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Airlines scrambling to limit impact of Omicron on their networks

CHICAGO : Airlines are scrambling to limit the impact of the latest coronavirus variant on their networks, while delays in bookings are threatening an already-fragile recovery for global tourism.

Shares in airlines performed better on Monday after the discovery of the Omicron coronavirus variant led to a sharp sell-off last Friday. The latest outbreak, first reported in southern Africa, dealt a blow to the industry just as it had recovery in its sights, especially following the easing of US-bound travel.

"The hope for US and European carriers had been that opening the Atlantic would allow them to operate long-haul routes on a cash-positive basis, but border restrictions make it even harder to get the demand in," said Mr James Halstead, managing partner at consultancy Aviation Strategy.

A pickup in long-haul traffic is critical for many carriers, which have been left with strained balance sheets following the plunge in air travel last year.

Southern Africa accounts for only a tiny portion of the world's international travel, but sudden border restrictions and route suspensions have left some carriers with an uncertain future.

Spain's Air Europa, caught in a months-long acquisition process by IAG-owned rival Iberia, which British and European regulators have so far been loath to approve, is especially vulnerable to renewed travel curbs.

US President Joe Biden said while the restrictions were needed to give the United States time to get more people vaccinated, he did not anticipate the need for additional curbs.

But Mr Willie Walsh, head of global airlines industry body Iata, called the restrictions a "knee-jerk reaction". In an interview with BBC Radio, he urged the authorities to institute "sensible" testing regimes and avoid measures that have caused "massive" financial damage to the industry in the past.

"This virus cannot be beaten in the way some of these measures would have people believe," he said. "We have to adjust. We have to take sensible measures."

Rising Covid-19 cases as well as new border restrictions have prompted analysts to adjust their outlook for the industry. Analysts at HSBC, for example, expect the industry's recovery would be pushed back by a year.

It is a setback for companies including the interconnecting Gulf carriers and Lufthansa, which depends heavily on transit traffic at its Frankfurt base, analysts said. - REUTERS