Airlines suffer blow as England bans overseas leisure travel

Overseas travel from England that’s not related to work will be prohibited to help curb a resurgence of the coronavirus, throwing airlines into a fresh crisis.

The new rules, part of a wider partial lockdown by Prime Minister Boris Johnson, will apply from Thursday until Dec. 2 and come as the industry struggles to survive a collapse in demand. Airlines hadn’t been informed about the restrictions before Johnson’s announcement Saturday evening, according to people with knowledge of the matter who asked not to be identified as they weren’t authorized to speak publicly on the issue.

Carriers were already reeling from the Covid-19 pandemic. They have eliminated jobs, retired older fuel-guzzling aircraft and turned to capital markets and asset sales to survive a slump in travel. Many have slashed capacity further in the wake of the resurgence in Covid-19 infections during the slower winter season.

EasyJet Plc, Europe’s second-biggest discount carrier, said it will operate its planned flights until Thursday. “It’s likely that much of the U.K. touching schedule will be canceled during lockdown with our planned flying set to resume in early December,” it said in a statement. British Airways said it’s assessing the new information and will keep its customers updated on changes to travel plans.

“Without targeted support to help protect the U.K.’s aviation industry, tens of thousands of jobs across the country will be lost,” Heathrow Airport said in a statement, calling on the government to put in a place a package of measures including business rates relief for airports and a Covid testing regime for passengers.

According to restrictions announced late Saturday, “overnight stays and holidays away from primary residences will not be allowed—including holidays in the U.K. and abroad.” All but essential shops will close, as will restaurants, bars and gyms, though schools and universities will remain open.

“Christmas is going to be different this year, very different, but it is my sincere hope and belief that by taking tough action now, we can allow families across the country to be together,” Johnson said at Saturday’s press conference.

Under the package announced by Johnson, state payments will be made to furloughed workers of as much as 80% of their wages through the new lockdown period. This could offer some relief to airlines—along with other businesses—as employers will only have to cover some tax payments for furloughed workers, a more generous system than at present where firms have to pay 20% of their wages.

British Airways’ owner, IAG SA, said this month it would operate only 30% of its 2019 capacity in the current quarter. EasyJet has raised almost $400 million through a sale and leaseback transaction for some Airbus A320 aircraft.

England’s new lockdown measures follow similar moves in countries including France and Germany. Even before the latest round of restrictions, the International Air Transport Association had predicted that the global airline industry was on track to burn through $77 billion in cash in the second half. In Europe, about 193 out of 740 airports will soon struggle to pay their bills while government-imposed quarantine requirements remain in place, the Airports Council International Europe said last week.

“The winter period is always tough for the travel sector but this is set to be ultra-cruel,” said Paul Charles, CEO of travel consultancy The PC Agency. “Job losses and company casualties are going to be widespread sadly and my fear is that lockdowns will be harder to ease than they are to switch on.”