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Coronavirus pandemic: Most airlines may go bankrupt by May-end, says CAPA

Coronavirus pandemic: Most airlines may go bankrupt by May-end, says CAPA
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Cash receivers of airlines are depleting fast, adds the industry advisory.

The continuing spread of coronavirus may lead to bankruptcy of most airlines as early as May-end, said Centre for Asia Pacific Aviation, a leading industry advisory.

It added that a catastrophe could be avoided only if governments came together and coordinated to limit further damage.

“Cash reserves are running down quickly as fleets are grounded and what flights there are operate much less than half full,” CAPA said in a statement on March 16.

And as governments impose travel restrictions, many airlines have probably already been driven into technical bankruptcy, or are at least substantially in breach of debt covenants, it added

Nearly 5,800 people have died from the coronavirus that first broke out in China. About 1,60,000 have been infected.

In India, the virus has resulted in two deaths, and 110 have been infected.

The Indian government has suspended tourists visas till April 15 and has asked people to limit travel within and outside the country.

Similar steps have been taken by several countries. Many in the Middle-East, including Qatar and UAE, have suspended flights.

Indian airlines, including IndiGo, Vistara and SpiceJet, have already seen a drop in bookings, and reports say up to 50 aircraft could be grounded.

Need for coordination

CAPA has come down heavily on the government, for what it says is a lack of coordinated steps.

“While governments are grappling with the health challenges of coronavirus, it is clear that there is little instinct to act cooperatively…Each nation is adopting the solution that appears best suited to it, right or wrong, without consideration of its neighbours or trading partner,” it said.

The advisory pointed out the example of US President Donald who announced cancellation of airline access to most Europeans without advising his European counterparts in advance.

“Even before the worst of this pervasive health attack has washed through, it is imperative that the world’s aviation forces – ICAO, the EU, IATA, the regional aviation associations and the key aviation nations – start the dialogue towards cooperation and establishing a 21st century regime that will truly satisfy the needs of the world’s social and economic needs,” it said.

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Post source : moneycontrol

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