Lockdowns halt Europe’s air-travel recovery, threaten jobs

The demise of Europe’s air-travel rebound and a fresh warning on jobs from Airbus SE are adding to evidence that the region’s aviation industry is in for a tough winter.

A rise in European air traffic that built up over July and August has abruptly shifted into reverse, the body that oversees the region’s skies said on Monday. The head of planemaker Airbus said separately that voluntary staff departures probably won’t be enough to cope with the deepening crisis.

The tally of flights this year will be about 6 million, or 55% below 2019’s level, Brussels-based air-traffic-management agency Eurocontrol said Monday. That represents a 1 million-trip reduction from its April forecast. Airbus Chief Executive Officer Guillaume Faury said mandatory job cuts are now on the cards as the Toulouse, France-based company hunkers down for a “deep and long downturn.”

A hoped-for surge in late summer traffic failed to materialize for European airlines, as the coronavirus pandemic continues to flare and countries apply a hotchpotch of restrictions on travel. Eurocontrol says that after recovering to about half of the usual schedule in August, the proportion of flights operated will be down 60% by January, versus its prior estimate for a 20% shortfall.

“We’re going backwards now and it’s really worrying for the entire industry,” Eurocontrol Director-General Eamonn Brennan said in a statement, blaming a lack of coordination between countries over the resumption of flights for sowing confusion and putting people off booking.

Eurocontrol said harmonized virus testing and common assessment criteria would provide more predictability and boost demand, while continuing blanket restrictions and quarantine measures could see a further deterioration.

Airbus Letter

Airbus CEO Faury delivered his grim assessment of future demand in a letter sent to staff Friday and obtained by Bloomberg News.

“The recovery in airline traffic over the summer period has not been at the level the industry was counting on,” he said, adding that it’s unlikely voluntary job cuts “will be enough” to deliver required savings.

A company spokesman confirmed that a letter had been sent to staff on Friday, adding that the latest view was consistent with current production rates. The company has already slashed output targets across its models to reflect the downturn in demand.

Discussions are under way with unions about the outlines of the voluntary retirement plan, the conditions of the furlough and who would be eligible, according to people familiar. Airbus is trying to protect factory jobs and these measures may be shaped to favor assembly line workers over other staff, according to one of the people.

Adding to the gloom around job security, the Netherlands finance minister, Wopke Hoekstra, said on Sunday that the survival of Franco-Dutch carrier Air France-KLM “is not a given” and that measures to trim the carrier’s cost base will need to be stepped up should the crisis persist beyond the end of next year.

His French counterpart, Bruno Le Maire, said Monday that the existence of the group’s Paris-based arm is not at risk and that France will “do what is necessary to guarantee the survival of Air France.”

European Union Transport Commissioner Adina Valean also said Monday she will propose that the current waiver of use-or-lose rules governing the ownership of airport slots in the bloc be extended until March 27.

The step will provide relief for airlines unable to operate the 80% of takeoff and landing positions usually required, though could further hold back traffic as faster-recovering carriers such as Wizz Air Holdings Plc are unable to source slots at busier hubs. The existing waiver was due to end on Oct. 24.