Airlines globally stand to lose $39 billion in the second quarter, which ends June 30, and could burn through $61 billion in cash reserves, according to analysis by the International Air Transport Association.
IATA is basing the number on a forecast of three months of severe travel restrictions, which would mean a 71 percent drop in demand in the second quarter. For the full year, demand will be down 38 percent and revenues down $252 billion, according to IATA's projections.
During the quarter, airlines' variable costs will be down about 70 percent, in part due to capacity cuts and in part to lower fuel costs, though fuel hedging will lessen some of those cost reductions, according to IATA. Airlines will be able to reduce fixed and semi-fixed costs by about a third.
Besides the United States, countries that have introduced financial or regulatory aid packages for airlines include Singapore, Australia, China, New Zealand and Norway, according to IATA. In addition, some countries—including Brazil, Colombia, the Netherlands and Canada—have eased regulations so that airlines can give passengers vouchers in place of refunds.
As airlines are facing up to $35 billion in liabilities from potential refunds, that capability "is a vital time buffer so that the sector can continue to function," according to IATA director general and CEO Alexandre de Juniac. "In turn, that will help preserve the sector's ability to deliver the cargo shipments that are vital today and the long-term connectivity that travelers and economies will depend on in the recovery phase."