* IATA sees lost revenue of $63-$113 bln due to virus
* British regional airline Flybe enters administration
* Norwegian Air scraps profit guidance, cuts flights
* Turkish has to fly jet home empty after virus case
By Sarah Young and Aradhana Aravindan
LONDON/SINGAPORE, March 5 (Reuters) - The coronavirus
epidemic could cost passenger airlines up to $113 billion in
lost revenue this year, an industry body warned on Thursday,
more than three times a projection it made just two weeks ago as
the virus continues to spread around the world.
The warning from the International Air Transport Association
(IATA) came as British regional carrier Flybe became the first
big casualty of the slump in travel demand due to the crisis and
Norwegian Air scrapped its profit forecast for this year.
Airlines across the world are rushing to cut flights and
costs, and warning of a hit to earnings, as a new virus that
started in China spreads, raising fears of a pandemic that could
plunge the global economy into recession.
In a sign of the difficulties this is creating for airlines,
a Turkish Airlines jet was flown back to Istanbul
without any passengers on board on Thursday on orders from
Singapore after a passenger who had arrived on the same plane on
Tuesday tested positive for the virus.
IATA projected the hit to passenger airlines in lost revenue
from the crisis could be anywhere between $63 billion and $113
billion this year, depending on the virus's progression. On Feb.
20, it had forecast a hit of $29 billion.
Global airline industry revenues totalled $838 billion in
2019, according to IATA data.
The COVID-19 virus has killed more than 3,000 people and
infected tens of thousands more, mostly in China. But the
disease has now spread to more than 60 other countries, leading
to multiple travel and other restrictions.
Among the latest events to be cancelled is the world air
traffic management congress in Madrid, which had been scheduled
for March 10-12.
'INEVITABLE'
The failure of British regional airline Flybe comes less
than two months after a rescue deal for the company was agreed
by its owners and the UK government.
Despite its commitment to improving regional transport
links, the British government backed away from that deal due to
the scale of the hit to demand from the virus outbreak.
"All flights have been grounded and the UK business has
ceased trading with immediate effect," Flybe said as it entered
administration, a form of protection from creditors.
The failure of the airline, which has long struggled with
losses, not only puts around 2,400 jobs at risk but could also
see some regional UK airports struggle.
Flybe carried around eight million passengers a year between
81 airports and was owned by a consortium of Virgin Atlantic,
Stobart Group and Cyrus Capital.
Its collapse came a day after Ryanair Chief
Executive Michael O'Leary predicted that the coronavirus crisis
would lead to bankruptcies.
"It's inevitable in the next couple of weeks we'll see more
failures," O'Leary told Reuters - citing Flybe as among the most
vulnerable.
"Where you have a massive short-term decline in bookings you
have a massive short-term decline in cash flow," he said on the
sidelines of an industry event in Brussels on Tuesday.
CANCELLATIONS
Norwegian Air, a pioneer of low-cost transatlantic
travel, has also been struggling for years due to cut-throat
competition and heavy debts built up during rapid expansion.
The company, which has repeatedly raised cash from
shareholders to stay in business, said on Thursday it was
scrapping its 2020 earnings guidance, which had predicted a
return to profit after three years of losses, due to the drop in
travel demand and disruption caused by the virus.
It also said it would cancel 22 long-haul flights between
Europe and the United States from March 28 to May 5, with routes
from Rome to Los Angeles, Boston and New York seeing a reduced
number of departures.
In addition, it will cut the number of flights between
London and New York, flying twice, rather than three times, on
some days.
"At this stage, it is too early to assess the full impact on
our business," it said in a statement.
Norwegian shares, which have lost more than 50% of their
value this year, were down more than 5% at 1000 GMT.
Willie Walsh, the outgoing CEO of British Airways parent IAG
, also warned governments this week against any
temptation to prop up airlines that were already struggling.
"I don't believe it's appropriate for governments to provide
state aid to airlines that were not sustainable before the
coronavirus," he said at the Brussels gathering.
($1 = 0.7770 pound)
(Additional reporting by Terje Solsvik in Oslo, Jamie Freed in
Sydney, Kate Holton in London and Laurence Frost in Paris
Editing by Mark Potter and Keith Weir)
International Airlines (IAG)
