Coronavirus pandemic has clipped wings of global air travel

The rapid and global spread of Covid-19 has dealt a stunning blow to the airline and aerospace industries. The advent of the virus has hastened the death of the Boeing 747 and the Airbus 380. Delta is losing US$60 million a day. With about 40 large and mid-size airlines now having cash-flow challenges, an aviation consultancy estimates that, by the end of this month, up to half of the 800 airlines around the world could face technical insolvency.

Leasing companies contracted to the major airlines could also face bankruptcy as the crisis drags on. The domino effect will result in a cataclysmic set of events that will change the face of aviation forever (“US$2 trillion loss estimated for aviation-related industries worldwide”, April 2).

After the September 11 terrorist attacks, revenues from the airline industry fell by US$23 billion, nowhere near the forecast loss of US$314 billion this year due to the coronavirus. When the oil war between Russia and Saudi Arabia subsides, how will airlines cope with new higher oil prices?

Prudent investors will be hesitant to buy stocks in the airline industry, as 60 per cent of the fleet – 16,000 passenger aircraft – is parked while others prematurely head for the metal graveyard to be broken up.

 Once aircraft are mothballed, bringing them back on stream after the crisis is over is a monumental logistical and financial task. Ensuring they are flight-ready will require time, skill and the necessary clearance from global aviation authorities.

Recent figures have laid bare the unprecedented collapse of global aviation. The United Arab Emirates, a global aviation hub, grounded all passenger flights from March 24. Hundreds of thousands are set to lose their jobs, including pilots, cabin crews, mechanics and many others associated with the airline industry.

The airlines most in danger of going under in a cash crunch

Covid-19 has ended the 20-year boom in global aviation. In one month, it clipped US$175 billion in market value from the US aerospace industry alone. Boeing shares are at their lowest level since 2017.

Since 2008, airlines spent US$1.15 trillion in purchasing new aircraft from Boeing and Airbus. Those golden years will fade into history, as the massive glut in aircraft results in huge cancellations. This deadly plague has undoubtedly been a black swan event for global aviation.

Farouk Araie, Johannesburg