Few sectors of the economy have been as hard hit by the coronavirus pandemic as the airline industry.
Most significantly, carriers are facing a cash crisis. According to the International Air Transport Association (IATA), the airline industry is set to burn through US$77 billion (AU$108b) in cash during the second half of 2020 – that’s equal to US$13 billion (AU$18.3b) a month or US$300,000 (AU$422k) a minute.
And despite the slow restart of air travel, IATA says airlines will continue haemorrhaging cash at an average US$5 to $6 billion per month in 2021.
While governments around the world have provided some US$160 billion (AU$225b) in support to airlines since the onset of COVID-19, the organisation says more is needed, including financial aid that does not add more debt to the industry’s highly-indebted balance sheet.
“We are grateful for this support, which is aimed at ensuring that the air transport industry remains viable and ready to reconnect the economies and support millions of jobs in travel and tourism. But the crisis is deeper and longer than any of us could have imagined,” IATA’s Director General and CEO Alexandre de Juniac said.
“If these support programs are not replaced or extended, the consequences for an already hobbled industry will be dire.”
“Historically, cash generated during the peak summer season helps to support airlines through the leaner winter months. Unfortunately, this year’s disastrous spring and summer provided no cushion.”
Despite cutting costs by over 50% during the second quarter, IATA estimates the industry went through US$51 billion in cash, with revenues falling year-on-year by 80%. It doesn’t expect the industry to turn cash positive until 2022.
Subscription successful! Thank you for subscribing.