COVID-19 Outbreak: Unprecedented Challenges for Airlines
China Aviation Daily | Apr. 07, 2020
COVID-19 brings unprecedented challenges to business and operation of airlines. At present, nearly a thousand airlines around the world are facing serious crises such as suspensions, layoffs, operational difficulties and even bankruptcy.
- Lufthansa will operate only 18 long-haul flights per week until May 3 for travel restrictions, and will eliminate annual shareholder dividends.
- Bangkok Airways will suspend all 20 international routes from March 29 to October 24 and all domestic flights from April 7 to 30.
- Cathay Pacific canceled 96% of passenger flights in April and May, but continued flying some passenger planes empty in order to transport cargo.
- Korean Air grounded four-fifths of its international capacity.
- WestJet reduced 6,900 out of its 14,000 employees and grounded at least 120 planes. All international flights were cancelled for a month.
- Air Canada plans to lay off 16,500 employees and cut its routes by 90% in April and May.
- British Airways will temporarily lay off more than 30,000 employees.
- Delta Air Lines in March reported a 25 percent drop in bookings. It also froze further hiring and suspended share buybacks.
- Ethiopian Airlines reported a loss of US$190 million in the months of February and March 2020
- Europe's largest regional airline, Flybe, already struggling financially prior to the virus outbreak, entered administration on 5 March 2020 due to the effects of coronavirus.
According to ICAO, in the first half of 2020, it is estimated that airlines in China will have a revenue loss of 19.4 billion U.S. dollars in a V-shaped scenario and up to 22.5 billion U.S. dollars in a U-shaped scenario. Approximately USD 19.4 to 22.5 billion loss of airline revenues in first half 2020 compared to Baseline depending upon the V- or U-shaped path in terms of global aviation industry.
Revenue Loss of the Aviation Industry in Selected Countries and Scenarios H1 2020
The source defines the following scenarios:
Scenario 1 - "V-shaped": quick recovery from May 2020 and other assumptions;
Scenario 2 - "U-shaped": prolonged contraction to June 2020 and other assumptions.
This article is excerpted from COVID-19 Outbreak: Analysis of Global Aviation Operation (Updated April 6, 2020) by VariFlight.