Hopes for an airline recovery in 2021 grow bleaker

The airline industry is starting to lower expectations for a robust recovery next year following signs that travelers just aren’t ready to get back on planes this holiday season.

Analysts, airlines and trade groups are warning that passenger traffic could be down as much as 50% compared to 2019 levels, at least for much of the year. A meaningful recovery could take even longer depending on how long it takes to develop and distribute a longawaited COVID-19 vaccine.

“The reality is the virus is not at the level of containment that we all thought it would be when the first (stimulus) grant was issued, and we will all need additional time to get our businesses in a better spot over it to get ready for next year,” Delta Air Lines CEO Ed Bastian told investors Tuesday.

“To see a meaningful step up in demand from here, we will need business travel to further improve, local quarantines to end, and international restrictions to lift,” he said. “That will only come with widespread advances by the medical community and offices reopening, which many expect will start to happen in the first half of next year.”

Delta was the first major airline to report results for the third quarter, turning in a $5.4 billion loss. On Wednesday, United Airlines posted a $1.8 billion loss. American and Southwest airlines are scheduled to report their financials next week.

In the meantime, airplane manufacturers and analysts are painting a bleak picture for 2021. They see airlines flying only a fraction of the travelers they carried in 2019 and struggling to stop losing money on a daily basis.

The International Air Transportation Association last week said it doesn’t expect cash burn for the global industry won’t stop until at least 2022. Airlines for America, a trade group representing the seven largest U.S. airlines, said air traffic will be down 35% to 60% from 2019 levels.