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Most airlines will be bankrupt by May, industry analyst warns

CAPA Centre for Aviation warns that coordinated government and industry action is needed now.

An airline industry analyst group warns that without coordinated government and industry action now, most of the world's airlines will go bankrupt by May amid the global economic slowdown from the coronavirus pandemic.

Australia-based CAPA Centre for Aviation says many airlines have probably already been driven into technical bankruptcy.

"Cash reserves are running down quickly as fleets are grounded and what flights there are operate much less than half full," CAPA wrote on its website.

"Forward bookings are far outweighed by cancellations and each time there is a new government recommendation it is to discourage flying. Demand is drying up in ways that are completely unprecedented. Normality is not yet on the horizon," CAPA added. 

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Last week, President Donald Trump issued a travel ban from most of Europe, with the exception of Americans returning home. That is being expanded to include the United Kingdom and Ireland starting Monday night.

CAPA described that travel ban as "essentially rubbing salt into the wounds of the country's airlines." The group was also critical of governments who were not working together on how to tackle the virus nor the impact on travel.

On Monday morning, three global airline alliances wrote in an open letter asking governments worldwide to prepare for the "broad economic effects from actions taken by states to contain the spread of COVID-10, and to evaluate all possible means to assist the airline industry during this unprecedented period." The groups Skyteam, Oneworld and Star Alliance represent almost 60 airlines round the world.

CAPA predicts government-funded airlines, such as those in China, are likely to remain solvent. It also said major U.S. airlines have lobbying power and can access government funding.

In a letter to employees Sunday, the president and the CEO of United Airlines warned that the airline would be cutting approximately 50% of its flights in April and May, and that they expected cuts to last into summer.

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