The International Air Transport Association (IATA) has estimated that the aviation industry would continue to experience a contraction and the cash burn in 2021 would balloon to about $75-95 billion from the previously anticipated $48 billion because of the Covid-19 pandemic that has hit travel demand amid restrictions in several countries.
“With governments having tightening border restrictions, 2021 is shaping up to be a much tougher year than previously expected. Our best-case scenario sees airlines burning through $75 billion in cash this year. And it could be as bad as $95 billion,” Alexandre de Juniac, IATA’s director-general and CEO, said in a release.
More emergency relief from governments will be needed. A functioning airline industry can eventually energise the economic recovery from Covid-19, he added.
“But that won’t happen if there are massive failures before the crisis ends. If governments are unable to open their borders, we will need them to open their wallets with financial relief to keep airlines viable.”
“It is clear that the first half of 2021 will be worse than earlier anticipated. This is because governments have tightened travel restrictions in response to new Covid-19 variants. Forward bookings for summer (July-August) are currently 78 per cent below levels in February 2019 (comparisons to 2020 are distorted owing to Covid-19 impacts),” IATA said in a statement.
“With airlines now expected to burn cash throughout 2021 it is vital that governments and the industry are fully prepared to restart the moment governments agree that it is safe to re-open borders,” it added.
IATA expects airlines globally to lose more than $38.7 billion in 2021 because of the muted travel appetite and various curbs during the pandemic. Airlines operating in the Asia-Pacific (Apac) region, including India, are expected to report combined losses of $7.5 billion in 2020 because of the adverse impact of the pandemic on travel demand.
IATA expects airlines to improve their performance in the second half of 2021 but passenger traffic may rebound to 2019-levels only by 2024.
