IATA now says 2021 will be worse for airlines than anticipated

Airplane airport tarmac runway [Credit: potowizard/Shutterstock.com]
The global airline industry is now not expected to be cash positive until 2022. Photo Credit: potowizard/Shutterstock.com

IATA now projects that airlines will burn through at least $75 billion in cash in 2021, up from the trade group's November estimate of $48 billion. 

In addition, IATA no longer expects the industry to reach cash positive in the fourth quarter of this year. Instead, the global airline lobby is estimating fourth-quarter cash losses of between $7 billion and $16 billion.

"It is already clear that the first half of 2021 will be worse than earlier anticipated," IATA said in a Wednesday update. "This is because governments have tightened travel restrictions in response to new Covid-19 variants. Forward bookings for summer are currently 78% below levels in February 2019."

The trade group laid out two scenarios for the remainder of the year. Under the first, travel restrictions would gradually be lifted once vulnerable populations in developed countries are vaccinated. Even in that case, such moves would only come in time to push demand over the summer to an estimated 38% of 2019 levels. Industrywide cash burn for the year would be $75 billion. 

Under IATA's more pessimistic scenario, governments would retain significant travel restrictions through the summer, leading to $95 billion in industrywide cash burn for 2021. 

"A functioning airline industry can eventually energize the economic recovery from Covid-19," IATA director general Alexandre d Juniac said in a statement. "But that won't happen if there are massive failures before the crisis ends. If governments are unable to open their borders, we will need them to open their wallets with financial relief to keep airlines viable." 


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