Airlines: Covid-19 Crisis to Continue into 2021, Losses Expected to Reach $157 Billion

Deep losses for the airline industry will continue into 2021 due to the impact of the coronavirus (Covid-19), the International Air Transport Association (IATA) said on Tuesday.

In a revised outlook for airline industry performance in 2020 and 2021, IATA said it expects a net loss of $118.5 billion for 2020 (deeper than the $84.3 billion forecast in June) and a net loss of $38.7 billion in 2021 (more than the $15.8 billion forecast).

“This crisis is devastating and unrelenting,” said Alexandre de Juniac, IATA’s Director General and CEO, in a statement.

Passenger numbers in 2020 are expected to plummet to 1.8 billion (60.5 percent down on the 4.5 billion passengers in 2019) and revenues are expected to fall to $191 billion, less than a third of the $612 billion earned in 2019.

“The history books will record 2020 as the industry’s worst financial year, bar none… Were it not for the $173 billion in financial support by governments we would have seen bankruptcies on a massive scale,” said de Juniac.

IATA expects airline financial performance to see a significant turn for the better in 2021, even if historically deep losses prevail. According to the association, the expected $38.7 billion loss in 2021 will be second only to 2020 performance.

Photo source: IATA

Passenger numbers are expected to grow to 2.8 billion in 2021, translating to a billion more travelers than in 2020, but still 1.7 billion travelers short of 2019 performance.

IATA said that on the assumption that there is “some opening of borders” by mid-2021 (either through testing or growing availability of a vaccine), overall revenues are expected to grow to $459 billion ($131 billion improvement on 2020, but still 45 percent below the $838 billion achieved in 2019).

The association does not expect passenger volumes to return to 2019 levels until 2024 at the earliest, with domestic markets recovering faster than international services.

Closed Borders/Quarantine

Photo source: IATA

Moreover, IATA pointed out that the biggest factors impeding the industry’s recovery are travel restrictions and quarantine measures that effectively prevent a meaningful revival of travel.

The association’s director general and CEO once again is insisting on safely re-opening travel with systematic testing.

“We cannot wait on the promise of a vaccine. We are preparing for efficient vaccine distribution. But testing is the immediate solution to meaningfully re-open air travel… We have fast, accurate and scalable testing that can safely do the job. The airlines are ready… Governments understood the criticality of a viable air transport sector when they invested billions to keep it afloat. Now they need to protect those investments by giving airlines the means to safely do business,” said de Juniac.