Latin America’s stricken airlines facing long haul to recovery

MEXICO CITY: Latin America’s beleaguered airlines will take up to three years to recover losses due to the Coronavirus Disease 2019 (Covid-19) pandemic, and in the meantime desperately need government help, according to experts surveying the damage to the industry.

The International Air Transport Association (IATA) estimates it will take at least that time for the region’s airlines to inch back to their pre-pandemic level for domestic and regional flights.

Long-haul services to the US and Europe will take until 2024 to come back, it says.

“It’s a long-range view; it will not be short term. It will take a lot of work,” said Peter Cerda, IATA vice president for the Americas.

Evidence of the severity of the crisis came last week when the region’s two largest airlines, Chilean-Brazilian LATAM and Colombia’s Avianca, filed for bankruptcy in the US.

With countries across the region in lockdown, flight activity has plummeted 93 per cent from around 200,000 a day, with losses in revenue estimated at US$18 billion.

Cerda says that figure is likely to increase.

The IATA official says the impact to the industry is even worse than the aftermath of the Sept 11, 2001 attacks on the US.

“We are going to have airlines that are not going to be able to recover, that will have to shut down their operations for good,” he said.

After almost three months of lockdowns and restrictions on movement across the region, airlines have run out of cash and government support is “urgent,” he says.

“What we are asking for is not a financial rescue. It’s support, immediate relief that allows the industry to sustain operations,” said Cerda.

Airlines are seeking tax relief and credit guarantees from governments.

Globally, government aid to the airline sector stands at US$123 billion, including US$300 million from Latin America, according to IATA.

“Airports and airlines as well as governments are all losing out at this juncture,” because of the lack of connectivity across the continent, says Fernando Gomez Suarez, an aviation industry analyst in Mexico.

Governments are conscious of the broader effects and Chile is considering a bailout for LATAM, seeing the airline as vital to the economy, and seeking to preserve 10,000 direct jobs as well as the livelihood of up to 200,000 people the government says are dependent on the airline indirectly.

The company has already cut 1,800 of its total 42,000 staff.

The company is also holding discussions with the governments of Brazil, Peru and Colombia to save jobs there. — AFP

An economist observed that people who are well-off, highly skilled and work from home are going to demand that their employers make accommodations for them while lower skilled workers are taking on more risk without more pay.

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An Aeromexico airlines plane lands at the Benito Juarez International airport, in Mexico City, amid the Covid-19 pandemic.