“In terms of recovery, light was at the end of the tunnel just weeks ago” one major airline CEO tells me in London. “But now, the world has been spooked by the uncertainties of Omicron” he added.
This week, Virgin Atlantic owners Sir Richard Branson and Delta have pumped another £400m into the struggling carrier, as the spread of the Omicron variant and growing travel restrictions spread gloom around airline investors.
Shai Weiss, chief executive of Virgin Atlantic, said that both shareholders and creditors had “been a source of unwavering support” during the pandemic, with an earlier £1.2bn recapitalisation in September 2020 bringing the airline back from the brink.
Delta’s chief executive, Ed Bastian, said that Virgin Atlantic’s business had now transformed, “allowing them to emerge from the pandemic a stronger airline”.
Weiss joined other UK airline bosses in signing a joint letter to the prime minister objecting to the “disproportionate and haphazard” policies hitting customers and businesses.
Earlier this week, UK airline bosses wrote to Prime Minister Boris Johnson: “As leaders of UK airlines, we are deeply concerned about the haphazard and disproportionate approach by government to travel restrictions following the emergence of the Omicron variant. Pre-departure and upon-arrival testing clearly add very little value to our Covid protection, but unnecessarily disrupt Christmas for families as well as businesses while severely damaging the UK travel industry.”
The airline bosses urged the government to “prevent the permanent scarring of our industry” by removing the requirement for fully vaccinated passengers to test, when the policy is formally reviewed, and to tackle the high prices and lack of regulation with the private PCR tests market – one created by the government itself.
Airline leaders added: “We and our customers feel sincerely let down, having believed a more pragmatic, evidence-led approach to travel, in line with the rest of the world, had been achieved and agreed by all concerned just a few months ago.”
Elsewhere, airlines continue to right-size and optimise their business in a boost to bid profitability following the Covid collapse. The “International Airlines Group” — the prominent multi-national holding company known as IAG (of which Qatar Airways holds a 20.01% stake) which acts as a parent company to British Airways, Iberia, Aer Lingus, Vueling and Level, is to scrap its plan to buy another Spanish airline Air Europa — a deal that was being investigated by competition authorities in the UK and the EU.
The move comes more than two years after International Airlines Group (IAG) – under its former chief executive, Willie Walsh – first announced plans to buy the carrier from the Spanish tourism group Globalia for €1bn (£850m) in November 2019, before renegotiating the deal at half the price after Covid-19 hit.
Stephen Gunning, IAG’s chief financial officer, said in a statement: “International Airlines Group and Globalia today confirm that discussions are at an advanced stage to terminate the agreement.”
Both UK competition authorities and the European Commission were both investigating whether the takeover would reduce competition in British and Spanish aviation markets. New agency Reuters reported claims from sources that European regulators had indicated they would not allow the takeover to go through without further concessions.
Elsewhere, British Airways has confirmed its return to short haul flying from London Gatwick next year, under a new subsidiary, BA Euroflyer. BA stopped flying from London Gatwick airport soon after the pandemic started, but will return with a short-haul leisure network in late March 2022 after almost two years.
The airline announced its intention to create a short-haul standalone business at Gatwick in August, similar to its operation from London City Airport, which operates under the British Airways name but exists as an entirely separate entity. The offshoot will launch later in 2022, with short-haul services at Gatwick being operated by mainline BA until the new entities’ Air Operators Certificate is issued. BA short-haul flights will start operating from Gatwick at the end of March, with three Airbus short-haul aircraft initially, ramping ramp up to 18 aircraft by the end of May.
The airline said the new operation, which will be separate from its parent, will offer flights to 35 destinations in Europe and North Africa with flights starting at £39 each way. During the pandemic, several routes were moved to Heathrow airport, some of which will return to Gatwick, as well as being maintained at Heathrow to give customers choice, including Faro, Ibiza, Malaga, Marrakech, and Tenerife. In addition, other new routes will be added at Gatwick including Athens, Berlin, Madrid, Milan Malpensa, and Santorini.
Sean Doyle, British Airways’ Chairman and CEO, said: “Today is a landmark moment for British Airways. The creation of a new British Airways short-haul organisation means Gatwick customers will benefit from access to a premium service from the UK’s flag carrier at competitive prices. We are looking forward to bringing a short-haul network back to Gatwick, with a fantastic flying team in place, to serve our customers from London’s second hub airport, which we feel sure will be a success.”
Following the news, British Airways (which is owned by International Airlines Group) saw its shares rise by 2.5% to 133.6p.
* The author is an aviation analyst. Twitter handle: @AlexInAir
This week, Virgin Atlantic owners Sir Richard Branson and Delta have pumped another £400m into the struggling carrier, as the spread of the Omicron variant and growing travel restrictions spread gloom around airline investors.
Shai Weiss, chief executive of Virgin Atlantic, said that both shareholders and creditors had “been a source of unwavering support” during the pandemic, with an earlier £1.2bn recapitalisation in September 2020 bringing the airline back from the brink.
Delta’s chief executive, Ed Bastian, said that Virgin Atlantic’s business had now transformed, “allowing them to emerge from the pandemic a stronger airline”.
Weiss joined other UK airline bosses in signing a joint letter to the prime minister objecting to the “disproportionate and haphazard” policies hitting customers and businesses.
Earlier this week, UK airline bosses wrote to Prime Minister Boris Johnson: “As leaders of UK airlines, we are deeply concerned about the haphazard and disproportionate approach by government to travel restrictions following the emergence of the Omicron variant. Pre-departure and upon-arrival testing clearly add very little value to our Covid protection, but unnecessarily disrupt Christmas for families as well as businesses while severely damaging the UK travel industry.”
The airline bosses urged the government to “prevent the permanent scarring of our industry” by removing the requirement for fully vaccinated passengers to test, when the policy is formally reviewed, and to tackle the high prices and lack of regulation with the private PCR tests market – one created by the government itself.
Airline leaders added: “We and our customers feel sincerely let down, having believed a more pragmatic, evidence-led approach to travel, in line with the rest of the world, had been achieved and agreed by all concerned just a few months ago.”
Elsewhere, airlines continue to right-size and optimise their business in a boost to bid profitability following the Covid collapse. The “International Airlines Group” — the prominent multi-national holding company known as IAG (of which Qatar Airways holds a 20.01% stake) which acts as a parent company to British Airways, Iberia, Aer Lingus, Vueling and Level, is to scrap its plan to buy another Spanish airline Air Europa — a deal that was being investigated by competition authorities in the UK and the EU.
The move comes more than two years after International Airlines Group (IAG) – under its former chief executive, Willie Walsh – first announced plans to buy the carrier from the Spanish tourism group Globalia for €1bn (£850m) in November 2019, before renegotiating the deal at half the price after Covid-19 hit.
Stephen Gunning, IAG’s chief financial officer, said in a statement: “International Airlines Group and Globalia today confirm that discussions are at an advanced stage to terminate the agreement.”
Both UK competition authorities and the European Commission were both investigating whether the takeover would reduce competition in British and Spanish aviation markets. New agency Reuters reported claims from sources that European regulators had indicated they would not allow the takeover to go through without further concessions.
Elsewhere, British Airways has confirmed its return to short haul flying from London Gatwick next year, under a new subsidiary, BA Euroflyer. BA stopped flying from London Gatwick airport soon after the pandemic started, but will return with a short-haul leisure network in late March 2022 after almost two years.
The airline announced its intention to create a short-haul standalone business at Gatwick in August, similar to its operation from London City Airport, which operates under the British Airways name but exists as an entirely separate entity. The offshoot will launch later in 2022, with short-haul services at Gatwick being operated by mainline BA until the new entities’ Air Operators Certificate is issued. BA short-haul flights will start operating from Gatwick at the end of March, with three Airbus short-haul aircraft initially, ramping ramp up to 18 aircraft by the end of May.
The airline said the new operation, which will be separate from its parent, will offer flights to 35 destinations in Europe and North Africa with flights starting at £39 each way. During the pandemic, several routes were moved to Heathrow airport, some of which will return to Gatwick, as well as being maintained at Heathrow to give customers choice, including Faro, Ibiza, Malaga, Marrakech, and Tenerife. In addition, other new routes will be added at Gatwick including Athens, Berlin, Madrid, Milan Malpensa, and Santorini.
Sean Doyle, British Airways’ Chairman and CEO, said: “Today is a landmark moment for British Airways. The creation of a new British Airways short-haul organisation means Gatwick customers will benefit from access to a premium service from the UK’s flag carrier at competitive prices. We are looking forward to bringing a short-haul network back to Gatwick, with a fantastic flying team in place, to serve our customers from London’s second hub airport, which we feel sure will be a success.”
Following the news, British Airways (which is owned by International Airlines Group) saw its shares rise by 2.5% to 133.6p.
* The author is an aviation analyst. Twitter handle: @AlexInAir