Industry losses to top $84bn in 2020

.. As airlines burn cash, accumulate debts

The International Air Transport Association (IATA) says the global air transport industry shows that airlines are expected to lose $84.3 billion in 2020 for a net profit margin of -20.1 per cent in its financial outlook for 2020. 

IATA in its latest release said revenues will fall 50 per cent to $419 billion from $838 billion in 2019. In 2021, losses are expected to be cut to $15.8 billion as revenues rise to $598 billion.

“Financially, 2020 will go down as the worst year in the history of aviation. On average, every day of this year will add $230 million to industry losses. In total that’s a loss of $84.3 billion. It means that—based on an estimate of 2.2 billion passengers this year—airlines will lose $37.54 per passenger. That’s why government financial relief was and remains crucial as airlines burn through cash,” said Alexandre de Juniac, IATA’s Director General and CEO.

“Provided there is not a second and more damaging wave of COVID-19, the worst of the collapse in traffic is likely behind us. 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. And, with the help of effective contact tracing, these measures should give governments the confidence to open borders without quarantine measures. That’s ant important part of the economic recovery because about 10 per cent of the world’s GDP is from tourism and much of that depends on air travel. Getting people safely flying again will be a powerful economic boost,” said de Juniac.

Meanwhile, the International Air Transport Association, IATA, says airlines globally are burning cash and accumulating debts without operations due to the Covid-19 pandemic.

This is just as the International body says if financial help fails to come before the end of June, 50 per cent of airlines will become insolvent.

It is against this backdrop that IATA’s Director, Advocacy and Strategy, Africa, Funks Adeyemi speaking at a virtual meeting organized by stakeholders in the industry, with the theme: “Flying into Turbulent Skies, Safely Navigating Covid-19 Headwinds – Survival Strategies for Nigerian Aviation”, says IATA is working assiduously to get Head of States and organizations to give the needed financial assistance to global airlines.

She added that their analysis recently revealed that if by the end if July airlines do not get financial support in the form of direct cash injection and about 50 per cent globally about 90 per cent will become insolvent.

“Am talking globally now, because this thing has affected all airlines, that means African airlines and Nigerians airlines as well and in this situation too.”

IATA Adeyemi noted estimates that for 2020 the industry is going to record a loss of about $400billion, adding that this was an industry just trying to maintain a balance from a very high cost and tiny margin before the pandemic.

“This a real cataclysmic event in aviation, the airlines are burning cash even

though they are not flying, they still have to spend, maintain their aircraft, maintain so many of their machinery and there is still a lot of money still being burnt and we estimate that about $60billion a quarter.”

Because of this negative impact of the coronavirus pandemic, the international body says it has sent out letters some personally written by its Director-General to Heads of States calling for assistance for the airlines to survive.

The IATA’s Director says, “And I personally drafted almost 50 letters to all the African States and the Ministries of Transports, Ministries of Finance and some cases we got our Director-General to write letters to Presidents and Heads of States of at least half of the African countries.”