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Airline Losses in 2020 Expected to Top $84 Billion

The airline industry is expected to lose $84.3 billion in 2020, the International Air Transport Association (IATA) said on Tuesday while giving its financial outlook for global air transport.

According to IATA, the biggest driver of industry losses was the drop in passenger demand as international borders closed and countries locked down to prevent the spread of the Covid-19 virus.

Referring to 2020 as “the worst year in the history of aviation”, IATA says that losses in 2020 will be the biggest in aviation history — over $84 billion and nearly $16 billion in 2021.

“By comparison, airlines lost $31 billion with the Global Financial Crisis and oil price spike in 2008 and 2009. There is no comparison for the dimension of this crisis,” said Alexandre de Juniac, IATA’s Director General and CEO, during a media briefing.

IATA’s data showed that all regions will post losses in 2020. Airlines in North America are estimated to deliver a net loss of $23.1 billion; net losses for Europe are estimated to be $21.5 billion; Asia-Pacific is expected to see $29 billion in net losses; Middle Eastern airlines are expected to see their losses rise to $4.8 billion; Latin America is expected to post a $4.0 billion net loss; and airlines in Africa are expected to record a $2.0 billion net loss.

Quarantine must be avoided

IATA’s CEO also referred to the need to avoid quarantine during the restart of travel and underlined the critical importance of governments and industry working together to implement the ICAO guidelines.

“This layered approach should give governments the confidence to re-open borders without quarantine measures… Ιf quarantine is introduced, economies are effectively kept in lockdown for the purposes of travel. Over 80 percent of travelers tell us that if quarantine is imposed, they won’t travel,” de Juniac said.

“We are encouraged to see the very fast developments in accurate mass testing capabilities for Covid-19. As confidence in testing grows, we see the potential for it to play a pivotal role in keeping borders open without quarantine,” he added.

Airlines to end 2020 with $550 billion in debt

Moreover, de Juniac said that the airline industry emerging from the coronavirus crisis will have much more debt.

“Vital financial relief measures by governments have kept airlines from going bankrupt but have ballooned debt by $120 billion to $550 billion,” he said, adding that further relief measures should be focused on helping airlines to generate more working capital and stimulating demand rather than further expanding debt levels.

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