Aviation disaster! More than 40 airlines have gone bankrupt this year, and there will be more!
Airlines are counting on the distribution of coVID-19 vaccines to save the crisis next year, but more closures should be expected in the first half of this year, according to the International Air Transport Association.
Revenue next year is expected to be about 50% of 2019 revenue, and the industry will lose about $38 billion, down from an estimated loss of $118 billion this year.
Brian Pearce, IATA's chief economist, said at a news conference that airlines were expecting "an increase in vaccine supply in the second half of the year, but the first half has been challenging."
At the end of the first quarter of this year, the average airline had about 8.5 months of cash in reserve, or through the end of the first quarter of 2021.But a recovery in tourism, or an increase in vaccines, will help in the second half of the year.
"If we don't get any better, the airlines are at risk of going out of business and we will inevitably see a more integrated industry," Pearce said.
"About 40 to 50 airlines have gone out of business so far, and given what's going on, some will not survive if the travel industry takes years to recover," pearce said.
The recovery will also be regional.The performance of Asia Pacific airlines has improved and is expected to recover most quickly.
"North America is another area of interest," he explained.Before the crisis, North American airlines' earnings before interest and tax were nearly twice that of the Asia-Pacific region.We think that will allow them to recover more quickly and become the second best performing region next year."
Passenger transport has become increasingly important relative to cargo in terms of capacity, but internal or regional travel is expected to recover more quickly than international or long-haul travel, favouring small aircraft with small cargo volumes.
But with freight taking a growing percentage of revenue, airlines are expected to do their best to maintain freight capacity.
Air cargo revenues have risen from $102.4bn to $117.7bn this year.The International Air Transport Association predicts cargo volume will reach 54.2 million tons in 2020, down from 61.3 million tons last year.Next year, freight volume should be about 61.2 million, with a 5% increase in yields and an all-time high of $139.8 billion in freight revenue.
Freight, which accounted for 12 percent of revenue in 2019, is expected to grow to 36 percent in 2020 and 30 percent in 2021.
"Freight has performed better than passenger traffic, but it has not made up for the decline in passenger revenue," said Alexandre DE Juniac, the director-general."However, this has become a significant part of airline revenues and freight revenues have made it possible for airlines to maintain their basic international networks."