Global airlines face economic collapse as passenger numbers slump

16 MARCH 2020: the number of coronavirus cases around the world has gone up by more than 10,000 in a single day according to the latest report by the World Health Organisation (WHO), dated 15 March.

Governments are scrambling to stop the spread of COVID-19 by introducing extensive travel restrictions, many of which are starting today, 16 March.

IAG, owner of British Airways and Iberia, said today that it will slash capacity for April and May by 75%

In the US, airlines are now contemplating the unthinkable - halting flights in and out of the US. 

Bosses at Virgin Atlantic will write to the UK government today to plead for an emergency bailout for UK airlines of a whopping GBP7.5 BILLION. The letter will call for a credit facility to be made available, alongside other help such as measures to make sure credit card companies that are fearful of the possibility of some airlines going bust do not withhold millions of pounds relating to payments their customers have made for future flights and holidays. It is proposed the emergency financing would be repaid once something close to normal service has resumed.

UK trade body, Airlines UK, says: “The time for action is now. No more delays or prevarication or bean counting. We’re talking about the future of UK aviation – one of our world-class industries – and unless government pulls itself together, who knows what will be left of it once we get out of this mess”.

Meanwhile in the US, travel restrictions will hit all transatlantic routes from Tuesday, further denting the aviation sector. US airlines are grappling with the once unthinkable scenario of halting all commercial domestic air travel as concerns about the spread of the coronavirus hurt demand for flights.

Airlines around the world are racing to preserve cash as demand for flights craters after political leaders turn to increasingly draconian measures that have disrupted daily life in an effort to stop the spread of COVID-19.

United Airlines said it expected its March revenue to be US$1.5 billion lower than a year earlier and said it will slash capacity by 50% in April and May. The airline is in talks with unions to figure out how to reduce payroll expenses for its 96,000 employees. Virgin Atlantic in the UK is requiring its some of its staff to take eight weeks of unpaid leave, to help the airline manage its cashflow.

American Airlines said it plans to slash its international flying by 75% to May 6 and that it will cut domestic capacity by 20% in April from a year earlier and by 30% in May. It will ground most of its long-haul fleet. 

These moves follow a grim announcement on Friday from Delta Airlines, who announced that they would cut capacity by 40% in the coming months — the largest cut in its history — freeze hiring, park 300 aircraft and defer deliveries of new orders. It will also ask employees to take unpaid leave to help preserve cash.

The speed of the demand fall-off is unlike anything ever seen in the industry. With the mortality and debilitation path of the coronavirus unknown and impossible to predict, and with Boris Johnson in the UK today saying that the UK is still "a few weeks" behind the worst-hit countries of China and Italy, the capacity slump in Europe - and the travel bans - only seem to set to get worse. 

We are in unchartered territory. 

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