The year will be even worse for airlines than anyone could have projected. IATA now says the global industry is on track to record $119 billion in losses this year. This is a significant downgrade from IATA’s already alarming previous guidance, in June, which forecast the industry would lose $84 billion.
By comparison, the world’s airlines made almost $26 billion in profits in 2019, and IATA forecast last December that the industry would approach $30 billion in profits this year.
IATA released its forecast at its Annual General Meeting (AGM) this week, held virtually from Amsterdam by host KLM. That the AGM, which usually occurs every June but was delayed in the hopes the pandemic would subside, was held virtually is itself startling. Airline executives (and the press) look forward the briefings, schmoozing, and chance meetings that happen at every AGM. This year, by all accounts, very little beyond the formal briefings occurred. The association is hoping that the next AGM, in Boston hosted by JetBlue, will be a return to normal.
That, of course, depends on the trajectory of the pandemic and the effective distribution and administration of vaccines, and whether governments will drop travel restrictions, and businesses will send employees back out on the road.
The other numbers IATA released were equally bad. Just under 2 billion people flew this year, compared with almost 5 billion last year. The world’s airlines reported revenues that were almost half a trillion dollars lower than last year, to $328 billion. Costs, however, fell to $365 billion from $430 billion.
This year had another unforeseen theme: The success of cargo. Air cargo revenues rose to $118 billion this year, from $102 billion last year. This was even as cargo capacity fell dramatically. Cargo capacity this year is expected to be 45% of last year’s levels, as there’s far less belly-hold capacity available.
And what about next year? IATA is bracing itself for the industry to lose almost $39 billion next year, and it expects passenger volumes to rise — a bit — to 2.8 billion. Cargo volumes are expected to match 2019 levels next year, IATA forecasts.
The group once again implored governments to ease travel restrictions and to support the airline industry. “We need to get borders safely re-opened without quarantine so that people will fly again,” Alexandre de Juniac, IATA director general, said.” And with airlines expected to bleed cash at least until the fourth quarter of 2021 there is no time to lose.”
