ANALYSIS: Virus-stricken airlines face bailout or bust, as coronavirus explodes around globally
Issued on: 17/03/2020 - 09:12
Modified: 17/03/2020 - 13:11 GMT/ZULU
ADVERTISING
Sydney
by Louise Healy and Biodun Iginla, France24 News Analysts
Airlines worldwide face an unprecedented existential threat as the coronavirus shuts down global travel, leaving governments with controversial and costly decisions about which carriers to bail out.
A toxic mix of fear, crippling travel bans and investor panic have pummelled the sector, with demand collapsing and carriers cutting flight capacity by up to 90 percent.
ADVERTISING
One troubled airline, Britain's Flybe, has already gone to the wall and market analysts believe many more could follow.
"By the end of May 2020, most airlines in the world will be bankrupt," market intelligence firm CAPA has warned.
Even before US President Donald Trump effectively barred trans-Atlantic travel, the International Air Transport Association (IATA) estimated the crisis would cost the industry $113 billion, or nearly 20 percent of its revenue this year.
The true figure now looks like being much higher.
Brendan Sobie, an independent aviation analyst based in Singapore, said the global situation was "unprecedented".
"You can compare it to things like SARS or the global financial crisis, but I think it goes beyond that. No one really knows how long it will last and what the full impact will be."
Airlines are now sprinting to slash costs and bolster company war chests where possible -- laying off staff, cutting routes, renegotiating deals with suppliers and flying smaller, cheaper-to-run planes.
Australian carrier Qantas has cut international flight capacity by 90 percent and domestic routes by 60 percent. Similarly, British Airways is slashing capacity by 75 percent.
Meanwhile, Dutch national airline KLM plans to cut up to 2,000 jobs, the CEO of Delta Air Lines has seen his salary cut to zero, and Lufthansa suspended dividends.
In an internal memo, Malaysia Airlines admitted the company was already in a "critical situation" and urged staff to take voluntary unpaid leave.
"Many airlines are now at risk of going bankrupt and Malaysia Airlines is no different," chief financial officer Boo Hui Yee wrote.
- Enter the taxpayer? -
Against this bleak backdrop, previously hushed whispers about government bailouts have become panicked screams for help.
British airlines are said to have asked the government for more than $9 billion in support.
Trade group Airlines for America has called for a $50 billion bailout, more than triple the aid provided after the 9/11 attacks.
US Treasury Secretary Steven Mnuchin said the sector would come "top of the list" for relief.
But such substantial government help could prove deeply unpopular.
Many taxpayers are still bitter about Wall Street bailouts during the 2008 global financial crisis and a perceived "heads I win, tails you lose" corporate culture.
"The biggest US airlines spent 96 percent of free cash flow over the last decade to buy back shares of their own stock in order to boost executive bonuses and please wealthy investors," complained former US labour secretary Robert Reich.
"Now, they expect taxpayers to bail them out to the tune of $50 billion. It's the same old story."
Airlines are already under the spotlight over their carbon emissions and sustainability.
And after years of shrinking legroom and charging for blankets, they frequently rank among consumers' most hated companies.
With major western economies heading for recession, governments may also struggle to triage requests for assistance.
"Airlines might be at the top of the list for directed fiscal help, but virtually every global industry is facing pressure without a government bailout," said Stephen Innes, a strategist at AxiCorp.
These companies are normally considered a vital strategic asset, underpinning tourism, trade, business contacts and large manufacturers such as Boeing, Airbus or Rolls-Royce.
In countries like Australia or South Africa -- which has repeatedly bailed out South African Airways -- flagship carriers are also seen as national champions, promoting the country in the world.
Repeated calls for rules to be loosened to encourage transborder mergers have been rebuffed on the grounds that foreign firms should not own such sensitive assets.
Airlines and airports are also large employers, accounting for around four million jobs worldwide and many tens of millions more in associated industries.
Staff have already taken a hit with reduced hours and the threat of job cuts.
One Cathay Dragon flight attendant based in Hong Kong, who asked not to be named, told us at France24 that he had not been on duty since February 6 and faced another couple of weeks off at the very least.
He has lost 60 to 70 percent of his normal monthly income and is relying on savings, in one of the world's most expensive cities.
For consumers, there could be big changes in store when the coronavirus restrictions lift.
For the brave, there are some deals to be had for now, but in the longer term "airfares may rise as airlines try to recoup losses", according to Endau Analytics analyst Shukor Yusof.
A rash of market consolidation and mergers could reduce competition and put upward pressure on prices.
PROMOTED CONTENT
- [Photos] 30 Strict White House Rules The First Lady Has to Follow
- Sponsored by Ice Pop
- One Thing All Liars Have in Common, Brace Yourself
- Sponsored by TruthFinder
- [Photos] Here's Why Air Force One Beats Every Other Plane
- Sponsored by Past Factory
- Erdogan orders Turkish coastguard to block migrants crossing Aegean Sea
- Tourists stuck in Morocco after links to Europe restricted over coronavirus
- Egypt suspends flights from Thursday over coronavirus
- Don't overpay for Patagonia â this hack can save you money
- Sponsored by Wikibuy
- Look Closely: The Most Brutal Breakup Message Ever
- Sponsored by Post Fun
- If you're over 40 - this game is a must!
- Sponsored by Vikings
- Luxurious Newport Apartments For Seniors. Search For Senior Livingâ¦
- Sponsored by eAnswers.com
- Americaâs Coolest Small Towns, by State
- Sponsored by Far and Wide
- All of Italy on lockdown as coronavirus cases surge
- Harry and Meghan wave royal goodbye at Commonwealth Day ceremony
- 'We need a social life': French café culture defies coronavirus shutdowns
Posted by Biodun Iginla at 4:20 AM Email This
Labels: bailouts, bankrupt, British Airways, coronavirus, donald trump, France24 News, global travel, Louise Healy and Biodun Iginla, Qantas, trans-Atlantic travel, Virus-stricken airlines
No comments:
Post a Comment
Subscribe to: Post Comments (Atom)
POPULAR POSTS
- Mexican troops kill 'El Chapo' family security chief
- 28 February 2018 - 03H20 GMT/UTC/ZULU TIME by Renee Celeste and Biodun Iginla, France24, Mexico City in Share © ...
- 'Difficult' fight for Hezbollah on Lebanon-Syria border
- 26 July 2017 - 22H55 GMT/UTC/ZULU TIME by Nasra Ismail and Biodun Iginla, France24, JURUD ARSAL (LEBANON) in Share ...
- Analysis: Jacob Zuma resigns
- by Susan Peterson and Biodun Iginla, Political News Analysts, The Economist Intelligence Unit, Johannesburg The disastrous legacy of Sou...
- Italy election: Polls open in unpredictable contest
- March 4, 2018 08H:12 GMT/UTC/ZULU TIME Share this with Facebook Share this with Twitter Share this with Messenger Share...
- BREAKING: Interpol chief Meng Hongwei vanishes on trip to China
- October 6, 2018 09H:04 GMT/UTC/ZULU TIME Share this with Facebook Share this with Messenger Share this with Twitter Sha...
- Julian Assange: Warrant for his arrest upheld by court
- 11H:37 GMT/UTC/ZULU TIME 14 February 2018 Share this with Facebook Share this with Twitter Share this with Messenger...
- Dagestan church shooting leaves five dead in Kizlyar
- February 18, 2018 20H:11 GMT/UTC/ZULU TIME Share this with Facebook Share this with Twitter Share this with Messenger S...
- Facebook steps up facial recognition use
- December 20, 2017 15H:35 GMT/UTC/ZULU TIME Share this with Facebook Share this with Twitter Share this with Messenger S...
- Brazilian inmates riot, take hostages in Rio de Janeiro prison
- February 19, 2018 00H:40 GMT/UTC/ZULU TIME by Enrique Krause and Biodun Iginla, BBC News and Reuters, SAO PAULO SAO PAULO - Inmates...
- Fun facts about this year's Oscar nominees
- 04 March 2018 - 08H16 GMT/UTC/ZULU TIME by Tamara Kachelmeier and Biodun Iginla, France24 Entertainment reporters, HOLLYWOOD (UNITED STAT...
FOLLOWERS
BLOG ARCHIVE
- â¼ 2020 (245)
- â¼ March (77)
- ANALYSIS: Virus-stricken airlines face bailout or ...
- ANALYSIS: Quarantine motels spark fear in virus-st...
- ANALYSIS: Coronavirus: 'All is well'. In Italy, tr...
- ANALYSIS: Coronavirus: Trump says coronavirus cris...
- ANALYSIS: France to deploy 100,000 police to enfor...
- ANALYSIS: Coronavirus: Social curbs ramped up arou...
- ANALYSIS: Global cases outpace China infections
- ANALYSIS: Coronavirus: Germany latest country to c...
- ANALYSIS AND BREAKING: Coronavirus: New York City ...
- ANALYSIS: U.S. eyes aid for airlines; sees no dome...
- ANALYSIS: As Latin America takes steps to counter ...
- ANALYSIS: Borders shut; rates cut; China cases dow...
- ANALYSIS: Coronavirus: EU states record highest on...
- ANALYSIS: British food retailers plea to shoppers:...
- ANALYSIS: Coronavirus: US airports in disarray ove...
- ANALYSIS: Chaos at US airports as France and Spain...
- ANALYSIS: Staying safe, and sane, as Silicon Valle...
- BREAKING: Coronavirus: Quebec leader asks seniors ...
- ANALYSIS AND BREAKING: Coronavirus: France and Spa...
- ANALYSIS: Italy's health workers on edge of exhaus...
- ANALYSIS: Coronavirus: US travel ban on 26 Europea...
- ANALYSIS: Google, Walmart join U.S. effort to spee...
- ANALYSIS: Corporate bonds and loans are at the cen...
- ANALYSIS: Italians in China caught between two epi...
- ANALYSIS: Coronavirus: Europe now epicentre of the...
- ANALYSIS: Coronavirus: Markets volatile as closure...
- ANALYSIS: Chinese official claims US may have brou...
- ANALYSIS: Four women at forefront of Israel's Arab...
- ANALYSIS: Coronavirus: Asian stocks extend global ...
- ANALYSIS:: Canada's Trudeau and wife test positive...
- BREAKING: New Zealand scraps big Pacific festival ...
- ANALYSIS: Coronavirus: Countries enforce mass clos...
- ANALYSIS: Coronavirus: US is failing on testing, s...
- ANALYSIS: Covid-19: The politics of pandemics
- ANALYSIS: China shuts down Everest over coronaviru...
- BREAKING: Tom Hanks announces positive test for co...
- ANALYSIS AND BREAKING: Coronavirus: Trump suspends...
- BREAKING: China allows some firms to resume work a...
- ANALYSIS AND BREAKING: Coronavirus: UK Health mini...
- ANALYSIS AND BREAKING: Pentagon says coronavirus c...
- BREAKING: Jamaica confirms first imported case of ...
- BREAKING: Last tourists race home from virus-hit I...
- ANALYSIS AND BREAKING: Coronavirus: Troops sent to...
- ANALYSIS: Stocks savaged, Italy on lockdown, Trump...
- ANALYSIS: Italy wakes to first day in lockdown, as...
- BREAKING: Afghanistan conflict: US begins withdraw...
- ANALYSIS: Coronavirus: Italy extends quarantine me...
- ANALYSIS: Trump's focus on coronavirus numbers cou...
- ANALYSIS: 'Very real' threat of coronavirus outbre...
- ANALYSIS: Italy's darkest hour, says PM amid crise...
- ANALYSIS: Coronavirus: Lowest cases in China since...
- ANALYSIS: Coronavirus: Italy death toll soars amid...
- ANALYSIS: U.S. airport screeners, health workers p...
- ANALYSIS: The women vying to take charge of Paris
- ANALYSIS AND BREAKING: Coronavirus: Northern Italy...
- ANALYSIS: Thousands stranded off California as vir...
- ANALYSIS: Coronavirus infects 100,000-plus worldwi...
- ANALYSIS AND BREAKING: Coronavirus: Italy reports ...
- BREAKING: 'It's pandemonium': virus panic-buying h...
- ANALYSIS AND BREAKING: First confirnfirmed case in...
- ANALYSIS AND PANIC IN SOUTH EAST ASIA
- ANALYSIS AND BREAKING: Bethlehem under lockdown af...
- ANALYSIS AND BREAKING: Coronavirus: White House co...
- ANALYSIS: Global coronavirus scenario expanding
- ANALYSIS: Michael Bloomberg ends US presidential c...
- Ronan and Dylan Farrow attack publisher Hachette o...
- ANALYSIS AND BREAKING: Italy's virus death toll ju...
- ANALYSIS: WHO warns of global shortage of medical ...
- ANALYSIS: US Democratic Primary: Press reacts to S...
- ANALYSIS: Super Tuesday: Biden seals comeback with...
- ANALYSIS AND BREAKING: China reports rise in impor...
- Top Los Angeles prosecutor apologizes after husban...
- ANALYSIS: EU raises virus risk as world cases grow...
- ANALYSIS: Talking about a menstrual revolution: As...
- BREAKING: Paris's Louvre shuts as cultural life ta...
- ANALYSIS: Coronavirus: South Korea sect leader to ...
- ANALYSIS: Coronavirus time bomb: America's uninsur...
- ⺠February (51)
- ⺠January (117)
- ⺠2019 (880)
- ⺠2018 (1455)
- ⺠2017 (1396)
- ⺠2016 (1402)
- ⺠2015 (1710)
- ⺠2014 (451)
- ⺠2013 (215)
- ⺠2012 (71)
- ⺠2011 (233)
ABOUT ME
Biodun Iginla is a News Analyst for BBC News and a freelance writer and author who writes about politics and culture. He divides his time between Minneapolis, London, and Paris. He has also published 58 books, novels and nonfiction. Please see his books at amazon.com
TOTAL PAGEVIEWS
07162163749536174839110211412913614615416717301844194620422134221723724825626100275289294
667,436