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Epidemic could cost airlines US$113b in lost revenues: Iata
THE coronavirus epidemic could cost passenger airlines up to US$113 billion in lost revenue this year, an industry body warned on Thursday, more than three times a projection it made just two weeks ago as the virus continues to spread around the world.
The warning from the International Air Transport Association (Iata) came as British regional carrier Flybe became the first big casualty of the slump in travel demand due to the crisis and Norwegian Air scrapped its profit forecast for this year.
Airlines across the world are rushing to cut flights and costs, and warning of a hit to earnings, as the virus that started in China spreads, raising fears of a pandemic that could plunge the global economy into recession.
In a sign of the difficulties this is creating for airlines, a Turkish Airlines jet was flown back to Istanbul without any passengers on board on Thursday on orders from Singapore after a passenger who had arrived on the same plane on Tuesday tested positive for the virus.
Iata projected the hit to passenger airlines in lost revenue from the crisis could be anywhere between US$63 billion and US$113 billion this year, depending on the virus's progression.
On Feb 20, it had forecast a hit of US$29 billion. Global airline industry revenues totalled US$838 billion in 2019, according to Iata data.
The Covid-19 virus has killed more than 3,000 people and infected tens of thousands more, mostly in China. But the disease has now spread to more than 60 other countries, leading to multiple travel and other restrictions.
The failure of British regional airline Flybe comes less than two months after a rescue deal for the company was agreed by its owners and the UK government. Despite its commitment to improving regional transport links, the British government has backed away due to the scale of the hit to demand from the virus outbreak.
The failure of the airline, which has long struggled with losses, not only puts around 2,400 jobs at risk but could also see some regional UK airports struggle.
Norwegian Air, a pioneer of low-cost transatlantic travel, has also been struggling for years due to cut-throat competition and heavy debts built up during rapid expansion.
The company, which has repeatedly raised cash from shareholders to stay in business, said on Thursday it was scrapping its 2020 earnings guidance, which had predicted a return to profit after three years of losses. REUTERS