The outlook for airlines across the Middle East region is expected to improve this year, but losses will still mount to approximately $4.2 billion, according to the latest data from the International Air Transport Association (IATA).
In a report issued on Wednesday, the air transport body said that net profit margin for the region's carriers will fall by 13.8 percent, as the coronavirus pandemic continues to weigh on travel demand.
The latest figures, however, are an improvement on the estimated $7.9 billion industry loss and -28.9 percent profit margin cuts incurred by carriers in the Gulf and around the Middle East in 2020.
Airlines have been among the worst hit by the COVID-19 outbreak, as fears of infection, coupled with strict border restrictions, have kept travellers away from the airports since last year.
Previous estimates indicated that the volume of air passengers in 2020 was less than 20 percent of the traffic recorded in 2019. The outbreak has also put more than 1.7 million workers in the Middle East at risk of losing their livelihood as airlines continued to burn cash.
Carriers across the region received some $4.8 billion in financial aid from the government last year.
Other markets’ performance
Losses forecast for the region will also be among the world’s biggest this year, just behind Europe, which is expected to lose $22.2 billion, Asia Pacific ($10.5 billion) and North America ($5 billion).
Overall, losses worldwide will be around $47.7 billion, down from last year’s $126.4 billion.
“This crisis is longer and deeper than anyone could have expected. Losses will be reduced from 2020 but the pain of the crisis increases,” said Willie Walsh, IATA’s director-general.
The air transport body has pushed for the rollout of its IATA Travel Pass, an app-based digital passport that seeks to simplify air travel during the coronavirus pandemic. With the new initiative, IATA hopes to entice people to fly again.
IATA has blamed travel restrictions, including quarantines, for killing travel demand.
Measured in revenue passenger kilometres or RPKs, global travel demand this year is expected to recover to 43 percent of 2019 levels. While that is a 26 percent improvement on 2020, “it is far from a recovery,” IATA said.
The country's major carriers Emirates and Etihad had cut jobs last year to cushion the impact of the pandemic.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here.
© ZAWYA 2021