With the coronavirus causing travel bans and cancelled flights across the world, airlines are taking a huge hit. Demand is down, airlines are grounding fleets and stocks are sinking. Some airlines, such as FlyBe in the UK, are already in administration. We take a look at the current airlines at risk from coronavirus.
“When you look around the world, it (airline demise) starts with what airlines were already not-so-profitable, or what airlines already had weak balance sheets,” says Seth Kaplan, an aviation analyst at Kaplan Research.
IATA, the International Air Transport Association, estimates that the coronavirus could have a $130 billion impact on the industry
Airlines At Risk From Coronavirus
Airlines all across the globe are making drastic cuts to pull through. Korean Air is ‘fighting for survival’. This comes as more than half of the world banned travellers arriving from South Korea amid coronavirus restrictions.
Woo Kee-hong, the president of Korean Air, says that more than 80% of the airline’s international capacity will be cut as a result of global travel bans. Korean Air has grounded about 100 of its 145 passenger aircraft and is encouraging employees to take voluntary leave.
Stock prices for International Airlines Group (IAG), the parent company of British Airways, Iberia, Vueling and Aer Lingus are down by 50%. Historically strong airlines like Delta and United are also feeling the pain. Although they are in a better position to wait it out. Sure, they are suspending up to half of their international routes. But with healthy balance sheets they will most likely survive over smaller, regional airlines.
Grounded Fleets & Staff Lay-Offs Are Ahead
Norwegian Air, which has stacked up large debts in an effort to establish itself as a low-cost transatlantic operator, says that it has “weeks not months” to avoid collapse. As of Monday March 15th, all of Norway’s airports are shut.
Even UK giant British Airways is struggling. In a memo to its 45,000 staff, CEO Alex Cruz warned of the implications. He said that British Airways will lay off staff, suspend routes and ground aircraft due to. lower demand from the coronavirus pandemic.
“Some of us have worked in aviation through the global financial crisis, the Sars outbreak and 9/11,” Alex Cruz wrote in the memo. “What is happening right now as a result of Covid-19 is more serious than any of these events. It is a crisis of global proportions like no other we have known.”
The outcome remains to be seen, with the future of the travel industry for 2020-21 hanging on hopes of new treatments and vaccines. One thing is for sure, and that is that airline travel as we know it has changed.
