Many airlines will require some form of financial assistance from governments as they face significant cash burn, according to ratings agency Moody's.
It added in a report that Lufthansa is among its 'fallen angel' companies that have seen a previous investment grade rating slump to junk status in recent weeks due to the impact of the coronavirus.
And the International Air Transport Association (IATA) has urged governments to work with the aviation industry to develop "confidence-boosting measures" in the face of an anticipated slow recovery in air travel demand.
"Passenger confidence will suffer a double whammy even after the pandemic is contained, hit by personal economic concerns in the face of a looming recession on top of lingering concerns about the safety of travel," said IATA's CEO Alexandre de Juniac.
"Governments and industry must be quick and coordinated with confidence boosting measures," he added.
A survey undertaken for IATA showed that 60pc of flyers anticipate travelling by air within one to two months of the pandemic being contained. The remainder said they intend to wait six months or more before flying.
The survey also found that 69pc of respondents might delay a return to travel until their personal finance situation stabilises.
"People still want to travel," said Mr De Juniac. "But they are telling us that they want clarity on the economic situation and will likely wait for at least a few months after any 'all clear' before returning to the skies.
"As countries lift restrictions, confidence-boosting measures will be critical to restart travel and stimulate economies."
He insisted that there should be a framework for a global approach that will "give people the confidence that they need to travel once again". "And, of course, this will need to be shored up by economic stimulus measures to combat the impact of a recession," Mr De Juniac added.
Moody's said that its downgrade of Lufthansa "reflected the expectation of a sharp decline in passenger traffic for several months".
"Lufthansa has felt the negative effect of declining passenger traffic earlier than other European competitors due to its strong long-haul network to China and the APAC [Asia-Pacific] region," it noted.
"Rating actions for EMEA airlines were part of a broader set of downgrades for airlines globally, as the sector is experiencing extended groundings of aircraft and will face severe capacity cuts at least in the second quarter of 2020," said Moody's.