Airlines around the world are expected to continue bleeding cash this year as flight operations are stunted by a wave of lockdowns and border restrictions to combat new COVID-19 variants, the International Air Transport Association (IATA) said.
Cash burn is likely to hit in the range of $75 billion to $95 billion, higher than the previously anticipated $48 billion, said the air transport body, which represents nearly 300 airlines globally.
“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,” IATA’s statement issued on Thursday said.
Airline bookings for the coming summer season, July to August this year, are currently 78 percent below the levels in February 2019.
In a pessimistic scenario, IATA said, travel demand would only be around 33 percent of 2019 levels and airlines would burn through $95 billion if travel restrictions are not lifted soon.
“The driver of this scenario would be governments retaining significant travel restrictions through the peak northern summer travel season,” said IATA.
According to Alexandre de Juniac, IATA’s director general and CEO, said airlines would then need further financial assistance from the government.
“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. And it could be as bad as $95 billion. More emergency relief from governments will be needed,” de Juniac said.
“A functioning airline industry can eventually energise the economic recovery from COVID-19. But that won’t happen if there are massive failures before the crisis ends. If governments are unable to open their borders, we will need them to open their wallets with financial relief to keep airlines viable.”
Airlines had a most difficult time during the lockdown in March, when borders around the world and businesses shut down.
Things started to improve after the restrictions eased in the middle of last year, but with the recent discovery of new COVID-19 variants, many countries have reinstated strict precautionary measures.
Emirates Airline had recently cancelled some flights to a number of destinations, including those in South Africa, United Kingdom, Brazil, Saudi Arabia and Hong Kong as a result of tighter border controls.
(Writing by Cleofe Maceda; editing by Seban Scaria)
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