Airlines to lose $51.8b in 2021

Global aviation industry will continue to struggle as the gradual recovery is unlikely to reduce their losses in near future as airlines are expected to incur $51.8 billion losses this year, latest data shows.

The International Air Transport Association (Iata) said net industry losses are expected to reduce to $11.6 billion in 2022 after a $51.8 billion loss in 2021, reflecting an increase of 8.6 per cent from $47.7 billion loss estimated in April.

In its latest outlook for airline industry financial performance, the global aviation body said net 2020 loss estimates have been revised to $137.7 billion from $126.4 billion due to slow recovery and worldwide travel restrictions.

“Total industry losses in 2020-22 are expected to reach $201 billion,” according to an Iata statement issued at its annual general meeting in Boston on Monday.

Total passenger numbers are expected to increase to 3.4 billion next year from 2.3 billion in 2021, Iata estimates, but will be below 4.5 billion in 2019.

Worst is over

Willie Walsh, Iata’s director-general, said the magnitude of the Covid-19 crisis for airlines is enormous.

“Over the 2020-22 period total losses could top $200 billion. To survive airlines have dramatically cut costs and adapted their business to whatever opportunities were available. That will see the $137.7 billion loss of 2020 reduce to $52 billion this year. And that will further reduce to $12 billion in 2022,” Walsh said.

“We are well past the deepest point of the crisis. While serious issues remain, the path to recovery is coming into view. Aviation is demonstrating its resilience yet again,” Walsh told the group’s annual meeting.

Recovery in travel demand

The Iata said overall travel demand is expected to reach 40 per cent of pre-crisis (2019) levels this year and further improve to 61 per cent in 2022. Seat capacity is expected to increase faster than demand growth, reaching 50 per cent of pre-crisis levels in 2021 and 67 per cent in 2022.

“International demand is the slowest to recover owing to continuing restrictions on the freedom of movement across borders, quarantine measures and traveller uncertainty. It is expected to reach 22 per cent of pre-crisis level this year and will further improve to 44 per cent in 2022,” according to global aviation body.

The Iata said the recovery varies by region. North America is the only region projected to generate positive profits in 2022.

"Europe is forecast to remain in the red, with losses of $9.2 billion in 2022, compared with a loss of $20.9 billion expected in 2021. The region’s carriers will see a recovery in intra-European travel, but long-haul travel will remain limited," Iata said.

It further said carriers in the Asia-Pacific region, Latin America, the Middle East and Africa are all expected to see smaller losses in 2022 compared with this year.

Load factors improving

The average passenger load factor in 2021 is expected to be just 67.1 per cent, a level not seen since 1994. By next year, it is expected to recover to 75.1 per cent, a level exceeded in every year since 2005 until this crisis hit, and far below the 82.6 per cent record set in 2019, Iata said.

““People have not lost their desire to travel as we see in solid domestic market resilience. But they are being held back from international travel by restrictions, uncertainty and complexity,” Walsh said.

Aviation is resilient

He said the freedom to travel is a good incentive for more people to be vaccinated.

“We fully agree that vaccinated people should not have their freedom of movement limited in any way.”

Re-establishing global connectivity, the 11.3 million jobs (pre-Covid crisis) in the aviation industry, and the $3.5 trillion of GDP associated with travel and tourism should be priorities for governments, Iata said.

“Aviation is resilient and resourceful, but the scale of this crisis needs solutions that only governments can provide,” Walsh said.

Overall revenues to grow

The industry body said overall revenues are expected to grow by 26.7 per cent this year compared to $472 billion in 2020. In 2022, industry revenues are expected to surge by 39.3 per cent to $658 billion, similar to 2011 levels.

“The passenger business will contribute $227 billion to industry revenues in 2021, rising to $378 billion in 2022. Yields are expected to grow by two per cent this year and a further 10 per cent in 2022,” Iata said.

Cargo revenues are expected to rise to a record $175 billion in 2021 with a similar $169 billion expected in 2022. Cargo yields are expected to grow by 15 per cent this year but decline by eight per cent in 2022, it added.

— muzaffarrizvi@khaleejtimes.com