IATA has increased the figure that it expects airlines to lose in the current year to US$118.5 billion, making it the “industry’s worst financial year, bar none”, according to IATA director general and CEO Alexandre de Juniac. The figure is a significant deterioration on the US$84.3 billion forecast in June.
The organisation says that next year will be slightly better but carriers will still lose US$38.7 billion (more than double the US$15.8 billion forecast it made in June).
“This crisis is devastating and unrelenting. Airlines have cut costs by 45.8 per cent, but revenues are down 60.9 per cent. The result is that airlines will lose US$66 for every passenger carried this year for a total net loss of US$118.5 billion,” said de Juniac, who is set to be replaced by former IAG boss Willie Walsh next April.
IATA said it expects aggressive cost-cutting during 2021 along with increasing demand due to the re-opening of borders with testing and the expected availability of a vaccine. It predicts the industry will turn cash-positive in the fourth quarter of 2021, earlier than previously forecast.
“The prospect of losing US$38.7 billion next year is nothing to celebrate,” he added. “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.”
“The numbers couldn’t get much worse. But there is a way forward. With the continued financial support of governments to keep airlines financially viable and the use of testing to enable travel without quarantine, we have a plan to overcome the worst immediately,” he said.
“Longer term the progress on vaccines is encouraging. Most importantly, people have not lost their desire to travel. The market response to even small measures to lift quarantine is immediate and strong. Where barriers have been removed, travel rebounded. The thirst for the freedom to fly has not been overcome by the crisis. There is every reason for optimism when governments use testing to open borders. And we need to make that happen fast."