If the coronavirus ends up resulting in a contraction in passenger growth for Asian carriers, it will be reminiscent of the decline that took place at the height of the SARS virus outbreak in 2003.
That was the only decline for regional airlines in nearly two decades.
European stock markets are in the red at the start of trading:
- FTSE 100 is down -0.6%
- German DAX is down -0.6%
- French CAC 40 is down -0.5%
- Spain’s IBEX is down -0.5%
Introduction: Airline body says coronavirus to cost industry nearly $30bn
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Airlines have been told to brace for a near $30bn (£23bn) hit to revenues in 2020, as fears over the coronavirus outbreak lowers passenger demand for air travel.
The International Air Transport Association (IATA) trade body has released initial forecasts showing a potential 13% loss in passenger demand for airline carriers in Asia-Pacific. That’s not great news for the region’s airlines, which were only expected to see 4.8% growth for full year. That translates into a $27.8bn revenue loss, the bulk of which will be shouldered by Chinese carriers.
Outside the region, global airlines are forecast to lose a further $1.5bn, assuming the loss of demand is focused to markets linked to China.
This would bring total global lost revenue to $29.3bn.
Alexandre de Juniac, IATA’s Director General and CEO, said:
The sharp downturn in demand as a result of COVID-19 will have a financial impact on airlines—severe for those particularly exposed to the China market. We estimate that global traffic will be reduced by 4.7% by the virus, which could more than offset the growth we previously forecast and cause the first overall decline in demand since the Global Financial Crisis of 2008-09.
Airlines are making difficult decisions to cut capacity and in some cases routes. Lower fuel costs will help offset some of the lost revenue. This will be a very tough year for airlines.
Elsewhere, it’s PMI central, so buckle up and get ready for some industry analysis.
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- 9am GMT: Eurozone composite PMI, manufacturing PMI, services PMI for February
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