Airline industry braces for lengthy recovery from coronavirus crisis

SYDNEY/WASHINGTON (Reuters) – International seat capacity has dropped by almost 80% from a year ago and half the world’s airplanes are in storage, new data shows, suggesting the aviation industry may take years to recover from the coronavirus pandemic.

Carriers including United Airlines Holdings Inc (UAL.O) and Air New Zealand Ltd (AIR.NZ) have warned they are likely to emerge from the crisis smaller, and there are fears others may not survive.

“It is likely that when we get across to the other side of the pandemic, things won’t return to the vibrant market conditions we had at the start of the year,” said Olivier Ponti, vice president at data firm Forward Keys.

“It’s also possible that a number of airlines will have gone bust and uneconomic discounts will be necessary to attract demand back,” he said in a statement.

ForwardKeys said the number of international airline seats had fallen to 10 million in the week of March 30 to April 5, down from 44.2 million a year ago.

Data firm OAG said that several years of industry growth had been lost and that it could take until 2022 or 2023 before the volume of fliers returns to the levels that had been expected for 2020. Cirium, another aviation data provider, said about half of the world’s airplane fleet was in storage.

“While many of these will be temporary storage, many of these aircraft will never resume service,” Cowen analyst Helane Becker said in a note to clients. “We believe the airline industry will look very different when we get to the other side of this.”

Planemakers are looking at drastic cuts in wide-body production amid a slump in demand for the industry’s largest jetliners, manufacturing and supplier sources said.

Deliveries of long-range jets, such as the Boeing Co (BA.N) 777 or 787 and Airbus SE (AIR.PA) A350 or A330, have been particularly badly hit as airlines seek deferrals and many withhold progress payments.

“Governments need to ensure that airlines have sufficient cash flow to tide them over this period,” said Conrad Clifford, Asia-Pacific vice president at the International Air Transport Association.

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