Travel stocks were among the worst hit in Europe on Monday as the spiralling coronavirus pandemic forced the Italian government to move to take over Alitalia.
A draft Italian government decree seen by Reuters showed that it has set aside €600m (£535m) to keep Alitalia, the country’s flag carrier, afloat.
The airline is reportedly running out of cash due to the fallout from coronavirus, despite receiving €400m from the government at the beginning of 2020.
Shares in British Airways-owner IAG (IAG.L) dropped by more than 27%, as did those in TUI (TUI.L), which said it was putting all package holidays, cruises, and hotel operations on hold, fell by more than 32%.
The coronavirus pandemic has had far-reaching consequences for the airline industry.
Virgin Atlantic said that it plans to ground 80% of its fleet by 26 March this year and has asked staff to take eight weeks worth of unpaid leave.
Norwegian Air, meanwhile, said that it will cancel 85% of its flights and temporarily lay off 7,300 of its employees.
Shares in EasyJet , which on Monday blamed “significantly reduced levels of customer demand” for its announcement of rolling flight reductions, declined by more than 22%.
Low-cost counterpart Ryanair warned that it plans to ground the majority of its aircraft across Europe over the next 10 days, noting that it will be forced to make significant reductions to working hours and payments.
Shares in the Dublin-based airline fell by around 18% on Monday.
Earlier this month, the pandemic pushed airline Flybe into collapse, risking 2,000 jobs, while Norwegian airlines (NAS.OL) said that up to half its workforce could face “temporary layoffs” due to the fallout.
The Centre for Aviation, an industry analysis and research group, warned that “most airlines in the world will be bankrupt” by the end of May.
It said that coordinated government and industry action was needed if catastrophe is to be avoided.
“As the impact of the coronavirus and multiple government travel reactions sweep through our world, many airlines have probably already been driven into technical bankruptcy, or are at least substantially in breach of debt covenants,” the centre said.
“Cash reserves are running down quickly as fleets are grounded and what flights there are operate much less than half full.”
If the prediction is borne out, 2020 would be the worst year for the aviation industry in decades.