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How long can airlines survive COVID-19?

Happy International Civil Aviation Day!
Happy International Civil Aviation Day!

By the end of May-2020, most airlines in the world will be bankrupt, according to a report on CAPA – Centre for Aviation.

The report urges that coordinated government and industry action is needed now – if catastrophe is to be avoided.

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.

Cash reserves are running down quickly as fleets are grounded and what flights there are operate much less than half full.

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.

At the same time, while governments are grappling with the health challenges of coronavirus, it is clear that there is little instinct to act cooperatively. Messages are mixed and frequently quite different.

Each nation is adopting the solution that appears best suited to it, right or wrong, without consideration of its neighbors or trading partners.

When, for example, President Trump peremptorily announced the effective cancellation of airline access to most Europeans, he didn’t even advise his European government counterparts in advance, let alone consult with them. Other governments have performed a little better.

Click here to read the full article on CAPA

 

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About the author

Juergen T Steinmetz

Juergen Thomas Steinmetz has continuously worked in the travel and tourism industry since he was a teenager in Germany (1977).
He founded eTurboNews in 1999 as the first online newsletter for the global travel tourism industry.