Airline Losses To Touch $118bn And $38.7 Bn In 2020 And 2021 Respectively

The International Air Transport Association (IATA) has predicted that the airline industry will see a net loss of $118.5 billion in 2020 and $38.7 billion in 2021. IATA has explained that several performance factors in 2021 will be better than in 2020. The latter half of 2021 is expected to perform better after a difficult first half. 

International markets were hit the hardest and will take time to recover

All major operational parameters in the passenger business were negative, according to IATA. Passenger numbers are further expected to plummet to 1.8 billion (60.5% down on the 4.5 billion passengers in 2019). Additionally, passenger revenues will also plummet to $191 billion, less than a third of the $612 billion earned in 2019. These factors are a result of a 66 per cent fall in passenger demand (measured in Revenue Passenger Kilometers/RPK). While international markets were hit significantly hard, domestic markets, led by recovery in China and Russia, are expected to perform much better. 

“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,” said Alexandre de Juniac, IATA’s Director General and CEO.

De Junaic added: “In 2020, the COVID-19 crisis challenged the industry for its very survival in 2020. In the face of a half trillion-dollar revenue drop (from $838 billion in 2019 to $328 billion) airlines cut costs by $365 billion (from $795 billion in 2019 to $430 billion in 2020). “The 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.”

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