Global airlines warned on Tuesday that the coronavirus-stricken industry was on course to burn through another $77 billion in cash in the second half of 2020, calling on governments to renew expiring wage support programmes.

“The issue now is that aid, particularly the wage subsidies, is starting to be withdrawn,” Brian Pearce, chief economist at the International Air Transport Association (IATA), told reporters.

Airlines consumed $51 billion in cash in the second quarter as the pandemic brought global travel to a near-standstill, the industry body said.

The call for increased support came as US airlines begin furloughs of more than 32,000 workers amid fading hopes for a new federal bailout package. Wage support programmes are also tapering off in Europe and elsewhere.

Whereas the withdrawal of subsidies makes sense for sectors in recovery, IATA warned of further airline bankruptcies in the northern hemisphere winter as the collapse in revenue continues to dwarf cost savings. The average carrier now has cash for 8.5 months of operations, Pearce said.

“We’re facing some tough winter months for airlines when cash flows are always seasonally weak,” he said. “We’re looking (at) airlines getting into trouble if not failing without either further government support or (being) able to access capital markets for more cash.”

Airlines are pushing for a global system of pre-flight COVID-19 tests to replace quarantines and travel restrictions they blame for worsening the travel collapse.

Separately, the long-haul arm of Malaysia’s flagship budget airline, AirAsia X Bhd (AAX) , has proposed restructuring its debt and reducing its issued share capital to avoid liquidation and pave way for fresh capital, it said in a late bourse filing on Tuesday.

AAX said in a separate statement it is facing severe liquidity constraints to meet debt and other financial commitments and with no return to normalcy in sight, “an imminent default of contractual commitments will precipitate a potential liquidation of the airline.”

A major debt restructuring and a renegotiation of its financial obligations, as well as revised level of operations, are pre-requisites for any raising of fresh equity and debt which will be required to restart the airline, it said.

The group is seeking to restructure approximately 63.5 billion ringgit ($15.30 billion) of debt and for any balance to be waived, the affiliate of AirAsia Group Bhd said.

AAX said unaudited records as at June 30 show it had a deficit in shareholders’ equity of 960 million ringgit, and its current liabilities of 3.38 billion ringgit exceeded current assets of 1.39 billion ringgit.

Meanwhile, Philippine Airlines will cut around a third of its workforce by the end of this year as part of an overhaul triggered by crippling coronavirus travel restrictions.

“The collapse in travel demand and persistent travel restrictions on most global and domestic routes have made retrenchment inevitable,” the airline said Monday, announcing the loss of up to 35 per cent of its more than 7,000 employees through voluntary resignations and forced layoffs.

WTO SEES SOFTER TRADE DROP: Global trade, devastated by the coronavirus crisis, will shrink by less than expected this year but the rebound will also be much weaker than previously forecast, the WTO said on Tuesday.

Revising its prior “optimistic scenario” forecast of at least a 12.9-per cent contraction in 2020, the World Trade Organization said it now expected global trade to shrink by just 9.2 per cent this year.

But it will then grow by only 7.2 per cent next year, rather than the previous 21.3 per cent estimate issued in April, the WTO added.

“World trade shows signs of bouncing back from a deep, Covid-19-induced slump, but WTO economists caution that any recovery could be disrupted by the ongoing pandemic effects,” the global trade body said in a statement. It further warned that the pace of trade expansion could slow sharply once pent-up demand is exhausted and business inventories have been replenished.

More negative outcomes were also possible if there is a resurgence of the coronavirus between now and the end of the year, it said.

Global gross domestic product (GDP) will fall by 4.8 per cent in 2020 before rising by 4.9 percent in 2021, the WTO forecast.

“Consensus estimates now put the decline in world market-weighted GDP in 2020 at minus 4.8 percent compared to minus 2.5 percent under the more optimistic scenario outlined in the WTO’s April forecast,” the organisation said.

“GDP growth is expected to pick up to 4.9 per cent in 2021, but this is highly dependent on policy measures and on the severity of the disease.”

WTO deputy director-general Yi Xiaozhun said a resurgence of Covid-19 requiring new lockdowns could reduce global GDP growth by two to three percentage points, and shave up to four percentage points off of merchandise trade growth in 2021.

“The incidence of Covid-19 worldwide has fallen from a peak in the spring, but it remains stubbornly high in many areas,” Yi told reporters at the WTO’s headquarters in Geneva.

Agencies