Any doubts as to whether the impact of the coronavirus outbreak would spread beyond Asia to European airlines has been answered by a slew of cost-savings measures, capacity cuts and warnings of potential earnings hits in the past few days.

British Airways and Iberia parent IAG, EasyJet and Finnair all today sounded warnings on the impact on air travel of the coronavirus, joining the likes of Air France-KLM and Lufthansa who had recently outlined preventative measures.

EasyJet at Milan Malpensa (c) Shutterstock

Source: Shutterstock

EasyJet is the biggest operator at Milan Malpensa airport

Notably that includes European short-haul operator EasyJet, reflecting the significance of the recent increased incidence of the virus in northern Italy. This underlines that the impact is not limited to those carriers from Europe operating to Asia, and mainland China – the source of the outbreak – in particular.

”Following the increased incidence of COVID-19 cases in northern Italy, we have seen a significant softening of demand and load factors into and out of our Northern Italian bases,” EasyJet says in a stock market update today. The UK carrier has a large base at Milan Malpensa – which Cirium schedules data shows is its fifth biggest base – as well as a presence in Venice, Verona, Pisa and Milan Linate.

”Further, we are also seeing some slower demand across our other European markets. As a result we will be making decisions to cancel some flights, particularly those into and out of Italy, while continuing to monitor the situation and adapting our flying programme to support demand,” the carrier adds.

In keeping with several other operators, EasyJet is introducing interim cost-saving initiatives including a hiring freeze, offers of unpaid leave and deferring non-critical capital expenditure.

”While it is too early to determine what the impact of the COVID-19 outbreak will be on current year outlook and guidance for both the airline and holidays business, we continue to monitor the situation carefully and will update the market in due course,” the carrier adds.

IAG took a similar line in releasing full-year results earlier today. It said uncertainly around the impact coronavirus outbreak meant it could not give earnings guidance for the year ahead.

“It’s clear that the industry is being affected as a result of weaker demand as a result of the coronavirus,” said IAG chief executive Willie Walsh during his last IAG annual results presentation today. While initially the group saw an impact on its Chinese operations, “it has now spread to other parts of our network”.

IAG carriers BA and Iberia had already suspended until the end of March services to mainland China, as well as trimming capacity on some Asian routes. It had also trimmed some northern Italian capacity and warned furthers cuts – both to Italy and across its wider short-haul network – were likely to follow. That could see cancellations spread to other carriers in the group, including Vueling.

”The net impact of current flight cancellations and redeployed capacity is to lower IAG’s full-year 2020 planned capacity by approximately 1% in terms of available seat kilometres to 2% for the year,” the group says.

Finnair, a partner of BA and Iberia in Oneworld, was more explicit today in outlining the financial impact. The carrier says it is expecting the coronavirus to result in significantly lower operating profits for the first half.

It is looking to trim costs by €40-50 million ($44-55 million) to cope with the threat to its revenue streams, and is considering measures such as temporary lay-offs, recruitment adjustment, and changes to sales and marketing activity.

The airline had initially predicted, just two weeks ago, a relatively limited impact from the outbreak, and still intended a 4% capacity increase for 2020. But in a revised outlook it says the situation is “fast-developing” and that coronavirus is having a wider-than-estimated effect on the air transport market.

Selected European carrier responses to the coronavirus outbreak

Air France-KLM: KLM has curtailed recruitment and capital investment in an effort to save costs amid reduced travel demand due to the outbreak.

EasyJet: The budget carrier has highlighted the impact on air travel demand, particularly on Italian routes. It is reassigning capacity, implementing a hiring freeze and has made staff an offer regarding unpaid leave.

Finnair: The operator is looking at programme of cost-cutting measures after paring back capacity plans and stating that first-half results will be “significantly” lower.

IAG: The group is implementing capacity cuts on short-haul in addition to its Asian routes. Outbreak uncertainty means it is unable to issue a full-year outlook.

Lufthansa Group: The business is implementing a hiring freeze and offering staff unpaid leave as part of cost-cutting measures across the group. It says capacity cuts are already the equivalent of having 13 aircraft grounded.

SAS: Chief executive Ricard Gustafson said on 26 February that as the outbreak was occurring during SAS’s winter season, the “bottom line impact is more manageable”. The airline has reaffirmed its full-year earnings guidance. While raising concerns over the potential impact in the summer, Gustafson says that for now, bookings for the summer season are in line with expectations.

Wizz Air: The low-cost carrier is suspending select routes to destinations in northern Italy between 11 March and 2 April, accounting for around 60% of its capacity to the country.

There is also a strong impact on cargo operators, given the importance of China to the air freight market. That was evident in the 27 February announcement that UK freighter operator CargoLogicAir has suspended operations as its exposure to China takes its toll.

”CargoLogicAir has been severely affected as it had placed a significant portion of its commercial activities in the Chinese market,” it states. “As a result, a decision was made to suspend the flights,” it notes.

Which airlines have capacity in Italy

While coronavirus seems likely to have an impact on overall air travel demand within Europe, the initial focus of cuts is around Italy.

The popularity of Italian destinations for both business and leisure markets, together with the weakness of Italian operators over the years, means European carriers have a relatively large footprint in the country.

Ryanair – which is yet to make a specific announcement regarding the potential impact of the coronavirus outbreak – is the largest operator on routes between Italy and the rest of Europe, Cirium schedules data shows.

Biggest carriers on Italy-Europe by seat capacity: March 2020
Airline             Flights              Seats               ASKs
Ryanair 18,408 3,479,112 3,665,323,997
Alitalia 13,686 1,916,082 1,282,890,254
EasyJet 9,508 1,629,096 1,651,230,827
Wizz Air 2,384 490,124 532,370,740
Lufthansa 3,064 468,699 304,127,238
Vueling Airlines           2,580 457,708 432,312,911
British Airways 2,209 347,435 398,941,476
Air France 2,375 291,398 243,521,141
Air Dolomiti 1,971 236,520 116,413,315
Eurowings 1,356 198,380 177,309,222
Source: Cirium schedules data March 2020

Lufthansa Group is the fourth-most-impacted operation, once its Italian regional carrier Air Dolomiti, budget brand Eurowings, Swiss, and Austrian are considered.

But it is northern Italy where the primary focus of airline capacity cuts have so far been. The biggest hub for European routes from Italy, Rome Fiumicino, is relatively unimpacted. But the next four biggest airports are all located in northern Italy. Eight of the 20 biggest Italian airports for European capacity are located above Florence and Pisa – the area identified by the UK government as being subject to precautionary measures in relation to the spread of the coronavirus.

Biggest Italian airports to Europe by seat capacity: March 2020
Airport           Flights                 Seats                 ASKs
Rome Fiumicino        9,443 1,529,883 1,421,649,195
Milan Malpensa 6,024 985,417 967,751,490
Bergamo Milan 3,137 583,546 604,256,219
Milan Linate 3,924 528,841 403,069,291
Venice 2,958 467,555 437,119,973
Naples 2,630 429,774 426,906,753
Bologna 2,637 419,740 412,632,869
Catania 2,147 370,695 364,232,349
Rome Ciampino 1,386 262,606 328,588,912
Palermo 1,432 247,435 203,283,359
Bari 1,417 244,355 203,754,505
Turin 1,503 221,618 180,937,777
Pisa 1,089 185,357 176,676,481
Cagliari 871 153,191 104,682,518
Florence 1,173 147,780 118,987,095
Venice Treviso 733 137,916 129,218,443
Verona 767 120,888 119,083,624
Brindisi 641 109,510 94,377,230
Lamezia Terme 587 103,726 88,831,726
Genoa 445 57,657 35,354,383
Source: Cirium schedules data

EasyJet is the biggest operator out of Malpensa on European routes, followed by Ryanair. Italy’s biggest carrier Alitalia has a relatively small presence at Malpensa – though is the dominant carrier at Milan’s downtown Linate airport. 

Biggest carriers on European routes from Milan Malpensa: March 2020
Airline             Flights               Seats              ASKs
EasyJet 3,906 679,692 635,204,706
Ryanair 1,414 267,246 278,679,946
Lufthansa 630 103,372 45,614,403
Vueling 454 88,604 61,676,107
Eurowings 626 87,756 55,325,066
Aeroflot 392 62,931 143,003,593
Wizz Air 284 60,820 57,085,621
Turkish Airlines 286 55,302 93,631,000
Austrian 343 55,248 36,276,519
Source: Cirium schedule data March 2020

Ironically, probably the more challenged business by a drop in demand at Malpensa may have been Air Italy, which had the lion’s share of its capacity at the airport. But backers of Air Italy had already made the decision earlier this month to pull the plug on the airline, even before the spike in coronavirus cases in northern Italy had emerged.

Ryanair is the biggest operator at Bergamo’s Orio al Serio airport – followed by Wizz Air – while EasyJet is the biggest carrier at Venice Marco Polo airport.

Lufthansa Group’s Italian regional carrier Air Dolomiti operates across a number of northern Italian airports – including Turin, Verona and Venice – as part of its feeder operations into Frankfurt and Munich.