The coronavirus pandemic is having disastrous impacts on businesses all over the world, especially the travel and tourism industry. The impact of the virus shall be felt deeply by the airline sector. According to the data, Europe’s Airbus has already cut the production rates by a third.
The global airline revenue is set to nosedive by $314 billion this year. As compared to the previous year, the passenger demand is down 95%. The environment right now is unpredictable and dynamic, making it difficult to estimate when the situation will stabilize and come under control.
Boeing has been weighing production cuts and layoffs with a recent layout plan of cutting its workforce by around 10%. It’s CEO David Calhoun says that it could take two to three years for the air travel industry to return to its pre-pandemic state, in an address to the shareholders.
He also tells the other plane makers that he doesn’t expect the air travel to regain its position as of 2019 levels for the next two or three years. The company would need to borrow more funds this year to sustain its operations.
The Chicago Aerospace is also facing repercussions. The giant’s have been cancelling and deferring plane orders, intensifying financial obligations stemming from the 737 MAX debacle following the global grounding of that aircraft after two fatal crashes took 346 lives.
Its shares fell 30 cents Monday to $128.68, while Airbus shares dropped 2.4% to Euro 51.07 in European trading. It can be evidently said that both the stocks are facing a major crisis with the share price down nearly 61% in this year.
According to a CNBC report, the commercial market will become smaller and the new market taste will be marked by an alteration in customer needs and demands. In the airline sector, domestic travel is supposed to pick up faster than international travel.
This also means that there will be a higher demand for narrow-body planes. The European plane makers are also bleeding cash and need to desperately cut costs and jobs.