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Bloomberg
The fast-spreading coronavirus could spell the end for the weakest airlines as travel demand dries up in and out of China.
The outbreak, which originated in the Chinese city Wuhan, has claimed 200 lives. Total infections have soared past 11,700 in China, surpassing the country’s official number from the 2003 Sars epidemic. Sars cost the global economy an estimated $40 billion in just six months and led to a 45% plunge in traffic for Asia-Pacific carriers that year.
The novel coronavirus hasn’t killed anyone outside China, but infections are spreading faster than Sars and that’s triggering a raft of flight cancellations to and from one of the world’s fastest-growing markets for air travel. For Asia-Pacific carriers, already buffeted by US-China trade tensions and protests in Hong Kong, the new virus is potentially an existential threat, Qantas Airways CEO Alan Joyce said.
While it’s unclear what the financial toll of the current outbreak will be, British Airways has halted flights to Beijing and Shanghai, joining peers from South Korea to Finland that scrapped services to the Chinese mainland.
Operating margins at Asia-Pacific airlines in the third quarter of 2019 — before the virus emerged — narrowed to 6.9% from 8% a year earlier, according to IATA. Cash-strapped Hong Kong Airlines nearly became a high-profile casualty in December as local authorities threatened to revoke its flying license because of liquidity concerns, while Malaysia is seeking an investor for Malaysia Airlines, which has been struggling with losses and debt.