Most of the world’s airlines will be bankrupt by the end of May due to the ongoing effects of coronavirus, experts have warned.
CAPA Centre for Aviation made the dramatic prediction as countries lock down their borders in light of the spread of COVID-19 which has caused more than 170,000 infections and 6,500 deaths around the world.
European nations like Spain, Italy and France have introduced strict lockdowns for tens of millions of citizens while countries like the US, Australia and New Zealand have either banned flights entirely or forced residents to go into self-isolation for two weeks on arrival.
CAPA Aviation said the impact could wipe out the aviation industry entirely unless governments act quickly in a co-ordinated effort.
“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,” it 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.”
The company warned governments are failing to co-operate, citing President Trump’s decision to ban flights from Europe which came as a surprise to EU leaders.
“National self-interest over co-operation is the evolving threat for aviation,” it said, arguing the “fragmented” airline industry is critical to global communications and trade.
“As things stand, the likely tepid response to the airline crisis will equally be fragmented and nationally based. 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 warning comes as airlines are forced to slash their flying schedules, shed jobs and seek government help in response to the clamping down of global borders.