IATA says global airlines' losses to hit $118.5 billion in 2020; travel curbs to hamper recovery
Deep industry losses will continue into 2021, even though performance is expected to improve.
November 24, 2020 / 08:43 PM IST
Global airlines' losses are expected to hit $118.5 billion in 2020 and $38.7 billion in 2021, which are deeper than the losses forecast in June as the second half of this year has been very disappointing, a top official of the International Air Transport Association (IATA) said on November 24.
The industry body has revised the outlook for the airline industry performance in 2020 and 2021. Deep industry losses will continue into 2021, even though performance is expected to improve over the period of the forecast, it said.
“This crisis is devastating and unrelenting. Airlines have cut costs by 45.8 percent, but revenues are down 60.9 percent. The result is that airlines will lose $66 for every passenger carried this year for a total net loss of $118.5 billion. This loss will be reduced sharply by $80 billion in 2021. But the prospect of losing $38.7 billion next year is nothing to celebrate. We need to get borders safely re-opened without quarantine so that people will fly again. And with airlines expected to bleed cash at least until the fourth quarter of 2021 there is no time to lose,” said Alexandre de Juniac, IATA’s Director General and CEO.
IATA also said aggressive cost-cutting will combine with an uptick in demand next year as several countries look to open up with testing and/or the widespread availability of a potential vaccine.
Airline financial performance is expected to see a significant turn for the better in 2021, even if historically deep losses prevail. The expected $38.7 billion loss in 2021 will be second only to 2020 performance.
One of the biggest factors impeding the industry’s recovery is travel restrictions and quarantine measures that effectively prevent a meaningful revival of travel, IATA said.
“The financial damage of this crisis is severe. Government support has kept airlines alive to this point. More is likely needed as the crisis is lasting longer than anyone could have anticipated. And it must come in forms that do not increase the already high debt load which has ballooned to $651 billion," Juniac said, adding that bridging airlines to the recovery is one of the most important investments that governments can make since it would aid the recovery in the travel and tourism sector which accounts for 10 percent of the global GDP.