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* Slew of carriers cancel flights to and from Italy
* Korean Air warns epidemic could threaten its survival
* Global airlines ditch forecasts, cut capacity
* EU to suspend airport slots rule to help airlines
By Hyunjoo Jin, Jamie Freed and Tracy Rucinski
SEOUL/SYDNEY, March 10 (Reuters) - Airlines around the world
sank deeper into crisis on Tuesday as the worsening coronavirus
epidemic and Italy's lockdown hammered passenger numbers, forced
the cancellation of thousands of flights and led to the delaying
of plane orders.
Some carriers face calamity, with Korean Air Lines
warning the virus outbreak could threaten its
survival after it scrapped more than 80% of its international
capacity, grounding 100 of its 145 passenger aircraft.
"The situation can get worse at any time and we cannot even
predict how long it will last," Woo Kee-hong, the president of
South Korea's biggest airline, said in a memo to staff that
summed up the turmoil facing the industry.
"But if the situation continues for a longer period, we may
reach the threshold where we cannot guarantee the company's
survival."
Leading U.S. airlines Delta and American
ditched 2020 forecasts and unveiled more sweeping capacity cuts
and cost-saving measures, while United announced a $2
billion capital raising and warned of a deep hit to the sector.
"Let me blunt. Speaking for United, hope is not a strategy,"
United President Scott Kirby said at an investor conference. He
said it could take 18 months before demand recovers, with public
concern about the virus potentially worsening before improving.
United also slashed its 2020 capital expenditure in a move
that will defer aircraft deliveries, a potential issue for
planemakers Boeing Co and Airbus SE.
Australia's Qantas Airways delayed an order for
A350 planes, suspended forecasts and slashed capacity due to a
plunge in demand that industry chiefs estimate could hit
airlines' revenue by up to $113 billion this year.
Its CEO and chairman will take no salary, managers will
receive no bonuses and all staff are being encouraged to take
paid or unpaid leave. United has announced similar
steps.
Delta, which is also freezing hiring and offering voluntary
unpaid leaves, said it had seen net bookings fall by as much as
25% to 30% and expected the situation to deteriorate further.
United said its dire scenario planning sees revenues falling 70%
in April and May.
"This clearly is not an economic event," Delta CEO Ed
Bastian said on Tuesday. "This is a fear event, probably more
akin to what we saw at 9/11."
ITALIAN LOCKDOWN
The unprecedented lockdown of the whole of Italy, which is
convulsed by Europe's worst coronavirus outbreak, has heaped
fresh disaster on global airlines.
Easyjet, Norwegian Air, IAG-owned
British Airways, easyJet, Wizz Air and El Al
Israel Airlines were among carriers to axe flights to
and from the country, where there have been more than 9,000
virus infections and over 460 deaths.
Ryanair said on Tuesday it was cutting its passenger
forecast for the year ending March by three million as a direct
result of suspending almost all flights to and from its most
important market for the next month.
Aviation analyst Mark Simpson, at Goodbody, said another
major concern for the travel industry was whether the
coronavirus epidemic would worsen markedly in European holiday
hub Spain, which has reported more than 1,200 cases.
"A similar outbreak in Spain would pull IAG into the fold,
the holiday groups like TUI and DART (Jet2)," he said. "IAG
would be much more exposed due to its ownership of Vueling,
Iberia and the soon to be completed Air Europa."
Air France said it expected to make a total of
3,600 flight cancellations in March, including cutting 25% of
its European capacity.
GHOST FLIGHTS
The global airline industry has been among the sectors
hardest hit by the coronavirus outbreak. It has lost almost a
third of its value - $70 billion - this year, according to
Reuters calculations based on the 20 top listed global carriers.
The Italian cancellations added to an already difficult
financial situation at Norwegian Air, which has lost 70% of its
market value this year and scrapped its 2020 outlook.
It said on Tuesday it would cut around 3,000 flights between
mid-March and mid-June and temporarily lay off a "significant
share" of its workforce.
In an effort to give the industry some breathing space, EU
chief Ursula von der Leyen said the bloc would suspend a rule
requiring airlines to run most of their scheduled services or
else forfeit valuable airport landing slots. This will do away
with "ghost flights" where airlines fly almost empty planes
simply to keep slots, she added.
Should Korean Air fall, it would not be the first airline
engulfed by the fallout of the outbreak; Britain's Flybe
collapsed last week as bookings faltered, and a further sector
shakeout is expected, industry experts have warned.
Conglomerate HNA Group, which owns or holds stakes in a
number of Chinese carriers, including Hainan Airlines
, said it was in a "state of war" in its efforts to
tackle the financial fallout of the outbreak.
Airlines in China, where the new coronavirus originated,
have cancelled tens of thousands of flights since the start of
the outbreak, though they have started to resume them.
($1 = 1.5246 Australian dollars)
(Reporting by Hyunjoo Jin in Seoul and Jamie Freed in Sydney
and Tracy Rucinski in Chicago; Additional reporting by Terje
Solsvik in Oslo, Laurence Frost in Paris, Rachit Vats in
Bengaluru, Stella Qiu and Brenda Goh in Beijing, Angel
Krasimirov, Tova Cohen in Tel Aviv, Sarah Young, Kate Holton and
Josephine Mason in London, anmd Christian Kraemer in Berlin
Writing by Pravin Char; Editing by Mark Potter and Nick
Zieminski)
