COVID-19: By the end of May 2020, most world airlines will be bankrupt, says CAPA

CAPA on Monday (March 16, 2020) said in a statement that by the end of May-2020, most airlines in the world will be bankrupt.

CAPA – The Centre for Aviation, part of the Aviation Week Network, is one of the world’s most trusted sources of market intelligence for the aviation and travel industry. It released a statement on its official website and said, “By the end of May-2020, most airlines in the world will be bankrupt. Coordinated government and industry action is needed – now – if catastrophe is to be avoided.”

As the impact of the coronavirus and multiple government travel reactions sweep through our world, many airlines have probably already been driven into technical bankruptcy, or are at least substantially in breach of debt covenants.

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

“Forward bookings are far outweighed by cancellations and each time there is a new government recommendation it is to discourage flying. Demand is drying up in ways that are completely unprecedented. Normality is not yet on the horizon,” stated CAPA.

At the same time, while governments are grappling with the health challenges of coronavirus, it is clear that there is little instinct to act cooperatively. Messages are mixed and frequently quite different.

Each nation is adopting the solution that appears best suited to it, right or wrong, without consideration of its neighbours or trading partners.

CAPA said, “When, for example, President Trump peremptorily announced the effective cancellation of airline access to most Europeans, he didn’t even advise his European government counterparts in advance, let alone consult with them. Other governments have performed a little better.”

“Failure to coordinate the future will result in protectionism and much less competition,” CAPA said in its note.

“In short, the post-coronavirus environment has all the makings of a geopolitical standoff. The last thing the world needs post-coronavirus is a nationalistic aeropolitical confrontation,” wrote CAPA.

As of March 12, InterGlobe Aviation, the parent of the country’s largest airline IndiGo tumbled 10 per cent to Rs 1,039.35 apiece, a day after it said that quarterly earnings would be hit due to falling in daily bookings amid the coronavirus outbreak.

The SpiceJet dropped over 18 per cent to Rs 49.40 while Jet Airways fell nearly 5 per cent to Rs 18.95.

Earlier on March 10, India temporarily suspended all the visas and e-visas granted on or before March 11 to nationals of three more coronavirus-affected countries — France, Germany and Spain — effective immediately, as part of the measure to contain the spread of the deadly virus.

The government had earlier also suspended visas and e-visas for nationals of Italy, Iran, South Korea, Japan and China. The decision was taken during a high-level review meeting chaired by Cabinet Secretary Rajiv Gauba with secretaries of the concerned ministries or departments to review the status, actions, preparedness and management of COVID-19 cases in the country.

According to the worldometers.info, the total number of coronavirus cases in the world have reached more than 1,70,000 and there have been around 6,524 deaths until afternoon of March 16, 2020.