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Business

U.S. airlines must suggest possible compensation for cash grants: Treasury

WASHINGTON/CHICAGO (Reuters) – Airlines must suggest possible compensation in return for government cash assistance and agree to conditions that include not cutting pay or laying off employees through Sept. 30, the U.S. Treasury Department said in guidelines issued on Monday as it prepares to quickly hand out $25 billion.

Congress approved legislation last week authorizing the $25 billion for passenger airlines, as well as $4 billion for cargo carriers and $3 billion in cash for airport contractors like caterers and airplane cleaners.

Under the law, Treasury is supposed to make initial payments of the grants designed to cover payroll costs by next week.

The companies “must identify financial instruments” that would “provide appropriate compensation,” the guidelines said, adding that these could include warrants, options, preferred stock, debt securities or notes.

The department told applicants to apply by April 3 at 5 p.m. to receive funds as soon as possible. Applications received after April 27 may not be considered.

Other conditions for the cash assistance include limits on executive compensation through March 2022 and no stock buybacks or dividend payments through September 2021.

Airlines may also apply for a separate $29 billion in government loans. Separate Treasury guidelines released Monday for loans said carriers must provide financial instruments “for the benefit of taxpayers, in equity appreciation or a reasonable interest rate premium.” Companies critical to U.S. national security can seek loans from a separate $17 billion fund.

Those seeking loans must describe losses they have “incurred or will incur as a result of coronavirus” and detail the cause of the loss such as reduced demand, unavailability of credit or unbudgeted medical expenses.

The Treasury Department said in reviewing applications for the cash assistance it will consider the “adequacy of the proposed financial instruments for providing compensation to the Federal Government.”

It also said it “may refuse to provide payroll support payments to applicants that have taken, or are currently evaluating, any action to commence a bankruptcy.”

Major U.S. airlines on Saturday asked the Treasury department to move quickly to release funds. They have cut tens of thousands of flights as travel demand collapses amid the coronavirus pandemic and warned that without cash they would need to quickly begin massive furloughs.

The chief executives of American Airlines (AAL.O), Delta Air Lines (DAL.N), United Airlines (UAL.O), Southwest Airlines Co (LUV.N) and others wrote in a letter that “given the urgent and immediate need, it is essential that these funds be disbursed as soon as possible.”

Treasury Secretary Steven Mnuchin said Friday taxpayers will be “compensated” for providing emergency assistance to air carriers.

American Airlines said Monday it will be allocated about $12 billion of the combined cash assistance and government loans. It has said it expects that Treasury will not seek “onerous” conditions.

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From airlines to hotels, layoff notices starting to pour in from across Colorado

Movie theaters, dental offices, a regional airline, a Vail resort, and several restaurants — those are among the first businesses that have informed the state that they have laid off workers due to the COVID-19 outbreak. They may be the first casualties to officially file, but they definitely won’t be the last.

The notices were filed with the Colorado Department of Labor and Employment under the Worker Adjustment and Retraining Notification Act starting on March 17 through March 23, and were made public Tuesday. They all describe a closure due to COVID-19 as the reason for the layoffs and furloughs.

Trans State Airlines, which operates out of Denver International Airport as a United Express provider, informed the state on Friday that it let go of 329 workers through April 2, the largest of the layoffs posted so far. Brian Randow, the Missouri-based airlines chief operating officer, informed the state that the layoffs were permanent. The airline isn’t coming back.

The Four Seasons Resort and Residences in Vail told the state it was letting go of 243 workers, including 22 cooks, 17 banquet staff, seven front desk workers, 14 guestroom attendants, six building engineers, 14 mountain activities attendants and supervisor.

The state’s mountain resorts have been hard hit due to the closure of all the state’s ski resorts. Areas like Pitkin and Eagle counties are experiencing some of the most severe outbreaks in the state and San Miguel County, home to Telluride, is under a full lockdown.

“Due to unforeseen, unexpected and sudden reduced business levels as a result of COVID-19, all employees at Four Seasons Resort and Residences Vail … will be placed on a furlough,” Jessica Beauchamp, director of people and culture, informed the state in a letter. The resort will be closed for the foreseeable future and the furloughs could turn into temporary or permanent layoffs, she wrote.

ClearChoice Management Services, which oversees a chain of dental offices, said it was sidelining 120 headquarters workers in Greenwood Village between layoffs and furloughs. The layoffs are permanent while the furloughs may extend up to six months.

Given the high risk of transmission from accidentally working on a patient with the novel coronavirus, the Colorado Dental Association last week strongly recommended that all members close their offices for weeks with the exception of emergency surgeries.

Movie chain Metropolitan Theatres also filed notices about the closure of its theaters in the state. They include the MetroLux 14, MetroLux Dine-in and Rocky Mountain Cinemas in Larimer County. Those locations are sidelining 120 workers, with 11 being put on furlough. Metropolitan is also closing the Wildhorse 6 Stadium Cinemas in Steamboat Springs, letting 21 workers go there.

Several restaurants also filed layoff notices with the state. They include Punch Bowl Social in Denver, which has let go of 81 workers; the Rusty Bucket Restaurant in in Westminster which dismissed 65 workers; and Tamayo and La Sandia, two Denver restaurants that didn’t disclose the number of layoffs.

Letting workers go is a tough decision. Some federal and state aid programs are conditioned on employers keeping their workers and using the funds to cover payroll. And employers always face the risk that workers they have trained may move on to other employers. Among those hiring right now are Amazon, King Soopers and Safeway and package delivery companies.

Wayne Cascio, a distinguished professor of management at the University of Colorado Denver, has studied the ability of companies to bounce back after an economic downturn. He said those who keep critical staff on board recover faster and perform much better going forward than those who cut to the bone.

Given the choice of letting go of assets, like cash, or letting go of workers, don’t make a knee-jerk reaction, he advised. Employees will respect and be more wiling to return to an employer that makes a sacrifice to keep them around as long as possible, employing strategies such as reduced hours, pay cuts and furloughs, even if they eventually must be let go. They will not respect a firm that cuts them loose at the first sign of trouble, he said.

“The more pain you can take before you let people go, the better you will be in the long run,” he advised business owners. But some businesses may be on the edge already and permanent layoffs could be a sign that they don’t plan on reopening.

Join our Facebook group for updates on coronavirus in Colorado.

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Politics

World's ailing airlines appeal for aid as U.S. offers $58 billion

DUBAI/SINGAPORE (Reuters) – Global airlines urged the world’s major economies to act quickly to prevent irreversible damage to an industry that has seen demand decimated almost overnight by the coronavirus crisis.

Several states have already stepped in to help airlines hammered by the travel slump, with the United States offering $58 billion in aid, Singapore announcing support for aviation and Australia easing competition rules.

As leaders from the Group of 20 nations met for a video summit, the International Air Transport Association (IATA) asked governments to provide or facilitate financial support for the major carriers it represents.

“The spread of the COVID-19 pandemic around the globe and the resulting government-mandated border closings and travel restrictions have led to the destruction of air travel demand,” IATA Chief Executive Alexandre de Juniac said in an open letter.

Underlining the industry’s plight, AirAsia, the region’s biggest budget carrier, became the latest to announce sweeping schedule cuts and said some of its businesses would halt flights altogether for a period.

Singapore Airlines said it would tap existing investors for up to S$15 billion ($10.5 billion) through the sale of shares and convertible bonds to offset the shock to its business from the coronavirus outbreak.

Related Coverage

  • U.S. airlines to dash for cash grants, not loans, even with potential government stake
  • IATA urges G20 to support airline industry

It also arranged a S$4 billion bridge loan.

“Many airlines have been paying out more in refunds than they have received in new booking revenues,” de Juniac, a former head of Air France-KLM, said.

“The average two-month cash reserves held by airlines are rapidly being exhausted,” de Juniac added, calling for direct financial support, loans or tax relief.

LOADING CARGO

In a desperate bid to preserve some revenues and keep global supply chains operating, U.S. Delta Air Lines, Air New Zealand and Abu Dhabi’s Etihad Airways joined a list of carriers that have offered to charter passenger planes as freight transporters, using their spacious cargo holds.

About half of the world’s air cargo normally travels in the bellies of passenger planes, so the cancellation of passenger flights has led to a sharp reduction in capacity, with knock-on effects on food, industry and other trade.

U.S. airlines, like others around the globe, have been reeling from the slide in passenger numbers and on Wednesday the U.S. Senate passed a $58 billion rescue package, half in the form of grants to cover some 750,000 airline staff wages.

Those receiving funds cannot lay off employees before Sept. 30 or change collective bargaining pacts. [L1N2BI0XW]

The bill has restrictions on stock buybacks, dividends and executive pay, and allows the government to take equity, warrants or other compensation as part of the package.

The U.S. House of Representatives is expected to back the move on Friday. President Donald Trump has promised to sign it.

A HEAVY PRICE

IATA, which estimates the pandemic will cost the global industry $252 billion in lost revenues this year, said earlier it had written to 18 countries in the Asia-Pacific region, including India, Japan and South Korea for emergency support.

Australia and New Zealand have joined other governments in announcing some financial relief. But this has not stopped carriers from putting staff on leave and grounding planes.

Virgin Australia plans to permanently cut more than 1,000 jobs among the 8,000 staff that have already been stood down. Australia’s Flight Centre Travel Group said it would cut 6,000 travel agent roles globally.

In a move unthinkable under normal conditions, Australia’s competition regulator said it would allow Virgin, Qantas Airways and Regional Express to temporarily coordinate schedules and share revenue on 10 regional routes.

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U.S. airlines cheer government relief but warn it is no 'cure' for deep industry crisis

CHICAGO (Reuters) – United Airlines Holdings Inc and Delta Air Lines welcomed on Friday a $50 billion relief package they said would protect jobs through September but warned that the continued challenges facing the industry will require more action.

Airlines are weathering their largest ever downturn as the coronavirus has ground global travel to a halt. A massive government stimulus package passed on Friday gives airlines some breathing room in terms of managing costs, but they still face tough decisions in the months ahead.

“If the recovery is as slow as we fear, it means our airline and our workforce will have to be smaller than it is today,” United said in a memo to employees.

Based on projections for the spread of the coronavirus and the global economy’s reaction, Chief Executive Oscar Munoz and President Scott Kirby said they expect “demand to remain suppressed for months after that, possibly into next year.”

Delta CEO Ed Bastian told employees that the relief package was not “a cure” and urged workers to continue signing up for voluntary unpaid leaves of absence.

U.S. airlines are set to receive $25 billion in grants to cover payrolls over the next six months, but are still encouraging workweek reductions, unpaid leaves and early retirements to further cut costs as they face more cancellations than bookings.

Before the global crisis, U.S. airlines were transporting a record 2.5 million passengers a day. Now planes are only 10% to 20% full and new bookings are showing 80% to 90% declines in traffic even after dramatic cuts in capacity, industry lobby Airlines for America said.

Airlines say the situation is dramatically different from just four weeks ago and getting worse each day with no end in sight. All are planning continued capacity reductions into the summer.

Unions representing pilots and flight attendants also welcomed the bill but said challenges remain in implementing it.

EQUITY STAKES

In exchange for the $25 billion in direct grants, U.S. Treasury Secretary Steve Mnuchin can demand equity, warrants or other financial instruments, a prospect that caused some frustration for airlines as the deal was reaching the finish line this week, people familiar with the matter said.

Airlines expect to learn the terms of the aid in the next five to 10 days, senior United executives said, and trust they will not be so onerous that airlines would not apply.

Related Coverage

  • U.S. airlines expect clarity on terms of payroll grants in 5-10 days: UAL senior executives

The industry directly supports 750,000 jobs and has argued that it must have the financial ability to jump-start operations once demand starts to return.

The leaders of American Airlines Group Inc, which has the largest workforce of any U.S. carrier, said late Thursday that they had not decided to apply for federal funds, noting that the terms were still unclear.

Still, Mnuchin insisted on Friday that taxpayers would be compensated. “I’ve been very clear this is not an airline bailout,” he told Fox Business Network.

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Politics

EU lawmakers back suspension of airline slots rule until October

BRUSSELS (Reuters) – European lawmakers overwhelmingly agreed on Thursday to suspend until Oct. 24 a rule requiring airlines to use at least 80% of their flight slots to keep them the following year so as to ease an industry crisis unleashed by the coronavirus pandemic.

Following a deal reached last week by envoys of the EU’s 27 member states, the European Parliament voted in its first-ever remote session in Brussels to suspend the EU slots rule until the summer season ends in late October as European flights fell 60% this week with several major airlines forced to ground their fleets.

The last time the EU waived the airport slots rule was in 2009 because of the financial crisis. EU governments will still need to approve the final agreement but that is seen as a formality.

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IATA pleads for more help for airlines after U.S. offers $58 billion aid

DUBAI/SINGAPORE (Reuters) – The International Air Transport Association (IATA) on Thursday urged the world’s major economies to act quickly to prevent irreversible damage to an airline industry that has seen demand crushed by the coronavirus crisis.

A number of governments have already stepped in to help airlines hammered by the virus-induced travel slump, with the United States offering $58 billion in aid, Singapore promising to keep its carrier aloft, and Australia easing competition rules.

As leaders from the Group of 20 nations met for a video summit, the world’s largest airline body asked governments in an open letter to provide or facilitate financial support for the industry.

“The spread of the COVID-19 pandemic around the globe and the resulting government-mandated border closings and travel restrictions have led to the destruction of air travel demand,” IATA Chief Executive Alexandre de Juniac wrote.

Underlining the industry’s plight, AirAsia, the region’s biggest budget carrier, became the latest airline to announce sweeping cuts to its schedule in response to the deepening crisis caused by the coronavirus outbreak. It said some of its businesses would halt flights altogether for a period.

“Many airlines have been paying out more in refunds than they have received in new booking revenues,” said de Juniac, a former head of Air France-KLM.

Related Coverage

  • IATA urges G20 to support airline industry
  • Pilots' union criticises UK's coronavirus job retention scheme

“As a result, the average two-month cash reserves held by airlines are rapidly being exhausted,” he added, calling for direct financial support, loans or tax relief.

LOADING CARGO

In a desperate bid to preserve some revenues and keep global supply chains operating, U.S. Delta Air Lines, Air New Zealand and Abu Dhabi’s Etihad Airways joined a list of carriers that have turned passenger planes into cargo-only transporters.

About half of the world’s air cargo normally travels in the bellies of passenger planes, so the cancellation of passenger flights has led to a sharp reduction in cargo capacity, with knock-on effects to food, industry and other vital trade.

In an unprecedented move, the U.S. Senate passed a $58 billion aid package late on Wednesday, half in the form of grants to cover some 750,000 airline staff wages. Those receiving funds cannot lay off employees before Sept. 30 or change collective bargaining pacts. [L1N2BI0XW]

The bill has restrictions on stock buybacks, dividends and executive pay, and allows the government to take equity, warrants or other compensation as part of the rescue package.

The U.S. House of Representatives is expected to back the move on Friday. President Donald Trump has promised to sign it.

PAYING A HEAVY PRICE

U.S. airlines, like others around the globe, have been reeling from the slide in passenger numbers.

United Airlines Holdings said capacity would drop 68% in April and Alaska Air Group cut its schedule by 70% for April and May. American Airlines suspended its dividend, drew down a $400 million credit line and secured an additional loan.

IATA, which estimates the pandemic will cost the global industry $252 billion in lost revenues this year, said earlier it had written to 18 countries in the Asia-Pacific region, including India, Japan and South Korea for emergency support for carriers.

Singapore’s finance minister Heng Swee Keat said Singapore Airlines Ltd would soon announce “corporate action” supported by state investor Temasek Holdings to tackle the crisis. Share trading in the carrier, which said this week it was seeking extra funds, was halted on Thursday.

Australia and New Zealand have joined other governments in announcing some financial relief. But this has not stopped carriers from putting staff on leave and grounding planes.

Virgin Australia plans to permanently cut more than 1,000 jobs among the 8,000 staff that have already been stood down. Australia’s Flight Centre Travel Group said it would cut 6,000 travel agent roles globally.

In a move unthinkable under normal conditions, Australia’s competition regulator said it would allow Virgin, Qantas Airways and Regional Express to coordinate flight schedules and share revenue on 10 regional routes.

“We hope that this temporary measure will also support airlines’ ability to again compete with each other on these routes once the pandemic crisis has passed,” Australian Competition and Consumer Commission Chairman Rod Sims said.

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U.S. Senate offers $58 billion aid to airlines as they struggle to stay airborne

SYDNEY/SINGAPORE (Reuters) – The U.S. Senate offered struggling airlines unprecedented aid worth $58 billion that will helping cover their staff wages, as carriers around the world seek state support and turn passenger planes into cargo liners in their desperate bid for revenues.

The coronavirus crisis has ravaged the travel industry and grounded many of the world’s planes, prompting governments to take previously unthinkable steps to prevent bankruptcies, ranging from state handouts to temporarily halting competition rules.

“For airlines, it’s apocalypse now,” said Alexandre de Juniac, director general of the International Air Transport Association (IATA), which represents carriers around the world.

“Travel restrictions and evaporating demand mean that, aside from cargo, there is almost no passenger business,” he said.

IATA, which estimates the pandemic will cost the global industry $252 billion in lost revenues this year, said it had written to 18 countries in the Asia-Pacific region, including India, Japan and South Korea for emergency support for carriers.

Airlines UK, representing carriers in Britain, asked the government for tax and air traffic fee holidays.

The U.S. Senate passed an industry aid package, half in the form of grants to cover some 750,000 employees’ paychecks. Companies receiving funds cannot lay off employees before Sept. 30 or change collective bargaining agreements.

The bill has restrictions on stock buybacks, dividends and executive pay, and allows the government to take equity, warrants or other compensation as part of the rescue package.

The U.S. House of Representatives is expected to back the move on Friday. President Donald Trump has promised to sign it.

United Airlines Holdings said capacity would drop by 68% in April and Alaska Air Group said it would cut its schedule by 70% in April and May. American Airlines suspended its dividend, drew down a $400 million credit line and secured an additional loan.

CUTTING JOBS

In Asian countries, Singapore, Australia and New Zealand have announced some financial relief for airlines, but this has not stopped carriers from putting staff on leave and grounding planes.

Singapore’s finance minister Heng Swee Keat said Singapore Airlines Ltd would soon announce “corporate action” supported by state investor Temasek Holdings to tackle the crisis. Share trading in the carrier, which said this week it was seeking extra funds, was halted on Thursday.

Virgin Australia plans to permanently cut more than 1,000 jobs among the 8,000 staff that have already been stood down. Australia’s Flight Centre Travel Group said it would cut 6,000 travel agent roles globally.

In a move unthinkable under normal conditions, Australia’s competition regulator said it would allow Virgin, Qantas Airways and Regional Express to coordinate flight schedules and share revenue on 10 regional routes.

“We hope that this temporary measure will also support airlines’ ability to again compete with each other on these routes once the pandemic crisis has passed,” Australian Competition and Consumer Commission Chairman Rod Sims said.

In bid to raise revenue and keep some planes flying, Delta Air Lines and Air New Zealand joined others in offering cargo flights and charters on passenger planes.

About half of the world’s air cargo normally travels in the bellies of passenger planes, so the cancellation of passenger flights has led to a sharp reduction in cargo capacity.

“We’ve shared these options with our global cargo customer base and are getting some strong interest from customers wanting to ship to and from Shanghai, Hong Kong, San Francisco, Los Angeles, Sydney and Melbourne,” said Rick Nelson, Air New Zealand’s general manager for cargo.

Abu Dhabi’s Etihad Airways said it would operate 34 weekly cargo-only flights with Boeing 787 Dreamliner passenger jets to India, Thailand, Singapore, Philippines, Indonesia and South Korea.

Hawaiian Airlines said it had added more cargo-only turboprop flights between the state’s islands.

Roughly 1,800 planes had been grounded globally on Monday and Tuesday, according to aviation research firm Cirium.

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Parking pain: Airlines, airports hunt for storage space as pandemic idles planes

SYDNEY (Reuters) – As airlines idle thousands of aircraft for which there are no passengers, they are hitting an unprecedented problem: finding a place to park them.

Taxiways, maintenance hangars and even runways at major airports are being transformed into giant parking lots for more than 2,500 airliners, the biggest of which takes up about as much room as an eight-story building with a footprint 3/4 the size of an American football field.

The number of planes in storage has doubled to more than 5,000 since the start of the year, according to Cirium data, with more expected to be parked in the coming weeks as carriers like Australia’s Qantas Airways Ltd (QAN.AX) and Singapore Airlines Ltd (SIAL.SI) proceed with further announced cuts to flight schedules.

In Frankfurt, Germany’s biggest airport is a ghost town of silent airliners. Its northwest landing runway, including taxiways and bridges, has been converted to an aircraft parking lot for Lufthansa (LHAG.DE), Condor and other airlines. Lufthansa brand Swiss has rented parking spots at a military airport close to Zurich.

Similar crowds of planes are parked at other major airports, including Hong Kong, Seoul, Berlin and Vienna as well as traditional desert parking lots in Victorville, California, and Marana, Arizona, according to data from flight tracking website FlightRadar24.

In Manila, some Philippines Airlines (PAL.PS) jets are parked in the Lufthansa Technik Philippines hangar, an airline official said.

Even some smaller airports have been converted to parking lots. Avalon Airport west of Melbourne expects to take 50 planes from Qantas and its low-cost offshoot, Jetstar, according to the airport’s chief executive, Justin Giddings.

“It is sad for everyone, the whole industry,” he told Reuters of the groundings, which have led Qantas to put 20,000 staff members on leave.

Qantas is sending 30 engineers to Avalon help maintain the planes so they can re-enter service in three to seven days when demand returns, according to a source with knowledge of the matter. The carrier is also parking about 100 other aircraft at major airports around Australia and its five aging 747s at a desert storage facility in Alice Springs, the source said.

Qantas declined to comment.

Asia Pacific Aircraft Storage (APAS) in Alice Springs is also home to SilkAir and Fiji Airways 737 MAX jets as part of a year-long global grounding that has placed further pressure on the ability to find spots to put other jets.

“Things are extremely busy,” APAS managing director Tom Vincent said. “There are further aircraft deliveries this week and into the coming weeks.”

Some airports, such as Melbourne and Brisbane, said they are providing parking for free. Brisbane Airport said that some international airlines had expressed interest in using its facilities, which can house up to 101 planes, but that no deals had yet been reached. Qantas and Virgin Australia Holdings Ltd (VAH.AX) will use some of the Brisbane spots.

Cathay Pacific Airways Ltd (0293.HK), one of the first and hardest hit by the coronavirus, has been using remote bays, taxiways and other operational areas at Hong Kong International Airport.

In the United States, United Airlines Holdings Inc (UAL.O) and American Airlines Group Inc (AAL.O) said they are parking planes at maintenance facilities for now, while Delta Air Lines Inc (DAL.N) said it was still looking into the issue.

FlightRadar24 data showed Delta had moved a dozen planes to Marana in mid-March and even more to Victorville over the last week.

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Skies clear as further coronavirus curbs ground more flights

SYDNEY/SINGAPORE (Reuters) – Widening travel curbs to contain the spread of the coronavirus led to further flight cancellations on Monday, with new restrictions spanning India, Australia, New Zealand, the United Arab Emirates (UAE), Hong Kong, Singapore and Taiwan.

Globally the number of scheduled flights last week was down more than 12% from a year ago, flight data provider OAG said, with many airlines having announced further cuts to come.

“It is a war against a virus,” Andrew Herdman, director general of the Association of Asia Pacific Airlines, told Reuters by telephone on Monday.

India’s commercial airlines were to cease domestic flights from midnight Tuesday, a civil aviation ministry spokesman said, the latest country to impose tight air travel restrictions.

Cargo flights were exempt from the order.

The impact on planemakers has been deep and sudden and on Monday planemaker Airbus (AIR.PA) announced new steps to bolster its financial position, including the signing of a credit facility for 15 billion euros ($16.1 billion).

Airbus added it was withdrawing its 2020 financial guidance, dropping a proposed 2019 dividend that had a cash value of 1.4 billion euros ($1.5 billion) and suspending funding to top up staff pension schemes.

Its U.S. rival Boeing (BA.N) is under similar pressure and has called for a $60 billion lifeline for the U.S. industry.

TRAVEL CURBS

Australia and New Zealand both warned against non-essential domestic travel, while the UAE halted flights and Hong Kong, Singapore and Taiwan took steps to ban foreign transit passengers.

“What we have to do is take care of the institutions and people’s livelihoods, the soft capital, so that we can restart effectively in a timely way when the time comes,” Herdman said.

The UAE, home to major carriers Emirates [EMIRA.UL] and Etihad Airways, said it would suspend all passenger flights and airport transit for two weeks to help rein in the virus.

The UAE’s decision takes effect in 48 hours, with cargo and emergency evacuation flights exempted. Emirates responded by saying it would temporarily suspend all passenger services for two weeks from March 25.

Singapore Airlines (SIAL.SI) grounded most of its fleet after the Asian city-state banned entry or transit by short-term visitors on Sunday.

“This is the greatest challenge in the SIA Group’s existence,” Chief Executive Goh Choon Phong said in a memo to staff.

The group said it had reached agreements with unions on a set of cost-cutting measures, including unpaid leave, affecting about 10,000 staff. The chief executive is taking a 30% salary cut from the start of April.

The airline normally relies heavily on connecting passengers from markets such as Australia to Europe, and India to North America through its Singapore hub.

Taiwan announced similar travel curbs that will hit China Airlines Ltd (2610.TW) and EVA Airways Corp (2618.TW), which have marketed Taipei as a convenient and affordable transit airport, competing with Hong Kong and Singapore.

In Hong Kong, Cathay Pacific Airways Ltd (0293.HK) has cut its passenger capacity by 96% in April and May as government restrictions hit travel.

GOING SOUTH

In the southern hemisphere, Qantas Airways Ltd (QAN.AX), Virgin Australia Holdings Ltd (VAH.AX) and Air New Zealand Ltd (AIR.NZ) were re-examining schedules after their governments advised against non-essential domestic travel.

Regional Express Holdings Ltd (REX) (REX.AX), which serves remote Australian towns, said it would shut all operations, except some subsidized routes, from April 6, unless governments quickly expressed a willingness to underwrite its losses.

In mainland China, domestic capacity has been rising as some internal curbs are eased, but there are concerns that passengers on international flights could re-import the virus.

China’s aviation regulator said all international flights due to arrive in the capital will be diverted to other airports from Monday.

($1=1.7483 Australian dollars)

($1 = 0.9340 euros)

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Domestic travel, airline hubs the latest hit as coronavirus curbs tighten

SYDNEY (Reuters) – Airlines canceled more flights on Monday, as Australia and New Zealand warned against non-essential domestic travel, the United Arab Emirates (UAE) halted flights for two weeks and Singapore and Taiwan banned foreign transit passengers in the coronavirus battle.

As demand evaporates, the number of scheduled flights last week was down more than 12% globally from the year earlier, flight data provider OAG said, with many airlines having announced further cuts to come.

“It is a war against a virus,” Andrew Herdman, director general of the Association of Asia Pacific Airlines, told Reuters in a telephone interview.

“What we have to do is take care of the institutions and people’s livelihoods, the soft capital, so that we can restart effectively in a timely way when the time comes.”

Ratings agency Moody’s estimated global capacity would fall by 25% to 35% this year, assuming the spread of the virus slowed by the end of June.

The UAE, home to major carriers Emirates and Etihad Airways, said it would suspend all passenger flights and airport transit for two weeks to help rein in the virus.

The decision takes effect in 48 hours, it added, with cargo and emergency evacuation flights exempted. Emirates said on its website it would temporarily suspend all passenger services for two weeks starting March 25 due to the government directive.

Singapore Airlines Ltd (SIAL.SI) had been planning to halve its international capacity before the Asian city-state banned entry or transit by short-term visitors on Sunday.

It stepped that up to a cut of 96% through at least the end of April, responding to what the carrier on Monday called the greatest challenge it has faced in its existence.

“Without a domestic segment, the group’s airlines become more vulnerable when international markets increasingly restrict the free movement of people or ban air travel altogether,” it said, announcing plans to ground most of its fleet.

The airline normally relies heavily on connecting passengers from markets such as Australia to Europe and India to North America through its hub.

Singapore Airlines would look to defer aircraft deliveries and has drawn on lines of credit to meet immediate cashflow requirements, it added.

Taiwan announced similar curbs that will hit China Airlines Ltd (2610.TW) and EVA Airways Corp (2618.TW), which have marketed Taipei as a convenient and affordable transit airport, competing with Hong Kong and Singapore.

In Hong Kong, Cathay Pacific Airways Ltd (0293.HK) has cut its passenger capacity by 96% in April and May as government curbs hit travel.

Planemaker Airbus (AIR.PA) announced new steps to bolster its financial position, including the signing of a credit facility for 15 billion euros ($16.1 billion).

Airbus added it was withdrawing its 2020 financial guidance, dropping a proposed 2019 dividend that had a cash value of 1.4 billion euros and suspending funding to top up staff pension schemes.

In the southern hemisphere, Qantas Airways Ltd (QAN.AX), Virgin Australia Holdings Ltd (VAH.AX) and Air New Zealand Ltd (AIR.NZ) were re-examining domestic schedules after their governments advised against non-essential domestic travel.

Regional Express Holdings Ltd (REX) (REX.AX), which serves remote Australian towns, said it would shut all operations, except some subsidized routes, from April 6, unless governments quickly expressed a willingness to underwrite its losses.

Australia’s largest airport operator, Sydney Airport Holdings Pty Ltd (SYD.AX), wants to cut capital spending from a forecast A$350 million to A$450 million ($200 to $257 million), so as to focus only on critical projects, it said on Monday.

In Hawaii, which ordered 14 days in quarantine for all arrivals from Thursday, Hawaiian Airlines (HA.O) said it would suspend most long-haul passenger services except for a daily flight from Honolulu to Los Angeles and a weekly flight to American Samoa.

In mainland China, the first to have been hit by the virus, domestic capacity has been rising as some internal curbs are eased, but there are concerns that passengers on international flights could re-import the virus.

China’s aviation regulator said all international flights due to arrive in the capital will be diverted from Monday to other airports in the country.

More than 570,000 flights to, from and within, China alone were canceled from Jan. 1 to March 16, flight data provider Cirium says.

($1=1.7483 Australian dollars)

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