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* Airlines slash more capacity worldwide
* Shares plunge as crisis deepens
* Air France cuts capex, IAG postpones CEO retirement
* Global alliances call for aid
(Adds Norwegian, Virgin, Alitalia, U.S. developments; details)
By Sarah Young and Laurence Frost
LONDON/PARIS, March 16 (Reuters) - Airlines made
unprecedented cuts to flights, costs and staffing on Monday,
stepping up calls for emergency aid as coronavirus lockdowns and
new travel restrictions hit more major routes.
Already battered shares in British Airways parent IAG
, easyJet and Air France-KLM plunged
again as they scrapped most flights for the coming weeks,
joining other major carriers that are all but halting operations
in the face of the pandemic.
"It is now clear that the coronavirus is by far the biggest
crisis in the history of aviation," Finnair Chief Executive Topi
Manner said, as the carrier announced a 90% capacity reduction
and its second profit warning in three weeks.
The outlook darkened further after Spain declared a state of
emergency and the United States extended travel curbs to Britain
and Ireland, while Australia and New Zealand began requiring all
travellers to self-isolate. Germany advised citizens against
non-essential trips abroad.
The travel collapse threatens more bankruptcies in the wake
of British carrier Flybe's failure this month.
Troubled Norwegian Air on Monday laid off 90% of
its workforce and cancelled 85% of flights, while the Italian
government prepared to take control of Alitalia with another
cash injection of 600 million euros ($668 million).
In an unusual joint statement, the world's three main
airline alliances - oneworld, SkyTeam and Star Alliance - called
for government aid to alleviate the "unprecedented challenges"
faced by the industry.
U.S. officials and lawmakers view the situation with
increasing alarm. United, American and Delta Air
Lines are in talks with the government about potential
assistance backed by pilot and flight attendants' unions. Tax
relief and federal loans are being considered, officials say.
IAG, which also owns Spain's Iberia and Vueling, said it
would cut April-May capacity by at least 75% and postpone CEO
Willie Walsh's retirement - keeping successor Luis Gallego at
Iberia's helm as the group navigates the crisis.
Besides cancelling flights, the group announced moves to
freeze discretionary spending, reduce working hours and
temporarily suspend employment contracts.
Budget carriers Ryanair and easyJet announced plans
to ground most of their fleets, with the latter echoing calls
for government help.
"Coordinated government backing will be required to ensure
the industry survives," easyJet CEO Johan Lundgren said.
In Europe, IAG's shares had fallen 25% by 1413 GMT, while
Ryanair was down 18%, easyJet down 17% and Air France-KLM 17%
lower. In New York, Delta was down 18%, and American 15% lower.
"Airlines are siphoning cash and have no way of stopping it"
as bookings grind to a halt and traffic collapses for six to
eight weeks, Bernstein analyst Daniel Roeska said.
With carriers' survival now in government hands, he added,
"the key focus should be on emergency liquidity support and
enabling short-term layoffs or working-hour reductions to
safeguard cash."
The German, French, Dutch and British governments have all
said they are considering ways to help the industry.
'UNPRECEDENTED'
IAG's Walsh, who has railed against state aid to rivals
throughout his career, said airlines should continue to try
self-help first.
But he added: "Clearly where governments are providing
general support particularly for employees that are being
impacted by the current crisis, we would avail (ourselves) of
those general facilities."
BA's archrival Virgin Atlantic said on Monday it would axe
London-Newark flights permanently and ask staff to take two
months of unpaid leave.
Air France-KLM said it would park its entire Airbus A380 and
Boeing 747 fleets as it reduces operations by 90% and discusses
emergency aid with the French and Dutch governments. CEO Ben
Smith also told staff on Monday he had cut his own pay by 25%.
The group will use government-funded partial layoffs to find
200 million euros in cost-cuts as it reins in capital
expenditure by a further 350 million.
Airlines are also likely to postpone new jet deliveries, a
prospect weighing on Boeing and Airbus, whose
shares were down 18%. Aircraft and engine makers also face a
slump in parts and maintenance sales as air traffic withers.
"Demand is drying up in ways that are completely
unprecedented," aviation consultant CAPA said in a report,
predicting that most global airlines would go bust by June
without government help. "Normality is not yet on the horizon."
Cathay Pacific struck a leaseback deal to transfer six of
its Boeing 777s to BOC Aviation Ltd for $704 million
in precious cash, the Hong Kong-based carrier announced on
Monday - along with its own 90% capacity cut.
Azul scrapped international flights from its main Sao Paulo
hub, and Chile's Latam warned of further cuts.
Germany's Tui AG and Scandinavian carrier SAS
also said they were suspending the vast majority of
operations and seeking government aid.
Finnair predicted a substantial loss this year as
it announced the near-halt of operations and scrapped its
dividend. Icelandair also slashed capacity and said
it was in union talks to cut its wage bill.
Earlier, United Airlines said March revenue had
dropped by $1.5 billion and planes may remain near-empty into
the summer even after severe schedule cuts. "This crisis is
moving really quickly," CEO Oscar Munoz and President Scott
Kirby told employees in a Sunday memo.
Air New Zealand Ltd, which has halted trading in
its shares until Wednesday, also plans job cuts after cutting
long-haul capacity by 85%, CEO Greg Foran warned.
"For the coming months at least, Air New Zealand will be a
smaller airline requiring fewer resources, including people," he
said.
($1 = 0.8933 euros)
(Reporting by Sarah Young and Laurence Frost; Additional
reporting by Sudip Kar-Gupta and Tim Hepher in Paris, Terje
Solsvik in Oslo, Tracy Rucinski in Chicago, Marcelo Rocaburn in
Sao Paulo and Alexander Cornwell in Dubai; Editing by Mark
Potter)
