Coronavirus Affected By Airlines Could Exceed $ 100 Billion, Flybe Collapses

LONDON / SINGAPORE (Reuters) – Coronavirus outbreak could cost passenger airlines up to $ 113 billion in lost revenue this year, industry body warned more three times a screening made just two weeks ago as the virus continues to spread. the world.

The International Air Transport Association (IATA) warning came as the British regional carrier Flybe became the first major victim of the decline in travel demand due to the crisis and Norwegian Air canceled his profit forecast for this year.

Airlines Around The World Rush To Cut Flights And Costs, Announce A Profit Hit, As A New Virus That Begun In China Spreads, Fearing A Pandemic That Could Plunge The Economy 39; world economy in recession.

As a sign of the difficulties this creates for airlines, a Turkish Airlines jet (THYAO.IS) was brought back to Istanbul without passengers on board Thursday on orders from Singapore after a passenger who arrived on the same plane on Tuesday tested positive for the virus.

IATA predicts that crisis airline passenger revenue losses could range from $ 63 billion to $ 113 billion this year, depending on the spread of the virus. On February 20, he planned a $ 29 billion hit.

Global airline industry revenues totaled $ 838 billion in 2019, according to IATA data.

The COVID-19 virus has killed more than 3,000 people and infected tens of thousands more, mainly in China. But the disease has now spread to more than 60 other countries, resulting in multiple travel and other restrictions.

Among the last events to be canceled, the World Congress on Air Traffic Management in Madrid, scheduled for March 10 to 12.

& # 39; Inevitable & # 39;

The failure of the British regional airline Flybe comes less than two months after a rescue agreement for the company was agreed by its owners and the British government.

Despite its commitment to improve regional transport links, the British government has abandoned this agreement due to the scale of the blow at the request of the virus epidemic.

"All the flights were grounded and the British company ceased trading immediately," said Flybe when entering administration, a form of protection from creditors.

The failure of the airline, which has long struggled against losses, not only puts around 2,400 jobs at risk, but could also see some UK regional airports struggling.

Flybe carried approximately eight million passengers per year between 81 airports and was part of a consortium of Virgin Atlantic, Stobart Group (STOB.L) and Cyrus Capital.

Its collapse came a day after Ryanair (RYA.I) CEO Michael O’Leary predicted that the coronavirus crisis would lead to bankruptcies.

"It is inevitable in the next two weeks, we will see more failures," O’Leary told Reuters, citing Flybe as one of the most vulnerable.

"Where you have a massive short-term drop in bookings, you have a massive short-term drop in cash flow," he said on the sidelines of an industry event in Brussels. Tuesday.

CANCELLATIONS

Norwegian Air (NWC.OL), a pioneer in low-cost transatlantic travel, has also been struggling for years due to fierce competition and the heavy debts accumulated during rapid expansion.

The company, which has repeatedly raised cash from shareholders to continue operations, said on Thursday that it was canceling its profit forecast for 2020, which had predicted a return to profit after three years of losses, due declining travel demand and disruption caused by the virus.

He also announced that he would cancel 22 long-haul flights between Europe and the United States from March 28 to May 5, with routes from Rome to Los Angeles, Boston and New York registering a reduced number of departures.

In addition, it will reduce the number of flights between London and New York, flying twice, rather than three times, on certain days.

"At this point, it is too early to fully assess the impact on our business," he said in a statement.

Norwegian stocks, which lost more than 50% of their value this year, fell more than 5% to 1000 GMT.

Willie Walsh, outgoing CEO of British Airways' parent company, IAG (ICAG.L), also warned governments this week against any temptation to support airlines already in trouble.

"I do not think it is appropriate for governments to provide state aid to airlines that were not viable before the coronavirus," he said at the rally in Brussels. .