SAA

African airlines could lose $2bn in the worst financial year in aviation history

Financially, 2020 will go down as the worst year in the history of aviation, according to Alexandre de Juniac, director general and CEO of the International Air Transport Association. On average, every day this year will add $230 million to industry losses, he said during a webinar on 9 June. About 10% of the world’s GDP is from tourism and much of that depends on air travel.

IATA’s financial outlook for the global air transport industry forecasts expected losses to total $84.3 billion in 2020 for a net profit margin of -20.1%. African airlines are forecast to make a total net loss of $2 billion in 2020.

However he also believes that, provided there is not a second and more damaging wave of Covid-19, the worst of the collapse in air traffic is likely now over.

“People will want to fly again, provided they have the confidence in their personal financial situation and the measures taken to keep travellers safe. There is no tried and true playbook for a recovery from Covid-19, but the International Civil Aviation Organisation’s globally harmonised [protocols],” said De Juniac.

In April, global air travel was roughly 95% below 2019 levels, but there are indications that traffic is slowly improving. Yet, IATA expects global air passenger numbers will roughly halve to 2.25 billion – roughly equal to 2006 levels. Furthermore, due to capacity taking time to be rebuilt, the industry body expects a 40.4% decline for the year. Load factors are expected to average 62.7% for 2020, compared to 82.5% achieved in 2019.

Significantly reduction of losses in 2021 compared to 2020 levels should provide some relief, but the industry’s recovery is likely to be long and challenging due to factors including debt levels, the need for social distancing, the recession and an expected phased return of greater travel confidence from domestic to regional and then international.