The representative body of the global airline industry, the International Air Transport Association (Iata), expects the sector to continue to make losses next year, in the aftermath of this year’s global and severe disruption of air transport – the consequence of attempts to contain the Covid-19 pandemic. However, 2021’s losses will be much reduced over those for this year.
While the global sector is expected to suffer losses of $84.3-billion this year, the predicted losses for next year are $15.8-billion. While the net profit margin for 2020 is forecast to be minus 20.1%, that for 2021 is expected to be much improved, coming to minus 2.6%.
Passenger numbers next year are predicted to rise to 3.38-billion, which will take them back to about the levels seen in 2014 (3.33-billion) but significantly lower than the 2019 number of 4.54-billion. Total revenues in 2021 will be 42% up on this year, amounting to $598-billion. But that figure will be 29% down on 2019’s $838-billion.
“Airlines will still be financially fragile in 2021,” cautioned Iata director-general and CEO Alexandre de Juniac. “Passenger revenues will be more than one-third smaller than in 2019. And airlines are expected to lose about $5 for every passenger carried. The cut in losses will come from reopened borders leading to increased volumes of travellers.”
Airlines’ unit costs are forecast to come down next year, because fixed costs will be spread over a greater number of passengers than carried this year. But these gains will be constrained by lower aircraft utilisation rates, which will be the result of continued measures to contain the pandemic.
The price of jet fuel next year is predicted to increase to an average of $51.8/bl. This will be the result of increased demand for oil as economies revive. Although this rise will put some pressure on airlines, the jet fuel price will be similar to what it was in 2016 ($52.1/bl) and the lowest it has been since 2004 ($49.7/bl).
“Competition among airlines will no doubt be even more intense,” he pointed out. “That will translate into strong incentives for travellers to take to the skies again. The challenge for 2022 will be turning reduced losses of 2021 into the profits that airlines will need to pay off their debts from this terrible crisis. … People will want to fly again, provided they have the confidence in their personal financial situation and the measures taken to keep travellers safe.”