IATA has warned that the airline industry will burn through US$77
billion in cash during the second half of 2020, despite the restart of
operations and airlines cutting costs by half.
It added that the slow recovery in air travel will see airlines burn
through cash at an average rate of US$5 to US$6 billion per month in 2021.
The organisation called on governments to support the
industry during the coming winter season with additional relief measures,
including financial aid that does not add more debt to the industry’s already highly
indebted balance sheet. It says that governments have already provided US$160
billion in support to airlines, including direct aid, wage subsidies, corporate
tax relief, and specific industry tax relief including fuel taxes.
IATA’s director general and CEO Alexandre de Juniac said: “We
are grateful for this support, which is aimed at ensuring that the air
transport industry remains viable and ready to reconnect the economies and
support millions of jobs in travel and tourism. But the crisis is deeper and
longer than any of us could have imagined. And the initial support programmes
are running out. Today we must ring the alarm bell again. If these support
programmes are not replaced or extended, the consequences for an already hobbled
industry will be dire.”
“With no timetable for governments to reopen borders without
travel-killing quarantines, we cannot rely on a year-end holiday season bounce
to provide a bit of extra cash to tide us over until the spring,” he added.
IATA estimates that despite cutting costs by just over 50 per
cent during the second quarter, the industry went through US$51 billion in cash
as revenues fell almost 80 per cent compared to 2019.
“Government support for the entire sector is needed," said de Juniac. "The
impact has spread across the entire travel value chain including our airport
and air navigation infrastructure partners who are dependent on pre-crisis
levels of traffic to sustain their operations. Rate hikes on system users to
make up the gap would be the start of a vicious and unforgiving cycle of
further cost pressures and downsizings."