April 14, 2020 / 4:30 PM / a month ago

Airlines mull empty seats and masks for coronavirus recovery

LONDON/PARIS (Reuters) - Wizz Air is making plans to fly jets only two-thirds full to allow more space between passengers, it said on Tuesday, as airlines voiced concerns that anti-coronavirus measures could blight their profitability long after travel restrictions end.

FILE PHOTO: A Wizz Air Airbus aircraft is pictured at London Luton Airport, Britain, April 13, 2019. Picture taken on April 13, 2019. REUTERS/Kacper Pempel/File Photo

Wizz Air (WIZZ.L) Chief Executive Jozsef Varadi and the head of the industry’s global trade association both said single-aisle planes may be required to leave the middle seats on each side vacant to allow a degree of “social distancing” aboard.

“We would basically be blocking a third of the airplanes,” Varadi told Reuters in a telephone interview. “A 180-seater would become a 120-seater.”

Beyond the open-ended lockdowns and travel bans that have brought air travel to a near-halt, deep uncertainty remains over the pace of an eventual recovery and the potential for lasting restrictions that could pile up yet more losses.

Raising its coronavirus impact forecast to $314 billion, the International Air Transport Association (IATA) described “worrisome” signs of governments “doubling down” on international travel restrictions even when lifting lockdowns - citing developments in China and South Korea.

Alexandre de Juniac, the airline body’s director general, said leaving the middle seat vacant was among likely conditions for a resumption of air travel to be discussed with governments in a series of coordinated meetings around the world.

Operating aircraft with more seats has been a “key element of profitability for airlines”, which typically break even above 75% seat occupancy, de Juniac said.

But removing seats could ease a possible fare-cutting war as airlines try to recoup market share coming out of the crisis.

“On the one hand ... you have airlines that are heavily in the red and desperately need passengers to come back, which could put pressure on prices,” de Juniac told Reuters.

On the other, he added, “if we ask for distancing in the aircraft we will have to neutralise a great number of seats and so it means that ... you need to raise prices. So you have contradictory trends,” he said in a video interview.

The effect could be felt most by low-cost carriers, whose business models rely on squeezing productivity out of fleets by installing more seats, filling a higher percentage of them with passengers and flying more trips per day than many older rivals.

BALANCE SHEETS

But stronger balance sheets and labour flexibility could make Wizz Air, Ryanair (RYA.I) and easyJet (EZJ.L) better able to withstand virus-related losses than older peers Lufthansa (LHAG.DE) and Air France-KLM (AIRF.PA). Citi analysts say Ryanair and Wizz Air may be the only major European carriers that can avoid raising new capital or government-backed debt.

Wizz Air, a London-listed carrier based in Hungary and focused on central and eastern Europe, said it was cutting 1,000 jobs, about one-fifth of its total workforce.

It nevertheless reiterated plans to increase capacity by 15% annually once markets return to normal and will take delivery of 12 single-aisle Airbus jets this year and 30-40 in 2021-23.

Germany’s Lufthansa, by contrast, last week predicted it would be years before air travel returned to pre-crisis levels. EasyJet has also said it would defer delivery of 24 Airbus (AIR.PA) jets.

Besides the additional effects of a broader economic slump on travel, airlines are nervous about passengers’ readiness to return to security lines, boarding lounges and plane cabins.

Wizz Air is exploring “all sorts of measures to put in place, especially in the initial period”, Varadi said - including protective gear for passengers.

The airline may need to “make sure that people actually travel in masks to protect themselves and protect their fellow passengers”, he said.

($1 = 0.9153 euros)

Reporting by Sarah Young, Laurence Frost, Tim Hepher; Editing by Jane Merriman and Mark Potter

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