Africa

African airlines could lose $2bn in the worst financial year in aviation history

  • 2020 is expected to go down in history as the worst yet for aviation, says the head of IATA.
  • Some $230 million is being lost on average each day. 
  • At the same time, IATA believes the worst is over.

Financially, 2020 will go down as the worst year in the history of aviation, according to Alexandre de Juniac, director general and CEO of the International Air Transport Association.

On average, every day of this year will add $230 million to industry losses, he said during a webinar on Tuesday. About 10% of the world’s GDP is from tourism and much of that depends on air travel.

IATA’s financial outlook for the global air transport industry, also released on Tuesday, forecasts expected to losses totally $84.3 billion in 2020 for a net profit margin of -20.1%.

Revenues are expected to fall 50% to $419 billion from $838 billion in 2019. In 2021, losses are expected to be cut to $15.8 billion as revenues rise to $598 billion.

It means that – based on an estimate of 2.2 billion passengers this year – airlines will lose $37.54 per passenger.

On average, every day of this year will add $230 million to industry losses

African airlines are forecast to make a total net loss of $2 billion in 2020.  

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“That’s why government financial relief was and remains crucial as airlines burn through cash,” said De Juniac.

At the same time, provided there is not a second and more damaging wave of Covid-19, he believes the worst of the collapse in air traffic is likely now over.

‘People want to fly again’

“People will want to fly again, provided they have the confidence in their personal financial situation and the measures taken to keep travelers safe. There is no tried and true playbook for a recovery from Covid-19, but the International Civil Aviation Organisation’s globally harmonised [protocols],” said De Juniac.

In April, global air travel was roughly 95% below 2019 levels, but there are indications that traffic is slowly improving. Yet, IATA expect global air passenger numbers will roughly halve to 2.25 billion – roughly equal to 2006 levels. Furthermore, due to capacity taking time to be rebuilt, the industry body expects a 40.4% decline for the year. Load factors are expected to average 62.7% for 2020, compared to 82.5% achieved in 2019.

IATA foresees that, although losses will be significantly reduced in 2021 from 2020 levels, the industry’s recovery is expected to be long and challenging due to factors including debt levels, the need for social distancing, the recession and an expected phased return of greater travel confidence from domestic to regional and then international.  

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