Dhaka: Airlines all over the globe are expected to spend a total of USD 35 billion for ticket refunds in Q2 alone, according to the latest report of the International Air Transport Association (IATA) on the spiralling state of the aviation industry in the wake of the coronavirus pandemic.
IATA has estimated that in Q2, airlines across the world could spend USD 61 billion of their cash reserves to counteract issues caused by the COVID-19 outbreak. The association also added that demand for air travel in Q1 could drop by 71 per cent as flights are grounded.
It is also mentioned that airlines could post a quarterly net loss of USD 39 billion for the second quarter of the year, which ends on June 30. In a situation where travel restrictions last for three months, full-year demand is projected to fall by 38 per cent, with revenues plummeting by USD 252 billion compared to last year, the report further states.
“Airlines cannot cut costs fast enough to stay ahead of the impact of this crisis," said, Alexandre de Juniac, Director General and CEO, IATA.
“We are looking at a devastating net loss of USD 39 billion in the second quarter. The impact of that on cash burn will be amplified by a USD 35 billion liability for potential ticket refunds. Without relief, the industry’s cash position could deteriorate by USD 61 billion in the second quarter.”
The UAE government recently announced it would inject equity into Emirates Airline to save it from succumbing to the financial consequences of coronavirus.