World’s airlines face another bleak year as outlook worsens

Paris, France – Airlines face another bleak year with steeper losses than previously forecast, as some regions struggle to speed up COVID-19 vaccination campaigns and control virus variants, an industry group has said.

The industry is expected to register net post-tax losses of US$47.7bn in 2021, greater than the US$38bn forecast in December, according to the International Air Transport Association (IATA).

On a brighter note, IATA slightly raised its forecast for global air passenger traffic, saying it would reach 43 per cent of pre-pandemic levels this year - compared to around 33 to 38 per cent forecast in February.

‘Financial performance will be worse and more varied this year than we expected in our December forecast, because of difficulties in controlling the virus variants and slower vaccination in some regions,’ the association said in a report.

IATA said it now expected ‘much more limited’ flying during the key summer season, when people take to the air on holiday.

Airlines lost more than US$126bn last year as the COVID-19 crisis prompted countries to lock down cities, close borders and ban international flights.

IATA expects more people to fly in 2021, with 2.4bn passengers compared to 1.8bn in 2020.

It still remains far from prepandemic air traffic: Some 4.5bn people travelled by plane in 2019.

The picture varies between regions.

North American airlines will fare better than previously thought, with losses of US$5bn instead of US$11bn, thanks to the recovery of the domestic market there, IATA said.

But the outlook has worsened in Europe due to a slower vaccination campaign and less easing of international travel restrictions.

European airlines are now tipped to lose US$22bn, compared to US$12bn in the earlier forecast.

Passenger volume at European airports is only expected to return to pre-pandemic levels in 2025, a year later than previously expected, according to industry group ACI Europe.

IATA expects zero growth in international passenger travel this year, but a better performance for airlines with large domestic markets such as North America, Latin America, and Asia-Pacific, thanks to a lack of travel restrictions within borders.

Airlines are expected to burn though US$81bn in cash this year.

While large airlines have raised sufficient cash to cover this, smaller ones have not and will need government aid or to raise more money from banks or capital markets, adding to the industry’s debt burden, IATA said.