With airlines across the globe remaining shut in the wake of coronavirus lockdown, the debt mount up will weigh heavily on carriers and may even hamper recovery.
With airlines across the globe remaining shut in the wake of coronavirus lockdown, the debt mount up will weigh heavily on carriers and may even hamper recovery. “The airline industry’s global debt could rise to $550 billion by year-end. That’s a $120 billion increase over debt levels at the start of 2020,” the International Air Transport Association (IATA) said in a statement on Tuesday. This amounts to about 28% jump in airline debts. However, these airlines can survive the onslaught of the coronavirus pandemic if governments provide financial aid. The airline industry had started to show cracks as soon as the travel curbs were imposed. A UK-based airline Flybe had also collapsed as revenues started to dry up.
“Government aid is helping to keep the industry afloat. The next challenge will be preventing airlines from sinking under the burden of debt that the aid is creating,” Alexandre de Juniac, IATA’s Director General and CEO, said. Governments around the globe have already committed $123 billion in financial aid to the airline industry.
Aviation industry is one of the worst hit sectors due to the coronavirus pandemic and back home as well, the industry has been struggling to keep up with drying revenues. Many domestic carriers were forced to cut employee salaries and ask senior management to take compulsory leave without pay for several days as the industry looked to save up on costs.
Meanwhile, domestic carriers have resumed flight operations albeit at reduced capacities as the government eased restrictions in the lockdown phase 4. “58,318 passengers flew to their destinations on 832 flights on the first day, 25th May till midnight … These numbers are all set to soar higher,” Minister of Civil Aviation Hardeep Singh Puri tweeted recently. He had earlier said that his heart goes out to people who are suffering due to coronavirus crisis and had assured that the government will lift flight restrictions soon.