Most airlines to go bankrupt in May due to virus pandemic
March 17, 2020
SYDNEY: Global aviation consultancy firm CAPA has said most airlines in the world will be bankrupt by the end of May due to the coronavirus pandemic and only a coordinated government and industry action right now can avoid the catastrophe.
“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 firm said.
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Across the world, airlines have announced drastic reduction in their operations in the wake of the coronavirus outbreak. Atlanta-based Delta Air Lines stated on Sunday that it would be grounding 300 aircraft in its fleet and reduce flights by 40%.
The US has suspended all tourist visas for people belonging to the European Union, the UK and Ireland. Similarly, the Indian government has suspended all tourist visas and e-visas granted on or before March 11.
CAPA, in its note said, “By the end of May-2020, most airlines in the world will be bankrupt. Coordinated government and industry action is needed — now — if catastrophe is to be avoided.” Cash reserves are running down quickly as fleets are grounded and “what flights there are operate much less than half full," it added.
“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,” it said.
European leaders are set to ban non-essential travel into the continent, the latest drastic attempt to curb the coronavirus pandemic that has upended society, battered markets and killed thousands around the world.
Originally published in The News
