2021 forecast: African carriers to lose $1.7b

Airline recovery is expected in the second half of 2021. PHOTO | FILE | NMG

Summary

• IATA also said globally, the industry will lose $118.5 billion this year against earlier projections of $84.3 billion while 2021 will account for $38.7 billion in losses.
• The industry lobby had initially expected next year’s losses to level off at $15.8 billion, but now blames the dampened prospects on the second wave of the coronavirus pandemic, which has stalled much-anticipated recovery in key markets.

By MICHAEL WAKABI

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African airlines will lose $3.7 billion between this year and 2021 with a revised forecast by International Air Transport Association (IATA) projecting global losses to top $157 billion over the same period.

Although IATA does not give a breakdown of the performance of individual airlines, it said the bulk of African losses ($2 billion) will be registered in 2020, and another $1.7 billion next year.

IATA also said globally, the industry will lose $118.5 billion this year against earlier projections of $84.3 billion while 2021 will account for $38.7 billion in losses. The industry lobby had initially expected next year’s losses to level off at $15.8 billion, but now blames the dampened prospects on the second wave of the coronavirus pandemic, which has stalled much-anticipated recovery in key markets.

Although there is optimism for improved performance in 2021 with the announcements of Covid-19 vaccines and availability of better pre-departure testing kits, the association sees “deep industry losses” continuing into 2021.

“This crisis is devastating and unrelenting. Airlines have cut costs by 45.8 percent, but revenues are down 60.9 percent. The result is that airlines will lose $66 for every passenger carried this year for a total net loss of $118.5 billion,” said outgoing IATA chief executive Alexandre de Juniac. He was commenting on the industry’s economic outlook on November 24.

“This loss will be reduced sharply by $80 billion in 2021. But the prospect of losing $38.7 billion next year is nothing to celebrate. We need to get borders safely reopened without quarantine so that people can fly again. And with airlines expected to bleed cash at least until the fourth quarter of 2021 there is no time to lose,” he added.

Recovery is expected in the second half of 2021 as the benefits of aggressive cost-cutting combined with increased demand supported by the re-opening of borders. Passenger numbers are forecast to increase to 2.8 billion in 2021 representing an improvement of a billion more travellers, although that will still be 1.7 billion travellers short of 2019 figures. Although 45 per cent below 2019, revenues are expected to rebound to $459 billion in 2021 while costs are expected to rise by $61 billion, resulting in improved financial performance.