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Chris Bryant

The World’s Airlines Have a Serious Credit Card Problem

As the airline industry reels from coronavirus, credit card companies may hold back more forward payments as collateral. That risks a doom spiral.

Taking no chances.

Taking no chances.

Photo: Bloomberg

With their bookings collapsing, airlines are frantically trying to preserve cash by cancelling flights, deferring aircraft deliveries, sending employees home and drawing down credit lines with banks. Brussels plans to help by suspending European Union rules that require companies to keep flying to retain their takeoff slots. The Donald Trump administration has promised unspecified assistance.

But for some weaker carriers these efforts may be in vain. Deutsche Lufthansa AG boss Carsten Spohr predicts “numerous insolvencies” in the industry. Qantas Airways Ltd.’s chief executive officer, Alan Joyce, says similar. Judged by the recent strains and failures in the travel sector, the timing and extent of those bankruptcies could be determined by a pocket-sized piece of plastic: your credit card.