AIRLINES BRACING FOR MORE IMPACT
Of aviation jobs needed to be axed to reach the level of productivity of recent years
paris — The airline industry holds its annual gathering by video conference next week under the shadow of the Covid-19 pandemic that has plunged the sector into a crisis that may yet claim more carriers — and operators need even more money to survive. The restrictions put into place to slow the spread of the coronavirus hit airlines hard, making travel impossible or difficult.
Airlines grounded nearly their entire fleets during the first wave of the pandemic. After hitting a low point in April, air traffic began to gradually increase, before slowing once more as the spread of coronavirus accelerated again.
The International Air Transportation Association (Iata) expects traffic to down by 66 per cent for 2020 as a whole.
The longer the crisis lasts, the greater the risk for bankruptcies. Nearly 40 airlines are in a very difficult situation Alexandre de Juniac, Director-general and CEO of Iata
This great industry reset will sadly still see more jobs lost and airlines fold... we still have a long way to go
chief analyst at StrategicAero Research
Saj Ahmad,
Airlines have already shed tens of thousands of jobs as they try to stay afloat, and according to a survey conducted by Iata in October, 59 per cent intend to cut more positions in the coming year.
Airlines for America, the trade body for US airlines, estimates that 90,000 jobs will have been shed between March and December. “To reach the level of productivity of recent years the number of jobs needs to be cut by 40 per cent,” Iata estimates.
Many governments stepped in to support the sector, but faced with another wave of the pandemic that has emptied their coffers, airlines are again seeking help.
The sector has already obtained $160 billion in various forms of aid, according to Iata calculations.
Two big Latin American airlines, Latam and Avianca, have sought bankruptcy protection, as has low- cost European airline Norwegian for two of its main subsidiaries. Virgin Australia fell into administration and was then bought by a US company. Britain’s Flybe is also hoping to be bought out of bankruptcy protection. Korean Air is set to buy its troubled rival Asiana Airlines.
If the pandemic choked off passenger transport, freight transport received a shot in the arm from urgent demand for masks and other medical gear at the start of the crisis. The distribution of vaccines is also expected to generate considerable business.
If freight represented 15 per cent of airlines’ revenue before the crisis, Iata says, that has jumped to 20 to 25 per cent due to the limited space available and increased demand pushing up prices.
Tens of billions more needed
And airlines need up to another $80 billion to survive, Iata’s head told a French daily on Friday, as many countries tighten restrictions to confront another wave of coronavirus infections.
“For the coming months the industry is estimated to need $70$80 billion in additional aid,” Alexandre de Juniac told La Tribune. “Otherwise they won’t survive.”
“The longer the crisis lasts, the greater the risk for bankruptcies,” de Juniac was quoted as saying by the daily. “Nearly 40” airlines “are in a very difficult situation or are under bankruptcy protection or administration,” he added.
Saj Ahmad, chief analyst at StrategicAero Research, said the welcome news of at least two proven vaccines against Covid-19 is probably the only positive that 2020 has delivered.
“Its been a brutal year for aviation and Iata’s grim picture lays bare the widespread devastation caused to airlines, airports, hotels and a slew of supporting industries. Even with these two vaccines, the biggest two obstacles to bringing about 2019-style normality is the physical limitations of vaccine production and then secondly, the distribution of these vials across the globe,” he told Khaleej Times.
“And with over seven billion people on the planet to inoculate, it could take up to 18 months to vaccinate everyone and have a healthy supply for emergency needs. To that end, air travel normality likely wont return to the way it was for at least a couple of years after that, and even then, lucrative high-yield business class traffic may not emerge given the advancements and proven working at home technology that dispenses the need for companies to pay for expensive flights, meals and hotels.”
“This great industry reset will sadly still see more jobs lost and airlines fold. Until passengers have a clean bill of health to fly, we still have a long way to go before the allure of air travel and cheap fares becomes a part of our lives — and with so many people losing their jobs and income, we’re in for a long wait.”