The Entire Global Airline Industry Could Go Under by the End of Next Month

The COVID-19 pandemic is changing the world as we know it, including endangering the viability of multiple global industries.

So far, the industry hardest hit by COVID-19 panic is unquestionably the airlines.

After 9/11, the airline industry in the United States was grounded for several days. Now, many airlines are worried about going out of business completely.

Business travel effectively has halted. Planes fly nearly empty. More than half of Americans are seriously rethinking their international vacation plans because of COVID-19. A recent USA Today/Ipsos poll showed that half of Americans would not even get on a plane.

The airlines meanwhile are overwhelmed with hundreds of thousands of requests for refunds by consumers due to COVID-19 panic. Governments worldwide are closing their borders and disrupting flight plans.

Several airlines have ceased operations or have begun to laying off employees.

UK-based budget airline EasyJet grounded its fleet of 331 planes during the final week of March 2020. The company does not know when it will resume operations. Virgin Atlantic is laying off more than 85% of its employees.

The International Air Transport Association (IATA) recently stated that unless governments intervene financially, the global airline industry would lose $252 billion in 2020 alone. That is a 44% revenue drop from the same time last year.

The organization, which represents more than 290 airlines said an “apocalypse” in the airline industry will occur if nothing changes. That apocalypse may occur sooner than later.

Technically bankrupt

The CAPA Centre for Aviation, an aviation consultancy based in Sydney, Australia, said that the global airline industry could be officially bankrupt by the end of May 2020.

According to CAPA, most airlines are already broke, rapidly depleting their finances, grounding their fleets, or flying planes at half-capacity or less.

CAPA argues that most airlines already are technically bankrupt. “Coordinated government and industry action is needed now if catastrophe is to be avoided,” CAPA said in a statement.

The recently ratified $2 trillion stimulus bill, designed to alleviate the economic trauma caused by COVID-19, includes a $60 billion bailout for the airline industry.

The bailout is to be shared evenly by all 58 air carriers in the United States. Since the industry stands to lose $252 billion this year, the economically stimulating effect of the bailout may be minimal.