Australian carrier Qantas Airways Ltd. QAN, +7.22% QABSY, +13.18% grounded half of its A380 fleet, cut overall capacity by 23% for the next six months, canceled a share-buyback program, asked staff to take unpaid leave and dumped management bonuses late Monday. A raft of other international airlines followed suit on Tuesday, including Air France-KLM AF, +0.19% AFLYY, +2.43% and Ryanair Holdings PLC RYA, +5.15% RYAAY, +6.16%
Airline stocks have been hit hard as companies cancel nonessential travel and consumers steer clear of regions and countries that have had high numbers of cases of the virus-borne COVID-19 illness, which broke out in Wuhan, China, late last year. The virus has spread to 114 countries and created clusters of infection in Iran, South Korea and Italy.
A decree put into place in Northern Italy this week has been extended to the entire country as the number of cases and deaths have soared in Italy. People there are now only allowed to travel for work or family emergencies.
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On Tuesday, airlines announced that they are acting to boost liquidity and conserve cash, with some agreeing to new borrowing facilities. Delta DAL, -2.62% said it’s deferring $500 million of capital spending, delaying $500 million of pension funding and suspending share buybacks.
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“Liquidity is strong and expected to be at least $5 billion at the end of the March quarter,” the company said. “In addition, Delta has approximately $20 billion of unencumbered assets, including $12 billion in aircraft.”
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Norwegian Air Shuttle ASA NAS, +2.58% said it’s canceling 3,000 flights between mid-March and mid-June, cutting about 15% of total capacity for the period, due to
Southwest Airlines Co. Chief Executive Gary Kelly has agreed to a 10% pay cut, according to the Wall Street Journal. Southwest signaled it had identified a “severe recession” in the sector.
“Given the weak travel demand, we are seriously considering reductions to our scheduled flying in the short term, and we will continue to monitor demand for necessary reductions thereafter,” Michelle Agnew, manager
Airline shares were mostly higher Tuesday, swept up in a broader market rebound from Monday’s carnage. The NYSE Arca Airline XAL, +1.19%