US airlines fear travel ban; Canadian carriers seek state aid
THERE is talk among airline analysts and industry experts that the US government may close all airspace to passenger carriers shortly, permitting only cargo flights, according to Boeing
19 March 2020 - 19:00
And while some airlines consider switching passenger flights to cargo-only flights, Airlines for America (A4A) that represents 11 of the biggest US passenger and cargo carriers anticipates its member airlines will experience a drop in liquidity of between US$18 billion and $26 billion in the first half of the year.
In this worst-case scenario, 'all seven of A4A passenger carriers run out of money completely sometime between June 30 and the end of the year,' the association said.
'Making matters even more urgent, credit card companies would likely begin withholding cash from sales before the carriers actually run out of money, effectively causing carriers to run out of money earlier than June 30.'
The industry association also warned: 'A 30-day domestic travel ban would worsen our optimistic scenario by $7 billion and our pessimistic scenario by $10 billion.
The airline industry in the US employs 750,000 people, and many carriers have already announced measures to protect cash reserves. These include offering voluntary unpaid leave to employees, grounding portions of their fleets and reducing new investments or postponing delivery of aircraft. Some airlines have started to furlough pilots, and have cut capacity in half.
The Air Transport Association of Canada (ATAC), which represents smaller Canadian airlines, has also made an 'urgent appeal for immediate government financial support to the air transport industry of Canada as it deals with the COVID-19 pandemic', according to a 16 March letter from the group to the Canadian government.
ATAC's members include Porter Airlines, Flair Airlines, cargo operator Cargojet and Chorus Aviation, which owns Air Canada regional-aircraft operator Jazz Aviation.
'Government financial assistance is urgently needed to avert a crisis in the aviation industry,' the letter states. 'ATAC expects that any financial aid package for the air transport industry would be made available to all air carriers. This is the only acceptable way to maintain a level playing field in such a difficult time.'
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