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The International Air Transport Association (THERE IT IS) released its financial outlook for the global airline industry showing significant losses for this sector during the 2020.
In a new press release, IATA made its financial analysis public, in which airlines are expected to lose $84.3 billion dollars in 2020 for a net profit margin of -20.1%. Revenues will drop 50% a $419 billion of $838 billion in 2019. On 2021, losses are expected to be reduced to $15.8 billion as revenue increases to $598 billion.
Within the declared crisis of the airline industry, that day by day its losses are marked more before the expansion of the countries to maintain travel restrictions, the body disseminated its study, which allows you to see how long the recovery will take more of 4 years:
Main forecast for 2020
Passenger demand evaporated as international borders closed and countries went into lockdown to prevent the spread of the virus. This is the biggest driver of airline industry losses. At the low point of April, global air travel was about a 95% below the levels of 2019.
There are signs that traffic is slowly improving. However, traffic levels are expected (en el Revenue Passenger Kilometers) for 2020 decrease by a 54,7% in comparison with 2019. The number of passengers will be cut in half to 2,25 billion, approximately equal to the levels of 2006.
Passenger revenue is expected to fall to $241 billion (below $ 612 billion in 2019). This is greater than the historical drop in demand, which reflects an expected drop in 18% in performance per passenger, as airlines try to encourage people to fly again through price stimulation. Load factors are expected to average 62.7% for 2020, some 20 percentage points below the record of 82.5% reached in 2019.
Fuel prices offer some relief. On 2019, jet fuel averaged $77 / barrel, while the average forecast for 2020 It is $36.8. The fuel is expected to represent the 15% of overhead costs (compared to the 23.7% on 2019).
The cargo is the only bright spot. In comparison with 2019, total tons of cargo transported are expected to decrease by 10.3 million tons to 51 millions of tons. Nevertheless, A severe shortage in cargo capacity due to unavailability of belly-load on passenger planes is expected to increase rates by a 30% during the year. Cargo revenue will reach a near record of $110.8 billion in 2020 (compared to $ 102.4 billion in 2019). As part of industry revenue, the load will contribute approximately one 26%, an increase vs. 12% on 2019.
regional performance 2020
All regions will record losses for the airline industry in 2020. The crisis has acquired a similar dimension in all parts of the world, with capacity cuts ranging from 10 a 15 percentage points or more, behind the drop in demand of more than 50% accumulated.
| Region | passenger demand (RPKs) | Passenger capacity (ASKs) | Net earnings | Comments |
| Global | -54.7% | -40.4% | -$84.3b | |
| North America | -52.6% | -35.2% | -$23.1b | The large domestic markets of North America and financial support to US airlines under the CARES Act are expected to play a key role in the recovery. |
| Europe | -56.4% | -42.9% | -$21.5b | The progressive opening of intra-European travel has the potential to boost the recovery, as long as onerous quarantine measures are avoided. Chains attached to government aid packages, particularly for environmental purposes, must be carefully managed to avoid unintended consequences such as damaged competitiveness. |
| Pacific Asia | -53.8% | -39.2% | -$29.0b | Asia-Pacific was the first region to feel the brunt of the COVID-19 crisis. It is expected to record the largest absolute losses in 2020. |
| middle East | -56.1% | -46.1% | -$4.8b | Lower oil prices will add additional pressure to a difficult economic situation within the region. The recovery of the region's super connectors could be delayed with the expected phase of the restart with national and regional routes followed by long-haul international routes.. |
| Latin America | -57.4% | -43.3% | -$4.0b | Latin America entered the crisis later. Governments in the region have implemented some of the most extreme measures in terms of border closures that could delay recovery.. |
| Africa | -58.5% | -50.4% | -$2.0b | The course of the virus in this region has not yet been fully seen. However, border closures have practically halted flights. International support will be needed to complement the limited means that governments in the region have to provide aid packages. |
Reduced losses in 2021
With open borders and increasing demand in 2021, the industry is expected to cut its losses to $15.8 billion for a net profit margin of -2.6%. Airlines will be in recovery mode but still well below pre-crisis levels (2019) on many performance measures:
- The total number of passengers is expected to recover to 3.38 billion (approximately the levels of 2014 when there was 3.33 billion travelers), which is well below 4.54 billion travelers in 2019.
- Overall revenue is expected to be $598 billion, what would be an improvement 42% on 2020, but still a 29% below the $838 billion of 2019.
- Air cargo demand expected to be strong as businesses restock at the start of the economic recovery, while a slow return of the passenger fleet will limit the growth of cargo capacity and keep cargo performance stable at the levels of 2020.
- Jet fuel prices are expected to rise at an average of $51.8 per barrel for the year, as global economic activity and demand for oil increases. While that will add some cost pressure on airlines, the price per barrel is similar to that of 2016 ($52.1) and will remain the lowest since 2004 ($49.7).
The only measure that will allow the industry to recover will be to fly again and at this point it will depend on the appropriate decisions of each government..
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