The International Air Transport Association (IATA) has released a new analysis showing that the airline industry will remain cash negative throughout 2021.
Analysis for November 2020 indicated that airlines would turn cash positive in the fourth quarter of 2021. However, IATA says airlines are now not expected to be cash positive until 2022.
Estimates for cash burn in 2021 have ballooned to the $75-billion to $95-billion range from a previously anticipated $48-billion. This is due to a weak start for 2021 due to travel restrictions in response to new Covid-19 variants.
IATA revealed that forward bookings for July to August are currently 78% below levels in February 2019 (comparisons to 2020 are distorted owing to Covid-19 impacts).
Alexandre de Juniac, IATA’s Director General and CEO, said that 2021 is shaping up to be a much tougher year for the airline industry than previously expected.
“Our best-case scenario sees airlines burning through $75 billion in cash this year. And it could be as bad as $95-billion. More emergency relief from governments will be needed. A functioning airline industry can eventually energise the economic recovery from Covid-19.
“But that won’t happen if there are massive failures before the crisis ends. If governments are unable to open their borders, we will need them to open their wallets with financial relief to keep airlines viable,” he said.
He said it's vital that governments and the industry is fully prepared to restart the moment governments agree that it is safe to re-open borders.
“Even as governments focus on managing the Covid-19 crisis, we must be thinking a step ahead to the plans, tools and standards needed to restart flying and energise the economic recovery from Covid-19. Working in partnership is nothing new for airlines or for governments. It’s how we have delivered safe, efficient, and reliable connectivity for decades.
"For a year, it’s been lockdowns and restrictions as vaccines were developed and testing capacity expanded. With good news on vaccines and growing testing capacity, there is a glimmer of light at the end of the tunnel. So, it’s the time to ask governments for their restart plan and to offer any support from industry that could help,” said de Juniac.