The global economy has been grappling with a severe demand shock, as more than 100 countries closed their borders in the past month. According to the UN Department of Economic and Social Affairs, the global economy could shrink up to 1% in 2020 due to Covid-19.
Efforts by the Governments’—stay-in-place order, property closures, social distancing—to contain the outbreak, is impacting the economic activity that the transport sector is largely dependent on. As a result, passenger operations have collapsed at an unprecedented rate, which has been coupled with fear of infection causing people to keep away from traveling. Global airlines are one of the most stressed sectors impacted by the coronavirus crisis, which could take a hit of up to $113bn according to the International Air Transport Association (IATA).
There is no current visibility of the overall duration and severity of the unfolding events. Major airlines are looking for government support, while taking stringent measured to build financial cushion. This has come in the form of capacity reduction, slashing salaries, lay-offs/forcing employees to take unpaid leaves, suspending dividends, selling of assets, etc. Airlines across geographies are looking for government aid in the form of government-backed loans, cash grants, etc. as they face this unprecedented storm. WSJ has reported that “US. Airlines are seeking about $50bn which would be about three times the size of the industry’s post-9/11 bailout.”
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Click here to download the full Sector Update Airlines Industry Insights