Airlines are fast running out of cash, as hundreds of thousands of fleets are grounded; as they battle to survive travel restrictions and country lock downs, that have engulfed the industry in crisis.
The escalating coronavirus crisis could bankrupt most of the world’s airlines by the end of May; unless they get help from governments and the industry, an aviation consultant has warned.
“Demand is drying up in ways that are completely unprecedented. Coordinated government and industry action is needed now if catastrophe is to be avoided.Sydney-based consulting firm CAPA Centre for Aviation
CAPA Centre for Aviation said the nature of the crisis requires a global, coordinated, response, but said it believed that was unlikely to happen.
"It will consist mostly of bailing out selected national airlines. If that is the default position, emerging from the crisis will be like entering a brutal battlefield, littered with casualties" the firm said.
U.S. airlines are seeking over $50 billion in financial assistance from the government, more than three times the size of the industry’s bailout after the Sept 11th attacks.
According to WSJ, the exact form of the aid and the amount is under discussion with Trump administration officials and congressional leaders. A potential aid package could include government-backed loans, cash grants and other measures, including relief from taxes and fees.
Airlines have been stunned by the rapid plunge in their bookings, as the coronavirus pandemic has spread around the world. As the worst-case scenarios they envisioned, just days or weeks ago, have come to pass, carriers have scrambled to make ever deeper cuts to their schedules.
United Airlines is estimating that their revenue would be down $1.5 billion in March, from a year ago, and would be posting a first-quarter loss.
United is planing to cut flying in half in April and May. They are also in talks with their unions about steps that could include furloughs, pay cuts or other measures to reduce payroll expenses.
Even then, the carrier expects its remaining planes to fly only a quarter full.
When medical experts say that our health and safety depends on people staying home and practicing social distancing, it’s nearly impossible to run a business whose shared purpose is ‘Connecting people. Uniting the world."United CEO Oscar Munoz and President Scott Kirby wrote in a letter to employees Sunday.
With United’s new schedule change policy for international flights, where travel is disrupted by more than six hours because of schedule changes resulting from government restrictions, customers will receive a credit for a year instead of refund. At the end of those 12 months, if the customer doesn’t use the credit they can get a refund to their credit card.
Airlines have bolstered liquidity in recent weeks, with bond issues and by drawing down existing credit facilities. Alaska Airlines said Monday they were seeking another $500 million, having drawn down a loan just last week.
There are about 460,000 jobs in the US airline industry, according to the Labor Department.