Coronavirus pandemic will bankrupt nearly every airline in the world by May, aviation experts say
The widespread coronavirus infections will result in nearly all of the world's airlines going bankrupt within weeks, aviation experts from Australia have said. With increasing traveling restrictions imposed by most countries to curb the infection spread and passengers rushing to cancel their flights, most airlines across the world will be bankrupt by May. The warning was issued by airline analysis and consulting firm CAPA Centre for Aviation, which has urged authorities to take urgent action to stem the airlines' downfall.
CAPA, in a statement released on Monday, said: "As the impact of the coronavirus and multiple government travel reactions sweep through our world, many airlines have probably already been driven into technical bankruptcy, or are at least substantially in breach of debt covenants."
The CAPA statement came as Australian Prime Minister Scott Morrison advised Australians to reconsider overseas travel. Meanwhile, President Donald Trump is also set to extend the United States' European coronavirus travel ban to include the UK and Republic of Ireland.
"Cash reserves are running down quickly as fleets are grounded and what flights there are operate much less than half full," CAPA said. "Forward bookings are far outweighed by cancellations and each time there is a new government recommendation it is to discourage flying. Demand is drying up in ways that are completely unprecedented. Normality is not yet on the horizon," the Daily Mail reported.
The organization said that an immediate coordinated action between governments and industries was required to avoid a "catastrophe." It added that the current government response, at least in Australia, is "fragmented" as it is along national lines.
"As things stand, the likely tepid response to the airline crisis will equally be fragmented and nationally based. It will consist mostly of bailing out selected national airlines," CAPA said. "If that is the default position, emerging from the crisis will be like entering a brutal battlefield, littered with casualties."
Australian Foreign Affairs Minister Marise Payne, when asked whether the government would support airlines like Qantas and Virgin amid the virus outbreak, said that there would be a significant economic response.
"Yes. We've already, of course, reported and announced a very significant economic response in the last week and that is about protecting the economy, trying to maintain confidence to support investment and importantly to keep people in jobs," she said. "But as this progresses, I am sure there will be other matters which need to be considered – may be the ones that you have raised."