Travel restrictions due to the outbreak of COVID-19 pandemic across the globe has cast a shadow over the aviation sector. The International Air Transport Association (IATA) said the sector is bracing for a 48 percent fall in passenger demand in 2020.
According to IATA, passenger revenue is expected to slump by 55 percent this year. In its forecast, the aviation industry body said domestic travel restrictions will last for nearly 3 months and that international restrictions could last even longer.
In an interview to CNBC-TV18, Alexandre De Juniac, DG and CEO of IATA, said airlines are staring at losses of more than $310 billion.
“The global impact is absolutely tremendous. It is most severe and an unprecedented crisis we have ever seen in the air transport industry. We have estimated the impact in terms of loss of revenues for airlines around more than USD 310 billion. The number of jobs that could be endangered by the COVID-19 crisis impact on the airline industry is 25 million jobs worldwide,” he said.
Juniac further added that airlines are facing the threat of going bankrupt. “We have estimated that for the second quarter of 2020, only the second quarter, we will burn $61 billion of cash. So, the main risk we are facing is to run out of cash and to be bankrupt because of this cash drain,” he said.
“We are asking governments to put together rescue packages, financial packages to inject cash urgently in our balance sheet and in our P&L. That is the most critical and urgent measure we are asking government for and they have shown a very open and supportive attitude,” he added.
He also said the governments can look at buying stake in private airlines.
“We have approached more than 90 governments all over the world to ask them to put together financial rescue packages. What we said is that we need cash injection, we need financial support by whatever means."
"So, it means credit loans, it means a treasury facility, state guarantee on loans and credits, capital injection and this package that we are asking for must be adapted by the situation of each country and each airline."
"So, we are advocating in favour of measures that are tailored, customised taking into account the situation of each airline in each country. So, if it goes up to capital injection and government taking stakes, which has already happened or has been already announced in some countries, we say if it is necessary, do it.” Juniac added.