Cost to airlines of Covid-19 crisis rises again to top €235bn

Cost to airlines of Covid-19 crisis rises again to top €235bn
Cost to airlines of Covid-19 crisis rises again to top €235bn

Airlines worldwide could lose €235bn in revenue this year from the coronavirus pandemic, threatening the survival of the industry, according to the International Air Transport Association.

The anticipated hit is more than double a decline mooted by IATA earlier this month, reflecting the steep downward spiral of many carriers as they grapple with a crisis more severe than anything the sector has ever faced, the trade group said. 

While governments around the world have pledged support, a liquidity crisis is “coming at full speed,” IATA chief executive Alexandre de Juniac said in a webcast briefing. 

Governments need to get “massive action” in place so there’s still an industry to rescue.

IATA, which represents 290 airlines around the world, warned earlier this month that only about 30 airlines have reasonably healthy debt and earnings. 

And even the stronger ones probably have only enough cash to survive for a matter of months.

As carriers across the globe take drastic steps to cut capacity and ground planes, the lobby has raised its estimate of the impact. It said at the start of the month lost sales could reach a maximum €105bn. 

The latest figure put forward represents 44% of last year’s total.

It said on March 17 aid and bailout measures totaling as much as €185bn. 

“We have few weeks to act, so these plans need to be put together quickly,” Mr de Juniac said, adding that it’s not the time for governments to pick favourites.

In Europe, airline shares rose as global stocks gained n US stimulus hopes. Ryanair shares rose 10% and IAG, which owns Aer Lingus and British Airways, gained 7%. Their shares have however been hit hard by the crisis in the recent weeks. 

Europe is taking the biggest battering at the moment and carriers there are probably most vulnerable, Brian Pearce, the trade group’s chief economist, said in the briefing. Yields in the region have plummeted and 90% of capacity will be wiped out for the second quarter, he said. 

Industry-wide traffic is expected to decline almost 40% in 2020 as a whole, IATA said, while a revival will take much longer than those from previous epidemics due to the global nature of the coronavirus outbreaks and the huge hit to economies that they have inflicted.

Source: Business News