Airlines set to lose $157 billion amid worsening slump

Reuters

Updated: Nov 24, 2020 / 06:52 AM CST

Airplanes are parked at their gates at Newark International Airport on November 21, 2020 in Newark, New Jersey. – Current US numbers — more than a quarter of a million deaths have been reported — have alarmed authorities enough to advise that people stay home for the November 26 Thanksgiving holiday, when Americans usually travel to be with their families. (Photo by Kena Betancur / AFP) (Photo by KENA BETANCUR/AFP via Getty Images)

PARIS (Reuters) — Airlines are on course to lose a total $157 billion this year and next, their main global body warned on Tuesday, further downgrading its industry outlook in response to a second wave of coronavirus infections and shutdowns afflicting major markets.

The International Air Transport Association (IATA), which in June had forecast $100 billion in losses for the two-year period, said it now projects a $118.5 billion deficit this year alone, and a further $38.7 billion for 2021.

The bleak outlook underscores challenges still facing the sector despite upbeat news on development of COVID-19 vaccines, whose global deployment will continue throughout next year.

“The positive impact it will have on the economy and air traffic will not happen massively before mid-2021,” IATA Director General Alexandre de Juniac told Reuters.

Passenger numbers are expected to drop to 1.8 billion this year from 4.5 billion in 2019, IATA estimates, and will recover only partially to 2.8 billion next year. Passenger revenue for 2020 is expected to have plunged 69% to $191 billion.

The forecasts assume some re-opening of borders by the middle of next year, helped by some combination of COVID-19 testing and vaccine deployment.

IATA reiterated its call for governments to replace travel-stifling quarantine protocols with widespread testing programs.

“We are seeing states progressively coming to listen to us,” de Juniac said, citing testing initiatives underway in France, Germany, Italy, Britain, the United States and Singapore.

While some governments and airlines such as Australia’s Qantas say passengers are likely to require vaccination for long-haul travel, the approach is unlikely to work everywhere, de Juniac said.

“It would prevent people who are refusing (the vaccine) from traveling,” the IATA chief said. “Systematic testing is even more critical to reopen borders than the vaccine.”

Air cargo, a rare bright spot for the industry as the grounding of flights pushes freight prices higher, will likely see global revenue rise 15% to $117.7 billion this year despite an 11.6% decline in volume to 54.2 million tonnes, IATA said.