Major airlines could be bankrupt by the end of the year without action, industry group warns

"This is a today problem, not a tomorrow problem."

March 16, 2020, 2:57 PM

An airline group called for immediate action to help lessen the blow of the novel coronavirus pandemic on the aviation industry, warning that if a worst-case scenario plays out, the seven major U.S. airlines will run out of money by the end of the year.

"This is a today problem, not a tomorrow problem," Airlines for America (A4A) president and CEO Nicholas E. Calio said in a statement. "It requires urgent action."

The COVID-19 outbreak and the resulting government and business-imposed travel restrictions are having an "unprecedented and debilitating impact on U.S. airlines," A4A said, adding that demand is "getting worse by the day."

The group called for grants, loans and tax relief to help alleviate the economic crisis. U.S. airlines directly employ 750,000 people and support an additional 10 million more jobs, according to its data.

PHOTO: A plane sits on the tarmac at a South Carolina airport on March 01, 2020 in Columbia, South Carolina.
A plane sits on the tarmac at a South Carolina airport on March 01, 2020 in Columbia, South Carolina.
Spencer Platt/Getty Images

In A4A's "pessimistic" scenario, which it calls "most likely," it would mean all seven passenger carriers they represent -- including Delta, United and American -- could run out of money between June 30 and the end of the year.

Even in an "optimistic" scenario, A4A forecasts a 59% drop in net liquidity for the passenger carriers by the end of the year.

On Sunday, the Centre for Aviation, an international market research firm for for the aviation and travel industry, warned that by the end of May 2020 "most airlines in the world will be bankrupt."

"Coordinated government and industry action is needed - now - if catastrophe is to be avoided," the group said in a statement.

The airline and travel industry is among the hardest hit by the COVID-19 pandemic and some airlines have said they were implementing layoffs in response to the travel restrictions.

Norwegian Airlines announced last week temporary layoffs of up to 50% of its employees, adding that this figure may even increase.

United Airlines said in a memo obtained by ABC News that it has started having conversations with union leaders about reducing payroll expenses, and that furloughs and layoffs were a very real possibility.

ABC News' Rebecca Jarvis, Gio Benitez and Mina Kaji contributed to this report.

This report was featured in the Tuesday, March 17, 2020, episode of “Start Here,” ABC News’ daily news podcast.

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