Airlines worldwide may burn $61bn

An Ethiopian Airlines plane at Kigali International Airport. / Sam Ngendahimana.

By

Julius Bizimungu

The International Air Transport Association (IATA) predicts that airlines globally could burn through
$61 billion of their cash reserves in the second quarter of this year, as the new coronavirus pandemic spreads.
IATA warns airlines could run out of cash by the end of June, and this could lead to some $39 billion in net losses
Revenues are expected to fall by 68 per cent in the same period, IATA which represents 290 airlines comprising 82 per cent of global air traffic said on Tuesday, calling on governments to step in.
Alexandre de Juniac, IATA’s Director General said airlines cannot cut costs fast enough to stay ahead of the impact of this crisis without support from their own states.
“Without relief, the industry’s cash position could deteriorate by $61 billion in the second quarter,” he said.
Juniac indicated that the impact of that on cash burn will be amplified by a $35 billion liability for potential ticket refunds, which came about as a result of massive cancellations from government-imposed restrictions on travel.
The association’s prediction is based on its forecast last week that airlines worldwide could lose $252 billion in revenue this year.
African airlines’ passenger traffic is expected to decrease by 32 per cent, which will lead to a 4 per cent revenue decrease in 2020.
Governments respond
Some governments are responding to the airlines’ needs with specific financial or regulatory aid packages.
This includes the United States, Colombia, Singapore, Australia, New Zealand, China and Norway, among others.
Airlines like Emirates, the world’s largest long-haul airline that’s currently grounded amid the crisis, will receive a bailout from the Dubai government.

The Finland government has provisionally agreed to provide a state guarantee of up to €600 million to assist flag-carrier Finnair.

In the United States, the historic $2.2 trillion stimulus bill that President Trump signed into law on March 27 includes $61 billion in relief for the airline industry.