LDN - Business

Airlines face growth warning as virus curtails Singapore Airshow

[February 10, 2020] By Jamie Freed and Tim Hepher

SINGAPORE (Reuters) - Asian airlines face "drastic" cuts in their planned growth because of the coronavirus crisis, an industry group warned, adding gloom to an already depleted Singapore Airshow as more companies scaled back plans on Monday.

The Singapore Airshow from Feb. 11 to 16 is proceeding, but the exhibition centre is pockmarked with empty spaces that would have held displays from Chinese companies and others skipping the show because of the epidemic, which has killed more than 900 people.

More than 70 exhibitors, including major U.S. defence firms Lockheed Martin Corp and Raytheon Co have pulled out over concerns related to the new coronavirus.

Few deals are expected at the biennial event, where the epidemic has triggered new safety measures and cast a shadow over airline profits and demand for airplanes.

Before the coronavirus hit, the International Air Transport Association had expected passenger numbers to rise by 4% in 2020 and cargo traffic to be 2% higher.

"All bets are off in terms of traffic forecasts for this year," Andrew Herdman, the director general of the Association for Asia Pacific Airlines, said in an interview.

"If you look at the schedule cuts and the actual operations they have been cut by 50%, 60%, 70% within China. It is pretty drastic," he said.

The Pentagon reduced the size of its delegation to the air show, which had been set to include its chief weapons buyer, U.S. Undersecretary of Defense Ellen Lord, Reuters reported on Friday.

"Sure, there were some adjustments by some colleagues but it has not changed our footprint," U.S. Department of State Assistant Secretary for Political-Military Affairs R. Clarke Cooper said Monday, adding that his agency's delegation remained fully intact.

"The United States still remains the largest international presence at the air show for 2020," he told reporters on a call.

Singapore on Friday raised its alert level for the coronavirus outbreak to orange, the same level reached during the 2003 Severe Acute Respiratory System (SARS) outbreak, sparking panic buying at supermarkets across the island.

There are 43 confirmed cases of coronavirus in Singapore. The orange alert level advises organisers to cancel or defer non-essential large-scale events and recommends precautions such as temperature screening and more frequent cleaning of common areas for those that do proceed.

Health experts, however, said they were concerned that temperature screening might not be effective, given reports the coronavirus could be spread by people without symptoms.

"Temperature screening is okay to pick up people already sick - and those people should not be coming to the show anyway - but doesn't pick up people incubating the virus," said John McBride, an infectious disease physician and professor at Australia's James Cook University.

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China's People's Liberation Army Air Force (PLAAF) Ba Yi aerobatics team perform an aerial display during a media preview of the Singapore Airshow in Singapore February 9, 2020. REUTERS/Edgar Su

SIA Engineering Company Ltd and GE Aviation on Monday said they had postponed plans to hold a groundbreaking ceremony for a new engine overhaul facility in Singapore on Tuesday until further notice because of the raised alert level.

Qatar Airways said on Monday it was postponing plans for its chief executive Akbar al-Baker to open a new airport lounge after his country issued a warning advising citizens to reconsider travel to Singapore due the virus. He had been due to host the official opening of the lounge on Friday.

Saudi Arabia's General Authority for Military Industries withdrew from the show late Sunday, citing concerns associated with the coronavirus.

The air show's organisers said on Sunday they were expecting more than 930 companies from 45 countries and 45,000 trade attendees - down from the 54,000 at the last show in 2018. They also plan to limit public attendance.

The lobbies of major hotels, usually bustling with attendees, were noticeably quiet.

A spokeswoman for the organisers on Monday declined to provide an update on numbers and why the air show was going ahead when many smaller associated events and briefings were being cancelled over coronavirus concerns.

Cancelling the show would lead to refunds running into the tens of millions of dollars, a source at one of the exhibitors told Reuters on condition of anonymity because of the sensitivity of the matter.

Organiser Experia Events, partly owned by ST Engineering and government agencies, charges at least S$1,550 per square metre for space in the show's exhibition hall, according to its website.

That would equate to more than S$3 million ($2.16 million) for ST Engineering's booth, the show's largest at more than 2,000 square metres. ST Engineering is majority owned by Singapore state investor Temasek Holdings [TEM.UL].

Experia Events managing director Leck Chet Lam on Sunday said he could not comment on the financial terms of a cancellation.

"That is between us and the exhibitor," he told reporters.

(Reporting by Jamie Freed and Tim Hepher. Editing by Gerry Doyle and Louise Heavens)

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