SINGAPORE, Jan 30 (Reuters) - Airlines in Asia are seeing a big drop in bookings along with forced cancellations because of the coronavirus outbreak in China, and the impact could last for a few months, the head of Avolon Holdings Ltd, one of the top global lessors said.
“There is a significant drop-off in bookings. Airlines are seeing forced cancellations. It’s going to be pretty tough,” CEO Domhnal Slattery told Reuters on Thursday.
The fast-spreading virus has killed 170 people and sickened nearly 8,000, with global airlines suspending or scaling back direct flights to China’s major cities amid an increase in travel warnings.
“If you draw the (Severe Acute Respiratory Syndrome) SARS analogy, the impact on the airlines will peak 3-4 months from now in terms of absolute lost revenue,” said Slattery, who leads the world’s fourth-biggest leasing firm and has been in the industry for more than 30 years.
With a fleet of 525 planes, about half deployed in Asia Pacific, Avolon counts roughly 150 airlines among its customers.
Slattery said that if the severity of the current situation is similar to SARS, airlines will then move to a “cash conservation” mode and defer or slow down any incremental fleet growth.
“A lot of low cost carriers that have established in the last 5-10 years have very thin balance sheets, not a lot of liquidity. And they’re going to be the ones that are most stressed in this scenario,” he said. (Reporting by Anshuman Daga; Editing by Elaine Hardcastle)