Coronavirus/COVID-19 Causes Airlines to Face Their Biggest Crisis Since September 11

Empty jumbo planes arriving at desert airports. Masked passengers disinfecting their own seats.

The coronavirus outbreak, or Covid-19 continues to spread throughout the world and the stability of the airlines is shaken.

It has been almost 20 years since the aviation industry does not face such a serious threat.

With the terrorist attacks of September 11, 2001, air travel collapsed and the airlines took years to recover. Today there is concern that the coronavirus may have an equally disastrous impact.

Airlines are competing to reduce the costs as the Covid-19 spreads. Concern about the lower demand for travel has sent the shares to minimums that had not been seen in years.

The aviation industry was already dealing with the problems of Boeing 737 Max, which has been out of service for a year after two fatal accidents.

The exit of operations of that plane undermined some airlines of the expected growth, forced them to cancel thousands of flights and resulted in billions of dollars in losses.

The markets financiers have reacted strongly.

Airline stock prices have fallen by almost 25% since the outbreak began, some 21 percentage points more than the decrease that occurred at a similar point during the SARS crisis of 2003.

To a large extent, this fall already affects Industry revenue.

Investors consider the possibility of canceled flights, lost sales and substantial reductions in service in the coming months.

American Airlines fell 5.85% on Monday in the middle of the session, reached $ 15.04, a new low since its merger in 2013 with US Airways. Shares of the Texas-based airline fell more than 22% in the last week.

Delta Air Lines lost more 3.51% during the morning, to reach $ 44.28 per share. United Airlines fell 6.10% and Southwest Airlines lost 3.26%.

Lufthansa shares fell 7.15%, reached 10.66 euros per unit. KLM Royal Dutch Airlines fell 10.09%. IAG, fell 4.15% towards the end of the session.

The coronavirus has already caused seizures in the stock markets, shook supply chains and forced companies to dust off emergency response plans.

The steep decline in global air travel announces that the economic effects of the outbreak may be heading for a more severe phase.

US airlines are facing their biggest demand shock since the financial crisis. Travel restrictions, along with potential risks such as quarantine, affect demand.

The situation has led large companies to give up business travel, which is profitable for airlines and hotels.

Globally, airlines could lose up to $113 billion in revenue this year, the most since the financial crisis, if Covid-19 continues to expand, calculates the International Air Transport Association.

Some companies are exempting exchange rates for new reservations and have lowered rates in an effort to attract passengers, but it has been counterproductive: the measures have accelerated the fall in the shares of companies in the sector that have fallen more than the market in general.

JetBlue offered hostesses vacations without pay next month, when they plan to reduce their capacity by 5%. The New York-based airline also reduced its hiring and cancellation events.

Flight attendants who take the unpaid voluntary license will retain their health benefits and travel privileges.

United Airlines announced on Wednesday that it would reduce next month its international flights by 20% and domestic flights by 10%.

The Chicago-based airline also withdrew its financial forecasts for 2020. In addition, it postponed its day for investors, which was scheduled for Thursday.

“The coronavirus prevents providing new estimates,” the company justified.

Other airlines announced more route closures in recent days to try to mitigate the effects of COVID-19.




Source: Cambio16