More economic gloom is heading towards the Middle East as a result of the coronavirus outbreak after it was announced that the region’s airlines are facing a liquidity crisis and hundreds of thousands of jobs could be at risk.
Many airlines have already warned they will not survive the epidemic, which has killed more than 8,000 globally. The forecast for the region’s carriers is just as bleak.
The International Air Transport Association (IATA) warned today that even the most drastic cost cuts were being outstripped by plummeting revenue. “The implications are not like we have seen before. We are struggling, suffering, and bleeding,” said IATA Africa Middle East Vice President Muhammad Ali Albakri at a press conference.
More than 800,000 jobs were directly at risk across ten countries in the MENA region including in the United Arab Emirates and Saudi Arabia according to Albakri.
Some $7.2 billion in revenue has been lost since 11 March with 16,000 flights cancelled since January, leaving a massive hole in the budget of MENA airlines. On average these airlines are said to have only two months of cash reserves to stay afloat.
IATA urged Middle East governments to step in and provide state aid to their airlines. Direct state financial support, loans and loan guarantees and tax relief have been recommended by the industry body along with other measures.
International bookings in the region are expected to fall 40 per cent in March and April, while domestic bookings are said to be also falling. Ticket refunds surged 75 per cent between 1 February and 11 March.
Saudi Arabia, Morocco and Dubai have suspended a rule requiring airlines to use most of their scheduled services or forfeit landing slots at airports, Albakri said.
Dubai’s Emirates, one of the world’s biggest international airlines, has asked its staff to take unpaid leave, with national carrier Etihad following suit.