Airlines double estimate of revenue hit to $250bn
The coronavirus crisis could push many travel companies into bankruptcy
Global airlines urged governments on Tuesday to speed up bailouts to rescue the air transport industry as they doubled their estimate of 2020 revenue losses from the coronavirus crisis to more than $250 billion.
“We clearly need massive action very quickly and urgently,” Alexandre de Juniac, director general of the International Air Transport Association (IATA), told reporters on a conference call. Airlines worldwide have grounded the majority of their fleets to preserve cash amid mounting travel restrictions designed to slow the spread of the epidemic.
The result pressure on has been huge the liquidity of airlines, up to half of which face possible bankruptcy in coming weeks if nothing is done to support the industry, IATA said.
“We have a liquidity crisis coming at full speed — no revenues and costs still on our (books), so we desperately need some cash,” de Juniac said.
His warning came after budget airline Ryanair told customers it had effectively written off the next two months, while European air traffic management body Eurocontrol said volumes on Monday were down more than 75 percent from the same day last year.
De Juniac, a former Air FranceKLM boss, brushed aside a growing debate about whether relief for airlines should come with strings attached, such as new commitments on climate goals.
But he said the airline industry would continue efforts already under way to curb emissions once the crisis recedes.
“We are in an emergency situation. It’s no time for requirements. I’m sorry for that. We need a fullspeed massive rescue package now,” de Juniac said.
With airlines at the front of bailout queues, green advocates fear climate action may lose momentum. In the United States, Republicans have opposed providing bailouts to passenger and cargo carriers, proposing help in the form of $58 billion in loans and saying the government could demand stock, options or other equity in return. IATA, which represents 280 airlines, including most of the world’s largest network carriers, said signs of a deep recession could delay a recovery in airline travel — in contrast with the fast rebound seen after previous epidemics. That could mean “more of a U-shaped than V-shaped recovery,” chief economist Brian Pearce said, referring in the latter instance to the shape of the graph of air travel indicators seen after the SARS outbreak in 2003.
IATA says 2.7 million jobs are supported by the airline industry, with tens of thousands already being furloughed.
“There are a very large number of airlines that are more or less breaking even and ... facing losses. Those airlines are very fragile,” Pearce said.
FASTFACT
IATA represents about 280 airlines worldwide.