More job losses are expected among airlines in the Middle East in the coming weeks and months as carriers are expected to make a loss of $4.8 billion this year because of the coronavirus crisis, which has destroyed demand for air travel.
The International Air Transport Association (IATA) issued its latest forecast for the industry on Tuesday, which estimates that the global airline market will lose $84.3 billion in 2020 as revenues fall 50% down to $419 billion.
“Financially, 2020 will go down as the worst year in the history of aviation,” said Alexandre de Juniac, IATA’s CEO. “On average, every day of this year will add $230 million to industry losses. That’s why government financial relief was and remains crucial as airlines burn through cash.”
In 2021, global losses are expected to be cut to $15.8 billion as revenues rise to $598 billion.
Airlines will begin to recover next year as global passenger numbers are expected to lift to 3.38 billion, which is around the levels they were at in 2014. Overall revenues in 2021 are expected to be $598 billion which would be a 42% improvement on 2020, but still 29% below 2019’s $838 billion.
De Juniac said that airlines will continue to be “financially fragile” in 2021 with passenger revenues remaining more than one-third smaller than in 2019.
“Airlines are expected to lose about $5 for every passenger carried. Competition among airlines will no doubt be even more intense. 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,” he said.
The industry’s recovery is expected to be hampered by increased levels of debt, reduced passenger confidence and an economic recession.
In the Middle East, super connectors will experience a more sluggish recovery in the near-term with long-haul international routes taking longer to bounce back than short-haul and domestic fights, IATA forecasts.