General Industry

Aer Lingus Owner Says It Has Exhausted Every Avenue To Shore Up Its Finances

By Dave Simpson
Aer Lingus Owner Says It Has Exhausted Every Avenue To Shore Up Its Finances

Aer Lingus and British Airways owner International Airlines Group (IAG) has exhausted every avenue to shore up its finances and is burning through cash, its CEO, Willie Walsh, said on Monday May 11 as the aviation industry warned of the fresh damage it will suffer if Britain quarantines international arrivals.

Walsh told the UK parliament's transport committee that IAG will have to review plans to resume flying in July if the UK government presses ahead with plans to introduce a quarantine on most people coming into the country by air as part of measures to prevent a second peak of the coronavirus pandemic.

While Walsh said that IAG is not in a position where it has to ask for a specific bailout from the government, he added that the quarantine plan will add to the pressure on the group.

"We've probably exhausted every avenue that I can think of at this stage to shore up our liquidity. The cash has been reducing significantly and that will be the case as we go through May, June and July," he said.

"The announcements yesterday of a 14-day period [of quarantine] for coming into the UK, it's definitely going to make it worse," he said, forecasting demand for "minimal" capacity under such rules.


Questioned by UK lawmakers over a British Airways plan to lay off up to 12,000 people, or 30% of its workforce, Walsh told lawmakers that aviation is facing the deepest crisis in its history.

"The industry has changed and anybody who believes that we're going back to the way things were in 2019 misunderstands the scale of the challenge that is being faced," he said.

He suggested that job losses could follow at Aer Lingus and IAG's other airlines, Iberia and Vueling, saying that Iberia management would be doing "everything they possibly can to right-size Iberia".

A Battle To Survive

Global aviation is facing a battle to survive, with most flights being grounded since March due to travel restrictions to contain the pandemic.

Britain's new quarantine rules risk derailing any recovery for UK-based airlines, and the industry has urged the government to come up with an alternative plan.


Heathrow Airport, which during normal times is Europe's busiest airport but saw passenger numbers plunge 97% in April, has called for common international standards to enable passengers to travel freely between low risk counties once the virus is under control.

This would allow borders to be re-opened, it said.

Meanwhile, budget airline easyJet said that any quarantine requirements must be short-lived and replaced by a targeted regime allowing low-risk passengers to travel easily.

Walsh said that IAG is working with regulators to implement a common system across Europe of measures to be taken at airports and onboard aircraft to stop the disease spreading.

He said that he believes that the European Union Aviation Safety Agency (EASA) will publish a draft document on safety measures later this week.


Calls For Clarity

Airlines UK, which represents British Airways, easyJet and other UK carriers, said that quarantine measures will lead to the industry requiring additional government support.

The industry body has already asked for Britain's job retention scheme to be extended beyond June, and has requested a temporary suspension of some taxes airlines pay, such as air passenger duty.

Bosses have complained there is lack of clarity over how long the new rules will last and how often they will be reviewed.

"It's inevitable that consumers will be confused by the message, they will not be certain as to when they should book their holidays," Manchester Airports Group CEO Charlie Cornish told BBC television.

Some destinations will be at an advantage, as travellers from France will be exempt from the quarantine rules, and airlines said that the new rules will not be applied to arrivals from Ireland either.


Britain's foreign minister Dominic Raab told BBC Radio there will be exemptions from the rules, but did not give details. He said that the government is aiming to bring in the quarantine from the end of the month.

Critics have asked why it was not brought in sooner and how it will be put into practise, given passengers could fly to France and then cross into Britain via ferry or train.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.