Global crash landing due to Covid-19

The Covid-19 pandemic has battered the air transport sector by all but grounding planes, resulting in layoffs, bankruptcies and rescue plans.

The International Air Transport Association (IATA) has estimated global airlines will lose USD314 billion in 2020 revenues, which is a 55 percent dive compared to 2019, and air traffic will not bounce back to where it stood before the virus until 2023.

According to a statement by IATA, governments have provided airlines USD123 billion to help weather the coronavirus storm, warning though that the assistance was adding to surging debt in the industry.

IATA warned that the sector’s debt was expected to rise to USD550 billion by the end of the year — an increase of 28 percent.

While governments have in many cases come to the rescue of their countries’ embattled airlines, IATA pointed out that USD67 billion of the USD123 billion committed so far would have to be repaid.

The remainder of the state aid consists of wage subsidies (USD34.8 billion), equity financing (USD11.5 billion), and tax relief/subsidies (USD9.7 billion).

IATA chief executive Alexandre de Juniac said the government aid is helping to keep the industry afloat and the next challenge will be preventing airlines from sinking under the burden of debt that the aid is creating.

IATA said this is vital for airlines which will burn through an estimated USD60 billion of cash in the second quarter of 2020 alone.

de Juniac added that many governments have stepped up with financial aid packages that provide a bridge over this difficult situation, including cash to avoid bankruptcies.

IATA pointed to bankruptcies in Australia, Britain, Italy, Thailand and Turkey where governments had not stepped in strongly enough.

Aviation has been crippled by border closures that have prevented travel since March almost everywhere in the world. Air traffic is not expected to return to its pre-crisis level until 2023, according to IATA.

Geneva-based IATA represents some 290 airlines comprising 82 percent of global air traffic.

 

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