Hospitality Ireland presents a round-up of global airline, aviation and travel news.
Israeli Carrier El Al Sees Recovery As Borders Start To Open
Israeli airline El Al reported a narrower loss in the third quarter and said it expected further improvement in the final three months of the year after Israel started to open its borders to foreign tourists.
El Al, Israel's flag carrier, was hurt badly by the COVID-19 pandemic. It said it lost a net $136.2 million in the July-September period that is typically its strongest, compared with a $146.6 million loss a year earlier.
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Revenue jumped to $253 million from $39.2 million a year ago, when borders were largely shut.
The airline's bottom line was impacted by a write down of $43 million for the value of aircraft taken out of service.
Seat occupancy rose to 71.4% from 23.1% a year ago and 67.3% in the second quarter. Typically its load factor reaches around 83%.
El Al said sales for the fourth quarter will be higher in the wake of the government's approval for tourists vaccinated within the prior six months to enter Israel as on November 1.
That "will reflect the recovery trend and a gradual return to the company's operations," El Al said.
It said it expects "continued positive momentum in the industry and activity throughout 2022" spurred by stronger transatlantic travel, the easing of Israeli entry rules and rollouts of COVID-19 vaccinations for children and booster shots for adults.
Israel had closed its borders in March 2020 at the outset of the pandemic.
El Al laid off 1,900 employees - nearly one-third of its staff - as part of a recovery plan mandated by the government to receive a $210 million aid package earlier in the year. It also reduced its fleet to 29 from 45.
The airline will receive another $30 million in aid due to the restrictions over the summer.
ESTONIAN PM SOME EU COUNTRIES HAVE EXPRESSED DOUBTS ABOUT IMPOSING SANCTIONS ON BELARUS STATE AIRLINE BELAVIA
ESTONIAN PM SAYS NOT IMPOSING EU SANCTIONS ON BELAVIA WOULD SEND WEAK SIGNAL TO LUKASHENKO
Nigeria Aims To Launch New National Airline By April, Aviation Minister Says
Nigeria aims to launch a new national airline by April and will seek to sell a minority stake to a foreign airline or financial institution, Hadi Sirika, minister of state for aviation, said on Wednesday November 24.
The plan, one of President Muhammadu Buhari's 2015 election campaign promises, has been on and off the table. The government suspended it in 2018, with no reason provided.
Sirika said the government will source a strategic partner via a procurement process to take a 49% stake in the new carrier, called Nigeria Air. The government would not own more than 5%, while local entrepreneurs would hold a 46% stake.
"The best case is that the airline will pick up... April 2022 if all things go equal," he told reporters after a cabinet meeting in Abuja.
The government has said the airline will require initial capital of between $150 million and $300 million.
Nigeria has been seeking to set up a national airline and develop its aviation infrastructure - currently seen as a barrier to economic growth - to create a hub for West Africa.
But decades of neglect and lack of investment have left Nigeria with low-quality infrastructure. The government has said that upgrading it will require private investment.
The West African country's previous national carrier, Nigeria Airways, was founded in 1958 and wholly owned by the government. It ceased to operate in 2003.
British billionaire Richard Branson set up domestic and international carrier Virgin Nigeria in 2000, but pulled out in 2010 in frustration at what he said was interference by politicians and regulators.
The airline he created, which was later rebranded Air Nigeria, closed in 2012 after collapsing under about 35 billion naira ($85.4 million) of debt which left it unable to pay staff, a former finance director of the company told Reuters at the time.
Estonian PM Warns EU Against Dropping Sanctions On Belarus Airline
The European Union must not back down from imposing sanctions on Belarus state airline Belavia after several countries in the bloc expressed doubts over the measure, Estonia's prime minister said on Wednesday November 24, warning that it could weaken the EU's hand.
The EU and NATO have accused Belarusian President Alexander Lukashenko of using migrants as a weapon to pressure the West by sending people fleeing the Middle East to Minsk and then onto the borders of Poland and the Baltic states.
The bloc agreed last week to press ahead with more sanctions on Belarus, targeting some 30 individuals and entities including the foreign minister and Belavia.
However, EU diplomats said Germany and Italy were among EU countries arguing that Belavia’s promise to stop flying migrants from Syria and Iraq was enough for now.
"We have heard that there are doubts for some countries regarding Belavia," Kaja Kallas told Reuters in an interview after talks with French President Emmanuel Macron.
"I think it would be a weak signal if Belavia was left out, because it's a state-managed company directly involved in bringing these people and opening new routes for smugglers and definitely should be sanctioned."
Sanctions on Belavia would end leasing agreements with Irish and other EU companies, but in practice, it would be up to Belavia to return the planes to the EU, which is seen as unlikely at least in the short term.
The disagreements have held up the fifth package of sanctions, now expected early next week.
"This is a hybrid attack, not a migration crisis ... to stop it Europe has to be strong because dictators only understand strength," Kallas said.
She added that she wanted the EU to also impose more diplomatic pressure on the countries from which the migrants were coming.
U.S. Justice Department To Step Up Prosecution Of Unruly Air Passengers
U.S. Attorney General Merrick Garland directed federal prosecutors on Wednesday November 24 to prioritise prosecution of airline passengers committing assaults and other crimes aboard aircraft.
The Federal Aviation Administration said on Nov. 4 it had referred more than three dozen unruly passengers to the FBI for potential criminal prosecution amid a sharp rise in onboard incidents this year.
"The Department of Justice is committed to using its resources to do its part to prevent violence, intimidation, threats of violence and other criminal behaviour that endangers the safety of passengers, flight crews and flight attendants on commercial aircraft," Garland said.
U.S. airlines have reported a record number of disruptive and sometimes violent incidents this year, and the FAA has pledged a "zero-tolerance" approach.
Through Nov. 23, there have been 5,338 reports of unruly passenger incidents, including 3,856 related to pandemic face-covering regulations. On Monday November 22, the FAA proposed $161,823 in fines against eight airline passengers for alleged unruly behaviour involving alcohol.
An FAA spokesman said the agency had initiated 227 enforcement cases and referred 37 to the FBI for review.
The FAA and Justice Department said they had established an information-sharing protocol for the FAA to refer unruly passenger cases to the FBI for review.
On Oct. 8, President Joe Biden said he instructed the Justice Department to "deal" with the rising number of violent incidents onboard planes.
A group representing major U.S. airlines, such as American Airlines Delta Air Lines Inc and United Airlines , as well as aviation unions, asked the Justice Department in June to prosecute violent air passengers, as have some Democrats in Congress.
U.S. prosecutors in Colorado charged a 20-year-old California man with assaulting a flight attendant on an Oct. 27 American Airlines flight bound for Santa Ana, California, that forced the plane to land.
Earlier this month, a 32-year-old passenger was arrested and charged with assaulting a Southwest Airlines Co operations agent after boarding a flight in Dallas.
Shell Ponders Biofuels Plant To Meet Rising Asian Aviation Demand
Global major Royal Dutch Shell may build a biofuels plant in Singapore to meet the region's rising demand for sustainable aviation fuels (SAF), the head of its downstream business said on Wednesday November 24.
The proposed 550,000 tonnes per year (tpy) project at Singapore's Bukom Island could produce SAF to supply major Asian hubs such as Hong Kong International Airport and Singapore's Changi, Shell Downstream Director Huibert Vigeveno told reporters.
"Many of the airlines are keen to talk to us," he said. "I see a lot of growth in sustainable aviation fuel."
Citing discussions with Asian airlines, including Singapore Airlines, Cathay Pacific, Japan Airlines and Nippon Airlines, he said the appetite for SAF was not just in Europe or the United States.
As Shell seeks to move away from fossil fuels, in response to pressure for climate action from governments and some shareholders, it is already building a 820,000 tpy biofuels plant in Rotterdam, the Netherlands.
Shell is also working with European airline KLM to test the blending of synthetic fuels.
Globally, Shell aims to make about two million tpy of SAF by 2025, although the renewable fuel accounts for less than 0.1% of today's global jet fuel demand.
To transit to low-carbon fuel production, Shell has shut a crude distillation unit at Bukom, which reduced its refining capacity by half, Vigeveno said, despite a recovery in global refining margins.
The proposed Singapore biofuels plant will also have flexibility to produce renewable diesel and bionaphtha feedstock for petrochemicals, he said.
"The alternative is much more valuable," he said, adding that Shell is focusing on higher-value products such as performance chemicals, bitumen and also lubricants, which provide a return on capital employed of more than 20%.
"Refinery margins have improved a bit, but they're far from the levels they used to be," Vigeveno said, adding the sector still had overcapacity.
Aviation is one of the most difficult forms of transportation to decarbonise.
Shipping, by contrast, he said had many fuel options, such as switching to liquefied natural gas (LNG), electricity, renewable diesel and in the longer term hydrogen provided the infrastructure is put in place.
Vigeveno said hydrogen could be viable for shipping this decade.
Company Valuations And Climate Strategies Are Poles Apart
Companies in the most polluting sectors that have invested in climate action often find themselves valued below peers that have been slower to do so, highlighting the difficulty of getting shareholders to back sustainability.
Investors have poured more than $30 trillion into environmental, social and corporate governance (ESG) strategies, data from the Global Sustainable Investment Alliance showed.
But the demand for sustainable investment has yet to remove the pressure to put profits first and pro-climate analysts are concerned the outcome of U.N. climate talks earlier this month did too little to help.
Analyses of companies globally by management consultancy Kearney in November seen exclusively by Reuters, as well as data by Credit Suisse Group AG published in April, found that companies that lowered their emissions in sectors where doing so was expensive and government regulation was limited were valued less, on average, than more emitting peers.
Investors were only found to reward the most emitting companies, such as energy, mining and heavy industry, for taking action on climate change when the cost of doing so was relatively small and government support and regulations were relatively strong.
"Investors want climate leadership, they want tangible transition plans, but at the same time they are only willing to reward companies that can do so without sacrificing returns," Betty Jiang, Credit Suisse's head of U.S. ESG research, said.
Given changing attitudes as climate change becomes more extreme, some see an opportunity to invest in companies cheaply before the market values their climate action more highly.
Others worry the risk of losing value is making corporate boards reluctant to act to avoid catastrophic climate change, especially after governments at the United Nations talks in Glasgow this month failed to send a strong message that global warming can be capped at 1.5 degrees Celsius (2.7 Fahrenheit).
"There is currently no clear line of sight between climate investing and its impacts. Green (investment) portfolios have not yet equated to a green planet," said Anthony Cowell, head of asset management at KPMG Islands Group.
Kearney calculated the valuation of 481 companies globally as a function of their cash flows.
It then assessed their climate action using the Transition Pathways Initiative benchmark (TPI), an investor initiative launched in 2017 to assess companies' response to climate change.
Where TPI scores were not available, Kearney looked at a ratio of companies' greenhouse gas emissions to their revenue to assign ESG leadership or laggard status.
Steel, chemicals, cement and power companies in Europe with top-rated carbon reduction plans have an average valuation premium of 62% to peers who are climate action laggards, the Kearney analysis found.
In the rest of the world, that premium is 25%, demonstrating that European investors value sustainability more than others globally.
Companies with higher climate scores in the aluminium, airlines, autos, diversified mining, infrastructure, maritime transport and oil and gas sectors show the opposite trend.
In Europe they trade at a 27% discount on average to environmental laggards, the analysis found. In the rest of the world, that discount is even wider - 41%.
Although many factors can skew a company's valuation, Alexis Deladerriere, head of international developed markets equity at Goldman Sachs Group Inc, said that in heavy-emitting sectors ESG scores were not reflected in a company's valuation premium.
"There is basically no correlation - no valuation premium - for having a high ESG score in general or having a high 'E' score specifically," Deladerriere said.
"If you are behaving badly, if you are polluting and you're not doing anything about it, do you get penalised for doing that? Unfortunately, not really in the short term."
The energy and mining sectors are dominated by risks that can impact valuation, but still the evidence is that the very sectors with leading roles in decarbonising are not being rewarded for moving away from fossil fuels.
BP Plc, for example, is viewed as a climate leader with a top "4STAR" TPI level. Yet it has a lower valuation, as measured by its enterprise value to cash flow ratio, than many ESG laggards with lower TPI scores, such as U.S. peer Valero Energy Corp.
In the mining sector, Rio Tinto Plc is considered a climate leader, with a TPI score of 4, but its valuation premium is less than a third of that of Freeport-McMoRan, which is a climate-laggard by the TPI measure, Kearney's data showed.
BP, Valero and Rio Tinto did not respond to requests for comment. A spokeswoman for Freeport-McMoRan said the company had made "significant progress" on climate in the last two years and is committed to "integrating our climate initiatives into our long-term business plans".
As climate change becomes an even bigger focus for markets and regulators, some corporate directors say boards will start to take stronger action on climate change as more investors begin to give them credit for it.
"Every company wants to figure out how to do (sustainability) quickly and easily because it's a shorter return on investment," said Orlando Ashford, a director on the boards of companies including drug maker Perrigo and solar energy equipment manufacturer Array Technologies.
"If you fold it into the construct of how you are running your business it will take longer, but it’s not a fad," Ashford said.
Virus Worries Knock FTSE To One-Month Lows, British Airways Owner Sinks 15%
UK's blue-chip index hit more than one-month lows on Friday November 26, with commodity, travel, and banking stocks slumping after a newly detected and possibly vaccine-resistant coronavirus variant sapped risk appetite among global investors.
The FTSE 100 index declined 3.3% by 0817 GMT on Friday November 26 - on course for its biggest one-day fall in over a year.
Tourism group TUI fell 9.9%, while airline companies like Wizz Air, Easyjet and British Airways owner IAG lost 16% to 20.9% after UK authorities imposed travel restrictions from South Africa and five neighbouring countries.
Britain said that the newly identified variant spreading in South Africa was considered by scientists to be the most significant one found yet and so it needed to ascertain whether or not it made vaccines ineffective.
Energy and mining stocks fell 6.6% and 4.5%, respectively, tracking a slump in commodity prices amid fresh economic slowdown fears.
The domestically focussed mid-cap index dropped 2.7%.
Locked In: Hong Kong COVID Rules Take Mental Toll On Cathay Pilots
One of Asia's largest airlines, Cathay Pacific, is facing a revolt from pilots who say Hong Kong's tough quarantine rules under its zero-COVID policies are endangering their mental health, leading to rising stress and resignations.
Cathay Pacific Airways Ltd last week fired three pilots who breached company rules by leaving their hotel rooms during a layover in Frankfurt and later tested positive for COVID-19.
The government responded by forcing more than 270 people, including school children linked to their families, into tiny quarters at a state quarantine camp.
Some pilots declared themselves unfit to fly for their first rostered duties upon release.
The extreme example of pandemic-related precautions under China's zero-COVID policy highlights the difficult working conditions facing Cathay pilots, all fully vaccinated, even as other Asian countries slowly reopen.
Cathay rivals including Australia's Qantas Airways Ltd have begun unwinding strict layover policies but the Hong Kong government is tightening rules further in line with the mainland, hoping to convince Beijing to allow cross-border travel.
The stricter rules come amid mounting concerns over a newly identified variant spreading in South Africa, which has been also found in Hong Kong and Botswana and prompted several countries to announce tighter broder controls and more rigorous testing.
"I don't think I can keep this up," one Cathay pilot who spoke on condition of anonymity told Reuters. "Just the stress of potential quarantine of my family and friends is taking a toll."
Several other current and recently departed Cathay pilots told Reuters morale was low and resignations were rising a year after many had their pay permanently cut by as much as 58%.
Extreme stress is a significant issue in an industry where any sign of psychological problems can make it difficult to get another job.
"What's the risk if I say to them I'm a bit stressed?" asked a pilot who has spent more than 200 nights locked in hotel rooms away from Hong Kong since the pandemic began. "Does that affect my medical? And then you leave here and they ask have you ever been stood down for psychological reasons?"
The pilots also expressed frustration with the ambiguity of some government-imposed pandemic-related rules. Pilots, for example, are required to avoid "unnecessary social contact" for three weeks after returning to Hong Kong, but they are not given time off to compensate.
Cathay acknowledged to Reuters in a statement that pilot resignations have risen beyond normal levels since the end of October.
"Regrettably, the incident in Frankfurt has affected current sentiment," the airline said.
Hong Kong classifies many destinations including the United States and Britain as "high-risk," meaning Cathay pilots flying passengers inbound from those places are subject to two weeks of hotel quarantine.
To staff those flights, Cathay started running "closed-loop" rosters on a voluntary basis in February involving five consecutive weeks locked in hotel rooms with no access to fresh air or a gym and then two weeks off at home.
"I did it to earn some money, since the 50% pay cut (last year) made life much more difficult," said a recently departed pilot who did two closed loops. "There are people currently in their 5th or 6th closed loop."
Cathay said on Thursday November 25 some inbound flights during the peak demand season of December would be cancelled, indicating a lack of volunteers.
The airline said it recognised the strain on its pilots and had bi-weekly dial-in sessions to share concerns and programmes like a peer-based pilot assistance network as well as offering extended leaves of absence.
As conditions improve elsewhere in the world, other airlines including Emirates and U.S. cargo carrier Atlas Air Worldwide Holdings Inc are head-hunting Cathay pilots, said those who spoke with Reuters.
Emirates, which has launched a recruitment drive for 600 pilots, declined to comment. Atlas did not respond to a request for comment.
The pilots Reuters spoke to said they expected more resignations next year when transitional housing and schooling benefits expired.
Cathay said it would employ "several hundred" new pilots and restart its cadet programme in the coming year.
Hong Kong's strict rules led FedEx Corp to close its pilot base in the city last week, underscoring the dimming allure of the territory as a major logistics hub.
"I really, truly feel for people that are at Cathay," a FedEx pilot who recently left Hong Kong said. "I am genuinely concerned about their mental health and how they are."
European Shares Rise After Massive Selloff Fuelled By Omicron Variant
European shares rose on Monday after their worst selloff in more than a year as investors awaited clues on whether the Omicron variant of coronavirus would hamper economic recoveries and monetary tightening plans by central banks.
The pan-European STOXX 600 gained 1.0%, recovering some of Friday November 29's 3.7% slump triggered by concerns around the newly discovered variant.
While the variant was spotted in several countries across the globe, a South African doctor who was one of the first to suspect a different strain said that symptoms were so far mild and could be treated at home.
"That news has reassured investors, but stocks, particularly in the travel sector, are going to remain volatile because of the disrupted routes, new restrictions, and overall uncertainty," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
To date, no death linked to Omicron has been reported, though further research was needed to assess its potential to escape protection against immunity induced by vaccines, the World Health Organisation said.
Travel stocks led gains in the STOXX 600, with Wizz Air, Lufthansa, TUI Group and British Airways-owner IAG all rising more than 3% after double-digit falls on Friday on fears of fresh travel restrictions.
Financial stocks added 1.7%, while oil stocks advanced 1.9% as crude prices recovered on speculation that OPEC+ may pause an output increase in response to the spread of Omicron.
Meanwhile, European Central Bank board member Isabel Schnabel reiterated the bank's monetary policy stance, saying inflation peaked in November and it would be premature to tighten policy.
Despite clocking several record highs in November, the STOXX 600 is on course to post monthly losses of about 2% as a strong earnings season and easing fears around tighter monetary policy were outweighed by concerns around the new variant and fresh restrictions in Europe.
BT Group jumped 9.0% on reports that Indian oil-to-telecom conglomerate Reliance was considering an offer for the UK telecom firm.
Vestas climbed 1.2% after saying almost all of its IT systems are back up and running again after a ransomware attack was reported at the world's largest wind turbine maker on November 19.
Auto stocks were weighed down by Faurecia's 6.3% drop after the car parts group trimmed its full-year guidance, citing a drop in European automotive production.
From Cruise Operators To Airlines: 'Reopening' Stocks Tumble On Variant Fears
Companies benefiting from this year's economic reopening, including AMC Entertainment, United Airlines and Carnival Corp, were hammered on Friday November 26 by fears that a possibly vaccine-resistant coronavirus variant could mar their recovery.
The variant, detected in South Africa, prompted several countries to tighten border controls and investors around the globe to dump equities for safer assets.
Travel and leisure stocks bore the brunt of the selloff in the United States, with carriers United, Delta Air and American Airlines losing between 8% and 10% to open at their lowest levels in several months.
Hotel chains Hyatt, Marriott and Hilton fell between 8% and 11%, while cruise operators Carnival, Royal Caribbean and Norwegian slumped about 10% each. Theater chain AMC sank 6.2%.
Little is known of the variant but scientists say it has an unusual combination of mutations, may be able to evade immune responses and could be more transmissible.
"The economic recovery has been quite impressive and the one thing that could knock it over completely would be a more dangerous variant. Time will tell how worried we should be, but investors are selling in front of potential bad news," said Ryan Detrick, senior market strategist at LPL Financial.
The news, however, sparked a rally in last year's stay-at-home darlings such as fitness company Peloton, Zoom Video Communications, and videogame publisher Take-Two.
"Investment gods have given the late-to-sell investors a second opportunity to do so because the stocks that did well in the COVID lockdown, like Peloton or Zoom, are probably going to do well once again," said Sam Stovall, chief investment strategist at CFRA Research.
Argentina Tightens Rules On Tourist Spending Abroad To Preserve Dollars
Argentina's central bank has tightened rules on spending to buy airline tickets and tourism services abroad in a bid to protect dwindling foreign currency reserves as it negotiates a deal to roll over its debt with the International Monetary Fund (IMF).
From Friday November 26, the bank is banning the sale of overseas flight tickets and tourism services in installments, a popular purchase method for Argentine consumers who have been hit hard by years of high inflation and weak economic growth.
The bank said it would remain possible to buy tickets in a single payment, or finance them through bank loans, but the move will likely hinder sales because card payment limits are often low and interest rates are very high for loans.
The government said the measure was needed due to the critical economic situation and the ongoing talks to roll over its debt of some $45 billion with the IMF.
"This is a one-off, temporary measure that will help overcome obstacles at a time of reactivation in Argentina," presidential spokeswoman Gabriela Cerruti told a news conference. "We are having to take charge of an international negotiation, the largest in Argentina's history."
Argentina imposed restrictions on access to dollars in 2019, which led to diverging exchange rates on official and unofficial markets as locals sought alternative ways to buy greenbacks.
The exchange rate in the highly-controlled official market is about 100 pesos per dollar, around half the price people pay for dollars in unofficial markets.
Travel agencies and airlines have complained to the government about the new restrictions because they fear they will hit activity just as it was starting to recover after the COVID-19 pandemic.
"These are desperate measures and in the current context they are understood although they are not justified," said Guido Lorenzo, an economist at the consulting firm LCG.
Nigeria Lifts Restrictions On Emirates Flights
Nigeria has lifted restrictions on Emirates airline flights, the aviation minister said on Friday November 26.
In March, Nigeria suspended Emirates from flying into or out of its territory after the carrier imposed additional COVID-19 test requirements on passengers from Nigeria.
"Today we received communications from Emirates removing some of the conditions for travelling for which we had concerns," the minister of state for aviation, Hadi Sirika, said on Friday November 26. "Having done that it is necessary to lift the ban on Emirates. This subsequent lifting of ban is a product of lengthy negotiations between us and them."
New COVID Variant Omicron Triggers Global Alarm, Market Sell-Off
The discovery of a new coronavirus variant named Omicron triggered global alarm on Friday November 29 as countries rushed to suspend travel from southern Africa and stock markets on both sides of the Atlantic suffered their biggest falls in more than a year.
The World Health Organisation (WHO) said Omicron may spread more quickly than other forms, and preliminary evidence suggested there is an increased risk of reinfection.
Epidemiologists warned travel curbs may be too late to stop Omicron from circulating globally. The new mutations were first discovered in South Africa and have since been detected in Belgium, Botswana, Israel and Hong Kong.
The United States will restrict travel from South Africa and neighbouring countries effective Monday, a senior Biden administration official said.
Going further, Canada said it was closing its borders to those countries, following bans on flights announced by Britain, the European Union and others.
But it could take weeks for scientists to fully understand the variant's mutations and whether existing vaccines and treatments are effective against it. Omicron is the fifth variant of concern designated by the WHO.
The variant has a spike protein that is dramatically different than the one in the original coronavirus that vaccines are based on, the UK Health Security Agency said, raising fears about how current vaccines will fare.
Scientists issued similar warnings.
"This new variant of the COVID-19 virus is very worrying. It is the most heavily mutated version of the virus we have seen to date," said Lawrence Young, a virologist at Britain's University of Warwick.
"Some of the mutations that are similar to changes we've seen in other variants of concern are associated with enhanced transmissibility and with partial resistance to immunity induced by vaccination or natural infection."
Those worries pummelled financial markets, especially stocks of airlines and others in the travel sector, and oil, which tumbled by about $10 a barrel.
The Dow Jones Industrial Average closed down 2.5%, its worst day since late October 2020, and European stocks had their worst day in 17 months.
Cruise operators Carnival Corp, Royal Caribbean Cruises and Norwegian Cruise Line plunged more than 10% each, while shares in United Airlines, Delta Air Lines and American Airlines slumped almost as much.
Several other countries including India, Japan, Israel, Turkey, Switzerland and the United Arab Emirates also toughened travel curbs.
In Geneva the WHO - whose experts on Friday discussed the risks presented by the variant, called B.1.1.529 - had earlier warned against travel curbs for now.
"It's really important that there are no knee-jerk responses," said the WHO's emergencies director Mike Ryan, praising South Africa's public health institutions for picking up the new variant of the coronavirus that causes COVID-19.
Richard Lessells, a South Africa-based infectious disease expert, also expressed frustration at travel bans, saying the focus should be on getting more people vaccinated in places that have struggled to access sufficient shots.
"This is why we talked about the risk of vaccine apartheid. This virus can evolve in the absence of adequate levels of vaccination," he told Reuters.
Less than 7% of people in low-income countries have received their first COVID-19 shot, according to medical and human rights groups. Meanwhile, many developed nations are giving third-dose boosters.
"Failure to help vaccinate sub-Saharan Africa - still barely 4% of the population - left us all exposed to risk of a new, more virulent #COVID variant," IMF Managing Director Kristalina Georgieva wrote on Twitter. "News of #Omricon is an urgent reminder of why we need to do even more to vaccinate the world."
The coronavirus has swept the world in the two years since it was first identified in central China, infecting 260 million people and killing 5.4 million.
One epidemiologist in Hong Kong said it may be too late to tighten travel curbs against the latest variant.
"Most likely this virus is already in other places. And so if we shut the door now, it's going to be probably too late," said Ben Cowling of the University of Hong Kong.
Discovery of the new variant comes as Europe and the United States enter winter, with more people gathering indoors in the run-up to Christmas, providing a breeding ground for infection.
Friday November 26 also marked the start of the holiday shopping period in the United States, but stores were less crowded than in years past.
Realtor Kelsey Hupp, 36, was at the Macy's department store in downtown Chicago on Black Friday.
"Chicago is pretty safe and masked and vaccinated. I got my booster so I'm not too concerned about it," she said. Eikon users can click https://apac1.apps.cp.thomsonreuters.com/cms/?navid=1063154666 for a COVID case tracker.
Delta, United Not Revising South Africa Flights Amid Variant Concerns
Delta Air Lines and United Airlines said on Friday they do not plan any changes to their South Africa-U.S. routes after the White House said it plans to impose new travel curbs on southern Africa starting Monday November 29 amid concerns about a new COVID-19 variant.
Delta and United are the only U.S. passenger carriers that have direct flights to southern Africa.
Delta currently operates service between Johannesburg and Atlanta three times weekly and the U.S. airline said "there are no planned adjustments to service at this time."
The White House said it plans to bar entry to most non-U.S. citizens who have been in South Africa and seven other African countries within the last 14 days.
Airlines for America, a trade group representing major U.S. passenger and cargo carriers, said Friday it remains "in communication with the U.S. government as specifics remain unknown at this time and there are many unanswered questions. Amid this rapidly evolving situation, it is critical that U.S. government decisions regarding international travel restrictions and requirements be rooted in science."
United said it "remains committed to maintaining a safe and vital link for essential supplies and personnel to transit between the African continent and the United States as feasible. We don’t have any adjustments to our schedule at this time."
United currently operates five flights per week between Newark and Johannesburg and reiterated Friday it plans to restart service between Newark and Cape Town on Dec. 1 as scheduled.
LATAM Airlines Files Restructuring Plan To Exit Bankruptcy
Chile's LATAM Airlines Group SA said on Friday November 26 it has filed a reorganization plan, proposing an $8.19 billion infusion of capital into the group, in a bid to exit its Chapter 11 bankruptcy.
The financing proposal will include a mix of new equity, convertible notes and debt, the group said in a statement, adding that it intends to launch an $800 million equity rights offering to shareholders, upon confirmation of the plan.
"While our process is not yet over, we have reached a critical milestone in the path to a stronger financial future," said Roberto Alvo, chief executive of the largest airline in Latin America.
Recently, LATAM said it received several offers to fund the exit from Chapter 11 bankruptcy, each of which are worth more than $5 billion. The group filed for Chapter 11 bankruptcy protection in New York in May 2020 as world travel came to a halt amid the COVID-19 pandemic.
Upon emerging from Chapter 11, LATAM expects to have total debt of about $7.26 billion and liquidity of about $2.67 billion, the company said in the statement.
The Santiago-based company reported losses of some $692 million in the third quarter, as the indebted company was still battling challenges from the pandemic.
The restructuring plan is accompanied by a support agreement with creditor group Parent Ad Hoc Group and some LATAM shareholders.
Syria's Cham Wings Airlines Resumes Flights From Damascus To Abu Dhabi - State Media
Cham Wings Airlines, a private Syrian airline, has resumed its flights from Damascus to United Arab Emirates capital Abu Dhabi, Syrian state media reported on Saturday November 27.
The United Arab Emirates foreign minister met Syrian President Bashar al-Assad in Damascus early this month, a sign of improving ties between Assad and a U.S.-allied Arab state that once supported rebels trying to overthrow him.
Emirates Postpones Start Of Tel Aviv Flights
Dubai airline Emirates has postponed the Dec. 6 launch of flights to Tel Aviv until further notice, a company spokesperson said on Sunday November 28, after Israel announced it would ban foreigners from entering in to combat the latest coronavirus variant.
"The postponement comes as a result of recent changes in entry protocols issued by the Israeli government. The airline is committed to launching services to Tel Aviv as soon as the situation allows," the spokesperson said in a statement.
Israel's Prime Minister Naftali Bennet on Saturday November 27 said the country would ban all foreigners from entering for 14 days as it awaits more information on how effective COVID-19 vaccines are against the Omicron variant first detected in South Africa.
Emirates was set to be the third United Arab Emirates airline, after flydubai and Etihad Airways, to start direct flights to Tel Aviv since the two countries established diplomatic relations last year.
Spread Of Omicron Variant Forces Nations To Rethink Plans For Global Travel
The global spread of the Omicron variant of coronavirus has brought new cases in Australia, Denmark, France and the Netherlands, prompting nations to reconsider plans for international travel as they scramble to avert an outbreak.
News of the variant triggered alarm and a sell-off last week in financial markets, as countries clamped on new curbs for fear it could resist vaccinations and upend a nascent economic re-opening after a two-year global pandemic.
The World Health Organisation (WHO) warned that deciding the severity level of Omicron, identified first in South Africa, could take "days to several weeks" in the absence of information that its symptoms differed from those of other variants.
Asian markets and oil prices regained some composure as investors settled in for a few weeks of uncertainty as they wait for more details.
Australia will review plans to reopen to skilled migrants and students from Dec. 1, Prime Minister Scott Morrison said on Monday, while adding it was a "bit too early" to reinstate two-week mandatory hotel quarantine for foreign travellers.
"So we just take this one step at a time, get the best information, make calm, sensible decisions," Morrison told broadcaster Nine News.
A national security panel will meet later in the day to assess border relaxations due from Wednesday, he added, with leaders of all states and territories to meet by Tuesday.
He called for calm as the severity, transmissibility and vaccine resistance of Omicron had not been determined, echoing remarks by the WHO, which dubbed it a "variant of concern".
Potentially more contagious than previous variants, Omicron has now been detected in Australia, Belgium, Botswana, Britain, Canada, Denmark, France, Germany, Hong Kong, Israel, Italy, the Netherlands and South Africa.
Symptoms of Omicron were so far mild and could be treated at home, a South African doctor, one of the first to suspect a different variant, has said.
Countries from Indonesia to Saudi Arabia have imposed travel curbs for visitors from southern Africa to limit the spread.
Singapore has deferred the start of vaccinated travel lanes with some Middle Eastern countries, such as Qatar, Saudi Arabia and the United Arab Emirates, given "their proximity as transport nodes to the affected countries", its health ministry said.
Britain said it would call an urgent meeting of G7 health ministers on Monday November 29.
In the most far-reaching effort against the variant, Israel is to ban the entry of foreigners and re-introduce counter-terrorism phone-tracking technology, it has said.
South Africa has denounced the measures as unfair and potentially harmful to the economy, saying it was being punished for its scientific ability to identify variants early.
"The prohibition of travel is not informed by science, nor will it be effective in preventing the spread of this variant," President Cyril Ramaphosa said on Sunday.
"The only thing (it) ... will do is to further damage the economies of the affected countries and undermine their ability to respond."
President Joe Biden will give an update on the variant and the U.S. response on Monday, the White House said in a statement.
It will take about two weeks to get definitive information about the transmissibility and other features of Omicron, Dr. Anthony Fauci, the top U.S. infectious diseases official, has told Biden, it added.
Fauci believes existing vaccines "are likely to provide a degree of protection against severe cases of COVID", the White House said.
Travellers On Edge As Countries Tighten Rules Due To Omicron Fears - Travel Agents
Some would-be travellers are considering cancelling or delaying trip plans in response to fresh curbs prompted by the Omicron variant of the coronavirus, travel agents said on Monday November 29, threatening an already fragile recovery for the global tourism industry.
Southern Africa, where Omicron was discovered, accounts for only a tiny portion of the world's international travel but Israel and Japan have announced border closures to all foreign travellers and Britain and Australia have tightened rules for all arrivals in response to the new variant.
Some Australian travellers booked through Flight Centre Travel Group Ltd have cancelled or delayed trips amid new requirements for arrivals to isolate at home or a hotel for 72 hours while awaiting the results of a COVID-19 test, a spokesperson for the travel agency said.
"We're not being rushed off our feet," he said of the number of changes to trips. "It is still very early days and people are generally prepared to wait and see what eventuates."
Australia's border remains closed to tourists from all countries except New Zealand and Singapore.
Jeremiah Wong, senior marketing communications manager at tour agency Chan Brothers Travel in Singapore, said some concerned customers had called to enquire about options for upcoming Australia trips due to the new isolation requirement.
"At this moment, the observation is that people are still keen to carry on with their travel plans, because they have been planning for this for a long time," he said. "We have not received any calls of concern for Europe tours."
Singapore Airlines Ltd said it had converted some of its passenger flights to Johannesburg and Cape Town to cargo-only after Singapore put in place restrictions on travellers who had been to southern Africa.
Singapore had only recently begun a cautious reopening to foreign travel and the country on Sunday deferred plans to open its borders to vaccinated travellers from the United Arab Emirates, Qatar and Saudi Arabia because those countries are transit hubs for African travel.
Singapore's Skyline Travel, which sells tour packages to Europe and South Korea, is "worried" about the situation though it has not yet seen cancellations, a spokesperson said.
"We have been making it compulsory for our clients to purchase travel insurance due to the fluidity of the situation," he said.
Costly Airbus Paint Flaw Goes Wider Than The Gulf
A dispute between Airbus and Qatar Airways over paint and surface flaws on A350 jets stretches beyond the Gulf, with at least five other airlines raising concerns since the high-tech model entered service, according to documents seen by Reuters and several people with direct knowledge of the matter.
Qatar's national carrier has grounded 20 of its 53 A350s, saying it is acting on orders from its local regulator, until reasons for what witnesses describe as the blistered and pock-marked appearance of some of its A350s can be confirmed.
Airbus says there is no risk to the A350's safety - a point echoed by the other airlines, which have not grounded any jets and describe the issue as "cosmetic."
The planemaker said in response to queries from Reuters there had been some problems with "early surface wear" that in some cases had made visible a sub-layer of mesh designed to absorb lightning, which it is working to fix.
Three people with direct knowledge of the situation said that at Qatar Airways and at least one other airline the mesh had in some instances itself developed gaps, leaving the carbon-fibre fuselage exposed to possible weather or other damage.
The A350, in service since 2015, is designed with ample protection to resist storms and is deployed around the world with high reliability, Airbus said in an emailed statement.
Asked about gaps in the mesh, it said some airlines were subject to higher swings in temperatures than others, apparently referring, for example, to desert conditions in Qatar.
Qatar Airways has called for a definitive cause to be identified and a permanent fix that satisfies its regulator. The Qatar Civil Aviation Authority declined to comment.
Two people familiar with the grounding decision said it was based on ongoing uncertainty over the cause and impact of surface degradation and gaps in lightning protection.
Airbus says it has found a root cause, but sources with two affected airlines said they had not been notified of one.
The row has set the clock ticking on a compensation battle that sources said could be worth hundreds of millions of dollars after Qatar Airways halted deliveries of 23 more A350s on order.
The clash between two of aviation's most powerful players became public in May, six months after Qatar Airways sent an A350 to be stripped and repainted in special livery for the FIFA World Cup to be held in the Gulf state next year.
But what for months had been widely presented as an isolated issue related to Qatar's severe heat is more widespread, according to a private maintenance message board used by Airbus and A350 operators and reviewed by Reuters.
Messages show Finnair, which operates in the colder north, raised paint concerns as early as 2016, and reported in October 2019 that damage had spread below to the anti-lightning mesh.
Cathay Pacific, Etihad, Lufthansa and Air France - acting in its capacity as maintenance provider for Air Caraibes - also complained of paint damage.
Following those previously unreported problems, Airbus last year set up a "multi-functional task force," while studying new material for lightning protection in future A350 jets, two people familiar with the matter said.
Finnair, Cathay Pacific and Lufthansa confirmed some of their A350s had suffered what they described as cosmetic damage. Air Caraibes said it and sister airline French Bee had seen "no major paint problems," and especially none regarding safety. Air France said its own A350s had operated normally since it began flying them in 2021 and declined to comment on Air Caraibes. Etihad declined to comment.
To be sure, Qatar Airways has had disputes with suppliers in the past before reaching compromise deals. Its CEO Akbar Al Baker has periodically criticised both Airbus and U.S. rival Boeing over perceived manufacturing and strategy errors.
Analysts say the dispute coincides with efforts by many airlines to reduce their exposure to long-haul jets following the pandemic. Gulf industry sources deny commercial motives for the grounding, noting Qatar badly needs jets for the World Cup.
Airbus is also not alone in facing problems. Boeing has had paint issues and a phenomenon known as rivet rash, or flecks of missing paint, on its competing 787s. A spokesperson said it was not safety-related and was being resolved.
However, the unusual partial grounding by Qatar comes at a sensitive time for Airbus as it races to meet an end-year delivery target and as Qatar Airways studies offers from Boeing to replace a fleet of 34 freighters.
In October 2016, a year after becoming the A350's first European operator, Finnair reported paint damage, according to the message board. It later complained "paint is in very bad condition."
Hong Kong's Cathay Pacific, which uses a different paint supplier, reported similar problems the same month. Almost a year later, it said it "continue(s) to experienced paint peeling problems on multiple aircraft."
In one posting, it disclosed that problems had been found on an A350 just two weeks after delivery.
"We can confirm that we have experienced some issues with A350 painting, and have been working together with ... Airbus to solve these issues," a Finnair spokesperson said, adding the problem was "cosmetic, but naturally unfortunate."
Cathay Pacific confirmed some of its A350s had experienced "to some extent cosmetic deterioration." The issue has been fully investigated and there is no safety impact, it said.
By October 2017, the messages show, Lufthansa had also found areas of peeling, some spanning more than a square metre.
Lufthansa said occasional cosmetic defects had been corrected and that safety had never been affected.
Paint has played a major branding and diplomatic role in the jet age, projecting the image of airlines and nations across the world. But a switch to new lightweight jets brought a hitch.
When Airbus 15 years ago launched the A350, it chose to follow Boeing's new 787 in using carbon-fibre instead of metal.
Experts say the lighter jets consume less fuel but are harder to deck out in a way that makes paint stick.
The new jets also need a layer of metallic mesh to dissipate lightning strikes because carbon-fibre is not conductive.
Finally, unlike metal, carbon does not expand and shrink as temperatures change. Yet paint does, resulting in a tug of war between plane and paint that can cause peeling over time.
Problems reported by Qatar Airways and some - though far from all - other A350 operators suggest this is happening earlier than expected, two people familiar with the design said.
The problem may have been compounded by the paint's especially weak adhesion to titanium rivets, they added.
Some industry experts have questioned whether other manufacturing flaws may also have contributed to the problem.
Pictures submitted on the message board by Finnair in 2019, seen by Reuters, appear to show corroded or missing mesh known as Expanded Copper Foil. Finnair and Airbus declined to comment on the photos, but Airbus officials said that particular problem may have stemmed from an early production issue, since resolved.
"We have seen no effect on the structure of the aircraft and operators continue to fly with high levels of operational reliability," A350 Chief Engineer Miguel Angel LLorca Sanz said of the broader paint issue.
"This is not at all affecting the lightning strike protection due to the substantial (safety) margins ... It is not at all an airworthiness issue," he said in an interview.
Airbus is nonetheless looking at updating the lightning system to a more flexible material called Perforated Copper Foil, industry sources said.
Airbus confirmed it is one option under review.
That still leaves a war of words over existing planes sitting idle with their windows taped up in Qatar.
Photographs obtained by Reuters show cracked or missing paint and exposed or corroded lightning protection on at least two of the jets.
Now regulators must try to break an impasse over whether that kind of damage is within the allowable margins for dealing with lightning, which Airbus insists would still wash safely over the jet. That in turn may determine whether compensation clauses will be triggered.
While European regulators have said there is no evidence of safety risk, Qatar is pressing for deeper analysis and shows no immediate signs of backing down.
Russia's Aeroflot Posts First Quarterly Profit In Two Years
Russia's flagship airline Aeroflot reported on Monday November 29 its first quarterly net profit since 2019 as a recovery of domestic and international traffic accelerated.
Aeroflot, whose shares rose by 1.6% to 0941 GMT on Monday November 29, said its net profit in the third quarter was 11.6 billion roubles ($155 million) compared to a loss of 21.14 billion roubles a year ago.
Aeroflot's domestic traffic has grown as Russia refrained from imposing a complete lockdown during a new wave of infections.
In the third quarter, Aeroflot's passenger numbers on the domestic market were 27.4% higher than the same period in 2019, before the pandemic.
"We also took maximum advantage of the gradual lifting of restrictions in the international segment, and this also had a significant positive impact on the results," Andrey Chikhanchin, Aeroflot’s Deputy CEO for Commerce and Finance, said.
Berenberg analysts said on Monday new lockdowns in parts of Europe and the spread of the new Omicron coronavirus variant threatened the global recovery in air travel.
Aeroflot's earnings before interest, taxes, depreciation, and amortisation (EBITDA) in the third quarter was 54.05 billion roubles, compared to 20.09 billion roubles a year ago.
The company said it planned to maintain strict cost control as its fuel costs jumped by 41.7% year on year in the first nine months of 2021.
Aeroflot said this month it would raise the fuel charge on its domestic and international routes because of rising jet fuel costs.
Brazil's Azul confirms LATAM M&A offer, but backs off as valuation too high
Brazilian airline Azul SA confirmed on Monday November 29 that it made an offer earlier this month to combine with Chile's LATAM Airlines Group , which is in bankruptcy proceedings, but said it had since decided to focus on its own operations.
In an exchange filing published late on Sunday November 28, Azul said it would consider potential partnerships only in the future.
The Brazilian airline said its non-binding proposal submitted on Nov. 11 had included around $5 billion in equity financing and was backed by some creditors of LATAM.
Azul added however that LATAM's valuation under its bankruptcy process had become higher than it believes to be acceptable, citing ongoing uncertainty in the aviation industry amid the COVID-19 pandemic, especially in long-haul markets.
"As a result, Azul will continue to focus on its exclusive competitive advantages provided by its unique network and fleet flexibility... and to evaluate future partnerships and consolidation opportunities available in the market," Azul said.
LATAM filed a reorganization plan on Friday in which it proposed an $8.19 billion infusion of capital into the group in a bid to exit its Chapter 11 bankruptcy.
The Chilean company previously said it had received several offers to fund the exit from Chapter 11 bankruptcy, each of which were worth more than $5 billion.
Azul said in its late Sunday filing that it believed its non-binding proposal would have provided significant increased network growth and generate synergies estimated at more than $4 billion.
It added that "the standalone plan presented by LATAM is, by definition, unable to generate synergies from a combination".
TUI Allows British Travellers To Reschedule For Free As UK Slaps Curbs
Travel company TUI said on Monday November 29 all UK customers due to travel before Dec. 21 would be able to change to another date for free if they chose to, in light of new travel curbs to contain the spread of the Omicron coronavirus variant.
The United Kingdom has restricted travel from southern Africa. The variant was first detected in South Africa last week.
TUI has approximately 1,600 travel agencies and online portals, five airlines, over 400 hotels, 15 cruise liners in major holiday destinations around the globe.