British Airways airplanes are seen at Heathrow Airport in London. $1 Billion in Two Weeks: Hedge Funds Capitalise on UK Airlines Gridlock Over COVID-19
Late last week, the trade body Airlines UK warned that the ongoing coronavirus pandemic may do irreparable damage to the country’s aviation industry if it does not get emergency support from the government.
In the past two weeks, hedge funds have made over £1 billion ($1.16 billion) as they bet on the meltdown of major UK airlines amid the COVID-19 outbreak, The Telegraph reports.
According to the newspaper, “billions of pounds have been wiped off the value of the likes of British Airways owner IAG, easyJet, and Ryanair – despite airlines recouping some lost ground on Friday”.
The developments come after the trade body Airlines UK warned of possible damage to the country’s aviation industry if it is does not get a shot in the arm from the government.
“We’re talking about the future of UK aviation – one of our world-class industries – and unless the government pulls itself together who knows what will be left of it once we get out of this mess”, Airlines UK said in a message late last week.
This followed British Airways warning its employees that the UK’s aviation industry is facing a “crisis of global proportions” due to the COVID-19 outbreak, which is ostensibly even worse than one caused by the SARS virus or the 9/11 attacks.
The air carrier’s head Alex Cruz, for his part, cautioned that British Airways will ground flights “like never before”, amid staff lay-offs.
Europe’s largest short-haul airline, Ryanair in turn said that it would reduce capacity by 80 percent in April and May, while EasyJet stated that it could ground the majority of its fleet, and that the government should step in and provide UK airlines with financial aid.
The Centre for Aviation, meanwhile, has predicted in a recent report that “by the end of May 2020, most airlines in the world will be bankrupt”, adding that “coordinated government and industry action is needed – now – 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 report asserted.
According to the World Health Organisation, there are currently more than 266,000 confirmed COVID-19 cases worldwide, with the death toll currently at over 11,000.