Wizz Air targets expansion despite €108m spring loss

Wizz Air chief executive Jozsef Varadi outlined plans for expansion despite reporting losses of €108 million for the three months to June. Varadi issued a bullish quarterly

results statement saying: “We’re operating more than 70% of pre-Covid capacity [whereas]the industry has recovered to 40%. We’re coping with the situation better than our competitors.” He told analysts: “Our fleet

continues to grow. Almost every airport in Europe is in discussions with us. We have a significant pile of cash.” Varadi argued: “Short-haul

traffic will come back much earlier than intercontinental and connecting travel. We fly the youngest passengers and younger travellers will come back earlier [in] a situation where they can fly much cheaper. We also rely on migration. Our business is hardly exposed to business travel. So it’s not surprising we have recovered to 70% of capacity. We’re going to see fewer players in the market.”

Wizz Air fleet ‘continues to grow’

Air France-KLM plans 12,500 job cuts despite $10.4bn in state aid

Air France-KLM reported a loss of €2.6 billion for the three months to June and warned of a “significant” loss of jobs. The Franco-Dutch group

reported “a slow recovery of leisure demand in June and July” and said it would “carefully increase capacity” to 45% of the 2019 level for July to September and 65% in the fourth quarter. But it forecast capacity for 2021

would remain at least 20% down on 2019 and a return to pre-crisis capacity would only come in 2024. Air France-KLM reported

having €14 billion in liquidity after receiving aid from the

French and Dutch governments, but said it “must significantly reduce employees”. Air France secured €7 billion in a loan and credit guarantees from the French government and KLM €3.4 billion from the Dutch government. The French carrier plans to cut 16% of jobs or 6,560 full-time staff by the end of 2022 and another 1,000-plus at subsidiary Hop. KLM announced up to 5,000 jobs will go. The group reported processing

three million refunds since March (90% of “direct refund requests”), and said: “Requests from customers booked through travel agencies can now be made through agencies.”

Walsh: Demand not hit by ‘Spain’ Ian Taylor

The UK quarantine on arrivals from Spain is not hitting UK demand for travel elsewhere in Europe, according to Willie Walsh, chief executive of British Airways parent International Airlines Group. Walsh reported a half-year loss

of €3.8 billion at IAG, owner of BA, Iberia, Vueling and Aer Lingus. But he said: “We’re encouraged by the booking profile in the UK. “We were concerned when

the UK government reintroduced quarantine [on arrivals from Spain] it would have an impact on demand to travel elsewhere. We’re not seeing that. We’re adding capacity to Greece because we see good demand.” Walsh insisted: “There is clear

evidence of strong demand for travel.” However, he said: “It will take until 2023 or 2024 until passenger demand recovers to the level of 2019.” We see leisure

demand recover very quickly when there are no restrictions

Luis Gallego, who will succeed

Walsh as IAG chief executive on September 24, reported: “Domestic Spanish bookings have [seen] the strongest recovery at 50% of last year. International short-haul is about 30%.” He acknowledged: “There has

been a decrease in the last two weeks given the rise in Covid cases in Spain and the UK quarantine restrictions.” But Gallego insisted: “We see

leisure demand recover very quickly when there are no restrictions. The biggest challenge is to get people booking and flying. Customers need to be confident they can get their money back if a flight is cancelled

and confident they will be safe on the ground and in the air.” IAG plans to operate at 25% of

capacity over the three months to September, rising from 15% in June to 38% in September and to about 54% in the fourth quarter. Walsh suggested the group could

“reach break-even on operations by the fourth quarter”, but conceded this assumes “some transatlantic operations”. Traffic between Europe and the US remains stalled by restrictions on both sides of the Atlantic. Yet Walsh said: “Our view is we’ll

see a gradual reopening [to the US] with restrictions in some markets being lifted.” He defended the redundancies

at BA, now expected to total up to 13,000. BA pilots voted to accept a deal that will see 270 job losses and salaries cut by 20%, reduced to 8% over two years.

6 AUGUST 2020

Willie Walsh 37

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