Airlines that could Dissolve

Airlines That Might Dissolve

The Covid 19 crisis is getting deeper and taking longer than any of us could have imagined. The lack of passenger revenues is inherently a daunting challenge for airlines, they must continue to pay fixed costs such as staff salaries, aircraft maintenance, aircraft leasing costs, aircraft orders and debt servicing. As the Covid-19 pandemic continues to decimate air passenger numbers, and with no timetable for governments to reopen borders due to travel-killing quarantines many airlines risk bankruptcy as governments across the world lack the financial resources needed to support their national carriers.

Despite the restart of operations, carriers are not in the clear yet and will likely need more support from governments the International Air Transport Association (IATA) warned that the airline industry is burning through $77 billion in cash during the second half of 2020, a cash drain of almost $13 billion/month or $300,000 per minute.

The slow recovery in air travel will see the airline industry continuing to burn through cash at an average rate of $5 to $6 billion per month in 2021 and what’s worse, the industry is not expected to turn cash positive until 2022.

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