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A U.K. plan to quarantine arriving air passengers threatens to push back the airline industry’s timeline for recovery from the coronavirus crisis.
Airlines that grounded most of their fleets since demand plummeted in March have been banking on travel to begin inching back somewhere between June and August. That time frame would allow carriers to salvage a portion of the ticket revenue usually reaped during the peak summer travel season that ends in September.
With recent earnings reports, Ireland’sRyanair Holdings Plc projected up to 50% of original planned travel for the July-Sepember period, while British Airways ownerIAG SA penciled in about a 45% level.
The quarantine “will once and for all close the book, we think, on any lingering upside risks of a summer rebound in U.K. air travel,” Citibank analyst Mark Manduca said in a note.
Prime Minister Boris Johnson will flesh out his plan forlifting the U.K. lockdown in Parliament on Monday, a day after outlining it in a televised address to the nation. Johnson is drawing up plans for a 14-day quarantine system to guard against a resurgence in infections, according to officials.
Shares of airlines with a significant exposure to the U.K. slid further, adding to significant losses this year. IAG fell as much as 2.7% and was down 1.3% as of 8:13 a.m. in London, withEasyjet Plc droping 4.2%. In Dublin, Ryanair declined 2.8%.
London, the world’s biggest market for air travel and a hub for business and tourism, was already feeling the blow from an aviation slump now in its third month. Three operators at London Gatwick — British Airways,Virgin Atlantic Airways Ltd. andNorwegian Air Shuttle ASA — have signaled they plan to reduce their presence, at least temporarily.
IAG Chief Executive Officer Willie Walsh, who will testify to Parliament on Monday, said last week that the airline is unlikely to do any flying with a quarantine in place.
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With a significant rebound in revenue put off until summer 2021, airlines that are heavily exposed to the U.K. market such as IAG and Easyjet may need to raise more capital, Manduca said. He estimates Easyjet Plc may need as much as 1 billion pounds ($1.24 billion) in added equity.
The industry is calling for more government aid.
“Ministers are effectively telling people they can no longer travel for the foreseeable future and airlines will respond to that by grounding their operations,” said Tim Alderslade, CEO of industry group Airlines UK. “That is why they require urgent additional government support to get through this growing crisis.”
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