Apart from some cargo and rescue flights, most airlines around the world have grounded their planes. Most governments have imposed sever border restrictions and closure.
As a result, airlines are bleeding millions of dollars everyday. While some are trying to lower the value of their assets to survive, such as Virgin Australia and Air Mauritius, others have already gone belly up.
South African Airways is bankrupt, it has ceased paying its creditors and employees. The government intends on creating a new national airline. However, will it integrate Star Alliance? The alliance just lost one of its two African carrier members, Ethiopian being the other one.
Carriers who have struggled before the covid-19 crisis will probably go down as well.
GOVERNMENT HELP
Governments have started announcing financial packages to airlines. Air France will receive close to C$11 billion as it currently flies less than 5% of its fleet. Ryanair has been livid about government aid given to legacy carriers. Although the carrier is not against it, it’s concerned aid packages may distort competition.
Same story for Lufthansa.
The US has committed to a $56 billion bail out to its airlines. But it seems like small change for the unforeseeable future.
Al Jazeera English covered the grounding and government help extensively on their Inside Story show.
WHAT’S NEXT?
No one knows how long this crisis will last. Even if some countries are “getting out” of the crisis, two major factors will delay getting back to normal.
First, no one knows when and if second waves of covid-19 will hit and how fierce they’ll be. That’s on top of the wait time before we see an efficient vaccine.
Second, this is a global effort. All of the countries and territories of the world have to work together to beat the virus. If major destinations/countries still struggle with covid-19, airlines will not fly to them. Many planes will remain idle.
In the meantime, we will witness a number of airline bankruptcies and consolidations in the next months.
