Airlines in the Middle East region have on average just two months of cash reserves and with revenue streams all but cut off by the Covid-19 crisis, the outlook is bleak for some privately owned carriers.
The cash situation is “extremely critical” according to The International Air Transport Association (IATA), which has called on governments in the Middle East to provide urgent financial support.
Countries including Saudi Arabia and the UAE have already outlined plans to assist the private sector and while some major carriers in the region are state-owned, IATA wants policy makers to include airlines in their economic stimulation packages.
“Airlines are taking a huge hit in the Middle East. We are struggling, we are suffering, we are bleeding,” said IATA’s regional VP for Africa and the Middle East, Muhammad Ali Albakr, on a telephone conference this afternoon.
He said that the longer the crisis persists the riskier the situation will become in terms of jobs.
“We are asking governments to seriously and urgently consider airlines in the economic packages they are announcing. We really need to categorically define airlines as an essential ingredient in all economic stimulation packages,” said Mr Albakr.
“The cash situation is extremely critical, airlines are bleeding, no revenues are coming in while they have to maintain costs. Cash is being depleted so fast that without urgent and critical and immediate government assistance, jobs will be lost, which will further complicate the economic situation for the nations in this region.”
So far, countries including Kuwait, Saudi Arabia, Lebanon, Egypt, Morocco, Jordan and Tunisia have restricted all commercial passenger flights.
Privately-owned carriers, those with poor liquidity and those which have previously been locked in price wars are most at risk.
According to Mr Albakr, the country in the Middle East which will be hardest hit from a loss in passenger volumes is Saudi Arabia, because of the huge number of passengers its airlines transport each year.
Alexandre de Juniac, IATA’s CEO, said that airlines are fighting for survival.
“Many routes have been suspended in Africa and Middle East and airlines have seen demand fall by as much as 60% on remaining ones. Millions of jobs are at stake. Airlines need urgent government action if they are to emerge from this in a fit state to help the world recover, once Covid-19 is beaten,” he said.
The Middle East’s air transport sector is valued at US$130 billion supporting 2.4 million jobs and contributing 4.4% to GDP.
IATA reckons the global aviation industry will require $200 billion of assistance to see it through the Covid-19 crisis.