DUBAI - Middle East airlines are facing a liquidity crisis and hundreds of thousands of jobs are at risk because of the coronavirus outbreak, the International Air Transport Association (IATA) said on Thursday, urging governments to provide state aid.
The epidemic, which has killed more than 8,000 globally, has seen many airlines warn they may not survive the crisis. The IATA, which represents around 290 airlines worldwide, said the travel restrictions that countries have imposed to slow down the spread of the virus “have more far-reaching implications than anything we have seen before.”
IATA Africa Middle East Vice President Muhammad Ali Albakri warned 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," he told reporters on a conference call. He said more than 800,000 jobs were directly at risk across 10 Middle East and North Africa countries including the United Arab Emirates, Saudi Arabia and Morocco.
The epidemic has cost Middle East airlines $7.2 billion in revenue as of March 11 with 16,000 flights cancelled since January. International bookings in the region are expected to fall 40% in March and April, while domestic bookings are also falling. Ticket refunds surged 75% between Feb 1 and March 11, he said.
"Airlines are facing a liquidity crisis," Albakri said. Most Middle East airlines are state-owned, few of which were profitable even before the current crisis.
Albakri said on average Middle East airlines have two months of cash reserves on hand. IATA is now urging Middle East governments to give state aid to their airlines, having earlier this month asked for support. The industry body is proposing direct state financial support, loans and loan guarantees and tax relief, while other measures have already been introduced.
Saudi Arabia, Morocco and Dubai have suspended a rule requiring airlines to use most of their scheduled services or forfeit landing slots at airports, he said.
Already, major carriers like Emirates have urged pilots and cabin crew to take unpaid leave. Reports have emerged that Qatar Airways laid off several hundred employees. Job losses in the Middle East have especially far-reaching consequences to the millions of foreign workers who send remittances back home to families in India, Pakistan, the Philippines and eastern European countries. Gulf states like Qatar and the United Arab Emirates rely heavily on foreigners to work as airport support staff, pilots, cleaners and cabin crew.
The UAE has not shut its airports but has barred the entry of all visitors and even its foreign residents who are currently abroad. The decision, which could last at least two weeks, impacts people whose homes, children, bank accounts and livelihoods are in the country, but who were traveling or outside the country. Only Emirati citizens are allowed to return.
The UAE is unique in that only about 10% of its population, or about 1 million people, are Emirati citizens. The other 90% are foreign residents who fuel its economy and keep the country running. They hold the vast majority of jobs in construction, transportation, hospitality, sales, medicine, education and other key sectors. The UAE also announced it was suspending all new labor permits, including those for drivers and domestic workers, until “further notice.”
Since February, Israeli national carrier El Al has laid off 1,000 employees and put another 5,500 on unpaid vacation, "almost all" of its staff, company spokesman Eitan Atias told the AP news agency. It has reduced its flights from 47 destinations globally to just six: New York, Newark, Paris, London, Toronto and Johannesburg.
Late on Wednesday, the last commercial flights arrived in Egypt and Lebanon before a lockdown took place at midnight. They were the latest two countries in the Middle East to shut down airports and suspend all passenger flights. Saudi Arabia, Iraq, Jordan, Tunisia and Morocco had already imposed bans on flights.
Sudan's transitional government reopened airports for 48 hours only to allow Sudanese stranded abroad to return home and expats to leave the country. Other countries have largely limited or halted all flights and border crossings. Some, such as Iraq and Lebanon, have ordered citizens to stay home to contain the virus.
The Middle East has some 20,000 cases of the virus, with most in Iran or originating from Iran. The virus has killed more than 1,100 people in Iran.