The International Air Transport Association (IATA) reported that airlines are expected to lose $84.3 billion in 2020 for a net profit margin of -20.1%. Revenues will see a 50% fall from $838 billion in 2019 to $419 billion. In 2021, losses are expected to be cut to $15.8 billion, as revenues rise to $598 billion.
2020 will go down as the worst year in the history of aviation financially
Alexandre de Juniac, IATA’s Director General and CEO stated: 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.”
“A key to the recovery is a 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,” said de Juniac.
IATA data reveals Passenger demand and revenues have decreased drastically
Passenger demand has sunken due to the closing of international borders and lockdown to prevent the spread of the virus. Global air travel was roughly 95% below 2019 levels, in April. There are indications that traffic is slowly improving. Passenger numbers will fall to 2.25 billion, approximately equal to 2006 levels. Capacity, however, cannot be adjusted quickly enough with a 40.4% decline expected for the year.
Passenger revenues are expected to fall to $241 billion (down from $612 billion in 2019). This is greater than the fall in demand. Load factors are expected to average 62.7% for 2020, some 20 percentage points below the record high of 82.5% achieved in 2019.
Costs are not falling as fast as demand. Total expenses of $517 billion are 34.9% below 2019 levels but revenues will see a 50% drop. Non-fuel unit costs will rise by 14.1%, as fixed costs are spread over fewer passengers. Lower utilization of aircraft and seats due to restrictions will also lead to rising costs.
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