Gatwick: Likely to take 4 years for passenger levels to recover to 2019 levels (if ever …)

Gatwick has said it will not ask the Treasury for emergency loans despite fearing that passenger numbers will not return to pre-Covid levels for up to 4 years. Gatwick has already secured a £300m loan from existing banks.  It has also cancelled dividends, cut a lot of costs and furloughed around 2,000 staff.  Boss Stewart Wingate said: “We think it is probably going to take somewhere between 3 and 4 years to get back to the levels that we were at in 2019.”  Gatwick hopes it can ride out months of losses, but want to have flights re-starting by the end of May.  Unlike rivals, Gatwick said “you should do absolutely everything you possibly can that is within your control to protect the business” before asking for state aid. Gatwick is open from 2-10pm each day, for a handful of flights. Unlike rival Heathrow, which gave out over £100 million in dividends to shareholders in February, Gatwick’s owners will not be taking a dividend despite the airport announcing an 8% rise in earnings of £432m in the 9 months to December 2019. There may not be dividends till 2022.  It is possible that British Airways might leave Gatwick in due course.


Gatwick: Four years for passenger levels to recover

Britain’s second-busiest airport remains hopeful that flights will restart at the end of May

By Oliver Gill  (Telegraph)
24 April 2020

Gatwick airport will not tap the Treasury for emergency loans despite fearing that passenger numbers will not return to pre-coronavirus levels for up to four years.

Britain’s second-biggest airport has secured a £300m loan from existing banks, cancelled dividends and furloughed around 2,000 staff.

Covid-19 has brought the aviation industry to a near standstill with airlines operating only a handful of flights each day and concentrating operations on cargo and repatriation flights.

Boss Stewart Wingate said: “We think it is probably going to take somewhere between three and four years to get back to the levels that we were at in 2019.”

Finance chief Nick Dunn added: “If this crisis were to drag on, we have got sufficient liquidity to ride out the storm. What we are hoping for is that we are back up and running towards the end of May.”

In contrast to other airports, which have appealed to ministers for industry-specific state aid, Mr Wingate said the Government’s furlough scheme, along with “self-help” steps it has taken, is enough to keep the business afloat.

“We always take the perspective that you should do absolutely everything you possibly can that is within your control to protect the business,” he said.

“We were delighted when [the Government] put the furlough scheme in place… We also welcome the fact that the Government is making available loans to players within the industry. But at this particular time, we won’t be seeking to take advantage of those.”

Gatwick continues to operate between 2pm and 10pm each day out of only one of its two terminals.

Currently around 600 members of staff are “manning the fort”, Mr Wingate said.

Unlike rival Heathrow, Gatwick’s owners will not be taking a dividend despite the airport announcing an 8pc rise in earnings of £432m in the nine months to December 2019.

Owners Vinci, the French infrastructure company, and investment firm GIP may have to wait until 2022 before dividend payments are restarted, Mr Dunn said.

Meanwhile, Mr Wingate shrugged off industry speculation that British Airways may not return to Gatwick following the Covid-19 lockdown and concentrate its operations at Heathrow.

“I can’t envisage British Airways not flying at Gatwick over the summer and over the coming years,” he said.

Separately, the owner of holiday firm and airline Jet2 announced that it approached ministers over its eligibility to access emergency funding from the Bank of England’s Covid Corporate Financing Facility.


See also:



Emergency fund for airports unravels

18 April 2020  (Transport Extra)

The Government appears to have abandoned proposals for an emergency fund to help the UK aviation sector through the Covid-19 pandemic.

On 17 March, as the economic disruption caused by Covid-19 was becoming apparent, the Chancellor Rishi Sunak said: “In the coming days, my colleague the secretary of state for transport [Grant Shapps] and I will discuss a potential support package for specifically airlines and airports.”

On 24 March, however, Sunak informed the aviation industry that there would be no specific fund for the sector. He said the Government expected “all companies to be pursuing all possible actions to preserve cash and maximise liquidity, including engaging with shareholders, lenders and the markets, and utilising all available assets and facilities”.

“Given the significant importance of the aviation sector to our economy and economic recovery, the Government is prepared to enter negotiations with individual companies seeking bespoke support as a last resort, having exhausted other options,” said Sunak. “However, further taxpayer support would only be possible if all commercial avenues have been fully explored, including raising further capital from existing investors.”

LTT (Local Transport Today) understands that Sunak’s letter came as a shock to the DfT, which had been confident that any aviation deal would include funding support for UK airports.

It is unclear why the airports deal collapsed. One source told LTT that the problem arose with airlines. Media reports on 20 March that Easyjet would go ahead with paying a £174m dividend to shareholders may have coloured the Government’s judgment. The foreign ownership of airlines may also have complicated matters and airlines had different views on a support package.

Airports were “collateral damage” in the failure of the airlines and Government to reach agreement, said the source.

The collapse in air travel poses severe financial difficulties for many UK airports.

The Welsh Government has allowed Cardiff Airport, which it owns, to repurpose a portion of a £21.2m loan to help the airport deal with the “early impacts” of the virus and “maintain solvency”. The loan was initially made last year to support the airport’s growth.

Transport minister Ken Skates said the UK Government should come forward with emergency funding for regional airports across the UK.

“Our support from the Welsh Government is a short-term solution for the airport and this is not a sustainable position,” he said. “The UK Government has the key lead in supporting the aviation industry and must change its policy towards further financial help for regional airports.”

But, with the idea of a But, with the idea of a dedicated aviation sector deal now apparently dead, Airlines UK, the Airport Operators Association, and industry body ADS, are trying to persuade the Government to amend its general support schemes to make them more useful to the aviation sector.

Among actions they want to see is the Government to extend the business rate relief for retail, leisure and hospitality to include aviation in England and Wales. The Scottish Government has already done this.

The bodies also want the Government to extend beyond May the Coronavirus Job Retention Scheme, whereby the Government will fund 80% of employees’ usual monthly wage costs, up to £2,500 a month.

The bodies expect the aviation sector’s recovery to be long and slow, since it relies on international travel restrictions being lifted and consumer confidence returning to visit popular destinations such as Italy and Spain, which have been badly hit by the virus.

Huge numbers of staff in the aviation sector have been furloughed as companies cut costs.

Carlisle & Lake District Airport has closed completely until further notice. Cornwall Airport Newquay, Teesside International Airport, and London City are all closed to passenger flights.

Heathrow has closed one runway and Manchester, Birmingham and Gatwick are operating from only one terminal.



US Treasury Disburses $2.9B In CARES Act Airline Aid

By Ben Goldstein April 21, 2020

WASHINGTON—The U.S. Treasury Department has disbursed an initial round of financial aid to passenger airlines worth $2.9 billion, as a deal was finalized with six large carriers over terms related to payroll assistance under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Roughly 55% ($1.62 billion) of the funds went to Southwest Airlines, the Dallas-based carrier reported in an April 21 securities filing. The remainder was divided between one other major airline and 54 smaller carriers, although the Treasury did not identify any recipients by name.

The six large airlines that have agreed to final terms are Allegiant Air, American Airlines, Delta Air Lines, Southwest Airlines, Spirit Airlines and United Airlines.

The Treasury expects to wrap up further agreements with five more airlines soon: Alaska Airlines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways and SkyWest Airlines.

More rounds of payments will be disbursed to approved carriers on a rolling basis.

“Treasury has received hundreds of applications for the Payroll Support Program from passenger air carriers, cargo air carriers and contractors, and is working to review and approve applications as quickly as possible,” the department said in a statement.

American Airlines will receive the most payroll support among all carriers, worth about $5.8 billion total, followed by $5.4 billion for Delta, $5 billion for United, $3.1 billion for Southwest, $992 million for Alaska, $936 million for JetBlue, $334 million for Spirit, $290 million for Hawaiian and $172 million for Allegiant.

As part of the deal reached with the Treasury, carriers receiving more than $100 million must repay roughly 30% of the funds in the form of a low-interest-rate loan. That rate is noticeably lower for Allegiant, however, which only has to repay roughly 12% the amount of its award, possibly owing to its smaller size. The company did not immediately respond to a request for comment.

The $25 billion payroll support program is separate from a $25 billion tranche of loans and loan guarantees included in the CARES Act, for which several large carriers including American and United have already applied.

Phoenix-based regional carrier Mesa Airlines separately said it will receive $93 million in payroll support from the Treasury, none of which will have to be repaid because the total amount is under $100 million.

“This aid may well serve as the bridge that allows the industry to survive and give us the means to continue to provide the safest mass transportation system in history,” Mesa Group chairman and CEO Jonathan Ornstein said in a statement.

The first injection of funds arrived as passenger volumes at U.S. airports plummeted 97% from a year ago for the week ended April 12, according to data from Airlines for America (A4A). The group reported 2,820 aircraft from U.S. passenger airlines are parked across the country as of April 19, more than double the 1,186 idled planes counted on March 31.


See also, aviation wanting government concessions:

COVID-19: UK government should remain cautious on airline bailouts

21.4.2020 (CAPA)

The UK’s seat capacity, for a country where international markets are more important than for Europe overall, is falling faster than in the rest of Europe. It has lost its European leadership to Russia.

The lack of surface transport (beyond maritime) even for short haul international travel could be a significant threat if air links remained curtailed for an extended period, or if UK airline bankruptcies hindered the resumption of international operations in the recovery.

The UK government is under pressure to help its airlines, whose capacity cuts are particularly severe, but the case varies by airline and should only be a last resort.

EasyJet has shown the value of self-help. British Airways has not sought government help., part of Dart Group, has good liquidity. TUI Airways is part of the German TUI Group. Virgin Atlantic is important to UK long haul, but its major shareholder’s residency on a private Caribbean island and non-domicility for UK tax may count against it, along with its powerful US partner. PSO networks could be widened to benefit regional airlines.

The UK government should remain cautious. Post-virus, the UK will again be an attractive aviation market – whether for the UK’s or foreign airlines.



Heathrow defends paying over £100m in dividends amid aviation industry struggle

The airport has agreed a 10pc pay cut with its biggest union Unite

By Oliver Gill (Telegraph)
13 April 2020

Heathrow airport has defended handing investors more than £100m in dividends despite the aviation industry being brought to its knees by the coronavirus pandemic.

Europe’s busiest airport said shareholder payouts were agreed in February “before the significant impacts of Covid-19 on our industry were clear or anticipated”.

The dividends will come as a boon to Heathrow’s major investors. But the decision to press ahead with rewarding shareholders could threaten to undermine a concerted effort by Britain’s airports to secure bespoke financial support from the taxpayer.

The Airports Owners Association ratcheted up the pressure on ministers over the weekend by calling for lending caps to be lifted for aviation businesses as well as the Government’s furlough scheme to be extended beyond May.

Heathrow has agreed a 10pc pay cut with its biggest union Unite.

Non-unionised staff have been warned they face the sack if they refuse to accept voluntary wage reductions of up to 15pc.

Around a quarter of Heathrow’s senior management has been made redundant and staff have been told they could be transferred on to the Government’s furlough scheme where the taxpayer foots the bill for 80pc of wages.