IATA 2020: Day 2 – The economics

Brian Pearce, Chief Economist at International Air Transport Association (IATA), was in a sombre mood when he delivered an address on airline economics during the second day of the airlines’ gathering. 

IATA now expects the global airline industry to record a net loss of $118bn in 2020, some $34bn deeper than the figure it projected in June.

That will be followed by a $38bn loss in 2021, IATA forecasts.

"That $38bn is still much more than the industry lost in previous crises such as 9/11 and the global financial crash,” Mr Pearce suggested.  

On a more encouraging note the industry is projected to turn cash positive in late 2021.

Using the slide below Pearce explained, after continued cash burn through the first half of the year, airline revenues in 2021 will be 50% of pre-crisis expectations.

Pearce outlined a revised financial projection for the crisis-hit industry.

Traffic is also expected to be half of that achieved in 2019, with a full recovery not expected until 2024.

IATA’s forecasts are based on “reasonably widespread distribution of vaccines in developed markets in the second half of 2021”.

Pearce adds that “government aid has kept airlines on life support” so far during the pandemic, but warns “more than half of that aid has been in the form of debt”.

Airlines have taken on $220bn of debt this year, Pearce notes, which is on top of the $430bn already in place in 2019.

“That’s going to be an issue for the restart of the industry,” he says.

See IATA Day 3.

www.iata.org

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