UPDATE 1-Airlines chief says high oil prices to delay debt reduction

- Advertisement -


(details, adds citation)

- Advertisement -

DOHA, Nov 10 (Businesshala) – High oil prices may delay airlines’ efforts to restore balance sheets weakened by the pandemic, but the lifeline of bookings made well in advance will be as the markets reopen. Simultaneously lifting.

- Advertisement -

Crude oil prices have risen 66% so far this year as economies exit lockdowns and supplies remain tight.

“I think it’s going to be tough, but I don’t think airlines can avoid it. They have to strengthen their balance sheets,” Willie Walsh, director general of the International Air Transport Association (IATA), told Businesshala.

- Advertisement -

“For some airlines this will take time, and the high oil price probably slows down the recovery period,” he said.

Airlines are grappling with $651 billion in debt since the COVID-19 crisis began, up from $220 billion since the COVID-19 crisis began, according to IATA, which represents nearly 300 carriers.

Walsh said labor shortages are also a concern and represent a real risk for the first time in decades.

There are gaps from pilots to ramp workers, he said, adding one airline was forced to increase hourly wages by more than 50%.

On the positive side, onward bookings are on the rise and extend up to a year ahead as travel restrictions are lifted. This marks a relief for airlines, which were recently forced to rely on last-minute bookings as passengers waited for the new COVID rules.

“It hasn’t returned to the same pattern, but people are now convinced to say ‘I’m going to start booking for next summer and beyond’,” Walsh said in an interview.

transatlantic potential

When the United States announced the lifting of COVID-related travel restrictions, bookings backfired in the crucial transatlantic market, leading to its reopening from Monday.

“It is very clear that when restrictions are lifted or relaxed, there is an immediate reaction – and it is immediate: the transatlantic spike was almost until the second,” Walsh said.

Walsh, a former boss of British Airways and a veteran of the world’s largest international travel market as its parent IAG, said a bounce back in US-bound transatlantic travel would prompt carriers to offer significant additional seats.

But he downplayed the airline industry’s risk of a financially damaging Atlantic capacity war.

“I don’t think they will be hurt financially because what you’ve seen is great demand,” Walsh said, adding that demand had proved strong between the peak of 2011 and the pre-crisis 2019.

“I expect that when we look back on this period, we will see a very significant increase in travel across the Atlantic from Europe,” he said.

Still, airlines around the world face the cost of bringing planes out of storage or accepting new ones and in some cases being able to take advantage of the rebound, making the start of a recovery a risky time for the industry. Is.

“For many people the risk is still ahead,” Walsh said. (Reporting by Alexander Cornwell and Tim Heffer Editing by Lewis Havens and Mark Potter)

,

- Advertisement -

Stay on top - Get the daily news in your inbox

DMCA / Correction Notice

Recent Articles

Related Stories

Stay on top - Get the daily news in your inbox