Airlines set to burn through $77bn of cash in second half of 2020

Alarm bells ringing says IATA chief as global airlines are set to lose up to $70bn in 2021
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Passengers have begun to travel again but many are being put off by the poor state of the economy and quarantine measures.
Passengers have begun to travel again but many are being put off by the poor state of the economy and quarantine measures.

Airlines around the world will hemorrhage around $77 billion of cash in the second half of 2020, equivalent to $13 billion a month, according to the International Air Transport Association (IATA).

Despite desperate attempts by airlines to slash costs by 50% and a general resumption of flights in the second quarter of 2020, IATA estimates that the industry burnt through $51 billion in cash as revenues fell 80% year-on-year.

Airlines are expected to go through a further $60-70 billion in 2021 and the industry is not expected to turn cash positive until 2022. 

Governments around the world have provided $160 billion in support for airlines but IATA said even more help is needed to pull carriers through the winter season.

“The crisis is deeper and longer than any of us could have imagined,” said Alexandre de Juniac, IATA’s CEO. “And the initial support programs are running out. Today we must ring the alarm bell again. If these support programs are not replaced or extended, the consequences for an already hobbled industry will be dire.”

He said: “Historically, cash generated during the peak summer season helps to support airlines through the leaner winter months. Unfortunately, this year’s disastrous spring and summer provided no cushion. In fact, airlines burned cash throughout the period.

“And with no timetable for governments to reopen borders without travel-killing quarantines, we cannot rely on a year-end holiday season bounce to provide a bit of extra cash to tide us over until the spring.”

Global airlines have already parked thousands of aircraft, cut non-critical expense and laid off hundreds of thousands of workers in an effort to reduce overheads. IATA fears further job losses if the industry does not receive help and if passengers do not start returning soon.

According to the latest figures from the Air Transport Action Group, the severe downturn this year, combined with a slow recovery, threatens 4.8 million jobs across the entire aviation sector.

But in a recent IATA survey, some two thirds of travelers have already indicated that they will postpone travel until the overall economy or their personal financial situation stabilises.

“Increasing the cost of travel at this sensitive time will delay a return to travel and keep jobs at risk,” said de Juniac.

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