March 31, 2020 / 12:32 PM / 2 months ago

Global airlines expect crisis to persist to late 2020

PARIS/LONDON (Reuters) - Global airlines will not start to recover from their worst-ever crisis until the last quarter of this year and any rebound will be short-lived if there is a new winter wave of coronavirus, the industry’s trade group warned on Tuesday.

FILE PHOTO: Delta Air Lines passenger planes are seen parked due to flight reductions made to slow the spread of coronavirus disease (COVID-19), at Birmingham-Shuttlesworth International Airport in Birmingham, Alabama, U.S. March 25, 2020. REUTERS/Elijah Nouvelage

Many carriers, even those with strong finances, are struggling to survive for that long as the industry burns $61 billion in cash this quarter because of a 70% drop in traffic and revenue, the International Air Transport Association said.

Airlines are set to post a collective net loss of $39 billion this quarter as the majority of their aircraft are grounded to weather lockdowns and travel restrictions.

“These are numbers beyond anything we have ever had in our industry,” said Alexandre de Juniac, Director General of IATA, which urged governments to speed up bailouts for airlines facing estimated full-year revenue losses of $252 billion.

U.S. Congress passed legislation on Friday authorizing $25 billion for passenger airlines, as well as $4 billion for cargo carriers and $3 billion in cash for airport contractors.

IATA said it expected government fiscal measures and central bank action to feed through to higher travel demand from the fourth quarter, after a widespread second-quarter lockdown and continued weakness in the third.

But it warned that airlines were facing severe short-term difficulties, with the economy already tipping into recession.

“Everyone is eager to have cash and is running out of cash,” de Juniac said on a media conference call.

IATA’s Chief Economist Brian Pearce said growth in the fourth quarter and a strong 2021 were its base case scenario

“It’s really not clear that that is actually going to happen. It could be that it takes much longer for us to get through the issues with the virus,” he told reporters.

“It could be that the virus comes back, so we are exploring scenarios where we have a much longer period of weakness, and obviously the pressures on airlines are correspondingly larger”.

Reporting by Tim Hepher, Alistair Smout, Editing by Louise Heavens and Alexander Smith

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