Airlines around the world are in desperate need of government liquidity support which in many cases is taking too long to reach them, IATA has warned.
Describing the coronavirus shutdown as “the biggest crisis we have ever had”, IATA director general Alexandre de Juniac stresses that although many governments have been “very supportive” of the aviation industry, their support must arrive imminently if carriers are to be saved from bankruptcy.
“We desperately need these packages to be implemented,” he said during IATA’s latest weekly crisis briefing, on 7 April. Assistance could come in the form of loans, loan guarantees, tax relief or other forms, he notes, but “whatever it is, we need it now”.
The calls are backed up by data from the association showing a 70% reduction in global flights compared with this time last year. The figure for Europe, Africa and Latin America is 90%. As most airlines have just two months of cash reserves and a host of fixed costs, they are now running out of financial legroom.
Refunds totalling around $35 billion are due in the second quarter alone, IATA says. It expects total cash burn of around $60 billion in the period.
Many airlines have begun issuing vouchers instead of cash refunds to customers, a practice de Juniac says is a simple “matter of survival” as the industry looks to conserve meagre cash supplies. Even with these measures, further bankruptcies are “inevitable”, he says, as the sector’s improved profitability over recent years has been confined to just a few carriers.
IATA also warns that a three-month industry shutdown threatens up to 25 million jobs, out of a wider pool of 65 million people who rely on the aviation industry, directly or indirectly, for work.
Pouring cold water on the suggestion that passenger growth is resurgent in China, de Juniac highlights that around half of flights are still not flying, and that load factors have not risen above around 50%.
He says there has been a “slight increase” in passenger numbers, but one that is “not very significant at this stage”. He adds that the country’s key leisure travel market remains essentially non-existent.