Revenue losses to reach $4.5 billion for Philippine carriers

MANILA, Philippines — Local airlines are seen taking a deeper revenue hit this year amid the worsening impact of the coronavirus disease 2019 pandemic in the Asia- Pacific region.

Based on the latest estimates from the International Air Transport Association (IATA), passenger demand in the country could decline by 47 percent this year, resulting in a revenue loss of $4.48 billion.

These figures are worse than IATA’s March assessment for the Philippines which estimated a 36 percent year-on-year drop in passenger demand that would translate to a revenue loss of $3.51 billion.

Potential job losses could now hit as much as 548,3000, up from previous estimates of 419,800 job losses.

IATA’s updated analysis shows that the COVID-19 crisis would see global airline passenger revenues drop by 55 percent or  $314 billion in 2020.

According to IATA, airlines in Asia Pacific would see the largest revenue drop of $113 billion and a 50 percent decline in passenger demand.

The estimates are based on a scenario of severe travel restrictions lasting for three months, with a gradual lifting of restrictions in domestic markets, followed by regional and intercontinental.

“The situation is deteriorating.  Airlines are in survival mode. They face a liquidity crisis with a $61 billion cash burn in the second quarter. We have seen the first airline casualty in the region. There will be more casualties if governments do not step in urgently to ensure airlines have sufficient cash flow to tide them over this period,” IATA’s regional vice president for Asia-Pacific Conrad Clifford said.

Clifford identified the Philippines as one of the priority countries that need to take action.

IATA is calling for a combination of direct financial support loans, loan guarantees, support for the corporate bond market, and tax relief.

“Providing support for airlines has a broader economic implication. Jobs across many sectors will be impacted if airlines do not survive the COVID-19 crisis. Every airline job supports another 24 in the travel and tourism value chain,” Clifford said.

The Air Carriers Association of the Philippines has written the government to request for assistance for the airline industry in the form of relief on current working capital credit lines, emergency lines of credit for six months, longer term facility, and waiver of all navigational and airport charges.

The group composed of Philippine Airlines, Cebu Pacific, AirAsia Philippines, PAL Express, and Cebgo said they are currently “facing an existential threat to their survival” and as such, are in urgent need for government intervention to mitigate the impact of the COVID-19 pandemic on their operations.