Travel giant Tui suspends vast majority of travel operations


Tour operator TUI today suspended most of its operations until further notice due to the coronavirus pandemic as British Airways revealed it would slash routes by 75% and EasyJet announced further cancellations. 

IAG, the owner of BA, said it would reduce capacity in April and May and its outgoing boss Willie Walsh would defer his retirement, days after a senior executive warned the airline’s very survival was at stake. 

EasyJet said it could ground the majority of its fleet on a rolling basis, while it joined Virgin Atlantic in calling for urgent government intervention to help the struggling aviation industry survive. 

Unite union warned thousands of jobs are under threat without official help, as pilots’ association Balpa said the aviation industry risked ‘being wiped out’ by the pandemic. 

Today’s announcements led to huge falls for airline shares, with IAG down 26% and EasyJet and TUI AG slumping 29% and 35% respectively. The wider FTSE dropped 5.3% to its lowest level since October 2011, adding to a 17% drop last week.

It came as the UK death toll increased by 14 overnight, bringing the total to 35, as the government prepared to introduce emergency measures including a £1,000 fine or jail for anyone refusing to self-isolate. 

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German operator Tui today announced it would be slashing three-quarters of its routes 

IAG, the owner of BA, said it would cut its flying capacity by at least three-quarters in April and May

IAG, the owner of BA, said it would cut its flying capacity by at least three-quarters in April and May

In a message to its 70,000 employees worldwide, TUI announced it was suspending the ‘majority’ of its global operations, including package travel, cruises and hotels. 

‘We are taking substantial cost measures to mitigate the earnings effect,’ its statement read. ‘Moreover, we have decided to apply for state aid guarantees to support the business until normal operations are resumed.’ 

Airlines have been hammed by the collapse in demand caused by the virus as people avoid travelling either voluntarily or due to mandatory containment measures, while transatlantic carriers are also suffering from the effects of Donald Trump’s travel ban. 

Unions are warning of huge job losses across the industry, prompting Unite to ask the government to take a financial stake in airlines and airports to ensure their survival. 

Transport Secretary Grant Shapps today refused to rule out such a measure, as he said there are ‘lots of different options’ to help the aviation industry through the coronavirus crisis.

He told Sky News: ‘We want to make sure that companies and individuals and organisations who are in a good state – not those that are going to fail anyway – are able to continue.

‘So, we’ll be looking at all of these measures, I’ll be discussing it with the Chancellor and the Prime Minister later today, and those discussions with the sector are ongoing.’

Asked if a bailout of airlines was on the table, Mr Shapps said: ‘There are lots of different options here – including some other things that people have been looking for, for example HMRC offer a ‘time to pay’.’ 

EasyJet blamed the ‘unprecedented level’ of travel restrictions imposed by governments and ‘significantly reduced levels of customer demand’ for its decision to cut flight operations. 

The Luton-based carrier said in a statement there is ‘no guarantee’ European airlines ‘will survive what could be a long-term travel freeze and the risks of a slow recovery’.

The airline went on to say it is taking ‘every action to remove cost and non-critical expenditure from the business at every level’, adding that grounding aircraft ‘will remove significant levels of variable costs’. 

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The economic cost of the virus has reached such a level that even large established carriers are under threat, according to Nigel Frith, a senior market analyst at asktraders.com. 

‘As the number of countries shutting down borders and the list of destinations suspending flights grows the aviation industry is facing an unprecedented challenge,’ he said. 

‘Staff are starting to be laid off as airlines struggle to rein in costs quickly in an attempt to weather the biggest crisis to hit the industry, worse than 9/11. This is no longer just the smaller players like Flybe who are being affected. 

‘Industry big shots such as British Airways is even warning over its survival. It wouldn’t be surprising if governments are forced to step in to prop up some airlines.’           

EasyJet said it could ground the majority of its fleet on a rolling basis, and its chief executive Johan Lundgren called for coordinated government backing

EasyJet said it could ground the majority of its fleet on a rolling basis, and its chief executive Johan Lundgren called for coordinated government backing

Both EasyJet and BA today insisted they had strong balance sheets, providing details on their cash positions and credit facilities.

IAG, which also owns Iberia and Aer Lingus, said it had total liquidity of 9.3 billion euros, while EasyJet said it had £1.6billion of cash plus an undrawn £405m revolving credit facility.

While IAG’s Walsh has long-opposed any government help for aviation businesses, and said as recently as two weeks ago that government’s should not prop up airlines, EasyJet’s Johan Lundgren called for help.

‘European aviation faces a precarious future and it is clear that coordinated government backing will be required to ensure the industry survives and is able to continue to operate when the crisis is over,’ Mr Lundgren said today. 

Meanwhile, Mr Walsh said: ‘We have seen a substantial decline in bookings across our airlines and global network over the past few weeks and we expect demand to remain weak until well into the summer.

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‘We are therefore making significant reductions to our flying schedules. We will continue to monitor demand levels and we have the flexibility to make further cuts if necessary.

‘We are also taking actions to reduce operating expenses and improve cash flow at each of our airlines. IAG is resilient with a strong balance sheet and substantial cash liquidity.’    

An empty terminal at Gatwick Airport yesterday, as airlines were hammered by a catastrophic drop in demand

An empty terminal at Gatwick Airport yesterday, as airlines were hammered by a catastrophic drop in demand 

 Chief Executive Alex Cruz wrote to all 45,000 workers saying the virus’ relentless spread is a crisis ‘of global proportions like no other we have known’, more serious than the 2008 financial crash, SARS or 9/11.

Mr Cruz warned people would be put out of work and planes would be grounded ‘like we’ve never had to do before’ and urged: ‘Please do not underestimate the seriousness of this for our company’ in a message entitled ‘the survival of British Airways’.

As part of cash-saving measures, IAG will also be cutting spending on IT, freezing recruitment, encouraging staff to take leave and reducing working hours. 

Today, Air France said it will slash flight capacity by 70-90 percent over the next two months. 

The Scandinavian airline SAS said on Sunday that it would temporarily halt most of its traffic starting today, leading to up to 10,000 employees being laid off. 

American Airlines it suspending almost all long-haul international flights from Monday, while last week Norwegian Air said it would lay off around half of its 11,000 staff and cancel 4,000 flights as it struggled to stay afloat. 

Have you had to cancel your holidays due to the coronavirus outbreak? Contact rory.tingle@mailonline.co.uk or phone 020 3615 2874 



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