'It's a perfect storm': Global airlines face extreme headwinds over coronavirus losses, request bailout

Two weeks ago, it would have sounded heretical. 

Across the globe, airlines are grounding their international fleets, restricting domestic routes, and bracing for the worst crisis ever in the aviation industry, due to the coronavirus. 

"Most of the 800 or so airlines in the world are going to fold if they have no income for three or four months," said Peter Harbison, the chairman of the Centre for Asia-Pacific Aviation, a consulting firm based in Australia. 

"It's a no brainer." 

Air Canada is suspending all but six of its international routes, down from 101, by the end of the month, and shaving 40 of its 53 routes to the U.S. CBC News learned Friday that it will lay off 5,100 members of its cabin crews.

"The restrictions on travel imposed by governments worldwide, while understandable, are nonetheless having a cataclysmic effect upon the global airline industry," said Calin Rovinescu, Air Canada's president and chief executive.

Germany's Lufthansa, a member of Star Alliance which includes partner Air Canada, is suspending 90 per cent of its flights. 

"The longer this crisis lasts, the more likely it is that the future of aviation cannot be guaranteed without state aid," said chief executive Carsten Spohr.

WestJet will end all international flights as of Sunday, and cut domestic flights by 50 per cent. 

Porter Airlines is grounding all its flights today. Air Transat will gradually suspend flights until April 30.

Sunwing Travel Group cancelled all southbound flights as of last Tuesday, but is now offering seats for free, if available, to stranded Canadians trying to return home from sun destinations.

The collapse of passenger traffic, mandated by government restrictions, will cause a cash crunch; already airlines' cash reserves are running down quickly. 

Aviation experts say the strongest airlines, many in the U.S. and Canada, with healthier balance sheets can likely survive, but smaller airlines could fail.

Airlines look for aid

 Air Canada says it will look to save $500 million by cutting costs, including through the 5,100 layoffs, deferring capital spending, and taking advantage of lower fuel costs. 

Nearly 60 global airlines, including in Air Canada, sought collective government help on Monday.

"We will be helping the airline industry, we will be helping the cruise industry," U.S. President Donald Trump said Thursday, as the administration works on a possible $1 trillion US stimulus and rescue package. 

The Canadian government says it's too early to outline a specific industry aid package. 

The airline crisis is cutting a wider swath across the aerospace industry. 

Paris's Charles De Gaulle Airport has closed two of its runways to make space for aircraft grounded by coronavirus.

Boeing, still struggling to recover from the two fatal air crashes in Indonesia and Ethiopia  which killed 346 people, is looking for government aid.  

Boeing supports a minimum $60 billion US bailout package, "including loan guarantees, for the aerospace manufacturing industry," said company spokesperson Gordon Johndroe. Without extensive assistance, in the coronavirus climate, the U.S. aviation manufacturing sector could collapse, he warned. 

'Perfect storm'

Ethiopian Airlines just marked the one-year anniversary of the crash of flight 302. In an interview with CBC News, CEO Tewolde Gebremariam said his airline has flown into "a perfect storm."

"A perfect storm is a situation whereby one risk element may not be fatal. Another risk element may not be, but when all of them put together happen simultaneously. That's a perfect storm. So unfortunately, it looks like that."

"Perfect storm: very tragic accident with Max 8, COVID-19, and too low oil price which is a very big problem for Africa's oil producing countries," he added.  

"It's a big, big, big problem."