Airlines losing P150-b revenues

Philippine airlines are expecting revenue losses of P150 billion in the second quarter of the year due to the coronavirus disease 2019 (COVID-19) pandemic.

“When we were operating and still had revenue for January, February and half of March, it [revenue loss] was already P5 billion,” said Air Carriers Association of the Philippines vice president and executive director Robert Lim.

“The fixed cost to pay even if you don’t fly is P7 billion per month” Lim added.

The ACAP, which includes AirAsia Philippines, Cebu Pacific, Philippine Airlines and their affiliates, recently discussed with senators the financial support requirements of the aviation sector to operate sustainably once the community quarantine period is lifted.

ACAP earlier requested the government to provide a credit guarantee scheme (not cash) to cover the banking sector’s loans and credit lines, most of which are secured with collaterals, in order to remove the aversion to the poor credit risk of the airline industry under the present operating environment.

The group sought a long-term facility at attractive rates or a guaranty facility to enable airlines to restructure debt to a more manageable level and give them leverage to negotiate better terms from aircraft lessors, lenders and creditors to ensure a successful recovery plan.

The International Air Transport Association said in its latest report the pandemic could cost 548,300 jobs in the Philippine air sector this year and cut the industry’s revenues to $4.48 billion.

It could also affect travel demand by as many as 28.85 million passengers from an earlier projection of 21.87 million passengers.

Globally, according to IATA, the revenue drop amounted to $113 billion in 2020 from an earlier estimate of $88 billion.

The estimates are based on a scenario of severe travel restrictions lasting for three months, with a gradual lifting of restrictions in domestic markets, followed by regional and intercontinental.

Conrad Clifford, IATA’s regional vice president for Asia-Pacific, said the global airline industry was in survival mode.

“There will be more casualties if governments do not step in urgently to ensure airlines have sufficient cash flow to tide them over this period,” Clifford said.

IATA is calling for a combination of direct financial support, loans, loan guarantees and support for the corporate bond market and tax relief.

“Providing support for airlines has a broader economic implication. Jobs across many sectors will be impacted if airlines do not survive the COVID-19 crisis. Every airline job supports another 24 in the travel and tourism value chain. In Asia-Pacific, 11.2 million jobs are at risk, including those that are dependent on the aviation industry, such as travel and tourism,” Clifford said.

Aviation think tank Center for Asia Pacific Aviation earlier predicted most airlines in the world would be bankrupt by the end of May because of COVID-19.

Topics: Air Carriers Association of the Philippines , ACAP , Philippines Airlines Inc. , Air Philippines Corp. , Cegbo Inc. , Cebu Air Inc. , Philippines AirAsia Inc. , coronavirus disease 2019 , COVID-19 , enhanced community quarantine
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