IATA expects aviation industry to remain cash negative during 2021

By Livemint

The International Air Transport Association (IATA) expects the aviation industry to remain cash negative throughout 2021 due to covid-19 pandemic that has hit travel demand amid restrictions in several countries to contain the virus.

Estimates for cash burn in 2021 have ballooned in the $75-$95 billion range from the previously anticipated $48 billion, the aviation industry body said in a statement.

“It is already clear that the first half of 2021 will be worse than earlier anticipated. This is because governments have tightened travel restrictions in response to new covid-19 variants. Forward bookings for summer (July-August) are currently 78% below levels in February 2019 (comparisons to 2020 are distorted owing to covid-19 impacts),” it said.

“With airlines now expected to burn cash throughout 2021 it is vital that governments and the industry are fully prepared to restart the moment governments agree that it is safe to re-open borders,” it added.

IATA expects airlines globally to lose more than $38.7 billion in 2021 due to the muted travel appetite and various curbs during the pandemic. Airlines operating in the Asia-Pacific (Apac) region, including India, are expected to report combined losses of $7.5 billion in 2020 because of the adverse impact of the pandemic on travel demand.

IATA expects airlines to improve their performance in the second half of 2021, but passenger traffic may rebound to 2019-levels only by 2024.

“With governments having tightening border restrictions, 2021 is shaping up to be a much tougher year than previously expected. Our best-case scenario sees airlines burning through $75 billion in cash this year.

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