- With about 70 percent of global capacity idled, the airline industry stands to lose $314 billion in ticket sales this year, according to the International Air Transport Association.
The coronavirus outbreak has upended commercial aviation, with consequences that are not fully realized. The airline trade group, International Air Transport Association(IATA), anticipates that the world’s air carriers will see this year’s revenues drop by more than half, and a number of industry watchers predict that it will be years before air travel returns to 2019 levels.
With about 70 percent of global capacity idled, the airline industry stands to lose $314 billion in ticket sales this year, according to the International Air Transport Association, reported Bloomberg.
As per the report, there’s uncertainty about which airlines will survive, how many people will want to fly after a pandemic, and what kind of new precautions airlines may take in the future.
This uncertainty about the survival of airlines has posed a huge risk to the entire aviation industry especially the low-cost carriers. Among the airlines most at risk are Europe's famously cheap flights, which regularly let people fly for the equivalent of just a few dollars, and for some underpin their entire way of life.
One of the examples of the low-cost carriers(LCCs) at risk is that of Ryanair which is one of the major LCCs.The carrier claims about having one of the strongest balance sheets in the industry with cash of €4.1bn, after recently raising £600m under the UK’s Covid corporate financing facility.
Despite having a relatively stronger balance sheet, Ryanair is considering base closures, cutting 3,000 jobs – mainly pilots and cabin crew – and reducing pay by 20% because the airline isn’t expecting the demand and passenger levels to rise. The measures are underway, including discussions with unions. Michael O’Leary who’s the airline’s Chief Executive said the airline would look first at loss-making bases in the UK, Germany, and Spain for closure.
As per reports, the Irish carrier forecast a loss of more than €200m for the first quarter, followed by a smaller loss in the second quarter. It expects to carry fewer than 80 million passengers this year, almost half its original 154 million targets.
Meanwhile, the CEO of Ryanair Michael O’Leary has accused the UK government of mismanaging the Covid-19 crisis, as the airline halved its passenger forecast for this year and revealed it had tapped Britain’s corporate loan program.
O’Leary described the UK’s planned introduction of a 14-day quarantine period for travelers arriving from abroad as “idiotic and unimplementable” as it will further discourage people from traveling into the U.K. and will further damage the airlines as it’ll make the business unsustainable.