The impact of coronavirus and government travel restrictions could bankrupt most of the world's airlines by the end of next month, the CAPA Centre for Aviation has warned.
The consultancy firm said many airlines have probably already been driven into technical bankruptcy thanks to diminishing cash reserves as flights are grounded and operate less than half full. It said that demand is drying up in ways that are “completely unprecedented“, with no sign of a recovery on the horizon.
“By the end of May 2020, most airlines in the world will be bankrupt,“ the firm said. “Coordinated government and industry action is needed now if catastrophe is to be avoided. Each nation is adopting the solution that appears best suited to it, right or wrong, without consideration of its neighbours or trading partners.“
Meanwhile, the International Energy Agency (IEA) expects oil demand to fall by 90,000 barrels a day in 2020 thanks to the deadly disease, and said that an “extraordinary degree of uncertainty“ hangs over the potential outcomes.
Stock markets have crashed, and the short-term outlook for the oil market will depend on how quickly and successfully governments move to contain the outbreak. This has led some analysts to believe that this year could see the first fall in global emissions since the financial crisis, but IEA executive director Fatih Birol said this is no reason to cheer.
“There is nothing to celebrate in a likely decline in emissions driven by economic crisis because, in the absence of the right policies and structural measures, this decline will not be sustainable,“ he added.
BloombergNEF has downgraded its expectations for the solar, battery and electric vehicle markets, and economists believe a global recession is imminent. The British Standards Institute, meanwhile, said that coronavirus has highlighted the fragility of global supply chains, and that business continuity plans must consider all possible natural disasters, including outbreaks.
“As companies are concerned over their supply chains in Asia amid coronavirus, industries must consider the corporate social responsibility risks still rife in China and the region, including child labour, forced labour, and poor working conditions,“ it said. “Natural disasters, invasive species and diseases on that continent in 2019 caused destruction of infrastructure and agriculture, all underscoring the need for businesses to develop response plans.“
