Global airlines continue to struggle for survival amid the deadly coronavirus outbreak, with more companies grounding fleet and going for layoffs and furloughs. This comes despite governments trying to bail out airline companies with billions of dollars through coronavirus stimulus packages.
Also, on Tuesday, the International Air Transport Association (IATA) said that passenger revenues are projected to fall more than $250 billion if travel restrictions continue for three months because of the coronavirus outbreak. The association also warned that many airlines may not be able to survive the cash squeeze in the second quarter, as both revenues and traffic plunge because of the coronavirus outbreak.
Airlines struggle to maintain operating costs
Airline companies could lose a quarter of a trillion dollars in revenues this year, according to the IATA, as travel comes to a standstill with countries locked down to fight the coronavirus pandemic. This has seen a large number of airline companies struggling to keep their operations going.
A number of airlines have already grounded their fleet, while a few are contemplating down so. Also, they are struggling to give salaries to the workers and are going for layoffs and furloughs. On Monday, Easy Jet, one of Europe's biggest airlines, grounded its entire fleet because of the coronavirus pandemic, which is hurting its profits. Airlines including Cathay Pacific and Virgin Atlantic have asked their staff to take unpaid leaves in an effort to cut operating costs.
More airlines slash flights, go for furloughs, layoffs
Earlier in March, Air France had said that would cut services by up to 90% in a bid to save 200 million euros in 2020 to survive the losses being incurred due to the coronavirus pandemic. According to Reuters American Airlines plans to ground almost its widebody aircrafts and slash 75% of its international flights through May 6. Air New Zealand on March 16 had said that it was cutting 85% in long-haul capacity over the next few months, while slash domestic flights by 30% in April and May.
German national carrier Lufthansa had said that it was slashing long-haul capacity by up to 90% from March 17 and would be operation a meager 20% of its international flights. El Al Israel has asked 5,500 of its 6,000 staff to go on unpaid leave till 31 after it slashed flight schedule following the coronavirus outbreak.
Global airlines at the brink of collapse
The IATA on Tuesday said that many airlines won't be able to survive the cash squeeze in the second quarter as both traffic and revenues continue to decline following the coronavirus outbreak. The IATA said that, per its latest analysis, annual passenger revenues will fall by $252 billion if travel restrictions owing to the coronavirus continue for three months.
Fresh quarterly estimates suggest that global airlines could suffer $39 billion net loss in the current quarter and could see another $61 billion cash burn. The warnings come at a time when governments have been trying to bail out airlines from this crisis. The United States in its $2 trillion coronavirus stimulus package allocated $58 billion for its ailing airline industry. Similar steps have also been taken by Singapore, Australia and New Zealand.