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Coronavirus causes US$ 118.5 loss to aviation industry

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Coronavirus causes US$ 118.5 loss to aviation industry

News Desk

Airlines globally will lose over $118.5 billion, the biggest in aviation history, during calendar year 2020 due to the covid-19 pandemic and a muted travel appetite, while losses next year are expected to be at $38.7 billion, industry body International Air Transport Association (IATA) said on Tuesday.

IATA, however, expects airline performance to improve during the second half of 2021, though the industry body expects passenger traffic to rebound to 2019-levels only by calendar year 2024.

“Aggressive cost-cutting is expected to combine with increased demand during 2021 (due to the reopening of borders with testing and/or the widespread availability of a vaccine) to see the industry turn cash-positive in the fourth quarter of 2021 which is earlier than previously forecast,” IATA said in a statement ahead of its 76th annual general meeting (AGM).

Airlines will lose $66 for every passenger carried this year, said IATA’s Director General and chief executive Alexandre de Juniac.

“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,” Alexandre de Juniac said.

“The history books will record 2020 as the industry’s worst financial year, bar none. Airlines cut expenses by an average of a billion dollars a day over 2020 and will still rack-up unprecedented losses. Were it not for the $173 billion in financial support by governments we would have seen bankruptcies on a massive scale,” he added.

Total number of passengers carried by airlines are expected to plummet to 1.8 billion during calendar year 2020, down 60.5% from the previous year, according to IATA data. However, global cargo revenues are expected to increase to $117.7 billion in 2020 up from $102.4 billion in 2019.

“Passenger numbers are expected to grow to 2.8 billion in 2021. That would be a billion more travelers than in 2020, but still 1.7 billion travelers short of 2019 performance. Passenger yields are expected to be flat and the load factor is expected to improve to 72.7% (an improvement on the 65.5% expected for 2020, but still well below the 82.5% achieved in 2019),” IATA said in a statement.

Meanwhile, IATA’s chief economist Brian Pearce expects several airlines to fold up in the coming months due to mounting debt amidst a decline in passenger demand.

According to IATA data, airline debt globally increased by over 50% to $220 billion during 2020, due to the pandemic.

“It is inevitable to see more consolidation in the industry. With building up of debt, and recovery (passenger traffic) still years away, some airlines will not be able to survive,” Pearce said.

Pearce said that airline will have to raise money from the market or seek out financial assistances from their respective governments to survive the pandemic.

While cargo revenue for airlines are expected to return to pre-covid levels by 2021, passenger traffic will return to 2019 levels only by 2024, Pearce said.

“Domestic markets will recover faster than international,” he added.

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