Global Airline industry to cut losses by 33.9% to $47.7bn in 2021-IATA

The International Air Transport Association (IATA) has estimated that the airline industry is expected to lose $47.7 billion in 2021, compared to $126.4 billion recorded in 2020.

IATA stated that the projected industry losses represent an improvement of a net profit margin of -33.9 per cent.

Director-General of the clearinghouse for over 290 global airlines, Willie Walsh in a virtual conference held Thursday on update on industry financial outlook for 2021 disclosed that the crisis is longer and deeper than anyone could have expected, stressing that losses would be reduced from 2020, with the pain of the crisis increasing.

He noted that a significant portion of the $3.5 trillion in GDP and 88 million jobs supported by aviation is at risk.

Most governments, he further explained have not yet provided clear indications of the benchmarks that they will use to safely give people back their travel freedom.

Effectively restarting aviation, he said, will energize the travel and tourism sectors and the wider economy, noting that with the virus becoming endemic, learning to safely live, work and travel with it is critical.

“That means governments must turn their focus to risk management to protect livelihoods as well as lives,” said Walsh.

According to him, “There is optimism in domestic markets where aviation’s hallmark resilience is demonstrated by rebounds in markets without internal travel restrictions. The government imposed travel restrictions, however, continue to dampen the strong underlying demand for international travel. Despite an estimated 2.4 billion people travelling by air in 2021, airlines will burn through a further $81 billion of cash.”

This is coming amid a report that African carriers will see slow vaccination rates limit international travel. With only 14 per cent of the region’s RPKs generated on domestic markets, this will provide a little cushion.

According to IATA, relatively weak economic growth will also limit the extent of pent-up demand. Nonetheless, net losses are expected to fall this year, from -32 per cent of revenues in 2020 to -24per cent.

Walsh further disclosed that the group’s immediate priority in the face of an ongoing crisis occasioned by the COVID-19 pandemic points to the start of industry recovery in the latter part of 2021.

IATA continues to urge governments to have plans in place so that no time is lost in restarting the sector when the epidemiological situation allows for a re-opening of borders.

Industry losses of this scale, he reiterated imply a cash burn of $81 billion in 2021 on top of $149 billion in 2020.