NO INDUSTRY HAS been more battered by covid-19 than air transport. With people wary of confined spaces—and country after country imposing travel bans—passenger numbers have nosedived, and with them airline revenues. The estimate of $113bn in lost sales, which the International Air Transport Association (IATA) made on March 5th, already looks rosy. The trade body says that the world’s carriers may need $200bn in state aid to stay aloft.
Plenty were stalling before the pandemic. Of the 120 airline companies ranked by IATA only around 30 made money in 2017 and 2018. Last year the biggest half-dozen in Europe earned the bulk of the $7bn in profits there, calculates Citigroup, a bank. Many firms had borrowed heavily to buy planes which the virus has grounded. The 90-odd that are in the red have on average six times as much net debt (adjusted for aircraft leases) as EBITDAR (a measure of airline profits). In January the typical carrier had enough cash to cover between 50% and 80% of short-term liabilities and about two months of revenues, IATA says (see chart). Three-quarters could not cover costs beyond three months—if that.
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