Most airlines could go bankrupt by end of May, says CAPA amid coronavirus outbreak

Global aviation consultancy firm CAPA on March 16 took to Twitter to say that if coronavirus infections continue n by end of May-2020, most airlines in world will be bankrupt. global consultancy firm added that a coordinated government and industry action was needed to avoid catastrophe. This comes as deadly virus has infected 1,70,027 and claimed lives of 6,524 people globally. 

In a public statement it said that as impact of COVID-19  and multiple government travel reactions sweep through 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 re are operate much less than half full. Forward bookings are far outweighed by cancellations and each time re is a new government recommendation it is to discour flying. Demand is drying up in ways that are completely unprecedented. rmality is t yet on horizon.”

Airlines affected globally 

This comes as Texas-based American Airlines Inc on March 14 anunced that it plans to cut 75 per cent of its international flights through May 6 and ground nearly all of its widebody fleet. Meanwhile, US airlines anunced additional steps on March 13  to ground planes and curtail executive pay as y prepare for an unprecedentedly bad travel market in near-term. On same day, Hawaiian Airlines anunced that it will cut capacity by 8 per cent to 10 per cent next month and by 15 per cent to 20 per cent in May as demand for air travel dropped.

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According to reports, Chinese airlines have reported a combined loss of $3 billion in month of February due to coronavirus outbreak. Zhang Qing, an official with Civil Aviation Administration of China while talking to press said that overall aviation industry in country has recorded a loss of $24.59 billion yuan in month of February due to COVID-19 outbreak.  

Read: American Airlines To Cut 75% Of International Flights Amid Coronavirus Outbreak

Last month, Singapore Airlines said that it will temporarily cut flights across its global network, including Mumbai, till May as deadly coronavirus outbreak has impacted flight demand to city-state. According to reports, Vietnamese airlines had endured a loss worth $430 million following travel bans between Vietnam and China. International Air Transport Association (IATA) has estimated revenue losses to airlines' passenger business of between $63 billion and $113 billion with higher figure for a scenario where COVID-19 spreads more widely around globe. 

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