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The passenger airline business could see losses of between $63 billion and $113 billion due to the novel coronavirus depending on the severity and length of the outbreak, the International Air Transport Association (IATA) said in an updated analysis published Thursday.

Alexandre de Juniac, IATA’s Director General and CEO, said the outbreak amounted to a “crisis” for the industry.

The IATA had previously published an estimate on Feb. 20 that lost revenue would hit $29.3 billion, but that was based on a scenario confining the fallout to markets associated with China. “Since that time, the virus has spread to over 80 countries and forward bookings have been severely impacted on routes beyond China,” the industry body said.

Airlines across the world have begun canceling flights due to lower demand and complicated travel restrictions of coronavirus, with airlines outside of Asia suffering amid a global pullback.

On Thursday, Norwegian Air announced it would cancel 22 long-haul routes between Europe and the U.S., between March 28 and May 5. Flybe, a British regional airline, grounded all flights and entered bankruptcy protection on Thursday, though the airline had been struggling before the novel coronavirus outbreak began.

The two main airlines in the United Arab Emirates, Etihad and Emirates, have both asked employees to move up leave in light of the slowdown in business. Emirates even suggested employees take unpaid leave for up to a month at a time because of “the availability of additional resources” according to Chief Operating Officer Adel al-Redha.

IATA said that the range of its newest estimate was based on the different scenarios, with the lower estimate reflecting the costs if coronavirus is contained in current markets with over 100 cases as of March 2 and the higher end if a the outbreak spreads further.

The analysis noted that financial markets were already pricing in a shock to industry revenue greater than its worst prediction, with airline share prices falling nearly 25 percent since the outbreak began.

Though falling oil prices may help airlines offset some of the cost, IATA suggested the industry would need government help.

“Governments must take note. Airlines are doing their best to stay afloat as they perform the vital task of linking the world’s economies. As governments look to stimulus measures, the airline industry will need consideration for relief on taxes, charges and slot allocation,” de Juniac said.

2020-03-05 11:33:00Z
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