How European Airlines Are Looking For Further Recovery Momentum
This is an abbreviated version of the article - European Airlines Look To U.S. Reopening For Further Recovery Momentum - by Helen Massy-Beresford and Jens Flottau
As the air traffic recovery within Europe gathers pace, the latest set of financial results from European legacy carriers highlights the remaining restrictions on transatlantic travel as the major obstacle standing in the way of further improvement.
While restrictions eased for U.S. residents wishing to travel to the EU in June, the Biden administration has so far opted to keep restrictions on foreign nationals traveling from many countries to the U.S., including the EU, in place.
However, the situation is improving within Europe, driven by demand from leisure trips and traveling for visiting family and friends. Eurocontrol statistics showed traffic in the region reached 68.3% of 2019 levels in the week to Aug. 1, up 0.5% compared with the previous week. But the limitation on transatlantic travel is a major sticking point in the way of recovery for Europe’s network carriers—although it is one they increasingly believe will soon be removed.
Carsten Spohr, CEO of the overall Lufthansa Group, now expects the U.S. to reopen air travel for fully vaccinated international passengers by the end of September. His forecast came as the group revealed a revenue decline of over 30% compared with the first half of 2020, down to €5.7 billion euros ($6.7 billion), and follows comments by the Biden administration that it is working on a stepped approach to allow foreign travelers back into the country, starting with those that are fully vaccinated against COVID-19.
Lufthansa posted a 1.8 billion euro net loss in the first half of 2021. The second quarter, in which the airline endured a 756 million euro net loss, was deeply affected by the pandemic.
While Lufthansa has no further information on timing, the group is now working on the assumption that it will be able to accept bookings for its U.S. flights from non-U.S. citizens or nonresidents at the end of the third quarter. The Lufthansa CEO hopes that the actual opening could even come some weeks sooner.
International Airlines Group (IAG), which reported its midyear results July 30, is also highly dependent on a transatlantic recovery. While it is still awaiting good news on U.S. travel restrictions, the airline group welcomed the development that fully vaccinated travelers from “amber” countries—according to its system of defining countries’ COVID-19 status for travel purposes—would not have to quarantine on arrival in the UK.
“We see this as an important first step in fully reopening the transatlantic travel corridor,” IAG CEO Luis Gallego said July 30.
The parent company of British Airways, Aer Lingus, Iberia, Vueling and Level posted a net loss of 2.17 billion euros for the first half of the year, compared with restated 2020 figures of 1.97 billion euros.
The UK airline sector has been vocal in calls for an easing of restrictions as vaccination rates have climbed. Industry group Airlines UK welcomed the move to exempt fully vaccinated travelers from “amber” countries, including EU countries and the U.S., from quarantine but said the UK’s scrapping of plans for an amber watchlist for countries at risk of having stricter travel restrictions reimposed did not go far enough.
“This is another missed opportunity and, with the summer season nearing its conclusion, means international travel has not had anything like the reopening it was hoping for,” Airlines UK CEO Tim Alderslade said.
Across the channel, Air France-KLM—like its German counterpart—sounded a hopeful note that remaining transatlantic constraints would soon be lifted. The company posted a net loss of 1.49 billion euros for the second quarter.
“We’re hopeful that by September there is reciprocity put in place, however, we do not have a fixed date [and] no firm statements on the part of the U.S. government,” CEO Ben Smith said July 30. “We are hopeful that toward the end of the third quarter we can see some easing of the restrictions, but again no firm date has been transmitted by the U.S. government.”