It’s a ‘critical time’ for governments to help airlines hit by coronavirus, says analyst

Lufthansa aircraft stand side by side at Munich Airport.

Peter Kneffel | picture alliance | Getty Images

Airlines are pretty much facing a cash flow and liquidity crisis due to the global coronavirus outbreak and will need government support, an aviation consultant told CNBC this week. 

“We think that it is a critical time now for governments to give a hand to the airlines, and probably other players as well,” said Joanna Lu, Asia’s head of consultancy at Ascend by Cirium.

In the U.S., airlines have asked the government for more than $50 billion in aid as the health crisis continues to put pressure on the industry. The virus has infected more than 200,000 globally and killed as many as 10,000, according to data from Johns Hopkins University. Many flights have been canceled as countries implement restrictions on travel. 

“You can’t imagine how the airlines can manage themselves … majority of the industry has been grounded,” Lu said. 

When asked why airlines should be given priority over other corporations such as hotels, Ascend by Cirium’s Lu pointed to the long supply chain in the aviation industry, which includes aircraft manufacturers and airports. 

“But airlines are by far the most vulnerable. They suffer the most because they are the first in line,” she said. “If traffic’s not coming on the plane … all the supply chains will be suffering.”

While many travelers may not be able to fly for now, Nate Gatten, a senior vice president at American Airlines, said the sector needs help so that it can provide services when the outbreak ends.

“These are extraordinary circumstances, and additional support is necessary to protect jobs and ensure that the flying public can continue to rely on our industry after the crisis ends,” Gatten wrote to the airline’s employees.

Beyond aviation, other businesses such as restaurants will also be affected if tourists can’t fly, said David Kuo, co-founder of investment education firm The Smart Investor.

“Ultimately, you need to get people travelling around the place, you need to connect the world again.”

— CNBC’s Leslie Josephs contributed to this report.

Source Article