Global airline losses reduced during the second quarter: North America even saw net profits

31st August 2021

By: Rebecca Campbell

Creamer Media Senior Deputy Editor

     

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The global airline industry’s representative body, the International Air Transport Association (Iata), has reported that the aggregated losses of the sector decreased during the second quarter of this year (Q2 2021) in comparison to the first quarter. The data was released in Iata’s Airlines Financial Monitor July-August 2021.

In fact, in the best performing region, North America, airlines achieved a net post-tax profit of $96-million during the second quarter. This was the result of a rebound in domestic air travel, itself stemming from the progress in Covid-19 vaccination programmes.

All other regions continued to register losses, but lower losses than before. The second best performing region in Q2 2021 was Latin America, with net losses of $702-million.

“On the other hand, improvement of Asia Pacific and European airlines was small due to still muted international travel, which represented an important source of these airlines’ revenues before the [Covid-19] crisis,” stated the report. Asia Pacific airlines recorded losses of $1 671-million, while those for European airlines came to $4 594-million.

“Although the initial Q2 2021 financial results show that net losses narrowed down, downside risks for further recovery are increasing for the coming quarters since new Covid-19 restrictions are affecting some domestic markets that are on the recovery track, ie China,” cautioned Iata in its report. “Moreover, international travel restrictions remain tight.”

Although the drop in airline operating costs during Q2 2021 came to 35%, this was far less than the simultaneous drop in passenger revenues, which came to 60% (compared to the pre-crisis second quarter of 2019). Fuel costs fell by 52% and user charges by 48%, while labour costs declined by 27%. Regarding passenger revenues, the regions which suffered the worst were Asia Pacific, where they fell 63%, and Europe, where they dropped 66%.

“In our initial small sample of airline financials, the cash flow generation improved considerably in Q2 2021,” noted Iata. “The industry-wide improvement was largely driven by North American airlines since passenger bookings for domestic travel rebounded sharply. North American carriers at the aggregate turned to positive both in operating and free cash flow generation. Cash flow of some of the major European carriers also turned positive since the beginning of the pandemic since passenger bookings for summer travel were boosted with the progress in vaccination.”

Edited by Creamer Media Reporter

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