IATA upgrades passenger revenue downfall to $252 billion
The International Air Transport Association (IATA) released its latest outlook on the current situation in the industry, struggling with the crisis due to the coronavirus COVID-19 outbreak.
The situation has worsened in terms of the number of revenue airlines are set to lose up until the end of 2020. Initially, the governing body predicted a drop of $29.3 billion in February 2020, based on the fact that the impact of the outbreak of COVID-19 was still confined to Asia-Pacific.
However, as the outbreak has proceeded to spread to other parts of the world, IATA has now increased the lost revenue prediction twice. On March 5, the organization predicted a $113 billion drop in passenger revenues compared to 2019. Now, the downfall in revenues was upgraded to $252 billion, according to a release issued by IATA.
Furthermore, IATA predicts a drop of 65% in capacity in Q2 2020, compared to the same period last year. All in all, the organization anticipates that globally airlines will deploy fewer seats when compared to 2019.
While the good news is that bookings have increased in the Chinese domestic market by 5%, worryingly, most airlines have around two months of cash liquidity to continue operating. With global demand for travel falling, the cash flows of airlines are severely disrupted, which could result in several airlines closing their doors for the final time.
The COVID-19 outbreak already contributed to the downfall of several airlines, with the latest being Flybe and Compass Airlines, two regional carriers based in the United Kingdom and the United States, respectively.
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