The coronavirus has created havoc across the world. Amongst the global industries that have been affected the most, is the air travel industry. This is because international travel has been halted with countries locked down to fight the COVID-19 pandemic.
The crisis for airlines has deepened as more and more airlines ground its fleet. Experts are fearing the industry may not survive coronavirus pandemic without government aid to offset nosediving demand.
Several airlines can potentially go bankrupt soon and Pakistan International Airlines (PIA) can also be one of them.
PIA on verge of bankruptcy
According to an article published by bloomberg.com, a PIA spokesperson has stated that the airline’s debt and losses have become nearly impossible for the organization to handle alone.
Some of the options suggested to the government to maintain the sustainability of PIA include the issuance of long-term bonds and a debt-to-equity swap. Parhlo tried to get a version from PIA in this matter, however, the national carriage did not respond.
It is also important to note that on Wednesday Minister for Aviation Ghulam Sarwar Khan also said that PIA had incurred losses of nearly Rs 4 billion as a result of the COVID-19 pandemic. This could rise to Rs 6 billion by the end of this month.
The aviation minister added, PIA operated 27 special flights for bringing back 8824 Umrah pilgrims from Saudi Arabia. Moreover, Pakistanis stuck in the United Arab Emirates (UAE) and Qatar were also brought back to the country through special flights.
On March 21, PIA announced to suspend its international flight operations. The international flight operation is also suspended until today. The domestic flights, however, are continuing as per the schedule.
Global air travel industry and COVID-19
According to the International Air Transport Association (IATA), most airlines could lose a quarter of a trillion dollars in revenue this year. Many carriers could well go bankrupt by end of May if they are unable to find support.
The coronavirus could affect every airline from budget operators to national flag carriers. Moreover, aircraft manufacturers and their vendors are also under massive pressure. Boeing Co has called for $ billions in state support. Airbus SE has extended its credit line and canceled its dividend.
Governments across the world are also discussing with global aviation organizations regarding financial support. Airlines such as Delta Air Lines Inc, with financial backing from billionaire investor Warren Buffett, will have direct access to other avenues for liquidity.
Akbar Al-Baker, CEO of Qatar Airways, has warned that various airlines may well go bust. This would limit their scope for potential takeovers. Baker said, “People who were bragging about not taking state aid and being independent are now themselves all over the world asking for state aid.”
What do you think of the story? Tell us in the comments section below.