German airline Lufthansa is planning to slash half of its flights and is considering grounding its entire fleet of A380 superjumbos, as the fallout from the coronavirus continues to hit the global air travel industry.
The company, which includes Swiss International Air Lines and Austrian Airlines, said it was considering temporarily grounding its entire fleet of 14 Airbus A380 superjumbos in Frankfurt and Munich.
It will cut up to half its flights from April in response to a drastic decline in air travel bookings as the number of coronavirus cases around the world grows daily.
“In recent days, the Lufthansa Group has been exposed to drastic declines in bookings and numerous flight cancellations due to the spread of the Covid-19 virus. All traffic areas are now affected,” it said in a statement.
The latest drastic cutback comes just two days after the company said it would ground about 20% of its fleet.
Earlier on Friday shares in rival airline Norwegian fell by more than a quarter amid investor fears over the airline’s resilience amid the coronavirus outbreak.
The selloff came as analysts warned that the airline’s cash reserves were slim. On Thursday, shares had already tumbled as the budget carrier withdrew its profits forecasts from last month and cancelled 22 transatlantic flights in the spring due to reduced passenger demand.
The company said it had already reduced capacity by 15% this year, and had relatively low exposure to Italy and the business travel market, both of which have been hard hit by the coronavirus outbreak. However, its share price has now dropped by more than 70% in less than a month.
Norwegian is the third-largest low-cost carrier in Europe behind easyJet and Ryanair,
and a pioneer of low-cost, long-haul flights.
While several analysts have viewed Norwegian as undervalued after it appeared to have got on to a firmer financial footing, on Friday morning the Oslo-based Pareto Securities cut its rating on the stock from buy to hold. Analyst Kenneth Sivertsen said: “The situation it is likely to wipe out [Norwegian’s] stellar start of the year and a prolonged crisis might require equity refill as the cash buffer is slim.”
Airlines worldwide have been hit hard by the coronavirus outbreak, with many implementing emergency cost-cutting measures and cutting back their flight schedules. The owners of Flybe said the coronavirus was the final blow that pushed Europe’s largest regional airline into administration this week.
According to the International Air Transport Association (Iata), the impact of the coronavirus could cost passenger airlines up to $113bn (£87bn) in lost revenues this year.
While Norwegian’s share price has dropped more than most, an average of 25% has been wiped off airline’s market value since the start of the outbreak in China.