Aegean Air braces for a demanding winter
The airline industry is going through its toughest year ever, with forecasts of what lies ahead being impossible for the time being. For Aegean, Greece’s main carrier, the cash flow it had secured before the pandemic will be its main asset, which the airline will attempt to strengthen further ahead of the winter.
Given the inability to make any forecasts as developments rely almost entirely on the unknown course of the pandemic, Aegean is taking a series of initiatives to safeguard the company’s financial strength.
“The last five months have been the most difficult and painful in the history of the company,” Chief Executive Officer Dimitris Gerogiannis told Aegean’s general meeting of shareholders on Tuesday, noting that the path back to a full flying schedule is “neither smooth nor predictable.”
In June and July, 40% of Aegean flying activity reverted to normal, with estimates for August putting that rate at 50% and pointing to a rising trend regarding the domestic network. The company is, therefore, focusing on strengthening its liquidity so as to respond to the uncertainty of the coming winter.
Constant changes in flight restrictions and demand fluctuations in an environment that changes every 15 days call for increased flexibility from Aegean, added Gerogiannis.
“This is the most demanding year for global air transport as well as for Aegean,” admitted Eftychios Vassilakis, the carrier’s chairman. He went on to assure that the necessary steps to shield the company have been taken. “Certainly, 2020 will not be pleasant but we have shown that we have the ability to adjust and the strength to meet the challenge,” he told shareholders.
Vassilakis reminded them that due to the terms of booking, tickets are reserved very close to flight dates, which leaves the company very little room for flexibility. He did add that although provisions concerning losses of 26-28 million euros per month for the second quarter of the year have been confirmed, cash burn has been below the forecast €40 million per month.
In end-June Aegean had cash reserves of €400 million, not including the €120 million credit line secured from Greece’s four main banks, or the €150-million loan taken in the context of the Corporate Guarantee Fund for Covid-19.