Airbus SE’s chief executive officer says the coming year is shaping up to be “chaotic” for the global aviation industry as governments begin COVID-19 vaccination programs and grapple with decisions on whether to lift or maintain travel restrictions amid renewed lockdowns in many countries.
“It’s going to be very complex to move from today to a normalized situation,” Guillaume Faury said Monday at a virtual conference held by the International Economic Forum of the Americas. “And 2021 will be chaotic most probably. But yes, there’s hope. We will probably see a much different situation by end of next year than what we see at the end of 2020.”
The priority for Airbus and its customers is an orderly return to air travel for passengers, Mr. Faury said. “What we have observed so far has been so much disorganization, lack of co-ordination” within and between countries, he said, adding the resulting disarray has hurt the industry far more than what was necessary.
Canada and most other countries have imposed travel restrictions and quarantines for travellers as part of their efforts to slow the spread of COVID-19, which has killed more than 1.5 million people worldwide. But there is no widespread harmonization of rules, and in Canada the government has imposed what airlines have called a “disproportionate” level of restrictions, such as mandatory 14-day quarantines for most people entering the country.
“We count on this work to take place now, with the arrival of the vaccine, to progressively reopen the routes and be able to have passengers back on flights,” Mr. Faury said. “Because when those routes are reopening, and we see it here and there, passengers are willing to fly. That’s the way to feed this industry, to fuel the return to some normality.”
Aerospace executives have ratcheted up calls for more broad-based testing of airline passengers in recent weeks as an alternative to mandatory quarantines. If a person can be shown to be healthy by testing, they do not need to isolate for 14 days when they arrive at their destination or return home, the industry says. The quarantines are seen as a massive barrier to travel.
Airbus, the world’s biggest plane manufacturer, cut its production rates by one-third in April and launched plans to slash its work force by 17 per cent, the key elements in a sweeping restructuring that has allowed it to weather the coronavirus crisis. In October, it said it aimed to return to breakeven on a cash flow basis in the last three months of 2020.
Mr. Faury said the vast majority of Airbus customers have not asked for order cancellations but rather deferrals. He said most of the world’s airlines will survive the pandemic with weakened balance sheets. “I call it wounded but alive.”
“We’re very much at the bottom of the pit” for passenger traffic, Richard Aboulafia, an analyst for aerospace consultancy Teal Group, told an audience Monday at another virtual conference, the International Aerospace Innovation Forum. Revenue passenger kilometres are still down about 70 per cent, he said.
The pandemic is forcing down both oil prices and interest rates, which is mixed news for manufacturers such as Airbus, Mr. Aboulafia said. Cheap fuel prices are discouraging their airline customers to purchase more fuel-efficient planes while on the flip side financing should remain cheap for some time to come, he said.
Governments from the United States to Asia have supported airlines with emergency funding to help them weather the worst crisis the sector has experienced and Mr. Faury called out Canada for failing to offer similar relief. “It’s fair to say that we had more expectations on the support we could have had in Canada,” he said.
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