Airlines will burn $77bn of cash this half, says IATA
THE world’s airlines will burn through $77bn (€65bn) in cash during the second half of 2020, the International Air Transport Association (IATA) has warned.
The association has called on governments to provide additional relief measures for carriers, including financial aid that does not burden airlines with more debt.
IATA said that the airline industry has been supported to the tune of $160bn (€135bn) so far this year by way of direct aid, wage subsidies, corporate tax relief and specific industry tax relief including fuel taxes.
In Europe, where the pandemic has seen state aid rules suspended, some airline groups including Lufthansa and Air France-KLM have received billions of euro of government bailouts to ensure their survival.
CEO and director general of the IATA, Alexandre de Juniac said carriers welcome the support they’ve received so far.
“But the crisis is deeper and longer than any of us could have imagined,” he said. “And the initial support programmes are running out.
Today, we must ring the alarm bell again. If these support programmes are not replaced or extended, the consequences for an already hobbled industry will be dire.”
Some carriers groups including Aer Lingus owner IAG have been shoring up their balance sheets by tapping shareholders for billions of euro worth of equity. IAG raised €2.7bn, while Ryanair raised €400m.
IATA reckons that despite cutting costs by just over 50pc during the second quarter of this year, the airline industry ploughed through $51bn in cash as revenues collapsed almost 80pc compared to the same period a year ago.
It said the cash drain continued during the summer, and that airlines will burn between $60bn and $70bn in cash next year. IATA doesn’t expect the airline industry to be cash generative again until 2022.
This morning, the Oireachtas transport committee will hear from executives from Aer Lingus, Ryanair, the DAA and Shannon Group about the challenges facing the airline industry, and connectivity in particular. Transport Minister Eamon Ryan will also attend the meeting.
Meanwhile, Dublin-headquartered aviation asset management firm Stellwagen is rebranding as Seraph Aviation Group. In August, the stake owned by its majority shareholder and founder, Douglas Brennan, was acquired by a consortium of new and existing shareholders.