William Walsh, The International Air Transport Association (Iata) director-general, on Monday praised the role of the Middle East governments to support their carriers to cope up with the Covid-19 pandemic.
“I’ve talked positively about the attitude of governments in the Middle East and their contribution has been significant,” said Walsh.
The Dubai government had pumped $2 billion (Dh7.35 billion) into Emirates Airline as equity when the Covid-19 pandemic hit the country. This helped the airline to better cope with the viral outbreak.
Replying to a query about UAE’s inclusion in the United Kingdom’s (UK) red list during an interview at Arabian Travel Market (ATM) virtual summit on Monday, he said the country should hold the decision off and wait for a few weeks and announce it properly.
He said some airlines don’t have traditional cash reserves so it is going to be a real challenge to survive these tough times.
Walsh said debt of the international airlines, which has increased to $220 billion, will continue to increase further as the carriers would continue to shrink and be more cautious.
“A lot of costs such as not paying for fuel, salaries of employees and not paying airport charges etc. have been eliminated. But all these costs will ramp up very quickly once the aviation sector returns to normalcy. If airlines don’t get the imbalance between cost ramp-up and revenue build-up right, the cash burn is going to be quite significant. Under-capitalised and cash poor airlines have to be very cautious when they see evidence of recovery,” he said.
In the post-Covid-19 pandemic world, he said the industry will not recover all the capacity. “It’s just impossible. Airlines will be more cautious. I don’t see merger & acquisition (M&A) activity because people will be very guarded and can’t see many opportunities that chief executive officers (CEOs) will pursue. Some airlines will shrink and some will disappear,” he added.
Iata chief said the good news is that strong underline demand — especially in major domestic markets such as China, the US and Europe – is there but it is being suppressed by restrictions.
Iata chief acknowledged that some restrictions have to be introduced but urged the governments don’t just blindly impose restrictions now as they did last year at the outset of the Covid-19 pandemic.
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