MIAMI – Iberia’s (IB) Chairman Luis Gallego assured during an interview at CEOE that the company would emerge smaller by 2025 as the air sector was facing the biggest crisis in history and the problem was not temporary.
Gallego added also that “without airplanes, there is no tourism and without tourism and mobility, our country [Spain] is in danger.”
From SARS of 2002 To Nowadays
In previous crises, such as the Severe Acute Respiratory Syndrome (SARS), identified in 2002, or the 9/11 terrorist attacks in New York, the curve of fall and recovery of demand was in the form of a V.
However, in the case of COVID-19, we have gone from a V to a U and now we are in an L, said Gallego, who stressed that we are facing the worst crisis in the history of aviation.
In addition, the executive said companies are set to face repayment of loans taken out during the pandemic, making recovery difficult.
Iberia’s Plans For Post-Coronavirus Times
Iberia operates in July, on the short and medium routes, a program that will be only a fifth of what it would have had under normal circumstances due to the Covid-19 crisis, added the Chairman.
In the long run, the company’s program, which focuses on regaining customer confidence in in-flight safety, has also been greatly reduced and is conditioned on how restrictions, bans, and quarantines evolve.
As detailed by its president, IB entered this crisis better than many of its competitors due to the transformation carried out since 2012, when IB had insolvency issues;
Although this would not mean that the company is now “safe,” IB is once again obliged to reinvent itself with a new business plan which will take a look at the future developments to put the company in a safe financial position.
Gallego considers that it is time to face structural measures that support the tourism sector and the airlines, such as unblocking the arrival of the AVE to the T4 terminal at Barajas airport, which would increase half a million passengers a year in the Madrid hub, boosting the single European sky and reducing taxes.
Competition, after the crisis, will be even more difficult, given that airlines that were already without a viable future before the pandemic “are being rescued with aid that is difficult to justify,” said the president of IB.
“Plan-Renove” for the European Aviation Industry
Gallego, during the CECOE, advocated a Plan-Renove for European aviation, where the Spanish government “has a golden opportunity to lead it,” to help airlines out of the crisis and contribute to a more sustainable industry.
Because of the large amount of liquidity used to keep the airlines alive, the carriers are not going to be able to afford the renewal of fleets aimed at greater sustainability.
Hence, due to old planes at very cheap prices and the price of fuel at historic lows, the investment in green technology is very uphill.
If the European Union (EU) develops a Plan-Renove that allows for the replacement of aircraft with old technology with new generation ones, this aid would have a multiplier effect, according to Gallego.
On the one hand, it would make it possible to reduce CO2 emissions (by approximately 30% in IB’s long-distance fleet and 15% in the case of the short-distance fleet), which would always be worth much more than the amount of aid received.
Secondly, by being able to afford the purchase of the new aircraft, the money flows through the aeronautical ecosystem, generating benefits that result in taxes for governments, such as the Spanish one, creating tens of thousands of jobs, concluded Gallego.