Global airline trade group says coronavirus could cost industry $ 29 billion

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TOKYO (AP) – The outbreak of the new virus threatens to wipe out $ 29 billion in revenue this year for global airlines, mostly Chinese carriers, as travel crashes around the world, according to the ‘International Air Transport Association.

The Global Airlines Trade Group said on Thursday that the virus that causes COVID-19 could lead to a 13% drop in demand from Asian carriers this year.

The contraction comes at a time when Asian airline sales were growing, the group said.

Global air traffic will be cut by 4.7% for the year, marking the first overall drop in such demand since the financial crisis of 2008 and 2009, IATA said in a statement. How profits will be affected is still unclear, he said.

Estimates predict a scenario in which COVID-19 has a “V-shaped impact”, similar to what happened during the SARS virus outbreak in 2003, with a sharp decline followed by a rapid recovery. , according to IATA.

The virus, which started in China late last year, has sickened more than 75,000 people in China, some 2,000 people have died in China. More than 1,000 cases have been discovered outside of mainland China.

International airlines including British Airways IAG,
+1.64%
, the German Lufthansa LHA,
+ 0.67%
, Australia’s Qantas and the three largest US airlines have suspended flights to China, in some cases until the end of April or May.

Cathay Pacific 293,
+ 0.43%
asked employees to take three weeks of unpaid leave to help him get through the crisis.

Travel restrictions within China and fear of illness have devastated demand for domestic flights in the rapidly growing Chinese market.

Many countries are warning people not to travel to China or are banning travelers from China, especially from the Wuhan area, at the center of the outbreak.

All over the world, people are also voluntarily reducing their travel, while some governments and health experts are urging people to stay indoors not only in China but also in South Korea and Japan to avoid becoming infected. .

“Times are tough for the global airline industry. Stopping the spread of the virus is the top priority, ”said Alexandre de Juniac, Managing Director and CEO of IATA. “It will be a very difficult year for the airlines. ”

Analysts at Cowen, a U.S. investment bank and financial services company, noted that IATA may underestimate the impact on travel to Asia outside of China, noting recent reports of dozens of case in South Korea.

“While still relatively small and too early to say if it will spread further, we see this as a significant negative data point on the global containment of the virus,” the Cowen report said.


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