Airlines globally to lose $118.5 billion this year: IATA

NEW DELHI: Airlines globally could end up with losses of a stupendous $118.5 billion this pandemic-stricken year. The International Air Transport Association (IATA) has revised upward 2020’s loss of $84.3 billion projected this June by 40% with the virus showing resurgence in successive waves due to which travel restrictions continue across the world. This means airlines will lose $66 for every passenger flown this year.
With next year’s loss currently estimated at $38.7 billion — a number that will be revised depending on whether vaccines prove to be successful in controlling the pandemic or not — Covid is currently elected to cost airlines $157.2 billion in 2020 and 2021.
IATA DG and CEO Alexandre de Juniac said: “This crisis is devastating and unrelenting. Airlines have cut costs by 45.8%, but revenues are down 60.9%. 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.”
With vaccines on the horizon, the global body estimates a travel uptick in second half of next year. However, surviving 2020 will be a challenge for airlines. IATA says airlines globally have cut costs by $365 billion (from $795 billion in 2019 to $430 billion in 2020) in wake of the half trillion-dollar revenue drop (from $838 billion in 2019 to $328 billion).
“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,” said de Juniac.
Passenger numbers are expected to plummet to 1.8 billion — 60.5% down from 4.5 billion passengers in 2019 — a number last seen in 2003. Passenger revenues are expected to fall to $191 billion, less than a third of the $612 billion earned in 2019 largely driven by a 66% fall in passenger demand. International markets were hit disproportionately hard with a 75% fall in demand. Domestic markets, largely propelled by a recovery in China and Russia, are expected to perform better and end 2020 49% below 2019 levels, IATA says.
Cargo carriage is not as badly hot as passenger traffic. In 2019 cargo accounted for 12% of revenues and that is expected to grow to 36% in 2020.
“Uplift is expected to be 54.2 million tonnes in 2019, down from 61.3 million tonnes in 2019. Cargo revenues are bucking the trend, increasing to $117.7 billion in 2020 from $102.4 billion in 2019. A 45% fall in overall capacity, driven largely by the precipitous fall in passenger demand which took out critical belly capacity for cargo (-24%), pushed yields up by 30% in 2020,” it says.
“Cargo is performing better than the passenger business. It could not, however, make up for the fall in passenger revenue. But it has become a significantly larger part of airline revenues and cargo revenues are making it possible for airlines to sustain their skeleton international networks,” said de Juniac.

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