Historical losses projected for the airline industry, recovery seen if no second wave

The International Air Transport Association (IATA) on Tuesday, June 9, disclosed that the financial outlook for the global air transport industry is projected to lose over USD84.3 billion in 2020—a figure that equates to a net profit margin of -20.1%.

“Financially, 2020 will go down as the worst year in the history of aviation,” said Alexandre de Juniac, IATA’s Director General and CEO.

“On average, every day of this year will add USD230 million to industry losses. In total, that’s a loss of USD84.3 billion,” he said, noting that all regions will post losses in 2020.

However, the IATA Chief further noted that if there are no next level waves of the novel coronavirus, the further downfall of the airline industry would likely be over.

“A key to the recovery is the universal implementation of the re-start measures agreed through the International Civil Aviation Organization (ICAO) to keep passengers and crew safe,” said the IATA chief.

As per De Juniac, revenues will drop 50% to USD419 billion from USD838 billion in 2019. In 2021, losses are expected to be cut to USD15.8 billion as revenues rise to USD598 billion. These projections are based on an estimate of 2.2 billion passengers for 2020 and that airlines will lose USD37.54 per passenger.

He said that was why government financial relief remained crucial as airlines “burn through cash.”

IATA said passenger demand dried up as a result of international border restrictions and lockdowns to prevent the spread of the virus which directly lead to the biggest force of industry losses.

About 10% of the world’s GDP is from tourism and much of that depends on air travel said De Juniac.

“Getting people safely flying again will be a powerful economic boost,” he said.

IATA said that the gradual reopening of air travel is likely to be progressive, first beginning with domestic markets, then regional markets and then onwards to the international market.

Their research suggests that about 60% of travelers will travel again within just a few months of the pandemic being under control.


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