USD 35-bn liability in June quarter over COVID-19: Airlines' body

The airlines are faced with refunding USD 35 billion of sold but unused tickets in the April-June period as governments across the world have imposed travel restrictions to curb the spread of the novel coronavirus pandemic, according to a global airlines' body.

India has imposed a 21-day lockdown to contain the spread of the COVID-19 (coronavirus disease 2019), and domestic and international commercial passenger flights have been suspended for this period. Many other virus-affected countries have taken similar measures.

"On top of unavoidable costs, airlines are faced with refunding sold but unused tickets as a result of massive cancellations resulting from government-imposed restrictions on travel. The second quarter liability for these is a colossal $35 billion. Cash burn will be severe," the International Air Transport Association (IATA) said on Tuesday.

The industry group has also estimated that the airlines are expected to burn USD 61 billion of their cash reserves in the April-June period.

Brazil, Canada, Colombia, Italy and the Netherlands have decided to allow airlines to issue vouchers in place of refunds.

"This (permitting voucher instead of refunds) will enable airlines to preserve the cash that they need to keep cargo operations running and preserve their ability to be fully operational when we can safely re-start the industry," IATA director general Alexandre de Juniac said.

"These governments have taken an extraordinary measure in extraordinary circumstances," de Juniac said. "And it will provide a vital buffer period for airlines to keep operating. I cannot stress how important that is."