Tuesday, January 18

Airlines See Covid-Related Losses Over $ 200 Billion

Airline losses from the coronavirus pandemic are expected to exceed $ 200 billion as travel restrictions weigh on corporate and long-haul demand well into 2022, according to the main lobbyist for the company. industry.

Carriers are poised to post a collective deficit of $ 11.6 billion next year, the International Air Transport Association in Boston said Monday at its annual meeting. The trade body also increased its loss estimate for this year and revised up the deficit for 2020.

The combined $ 201 billion in net losses during the pandemic-ruined period dwarfs nearly nine years of industry earnings, according to IATA figures. While domestic and regional travel have started to pick up, there has been little recovery on the world-spanning trade routes so crucial to many airlines.

The United States is poised to open its borders to transatlantic visitors next month, but other long-haul markets remain stagnant, especially those connecting Asia with Europe and North America.

“The scale of the Covid-19 crisis for airlines is enormous,” IATA Director General Willie Walsh said at the industry’s largest meeting of CEOs in more than two years. “People have not lost the desire to travel, as we see in the strong resilience of the domestic market. But they are prevented from traveling internationally due to restrictions, uncertainty and complexity. ”

Environmental demands

Carriers face an additional challenge in responding to demands for the industry to move faster to reduce its carbon footprint. The pressure, which started before the pandemic, has only increased in recent months. IATA accelerated its targets on Monday, setting a target to reach net zero emissions by 2050.

Passenger traffic, the number of people who fly by distance traveled, is expected to reach 40% of pre-pandemic levels this year, increasing to 61% in 2022, when the traveler count should be 3.4 billion. That’s similar to the number of clients for 2014, but about a quarter below the number for 2019.

To aid in the recovery, Walsh called on governments to simplify complex travel restrictions and allow vaccinated travelers to move freely between countries.

“The travel restrictions gave governments time to respond in the early days of the pandemic,” he said. “Almost two years later, that foundation no longer exists.”

This year’s losses will total nearly $ 52 billion, IATA predicts, worse than the $ 48 billion estimated in April, after flights remained limited during the normally lucrative northern summer.

Last year’s loss was revised to around $ 138 billion from $ 126 billion.

US recovery

Among global regions, only carriers in North America are forecast to make a profit again next year, with nearly $ 10 billion in net revenue. European airlines will post losses of about $ 9.2 billion, according to IATA, while Middle Eastern carriers, which are heavily reliant on intercontinental routes, will run a deficit of $ 4.6 billion.

Walsh, formerly CEO of IAG SA, owner of British Airways, offered some optimism to the airline leaders who met, saying that the industry has “well beyond the deepest point of the crisis” and that “the path to recovery is in sight. ”

Domestic flights, which benefit from the removal of curbs, will almost return to pre-pandemic passenger levels next year, IATA said.

Air cargo is another bright spot, with demand this year expected to be 8% above 2019 levels, rising to more than 13% in 2022 amid a surge in shipments from a global replenishment and the switch to online shopping.

Walsh said carriers will continue to need wage support measures from governments until international travel picks up on a large scale, as well as regulatory measures such as suspension of use-or-lose rules for airport slots.

Airlines are expected to regain capacity faster than the rebound in traffic, hurting seat occupancy levels. The average passenger load factor is expected to be around 67% this year, rising to 75% in 2022, still well below the record 83% set in 2019.

While IATA represents 290 airlines that comprise 82% of global air traffic, its membership excludes several low-cost airlines that are among those expected to recover the fastest from the crisis.

© 2021 Bloomberg


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