* British regional airline Flybe enters administration
* Norwegian Air scraps profit guidance, cuts flights
* Turkish has to fly jet home empty after virus case
By Sarah Young and Terje Solsvik
LONDON/OSLO, March 5 (Reuters) - The worsening coronavirus
epidemic heaped fresh misery on the airlines sector on Thursday,
as British regional carrier Flybe became the first big casualty
of a slump in travel demand and Norwegian Air scrapped
its profit guidance for this year.
Airlines across the world are rushing to cut flights and
costs, and warning of a hit to earnings, as a new virus that
started in China spreads around the world, raising fears of a
pandemic that could plunge the global economy into recession.
In a sign of the difficulties this is creating for airlines,
a Turkish Airlines jet was flown back to Istanbul
without any passengers on board on Thursday on orders from
Singapore after a passenger who had arrived on the same plane on
Tuesday tested positive for the virus.
Finnish national airline Finnair, meanwhile, said the impact
of the new coronavirus, which has claimed more than 3,000 lives
and infected tens of thousands more in over 60 countries, would
be worse than the SARS epidemic in 2003.
The International Air Transport Association (IATA) warned on
Feb. 20 of a potential $29 billion hit to airlines' revenues
this year, but that was before fresh travel restrictions put in
place by several countries as the virus gained a stronger hold
outside of China, in places such as Italy, Iran and South Korea.
Among the latest events to be cancelled around this world
due to the crisis is the world air traffic management congress
in Madrid, which had been scheduled for March 10-12.
GROUNDED
The failure of British regional airline Flybe comes less
than two months after a rescue due for the company was agreed by
its owners and the UK government.
Despite its commitment to improving regional transport
links, the British government backed away from that deal due to
the scale of the hit to demand from the virus outbreak.
"All flights have been grounded and the UK business has
ceased trading with immediate effect," Flybe said as it entered
administration, a form of protection from creditors.
The failure of the airline, which has long struggled with
losses, not only puts around 2,400 jobs at risk but could also
see some regional UK airports struggle and business travel hit.
Flybe carried around eight million passengers a year between
81 airports and was owned by a consortium of Virgin Atlantic,
Stobart Group and Cyrus Capital.
Its collapse came a day after Ryanair Chief
Executive Michael O'Leary predicted that the coronavirus crisis
would lead to bankruptcies.
"It's inevitable in the next couple of weeks we'll see more
failures," O'Leary told Reuters - citing Flybe as among the most
vulnerable.
"Where you have a massive short-term decline in bookings you
have a massive short-term decline in cash flow," he said on the
sidelines of an industry event in Brussels on Tuesday.
Norwegian, a pioneer of low-cost transatlantic travel, has
also been struggling for years due to cut-throat competition and
heavy debts built up during rapid expansion.
The company, which has repeatedly raised cash from
shareholders in order to stay in business, said on Thursday it
was scrapping its 2020 earnings guidance, which had predicted a
return to profit after three years of losses, due to the drop in
travel demand and disruption caused by the virus.
It also said it would cancel 22 long-haul flights between
Europe and the United States from March 28 to May 5, with routes
from Rome to Los Angeles, Boston and New York seeing a reduced
number of departures.
In addition, it will cut the number of flights between
London and New York, flying twice, rather than three times, on
some days.
"At this stage, it is too early to assess the full impact on
our business," it said in a statement.
Norwegian shares, which have lost more than 50% of their
value this year, were down more than 3% at 0820 GMT.
Willie Walsh, the outgoing CEO of British Airways parent IAG
, also warned governments this week against any
temptation to prop up airlines that were already struggling.
"I don't believe it's appropriate for governments to provide
state aid to airlines that were not sustainable before the
coronavirus," he said at the Brussels gathering.
($1 = 0.7770 pound)
(Editing by Mark Potter and Keith Weir)
International Airlines (IAG)
