Cape Town - The International Air Transport Association (Iata) presented a new analysis showing that the airline industry cannot slash costs to avoid bankruptcies and preserve jobs in 2021.
Representing 290 airlines in 120 countries, the association said although airlines have taken drastic steps to reduce costs, around 50% of airlines’ costs are fixed or semi-fixed.
The result is that costs have not fallen as fast as revenues, it said in a statement.
Iata director-general and chief executive Alexandre de Juniac said things did not look good for the industry for the foreseeable future.
“The fourth quarter of 2020 will be extremely difficult, and there is little indication the first half of 2021 will be significantly better, so long as borders remain closed and/or arrival quarantines remain in place.
“Without additional government financial relief, the median airline has just 8.5 months of cash remaining at current burn rates.
“And we can’t cut costs fast enough to catch up with shrunken revenues,” De Juniac said.
Finance Minister Tito Mboweni, meanwhile, announced that national carrier SAA will get R10.5billion to implement its business rescue plan.
“This allocation is funded through reductions to the baselines of national departments, public entities and conditional grants. Our approach is in line with the principle that funding to state-owned companies must come from within the current framework and be reprioritised from elsewhere,” he said.
Flysafair chief marketing officer Kirby Gordon said: “Realistically, the hole this industry is in continues to be dug deeper. Certainly the pace of that digging has slowed, as we are able to start some level of viable operations.
“International carriers continue to be impacted in a massive sense given boarder restrictions, which means that they’ve had to endure a far longer period of intense limitation to operations versus us on the domestic market in South Africa.
“We were allowed to operate, under strict ‘business only’ limits, under level 3 which started in June.
“This means that we were on the ground for just more than two months.”
Cape Times