Industry Desk: The $113-billion loss for the global airline industry caused by the coronavirus is not being revised just yet, the International Air Transport Association (IATA), a global body representing over 200 airlines, said even as it cautioned that the situation is much worse than what had been anticipated earlier.
In a conference call with the global media, Brian Pearce, IATA’s Chief Economist, said that the virtual closure of the North Atlantic immediately changed the $113-billion figure.
Pearce pointed out that there are a large number of fixed costs that airlines have to pay, whether they operate flights or not. “At the beginning of this year, about 75 per cent of the airlines had less than three months of cash to cover their fixed costs. Airlines are looking at a liquidity crisis due to the recent situation arisen due to cancellations across the globe,” he said.
In response to a question on possible job losses due to the crisis, Pearce said it is “very severe.”
IATA officials felt that governments globally should step in to help the airline sector either financially or through other measures such as waiving overflight charges and taxes on security apart from providing some sort of financial relief to the industry. Officials pointed out that many global airlines had cash to cover for less than three months of expenses adding that outside the 30 top airlines the balance sheets of most others were not that strong.
Pearce was of the opinion that recovery of the global aviation industry will take place soon pointing out that China was already moving to the recovery phase even as the situation in Africa is worsening. “In principle, there is no reason to doubt that the recovery will happen,” Pearce said adding that in the past situation-shaped recoveries have been known to happen in 6-9 months after the incident.
Officials were of the view that the bigger question was whether airlines lasted before they ran out of cash.
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