Governments look set to offer help to airlines, which are losing $30 million a day and facing huge insurance hikes

European airlines have been closing ranks in negotiations with national governments and the European Commission (EC) to find a way of stemming losses which could bring large sectors of the industry down.

The only casualty so far has been UK regional carrier Gill Air, but long-time troubled Belgian flag carrier Sabena looks to be on the edge, and senior EC officials are making it clear that special help will not be allowed for a carrier which was already toppling.

The Association of European Airlines (AEA) told transport commissioner Loyola de Palacio that its member airlines had started by losing $30 million a day directly as a result of the grounding of transatlantic flights. Now they face insurance hikes of 800% for passenger liability and 1,500% for war risk. "These are not negotiable," says AEA secretary general Karl-Heinz Neumeister. He reports that de Palacio was sympathetic and did not close the door on possibilities for European Union (EU) help. More likely, however, appears to be national government help for airlines with fast track approval from the EU.


Consolidation prompted by the current crisis remains subject to the EC's competition scrutiny, senior officials say.

Although de Palacio and the AEA agreed that European security systems have a good base, they believe that security needs further improvement. Meanwhile, a specially convened 20 September meeting of security experts from the 38-nation European Civil Aviation Conference (ECAC) member countries has resulted in the creation of three task forces to develop countermeasures to specific terrorist threats.

The first group is to study the control of cockpit access, in-flight security personnel and maintaining effective air-ground communications in a crisis. The second is examining procedures and equipment for screening passengers and hand baggage, and the third task force will draft "a requirement for national quality control programmes in all ECAC states".

The ECAC, the EC and other groups intend to raise with the International Civil Aviation Organisation, at their general assembly starting 25 September, the need for a more global approach to security, and that there should be no distinction between domestic and international services in the level of security applied.

UK transport minister Stephen Byers, following meetings with British Airways, BMI British Midland and Virgin Atlantic covering security and finance issues, was among several in Europe indicating that help with airline security costs might be forthcoming.

Meanwhile, the airlines are all cutting back services, fleets and investment in ways which reflect their pre-crisis strength and exposure to the North Atlantic market.

Sabena at first declared 1,400 jobs and network cuts, but now claims the strategy has become a "survival plan". Observers, including airline sources, expect bankruptcy without substantial financial help. The airline has been losing c1 million ($920,000) a day since the 11 September attacks. Loss-making Alitalia has asked the Italian Government for a support package of L600 to L700 billion ($280,000 to $330,000) through the cancellation of the 10% tax on airline tickets and aid for paying off 3,000 to 4,000 workers. Airline president Faustio Cereti says that the aid package would include an L750 billion payment which had been approved by the EU but not paid. British Airways has made the most drastic cuts to date, reducing the workforce by a further 5,200 on top of the 1,800 cuts announced in recent weeks. Its Boeing 747-200 fleet was already being withdrawn and this has been joined by six Boeing 767s and four narrow-bodies on short-haul routes and 10 unspecified long-haul aircraft - probably 747-400s and early delivery 777s. State-owned Irish carrier Aer Lingus, highly exposed on the North Atlantic, says it has to achieve 25% cost reductions to survive. It will be cutting transatlantic services and reducing its fleet by returning two Airbus A330s and an A321 to lessors, not taking up a Boeing MD-11 and two A320s due for lease next year and retiring two 737-400s. Lufthansa says it is no longer able to achieve its forecast of c750 million profit for 2001, but says the situation is so fluid it cannot predict a final figure. It has shelved its purchase of 15 Airbus A380s and four 747-400s. Some 20 aircraft will be grounded out of a fleet of 236, and the airline warns more may go. Virgin Atlantic, which like BA is heavily exposed on North Atlantic routes, is to ground five 747-200s, and lay off 1,200 staff. Air France will retire five Airbus A310-200s early and ground a 747F from next month. A further four A310-300s will be retired from October to mid-January 2002. Four 747-200s will be withdrawn from service at the beginning of summer 2002, while three A321s will also be withdrawn upon lease expiry in the second quarter 2002. The troubled Swissair Group declines to outline any plans following the terrorist attacks apart from confirming that it lost CHF65 million ($41 million) in the days following the attack. Losses were experienced across the group at Swissair, Crossair, Swissport and Cargo in the week following the US attacks. Dutch flag carrier KLM has reduced its capacity by 5% for next month and by 15% on the North Atlantic for October. The airline confirms there will be fleet reductions but declines to be specific.

Source: Flight International