Israel Looks to Back-Up Airport as Flight Cancellations Mount

By Sarah Young and Dan Williams

Palestinian militants have repeatedly shelled the Tel Aviv area during hostilities that erupted on Monday, raising safety concerns over Ben Gurion Airport, Israel’s main airport, and prompting it to reroute some flights to Ramon Airport, some 200 km (125 miles) to the south, which serves Eilat.

“The safety and security of our colleagues and customers is always our top┬ápriority, and we continue to monitor the situation closely,” British Airways said after cancelling its flights to and from Ben Gurion for Thursday.

Hamas militants in Gaza said they had launched a rocket at Ramon Airport on Thursday, but the Israel Airports Authority said that no rocket had struck Ramon and that it was operating as normal. The airport, which opened in 2019, can handle about 2 million passengers a year. It is connected by bus routes to the north, although there is no train service.

Its arrivals board showed several El Al Israel Airlines Ltd. flights from abroad that had been originally scheduled to land at Ben Gurion.

An Israeli official said the two airports were operating in sync. Ben Gurion was handling cargo, private and some other flights, and Ramon is “open for landing international commercial flights” and running scheduled domestic flights, he said.

Social media carried footage, purportedly taped by a passenger on an El Al flight from Brussels that was the first plane rerouted to Ramon, showing the view through the window of rockets being fired and intercepted over Tel Aviv. Reuters could not independently verify the footage.

UK-based Virgin Atlantic cancelled its flights to Tel Aviv for Wednesday and Thursday.

Spanish airline Iberia also cancelled its flight to Tel Aviv from Madrid on Thursday and back on Friday a spokeswoman said, while Germany’s Lufthansa also cancelled its flights.

“Due to the current situation in Israel, Lufthansa is suspending its flights to Tel Aviv until Friday, May 14,” the airline said.

Wizz Air said it had delayed its Thursday flight from Abu Dhabi to Tel Aviv until Friday.

Emirati carrier Flydubai said it was continuing to operate daily flights from Dubai to Tel Aviv. The airline was scheduled to operate three flights on Thursday, its website showed, while a fourth, night-time flight was cancelled.

United Airlines, Delta Air Lines and American Airlines on Wednesday all cancelled flights between the United States and Tel Aviv.

Virgin Atlantic had said earlier this week that bookings to Israel had soared 250% week on week after an announcement by Britain that Israel was on its “green list” for the reopening of overseas leisure travel during the COVID-19 pandemic.

But an explosion of violence, with fighting in Jerusalem and the Gaza Strip causing mounting civilian deaths, have made international airlines wary of the region.

Israel’s national airline El Al has said it was ready to operate additional planes to make up for shortfalls in foreign carriers.

British airline easyJet said that it was not yet cancelling its flights to Tel Aviv. Its next flight there is from Berlin and not scheduled until May 16, with a service from London Luton to Tel Aviv scheduled for May 18.

(Reporting by Sarah Young; Additional reporting by Inti Landauro in Madrid, Christoph Steitz in Frankfurt and Alexander Cornwell in Dubai; Editing by Michael Holden, Carmel Crimmins and Hugh Lawson)

Air France-KLM Operating Loss Widens as European Recovery Lags

By Laurence Frost

Air France-KLM said it expects to operate 50% of its pre-pandemic flight capacity in the second quarter under way, ramping up to 55% to 65% in July-September.

“We’re waiting to see the first effects of vaccination,” Chief Financial Officer Frederic Gagey said. Demand is showing “no noticeable improvement so far”, he added, with customers often waiting to book at the last minute.

While rebounding U.S. and Chinese domestic markets are already benefiting airlines there, carriers in Europe are stuck waiting for the region’s slower vaccine rollouts to give way to looser curbs and an anticipated recovery.

Lufthansa cut its 2021 capacity forecast last week while narrowing its first-quarter loss with a workforce reduction of 19%. British Airways parent IAG posts quarterly earnings on Friday.

Air France-KLM’s operating loss increased to 1.18 billion euros ($1.42 billion) from 815 million in the first quarter of 2020, which was only partially affected by the onset of the pandemic. Revenue fell 57% to 2.16 billion euros.

The group, which took a 10.4-billion-euro government-backed bailout last year, raised 1 billion euros in an April share issue that saw the French state double its holding to 28.6%.

Air France-KLM is seeking shareholder approval this month to raise more equity and hybrid capital, in a process its CFO said would see debt and state support “gradually transformed into market-credible products” as the outlook improves.

Gagey, 64, is due to retire at the end of June and will be replaced in the group role by current Air France finance chief Steven Zaat, the company said on Thursday.

The quarterly numbers beat the 2.07 billion in revenue and 1.31-billion-euro operating loss expected by analysts, according to the median of 12 estimates in a company poll.

The net loss narrowed to 1.48 billion euros from 1.8 billion a year earlier – which included a large fuel-hedging deficit as traffic collapsed.

Air France-KLM said net debt rose by 1.5 billion euros over the quarter to 12.5 billion at March 31, when it held 8.5 billion euros in liquidity and available credit.

(Reporting by Laurence Frost; Editing by Cynthia Osterman and Keith Weir)

Analysis-Stricken Airlines Seek Lifeline from Transatlantic Opening

By Laurence Frost and Sarah Young

Talks between Brussels and Washington on resuming mass travel for vaccinated tourists have raised hopes of a summer rebound – further buoyed by new EU reopening proposals.

Airlines are desperate for good news after a year of COVID-19 lockdowns that pushed many to the brink of collapse, or into the arms of governments.

The United States will reopen to Europeans in “a matter of the next two or three weeks”, Lufthansa Chief Executive Carsten Spohr predicted last week.

But the German airline boss also cautioned against any race to the bottom on fares.

“The North Atlantic is historically the most disciplined traffic region,” Spohr told investors. “I expect this discipline (to) prevail.”

United Airlines, American Airlines and Delta Air Lines have added summer routes to countries like Iceland and Greece that plan to welcome vaccinated travellers.

Consumers are showing some interest.

Air France-KLM said U.S. sales twitched back to life last month after French President Emmanuel Macron announced restrictions may be eased for vaccinated Americans – and again when the EU confirmed talks with Washington.

Air France is adding a Paris-Denver service, in what network chief Olivier Piette described as a “big bet” on a secondary U.S. leisure route with less direct competition.

The Franco-Dutch group is partnered with Delta and Virgin Atlantic in one of three transatlantic joint-ventures that allow extensive commercial cooperation. Lufthansa is paired with United, and British Airways with American.

Virgin is expecting a scrap, Chief Executive Shai Weiss said recently. “I’m sure there’s going to be tremendous competition and we’ll rise to it.”

But airlines bled dry by the crisis will resist aggressive discounting, predicts analyst John Grant of data specialist OAG.

“The bean counters will be keeping a close eye on that,” he said. “Investors will also want to see airlines behaving responsibly in the recovery.”

DISNEY AND A DOSE OF REALITY

Airlines currently plan about 65% of pre-crisis transatlantic capacity in the third quarter, according to OAG – but many flights could end up cancelled.

Mid-sized Boeing 787s and Airbus A350s will be summer favourites, OAG expects, thanks to fuel efficiency and freight capacity. Grounded 747s and A380 superjumbos are unlikely to return so soon.

Summer bookings are just a fifth of their level at the same point in 2019, separate ForwardKeys data show.

Greece, which has been promising unfettered access for visitors with vaccines or negative tests, is so far the standout destination for U.S. tourists with sales at 74% of pre-crisis levels.

For Britons, Disney World remains a draw, with Orlando, Florida bookings down 52%, a relatively strong showing.

Airline network managers have suffered repeated false starts, with a shift to last-minute booking further obscuring recovery prospects.

American Airlines revenue chief Vasu Raja offered a “dose of reality” on summer traffic to Europe. “A lot of the customers that would have gone there have already booked trips to Hawaii or Florida anyway,” he told investors.

European carriers such as Virgin and British Airways have more at stake in the North Atlantic than U.S. peers cushioned by a rebounding domestic market. Hopes are high for a return to quarantine-free travel between Britain and the United States.

European airline shares rose on the latest EU reopening steps, with British Airways parent IAG up 2.5% on Tuesday as London trading resumed after a public holiday.

Geoffrey Weston, a consultant with Bain & Co., expects airlines to rein in revenue management software that typically sets fares to fill planes.

“In recovering markets there’s more human intervention and control over pricing,” Weston said, adding that Norwegian Air’s transatlantic exit had also eased pressure.

Soaring cargo rates have allowed airlines to keep routes open with low passenger occupancy and may limit the competitive drive to slash fares as demand picks up.

Air France is serving 11 U.S. cities – increasing to 12 with Denver – with A350s, 787s and first class-equipped 777s whose freight loads largely cover the costs of running the flight.

“It’s thanks to cargo that we’ve been able to maintain our long-haul programme,” said Piette.

“It’s a good fit with current consumer behaviour.”

(Reporting by Laurence Frost and Sarah Young; Additional reporting by Tracy Rucinski in Chicago and Ilona Wissenbach in Frankfurt; Editing by Tim Hepher and Pravin Char)

France Will Continue Massive Support for Air Transport Sector: Finance Minister

“We will continue to support massively and durably the French air transport sector, the small- and medium-sized companies that work in the industry, the aerospace industry, Airbus, and the entire French industry ” Le Maire told the French Senate.

On Tuesday, France announced plans to contribute to a 4 billion euro ($4.8 billion) recapitalisation of Air France-KLM and more than double its stake in the airline to nearly 30%.

Under the EU-approved terms, Air France will give up 18 Paris-Orly take-off and landing slots to competitors, amounting to 4% of its current portfolio at the airport.

Le Maire said the government would make sure that no company practicing “social dumping” – cutting staff pay and benefits as much as possible – would get access to these slots.

He also said the government will support the industry while trying to decarbonise air travel, notably by supporting projects for a zero-carbon hydrogen-fueled airplane.

He added that the government wants to reduce the use of airplanes when possible and said Air France has been asked to scrap all connections to cities where there is an alternative by train that takes less than 2-1/2 hours.

Le Maire also said Air France will not take a stake in Reunion island’s Air Austral but he said the state will defend Air Austral with a 30 million euro state-guaranteed loan.

(Reporting by GV De Clercq and Dominique Vidalon; editing by Jonathan Oatis)