British Airways yesterday denied suggestions that it might pull out of Gatwick Airport but said it may sell some of its valuable property assets to raise cash if the market for air travel continues to deteriorate in the wake of the terrorist attacks on the US.
BA has been losing money at Gatwick for some time but described weekend press reports that it might pull out of the airport completely as "absolute nonsense". However, the struggling carrier declined to say whether there might be more cuts at the Sussex hub, which is already the subject of a review.
BA said it had no immediate plans for property disposals after reports that it could be looking to raise up to £2bn to shore up its finances should they become strained.
However, the group admitted disposals or sale and leasebacks were possible. "BA has £1bn in cash. But if the position were to become dire them the company has other assets such as property it can draw on," a spokesman said.
These assets include BA's state-of-the-art "village"-style headquarters near Heathrow. It also has technical centres and a cargo hub at Heathrow which could be sold and leased back. There is valuable property at Gatwick which could be sold if BA's operations there are scaled back substantially.
BA announced an additional 5,200 job losses last week on top of 1,800 previously announced. It also decided to mothball 20 aircraft as it seeks to rein back capacity. The airline declined to comment on how busy its existing flights are ahead of its regular monthly traffic figures to be released next week.
Meanwhile, Stelios Haji-Ioannou, the chairman of EasyJet, says in an interview with the German newspaper Handelsblatt, that he expects up to six European airlines to file for bankruptcy in the next six months.
Lufthansa, the German carrier, said it would decide this week whether it would close an additional 13 per cent of its North Atlantic routes. It has already cut 8 per cent as nervous passengers cancel bookings – already down 34 per cent for October. With the "no-show" rate – passengers who buy tickets but do not use them – it had risen to 50 per cent for some routes.
Lufthansa said it planned to begin using "armed sky marshalls" soon on some routes and would be reinforcing the barriers between cockpits and passenger areas. Governments around the globe moved swiftly over the weekend to ensure their airlines can keep operating this week as the industry struggles to cope with dwindling demand and commercial insurers withdraw adequate war risk cover. But they were at pains to be seen to be providing general relief across the industry in the wake of the US hijacked plane attacks and not to be throwing individual lifelines to airlines already in financial trouble.
In the US, President Bush signed legislation that will provide US carriers such as American Airlines with as much as $15bn (£10.3bn) in aid. In Japan, Nippon Airways, the second-largest carrier in Asia, said it may need government aid. Cathay Pacific Airways, Hong Kong's dominant long-haul airline, held talks with government officials yesterday to seek help.
The Australian government said over the weekend that it will provide $5bn to insure Qantas Airways and other national airlines threatened by cancelled flights. The New Zealand government earmarked $807m to insure the national carrier Air New Zealand. Thailand and South Korea also said today they were considering assistance for their national carriers.
While European Union finance ministers ruled out direct financial aid they agreed yesterday to allow governments to act as airlines' guarantors for at least a month after insurers lowered the ceiling of cover for damage caused by planes brought down by terrorism or acts of war to $50m from as much as $2bn.Reuse content