Omicron coronavirus variant at bay, prompting travellers to reconsider their plans.
Jet fuel demand - the biggest laggard in the oil complex - had been forecast to post the strongest growth of 550,000 barrels per day to 5.9 million bpd in fourth quarter, according to the International Energy Agency in its Nov. 16 report.
But now Omicron pose the greatest risk to jet fuel consumption. Hong Kong expanded a ban on entry for non-residents from several countries, the latest to expand travel curbs after Israel and Japan have already announced border closures to all foreign travellers.
Britain and Australia have tightened rules for all arrivals in response to the new variant while hundreds and thousands of would-be travellers are now considering to cancel or delay their trips in response to renewed restrictions.
"The real risk from the new variant is ... the reimposition of more widespread flight restrictions during the winter and again reducing current global jet fuel demand of some 6 million barrels per day significantly," energy consultancy FGE said in a note.
Asian refining margins for jet fuel slumped to their lowest in more that two months on Monday at $6.92 a barrel, while the front-month time spread for the aviation fuel in Singapore flipped to a contango for the first time since end-September.
"Current jet demand levels are just 1 mb/d above last winter, when cases and hospitalizations were far higher and before any widespread vaccinations," Goldman Sachs analysts said in a Nov. 26 note.
"While a worst case outcome could be a return to last winter's levels, 0.5 mb/d downside to our current base-case until 2Q22 would be a conservative assumption given what we know at present."
Global airlines, most of which have been struggling since last year's plunge in air travel as a majority of long-haul international flights remained grounded, are now scrambling to limit the impact of the latest variant on their networks.
"In total, 2.4% of scheduled (global airline) capacity has been removed for the next four months," aviation data firm OAG said.
"But it is too soon to say whether this is due to slightly weaker demand than expected, or an early response by some airlines to the prospect of the Omicron variant of the COVID-19 virus causing a return to border restrictions for international air travel."
Trade sources said the new variant have dampened the near-term hopes for any substantial demand recovery.
"Now it's like the snake and ladder boardgame. I think Vaccinated Travel Lanes (VTL) would be important to keep the momentum in the aviation industry," a Singapore-based jet fuel trader said.
"Definitely, there's no hope to see a speedy recovery, which was expected before this Omicron variant."
REUTERS NEXT-EMIRATES PRESIDENT SAYS AIRLINE PLANS TO HAVE FULL FLEET BACK IN AIR BY NEXT SUMMER
Emirates Warns Omicron Could Cause "Significant Traumas" For Aviation Industry
A major hit to the peak December travel season because of the Omicron variant of the coronavirus would cause "significant traumas" in the global aviation business, Emirates airline President Tim Clark said on Tuesday November 30.
Clark said Emirates was working on the basis the newly discovered variant could be dealt with effectively by vaccines, but acknowledged the next few weeks would prove critical for the industry as scientists assess the risks.
"I would say probably by the end of December, we'll have a much clearer position," Clark said in an interview for the Reuters Next conference.
"But in that time, December is a very important month for the air travel business," he added. "If that is lost, or the winter is lost to a lot of carriers, there will be significant traumas in the business, certainly the aviation business and the periphery."
The World Health Organization (WHO) warned on Monday that the heavily mutated Omicron coronavirus variant is likely to spread internationally and poses a very high risk of infection surges that could have "severe consequences" in some places.
Omicron was first reported on Nov. 24 in southern Africa, where infections have risen steeply. It has since spread to more than a dozen countries, many of which have imposed travel restrictions to try to seal themselves off. Japan on Monday November 29 joined Israel in saying it would close its borders completely to foreigners.
"It's likely to arrest, inhibit, but not stall the uptick in demand that we've all had the benefit of in the last month or two," Clark said.
He noted, however, that it could also "go the other way", with more draconian measures in response to a greater threat from the variant.
Clark said the airline's decision to close down flights out of South Africa and a handful of surrounding countries was difficult, given strong demand for the December period.
However, he said bookings generally remained strong despite the reintroduction of measures in some European markets such as track and trace, quarantine and PCR testing.
"People haven't made that decision to cancel or pull off, so we're hoping that it doesn't worsen, that the border procedures for re-entry are not so draconian that it prevents them from travelling at all," he said.
Emirates Chief Executive Sheikh Ahmed bin Saeed Al-Maktoum said just two weeks ago at the Dubai Airshow that the airline planned to deploy a further 60 A380s in response to improving demand, adding to the 47 currently in operation.
"That will be tempered by whatever form this variant takes," Clark said on Monday November 29. "If it's mild and its accepted as being mild in its effect and the efficacy of the vaccine shield is able to deal with it, then we hope to have all our aircraft flying, including all the 380s by the summer of next year."
Clark said re-embedding cabin crews, pilots and engineers and re-training them for safety and other procedures was currently the "greatest inhibiter" for the airline.
"We are continuing to move as if this variant will be dealt with," he said. "If it isn't ... we will retard our plans accordingly."
Airline SAS Reports Narrower Loss, Wary Of Omicron Uncertainty
SAS's loss for the August-October quarter narrowed from a year earlier as air travel picked up but the carrier warned the new Omicron coronavirus variant added uncertainty.
The airline, part-owned by the governments of Sweden and Denmark, reported a fourth-quarter loss before tax of 945 million Swedish crowns ($104 million) versus a year-earlier loss of 3.25 billion.
SAS said in a statement ticket sales were increasing but that uncertainties continued to affect the ramp-up of business.
"We remain cautious due to prevailing uncertainties, but see that underlying demand is healthy once restrictions are lifted, both for business and leisure travel," it said.
"The short-term effect of recent developments needs yet to be fully analysed, however we remain optimistic for the peak periods ahead of us."
CEO Anko van der Werff told Reuters a rise in sales over the Black Friday weekend made it difficult to analyse data to tell whether Omicron had begun to have an effect on demand.
"But, no-one likes uncertainty, so that's the challenge," he said in an interview.
He said it was too early to tell how Omicron would affect SAS and that the company was sticking to its plan to ramp up its operations this year to 80% of pre-pandemic 2019.
"We have to remain agile but our plan is going back to that for the summer."
The uncertainty about the new variant has triggered global alarm, casting a shadow over the economic recovery from the pandemic.
Dubai Government Considering Emirates IPO - Airline President
The Dubai government is considering an initial public offering of Emirates airline, the flagship carrier's President Tim Clark said on Monday November 29, as authorities work to boost activity on the local stock market.
The emirate's government is planning to list 10 state-backed companies on its stock exchange and set up a 2 billion dirham ($545 million) market maker fund to encourage trading activity.
"Yes, there has been talk about it. Yes, there has been, perhaps a little bit more flesh on the whole subject than there has been in the past," Clark said in an interview for the upcoming Reuters Next conference when asked if a listing was a possibility.
"I'm waiting instructions as to how this is going to affect the Emirates Group. What the government of Dubai decides to do...is up to them, I would basically do as I am bid."
Emirates Chairman Sheikh Ahmed bin Saeed Al-Maktoum said earlier this month that it was possible to list the carrier or its subsidiaries.
Governments have pumped billions of dollars into airlines during the coronavirus pandemic and state-owned Emirates has received around $3.8 billion in equity injections from Dubai, including $2 billion disclosed last year.
The airline posted a loss of 5.8 billion dirham ($1.6 billion) for the April-September period, down from a 12.6 billion dirham loss for the same period last year.
However, Clark said he does not expect further government support over the next year so long as the new variant of the coronavirus does not cause too much disruption.
"We are restoring our cash position at pace. So it is unlikely, notwithstanding the Omicron variant and its effects... if it's not as bad as people think it may be, then we see no further recourse to the owner putting equity into the business.
Clark said that although Emirates would still suffer a loss this year, it would be considerably smaller than in the preceding 12 months. For 2022, he expected the airline to break even or make a profit.
"I am very pleased to say we have returned to profitability already, over the last six, seven weeks, we've been profitable," he said.
Airline EasyJet Sees Softening In Demand As COVID Clouds Outlook
British airline easyJet said it had seen a softening in demand as COVID-19 outbreaks and the discovery of the Omicron virus variant forced customers to cancel city breaks, although longer-term bookings have held up well.
Reporting full-year results five days after news of the new coronavirus variant hammered airline stocks, easyJet said it had seen some short-term drop off in demand, with customers delaying flights into early next year. It has not seen an increase in 'no-shows' at airports however.
"We do see that there has been an impact, particularly on the short-term departures, but it's not to the same level of impact and drop off we've seen in previous times when restrictions have been introduced," Chief Executive Johan Lundgren told reporters.
The airline's shares bounced around in early trading, and were down 2% at 0910 GMT on Tuesday November 30.
EasyJet said despite the uncertainty, its new Oct.1 financial year had started well and for summer 2022 - the fourth quarter of its financial year - it expects capacity to have recovered to close to pre-pandemic levels.
The group came through the pandemic by cutting costs, bolstering its balance sheet and switching capacity to the busiest routes. It is now increasing its fleet plan by 25 aircraft, with slots added at Gatwick, Porto, Lisbon and Milan's Linate.
Airlines have been on a roller-coaster of a ride this year, steadily recovering in the first half as first Europe and then Britain reopened for travel, before fears started to grow about the pace of the recovery, and as new COVID-19 outbreaks emerged.
Airline shares plunged on Friday after news of the Omicron variant broke. Low-cost group Ryanair had already warned that European airlines were in for a fraught end to the year as infection rates on the continent surged. "There is no getting away from the fact there's further to climb and the coming months will be patchy at best," said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.
"But a newly refreshed liquidity position and competitive advantages means there are some reasons for optimism where easyJet's concerned." EasyJet reported a headline loss before tax of 1.14 billion pounds ($1.52 billion) for the year to end-September, at the higher end of forecasts, and said first-quarter capacity was expected to be up to around 65% of 2019 levels.
It had previously forecast 70%. It did not give a full financial outlook however as customers book flights closer to departure, preventing clear visibility.
Airlines Bosses Worry About Impact Of Omicron Variant
Airline bosses voiced concern on Tuesday November 30 that travel restrictions linked to the emergence of the Omicron variant of the coronavirus risked blowing an industry recovery off course.
The strongest warning came from Emirates airline President Tim Clark who said a major hit to the peak December travel season would cause "significant traumas" in the global aviation business.
British budget airline easyJet also spoke of a softening in demand in recent weeks as the resurgence of the virus in parts of continental Europe prompted customers to rethink city break plans.
The discovery of the Omicron variant, first reported in southern African last week, dealt a blow to the industry just as it had recovery in its sights, especially following the easing of U.S.-bound travel earlier in November.
Multiple countries including Japan, the United States, Britain and Israel have imposed travel curbs in order to slow the spread of the new variant which it is feared could prove more resistant to vaccines.
Clark said the next few weeks, the run-up to the Christmas and New Year holiday season, would prove critical for the airline industry as scientists assess the risks.
"I would say probably by the end of December, we'll have a much clearer position," Clark said in an interview for the Reuters Next conference.
"But in that time, December is a very important month for the air travel business," he added. "If that is lost, or the winter is lost to a lot of carriers, there will be significant traumas in the business, certainly the aviation business and the periphery."
The impact of travel restrictions was evident in financial results published on Tuesday November 30 by easyJet and Scandinavian operator SAS.
EasyJet reported a headline loss before tax of £1.14 billion for the year to the end of September, at the higher end of forecasts, while SAS remained in the red in the August to October quarter.
EasyJet said it was difficult to gauge the effect of the new variant but that broader concerns over the coronavirus were still influencing travellers.
"We do see that there has been an impact, particularly on the short-term departures, but it's not to the same level of impact and drop-off we've seen in previous times when restrictions have been introduced," easyJet Chief Executive Johan Lundgren told reporters.
Both easyJet and SAS noted that there was strong appetite for travel when curbs were removed.
"We remain cautious due to prevailing uncertainties, but see that underlying demand is healthy once restrictions are lifted, both for business and leisure travel," SAS said.
U.S. Senate Panel Invites Airline CEOs To testify At Dec. 8 Hearing
The chair of the U.S. Senate Commerce Committee, concerned about worker shortages at airlines that received billions of dollars in government assistance, has invited CEOs of seven major U.S. carriers to testify at a Dec. 8 hearing, airlines and a committee official told Reuters.
Senator Maria Cantwell, a Democrat who chairs the panel, is inviting the chief executives of American Airlines, Delta Air Lines, Southwest Airlines, United Airlines, JetBlue Airways, Alaska Airlines and Spirit Airlines to testify, the official added.
The airlines declined to comment or did not immediately respond to requests for comment. Reuters first reported plans for the hearing on Nov. 3 but it was not clear at the time if Cantwell would ask the CEOs to appear.
Starting in March 2020, Congress approved three separate rounds of taxpayer bailouts totaling $54 billion to cover much of U.S. airlines' payroll costs through Sept. 30 as a result of COVID-19.
The heavy U.S. Thanksgiving travel week would not have been possible without the government payroll assistance program and union-negotiated incentives, Sara Nelson, president of the Association of Flight Attendants-CWA, representing workers at 17 airlines, said Tuesday November 30 in a statement.
"We made sure aviation workers were in place to meet the return demand for air travel after access to vaccination," Nelson added.
Last month, Nelson that the airline industry "created a COVID-19 relief plan that no other industry got."
Airlines that received government assistance were not allowed to issue involuntary layoffs or cut worker pay. They also had to limit executive compensation and halt share buybacks and dividend payments.
Staffing shortages in recent months have prompted some airlines to cancel hundreds of flights at times even as they worked to boost staffing.
In July, Cantwell asked several airlines detailed questions about "workforce shortages, flight cancellations, and delays, creating havoc and frustrating consumers as more Americans resume travel."
That letter said each airline "poorly managed its marketing of flights and workforce as more people are traveling, and, at worst, it failed to meet the intent of tax payer funding and prepare for the surge in travel."
This month, Federal Aviation Administration chief Steve Dickson said difficulties with some airline operations are "due more to changes in consumer behavior" like a jump in leisure travel.
"They probably don't have as much buffer in their schedule as they had previously," he added.
A group of U.S. senators this month led by Democrat Richard Blumenthal reintroduced legislation to expand protections for air travelers aimed at ensuring "airlines provide passengers with fair compensation, refunds, and recourse in the event of airline-caused flight delays and cancellations."
Cathay Pacific's Liquidity Strong, Omicron Impact Unclear - Exec
Hong Kong's Cathay Pacific Airways Ltd has maintained a strong liquidity position at a time when the impact of the Omicron variant of COVID-19 on travel demand remains unclear, a senior executive said on Wednesday December 1.
The airline said its liquidity of HK$31.7 billion ($4.07 billion) as of Oct. 31 was only slightly down on HK$32.8 billion at June 30 due largely to a strong performance in the air cargo business.
"It is too early to assess the impact on travel demand," Cathay Chief Customer and Commercial Officer Ronald Lam said of the Omicron variant in an analysts' briefing.
Cathay last month said it expected its second-half results to improve considerably from the first half, though it still forecast a substantial loss for the full year.
The airline continues to suffer from COVID-19 pandemic-related travel restrictions, operating at only 10% of pre-pandemic passenger capacity in October and posting a 97.2% decline in passenger numbers from 2019.
Cathay last week switched some inbound passenger flights for December to cargo only after not enough pilots volunteered to fly rosters to high-risk destinations that involve five weeks locked in hotel rooms.
Hong Kong this week added countries including Australia, Canada, Germany and Israel to the list of high-risk destinations as it pursues a zero-COVID strategy that it hopes will lead to a border opening with mainland China.
Lam said it was too early to provide a capacity outlook for the first quarter of 2022.
"We do have hope that sometime in 2022 the Chinese mainland government and Hong Kong government may consider opening up," he said of international travel.
However, John Grant, chief analyst at travel firm OAG, said Hong Kong's growing alignment with the Chinese mainland border policy meant the financial centre was unlikely to recover its status as a major transit hub anytime soon.
Global Airlines Prepare For Omicron Volatility, Agility Will Be Key
Global airlines are bracing for more volatility due to the Omicron variant of COVID-19 that could force them to juggle schedules and destinations at short notice and to rely more on domestic markets where possible, analysts say.
Many travellers have already booked trips for the Christmas period, a peak season for airlines, but there are growing industry concerns over a pause in future bookings and further delays to the already slow recovery in business travel.
Fitch Ratings said it had lowered its global passenger traffic forecasts for 2021 and 2022, with the emergence of new variants like Omicron highlighting the likelihood that conditions would remain volatile for airlines.
"It feels a little bit like we are back to where we were a year ago and that's not a great prospect for the industry and beyond," Deidre Fulton, a partner at consultancy MIDAS Aviation, said at an industry webinar on Wednesday December 1.
Omicron's impact will vary by country and region due to each government's response and the diverse nature of global airlines as well as their business models.
Japan Airlines and ANA Holdings on Wednesday December 1 suspended new reservations for international flights arriving into Japan until the end of December as the country tightens border controls.
Hong Kong's Cathay Pacific Airways, which lacks a domestic market and is operating at only 10% of pre-pandemic capacity, said it was too early to assess Omicron's impact on demand.
Airlines in countries with large, strong domestic markets like the United States, China and Russia are better shielded from the greater uncertainties of international travel.
An analysis by UBS shows U.S. carriers have not yet changed their scheduled capacity, which is running at 87% of 2019 levels in December and is expected to reach 92% of pre-COVID capacity in January.
United Airlines is launching its Newark-Cape Town route on Wednesday despite a U.S. ban on non-citizens entering from South Africa and Delta Air Lines said bookings over the Christmas period were strong.
"In the past year, each new variant has brought a decline in bookings, but then an increase once the surge dissipates. We expect the same pattern to emerge," said Helane Becker, an analyst at Cowen and Co.
Travel booking website Kayak said international travel searches from the United States were down only 5% on Sunday November 28 - a stark contrast to a 26% fall in searches from Britain, which had tightened testing requirements for arrivals.
Major European airlines are far more dependent on international travel than their U.S. counterparts, placing them more at risk of fallout from the Omicron variant.
In Asia, countries like Australia, Japan, Singapore and Thailand had only begun to cautiously lift border restrictions in recent weeks and passenger numbers remained at fractions of pre-pandemic levels before the Omicron variant was discovered.
John Grant, chief analyst at travel data firm OAG, said moves by Japan and Australia to delay entry to some foreigners due to Omicron were "sad and frustrating" but the proportionate impact on travel was "relatively insignificant".
Airlines globally have been more agile about quickly adjusting their schedules and destinations during the pandemic and that is expected to continue, he said.
Japan Escalates Omicron Emergency As Airlines Halt Reservations, Second Case Found
Japan's flag airlines halted new reservations on Wednesday December 1 and the government widened a travel ban amid escalating alarm over Omicron after a second case of the coronavirus variant was detected in the country.
Japan Airlines Co and ANA Holdings Inc said they were suspending new reservations for international flights to Japan until the end of December. The move came at the request of the transport ministry, which has also requested foreign airlines to halt to all such reservations.
Japan took some of the strictest steps globally on Monday by closing its borders to new foreign entrants for about a month in light of the emergence of Omicron. A day later, Japan's first Omicron case was discovered - a Namibian diplomat who arrived in the country on Sunday.
A second case was found in a male traveller in his 20s coming from Peru who landed at Narita International Airport on Saturday, the health ministry confirmed.
The government said it will prevent the reentry of those with residency status travelling from 10 southern African states from midnight on Wednesday for at least a month.
The restrictions apply to Japan residents coming from South Africa, Eswatini, Namibia, Zambia, Malawi, Mozambique, Lesotho, Angola, Botswana and Zimbabwe.
"From the view of prevention, we won't just restrict new entry by foreigners but also returning foreigners with resident status, unless there are special extenuating circumstances," Chief Cabinet Secretary Hirokazu Matsuno told a news conference.
"We will maintain a sense of urgency and keep track of the situation in various countries to be able to respond quickly and flexibly."
Regarding other passengers on the plane with the Namibian diplomat, he said none of the 70 people designated as close contacts and currently observing quarantine had shown signs of falling ill.
Health Minister Shigeyuki Goto later said his ministry was in contact with local governments to keep an eye on the fellow passengers.
Japanese border measures were loosened slightly a few weeks ago, but all of those changes have been rolled back in a move generally applauded by the public and accepted by business leaders, although some sectors of the economy dependent on foreign trainees could be hit if the closing is extended.
Commodity, Travel Stocks Lift UK Shares As Omicron Fears Ease
UK's FTSE 100 rebounded on Wednesday December 1, boosted by a recovery in oil, mining, and travel stocks after concerns around the new coronavirus variant Omicron eased slightly.
The commodity-heavy index gained 1.2% in morning trade, with miners jumping 2.9% following a bounce-back in copper prices, while rate-sensitive banks rose 1.9%.
Oil majors BP and Royal Dutch Shell climbed more than 3% each as major producers prepared to discuss how to respond to the threat of a hit to fuel demand from the Omicron variant.
"Investors are buying the dip because it appears that the variant isn't going to be as disastrous as initially thought and they're using this pullback as an opportunity," said David Madden, market analyst at Equiti Capital.
"If you just roll the clock back a week or two, the FTSE was touching 20-month highs."
The blue-chip index suffered its worst monthly performance in over a year in November as worries about vaccine efficacy against Omicron and hawkish comments by Federal Reserve Chairman Jerome Powell fuelled a selloff.
The domestically focussed mid-cap index added 1.0%, with Wizz Air and Easyjet leading gains. Other travel stocks recouped some of Tuesday's heavy losses.
"The movement in the airline sector sums up how the markets as a whole of reacted dreadfully initially to the news and then realized that things aren't as bad as they initially thought," Madden added.
British Health Secretary Sajid Javid said there were 22 confirmed cases of the Omicron variant in the country, and urged people to book a COVID-19 booster shot.
Pendragon Plc climbed 6.5% after it raised its annual profit outlook for the second time in two months on continued robust demand for used vehicles.
Software group Blue Prism rose 1.7% after it agreed to be bought by U.S.-based SS&C Technologies for £1.24 billion.
U.S. And Other Countries Tighten Travel Rules Over Omicron, EU Urges Vaccination
Air travellers to the United States COVID-19 testing rules to try to slow the spread of the Omicron variant and other countries tightened border controls as a European leader urged all concerned to "prepare for the worst".
A World Health Organization official said 24 countries may have reported cases of the variant so far but that some of the early indications were that most cases were mild, with none severe. Travel bans had consequences, he said, but there would be more mutations without other measures to contain its spread.
Staving off Omicron while scientists establish how easily it can spread and whether it can evade vaccine protection is a "race against time" the president of the European Union's executive Commission said, emphasising the role of vaccines.
"Prepare for the worst, hope for the best," Ursula von der Leyen told a news conference, adding that according to scientists, full vaccination and a booster shot provide the strongest possible protection.
Ghana, Nigeria, Norway, Saudia Arabia and South Korea were among the latest countries to report cases of the variant. Britain reported 22 cases so far, a number it said would certainly go up.
Australia said at least two people visited several places in Sydney while likely infectious and Denmark said an infected person had taken part in a large concert.
Japan, which had already barred all new foreign entrants, reported its second case of the new variant and said it would expand travel restrictions.
Such curbs have become more tangled as they have spread.
Hong Kong added Japan, Portugal and Sweden to its travel restrictions while Uzbekistan said it would suspend flights with Hong Kong as well as South Africa. Malaysia temporarily barred travellers from eight African countries and said Britain and the Netherlands could join the list.
The World Health Organization (WHO) said "blanket travel bans will not prevent the international spread and they place a heavy burden on lives and livelihoods", while advising those unwell, at risk or 60 years and over and unvaccinated to postpone travel.
Global shares came off lows plumbed on Tuesday November 30 after remarks by the CEO of Moderna raised questions about the efficacy of COVID-19 vaccines against Omicron.
Health officials have since offered reassurances and said it is very likely vaccines will still prevent people getting seriously ill.
European Medicines Agency Executive Director Emer Cooke said laboratory analyses should indicate over the next couple of weeks whether the blood of vaccinated people has sufficient antibodies to neutralise the new variant.
BioNTech's CEO said the vaccine it makes in a partnership with Pfizer was likely to offer strong protection against severe disease from Omicron. The European Union brought forward the start of its vaccine rollout for five-to-11-year-old children by a week to Dec 13.
Britain and the United States have both expanded their booster programmes in response to the new variant, which has highlighted the disparity between massive vaccination pushes in rich nations and sparse inoculation in the developing world.
Some 56 countries were reportedly implementing travel measures to guard against Omicron as of Nov. 28, the WHO said.
WHO head Tedros Adhanom Ghebreyesus said he was concerned that several member states were "introducing blunt, blanket measures", which "will only worsen inequities".
South Africa first reported the variant a week ago, but data from elsewhere already shows it was circulating before then although Nigeria said a case from October it had initially reported as Omicron had in fact been the Delta variant.
In Germany, which is battling a surge in COVID-19 infections and deaths, officials said four fully vaccinated people had tested positive for Omicron in the south but had moderate symptoms.
The United States is moving to require all air travellers entering the country to show a negative COVID-19 test performed within one day of departure, the Centers for Disease Control and Prevention (CDC) said on Tuesday November 30.
The new one-day testing requirement would apply to U.S. citizens as well as foreign nationals.
The CDC lists about 80 foreign destinations as having "Level Four", its highest level of COVID-19 transmission, and discourages Americans from travelling to those destinations.
In Asia, Japan said it would expand its entry ban to foreigners with resident status from 10 African countries.
Global airlines are preparing for more volatility.
Japanese airlines ANA and JAL said they were suspending new reservations for international flights to the country until the end of December.
"It feels a little bit like we are back to where we were a year ago and that's not a great prospect for the industry and beyond," Deidre Fulton, a partner at consultancy MIDAS Aviation, said at an industry webinar.
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