Coronavirus has caused many unforeseen events and setbacks. The lockdown of regions and travel limitation from governments caused the layoff decisions of several airlines. The aviation sector is among the most affected by the COVID-19 crisis. The Industry is going through challenging times of uncertainty. As a result most fleets are grounded and losses are growing.
Recovery of the situation can last for several years
Almost all Experts say that carriers will need two to three years to recover from the disruptions. Daniel Roeska, analyst at Bernstein, estimates that a complete recovery of the sector will last longer. While facing cash flow and liquidity crisis, airlines are in urgent demand for government support.
Actually, the International Air Transport Association (IATA) has stated that the COVID-19 pandemic could put more than 25 million jobs at risk. “In a scenario of tight travel restrictions that lasts three months, the investigation carried out by IATA estimates that even 25 million jobs related in the aviation sectors are in danger around the world,” said the organization. They estimate that the sharp drop in demand for air travel could affect the lives of around 65.5 million people who depend on the aviation industry.
Government support for airlines
The Lufthansa airline group applied for social benefits to help their 87,000 employees worldwide who are out of work due to this pandemic. This number accounted for two-thirds of its workers. Furthermore, the German Federal Employment Agency pays the worker up to 67% of the salary in these circumstances. Above all, Lufthansa has also guaranteed the ground staff and cabin staff to cover the rest, up to 90% of the salary. The company ensures that the primary goal, for now, “is to safeguard as many jobs as possible.” Lufthansa group had to leave 700 of its 763 planes on the ground due to the pandemic and requested support until the end of August.
Likewise, Nate Gatten, senior vice president at American Airlines, has claimed that the Industry needs help to continue services when the outbreak ends. “This is an extraordinary situation, and support is needed to protect jobs. Also, to ensure that the flying public can continue to rely on our industry after the crisis ends,” Gatten wrote to the airline’s employees.
Some governments are already providing financial support to airline companies. The U.S. Treasury Department stated it has released $9.5 billion in additional funds from the Payroll Support Program to U.S. Air carriers. Carriers may even require more cash as U.S. air travel demand has fallen by 95% and gives no indication of improving.