Major airlines to ‘plunge into bankruptcy’ as flights cancelled around the world | World | News
A Dubai-based billionaire has warned that several major airlines could go bankrupt within weeks as scores of flights are canceled around the world. The statement comes as ongoing conflicts in the Middle East have paralyzed the aviation industry as bookings plummet and fuel costs rise.
Gediminas Ziemelis, founder of Avia Solutions Group, said the situation was quiet, similar to Covid times, as planes were grounded, demand collapsed and there was no clear timeline for recovery. “We need to be ready for every region, region, jurisdiction and geopolitical risk. If it lasts more than a month, we could see potential first bankruptcies of airlines around the world,” he told Bloomberg.
The rapid increase in fuel prices places a serious burden on airlines, which are currently struggling with disrupted routes. Mr. Ziemelis said fuel normally accounts for about a quarter of an airline’s operating costs, but recent conflicts have driven up oil prices by almost 50 percent to around $100 a barrel.
The sharp increase is forcing some airlines to impose extra surcharges, while others are cutting routes entirely to manage costs. At the same time, concerns are growing about whether enough jet fuel will be available, adding another layer of uncertainty for the industry.
Airlines are being forced to reroute their services to avoid large parts of the Middle East; This is a change that adds significant time and cost to their operations. In response, many European and Asian carriers have already increased fares and scaled back their networks as the conflict enters its fifth week.
The situation is even more serious for airlines in the region, where constant missile and drone attacks have led to the cancellation of thousands of flights and the emergency evacuation of passengers, crew and aircraft.
Major operators such as Qatar Airways, Gulf Air, flydubai and Air Arabia are now undertaking internal reviews to cut expenses and save cash as they continue to lose millions in revenue every day.
But the billionaire added: “All the companies that survived after Covid made extraordinary record profits. So sometimes crises are opportunities.”
