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Is the Airline Industry Collapsing Due to Coronavirus Pandemic?

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The impact of the coronavirus has hit the airline industry hard as many countries, including the U.S., have imposed a travel ban

Besides that, people have also stopped traveling amid the fear of coronavirus, which has forced the airlines to cancel most flights and reduce its staff as well.

Norway's largest airline, Norwegian Air  (NAS) , said that it is canceling 85% of its fights, temporarily laying off 90% of its staff.

“It is indeed with a heavy heart we have to temporarily lay off more than 7,300 of our colleagues, but we unfortunately have no choice," said Norwegian CEO Jacob Schram, in a statement. "However, I want to emphasize that this is temporary, because when the world returns to normalcy my goal is to keep as many of our dedicated colleagues as possible."

Needless to say, U.S. airlines are also hit hard by the coronavirus, which is why, they are seeking an aid package from the federal government for more than $50 billion.

Does this mean that airline industry is on the brink of collapse?

A Sydney-based consultancy CAPA says, "By the end of May-2020, most airlines in the world will be bankrupt. Coordinated government and industry action is needed - now - if catastrophe is to be avoided.”

“As the impact of the coronavirus and multiple government travel reactions sweep through our world, many airlines have probably already been driven into technical bankruptcy, or are at least substantially in breach of debt covenants. Cash reserves are running down quickly as fleets are grounded and what flights there are, operate much less than half full,” CAPA adds.

Many U.S. airlines, such as American Airlines  (AAL)  and United Airlines  (UAL) , have already started reducing its flights. 

In the U.K., besides cutting the flights, Virgin Atlantic has also asked staff to take eight weeks unpaid leave.

The airline industry supports over 10 million jobs across the U.S. and 65.5 million jobs around the world.

To know more about how airlines are dealing with the crisis, watch the video above.

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