The International Air Transport Association (IATA) released its revised financial outlook for the global air transport industry in 2020 predicting that airlines are expected to lose $84.3 billion for a net profit margin of -20.1 percent this year.
The forecast projects industry revenues will fall 50 percent to $419 billion from $838 billion in 2019. IATA does expect a rebound in 2021, estimating global air transport industry revenues to rise to $98 billion, with losses cut to $15.8 billion.
“Financially, 2020 will go down as the worst year in the history of aviation,” said Alexandre de Juniac, IATA’s Director General and CEO. “On average, every day of this year will add $230 million to industry losses. In total that’s a loss of $84.3 billion. It means that – based on an estimate of 2.2 billion passengers this year – airlines will lose $37.54 per passenger. That’s why government financial relief was and remains crucial as airlines burn through cash.”
He added that, provided there is not a second and more damaging wave of COVID-19, the worst of the collapse in traffic is likely behind the industry.
“A key to the recovery is universal implementation of the re-start measures agreed through the International Civil Aviation Organization (ICAO) to keep passengers and crew safe,” de Juniac said. “And, with the help of effective contact tracing, these measures should give governments the confidence to open borders without quarantine measures.”
The IATA report noted passenger traffic levels, measured in Revenue Passenger per Kilometer (RPK) will fall 54.7 percent compared to 2019 to about 2.25 billion, approximately equal to 2006 levels. Capacity during the year is expected to be down 40.4 percent.
IATA added overall global aviation costs will drop nearly 35 percent to $517 billion, noting one bright spot in aviation fuel prices, which will be $36.80 per barrel on average in 2020, compared with $77 per barrel in 2019.
Cargo will be the sole good news story, the Geneva-based organization said, as revenues will reach a near-record $110.8 billion in 2020, up from $102.4 billion in 2019. As a portion of industry revenues, cargo will contribute approximately 26 percent – up from 11 percent in 2019.
In North America, IATA projects that passenger demand will fall by 52.6 percent for the full year, leading to $23.1 billion in annual losses for the region.
