Airlines running out of cash as Covid-19 restrictions ground many flights

More than 75 per cent of airlines globally have cash to cover costs of less than three months, Brian Pearce, the chief economist at global airlines body IATA, said on Tuesday as global aviation traffic has drastically reduced in the past few weeks due to the coronavirus pandemic.

"We are concerned that large parts of the aviation industry might not be there as the airlines are running out of cash," Pearce told reporters in a conference call.

More than 7,100 people have died globally till now due to COVID-19.

Many countries across the world have partially or completely sealed their borders, causing major airlines across the world to ground most of their planes.

 

"More than 75 per cent of airlines we have looked at had actually less than three months of cash to cover their costs," Pearce said.

The International Air Transportation Association (IATA) has approximately 290 airlines that account for more than 82 per cent of global air traffic.

Pearce stated that even though China has started recovering, the global recovery will take a long time.

"Can the airlines last that long before they run out of cash? That is the question to answer," he told the reporters.

Alexandre De Juniac, Director General of IATA, told the reporters that the aviation industry would need up to USD 200 billion of aid from the government to survive.

Juniac stated that the aviation industry will see restructuring and consolidation in the coming days but some "airlines will disappear" unfortunately.