Middle East airlines projected to lose $5bn this year
IATA’s recovery forecast estimates the industry will lose in excess of $84bn in 2020
“Financially, 2020 will go down as the worst year in the history of aviation,” said International Air Transport Association (IATA) CEO Alexandre de Juniac in its latest recovery forecast.
Airlines in the Middle East are projected to make a loss of US$4.8 billion this year, with lowering oil prices exacerbating the threat and COVID-19 slashing through passenger demand.
IATA has estimated that the global aviation market will lose $84.3 billion this year as revenues plummet 50% down to $419 billion. “On average, every day of this year will add $230 million to industry losses. That’s why government financial relief was and remains crucial as airlines burn through cash,” added de Juniac.
Airlines aren’t expected to recover until 2021, where passenger levels are projected to reach 3.38bn, approximately the same level they were at in 2014. Revenues for next year are expected to hit $598bn which is a 42% improvement on this year, but 29% below 2019’s $838bn.
“Airlines are expected to lose about $5 for every passenger carried. Competition among airlines will no doubt be even more intense. That will translate into strong incentives for travellers to take to the skies again. The challenge for 2022 will be turning reduced losses of 2021 into the profits that airlines will need to pay off their debts from this terrible crisis,” he said.
IATA warned that the path to recovery is not a clear cut one, with debt levels ballooning, a looming recession and a major hit to consumer travel confidence.
“People will want to fly again, provided they have the confidence in their personal financial situation and the measures taken to keep travellers safe.
“There is no tried and true playbook for a recovery from COVID-19 but the ICAO Takeoff re-start plan outline is globally harmonised. It is important that industry and governments follow it so that travellers will have the maximum reassurance about their safety. That will be a good start. And depending on how the pandemic evolves, knowledge of the virus deepens, or science improves, industry and governments will be better prepared for a globally coordinated response. That includes the potential removal of measures when it is safe. That will give airlines some breathing room to rebuild demand and repair damaged balance sheets,” said de Juniac.