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Major airlines could go bankrupt by May, per analysis

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Posted at 6:18 PM, Mar 16, 2020
and last updated 2020-03-16 21:42:39-04

An analysis of the airline industry suggests that major airlines will likely go bankrupt by May, as the industry encounters an abrupt interruption in travel due to coronavirus fears.

According to a report by the Centre for Aviation on Monday, airlines are running low on cash reserves as flights are either being canceled, or being flown with few passengers.

Stocks for major airlines have taken a huge tumble. United Airlines stock has dropped by 60 percent in the last month. Delta's stock has dropped more than 40%. American Airlines' stock dropped 45% in the last month.

Delta announced an approximately 50% cut in capacity for April and May on Monday. Delta expects these cuts to extend into the summer travel period. Even with those cuts, Delta said its expecting load factors to drop into the 20-30% range -- assuming things don't get worse.

United Airlines said it estimates March 2020 revenues will be $1.5 billion below March 2019 figures after having one million fewer passengers the first two weeks of March this year compared to last. United is also dropping 40% of its domestic flights and 75% of its international routes.

American Airlines is also dropping 75% of its international flights. American Airlines plans on dropping 20% of its domestic April flights, and 30% in May.

Adding insult to injury, the World Travel and Tourism Council estimates that 50 million jobs in the industry could be affected.

"Attempts to compare this black swan event to 9/11 or SARS could soon be rendered irrelevant as sports teams suspend their seasons and an increasing number of employees are being required to work from home. The economic reverberations will be deep, and the timing of any recovery is by no means yet within view," according to the Centre for Aviation analysis.

President Donald Trump offered his support to the airline industry, but didn't specify what that support would look like.

"We're going to back the airlines 100%. Not their fault. It's nobody's fault, unless you go to the original source. But it's nobody's fault. And we're going to be in a position to help the airlines very much. We've told the airlines we're going to help them," Trump said on Monday.