It seems the news of a Covid-19 vaccine and the knee jerk reaction some of the airline stocks will not play out accordingly to that some analyst predict. There will not be a ‘V” shape recovery for the industry, in fact International Air Transport Association IATA believes the recovery can only be seen sometime in 2024.
Until then, the industry will have to continue with their hibernation and look into ways to cut cost, IATA’s new revised outlook says that deep losses will continue into 2021, even though performance is expected to improve over the period of the forecast.
The overall global airline industry is set to record an eye tearing net loss of US$118.5 billion this year deeper than the US$84.3 billion forecast in June, followed by net loss of US$38.7 billion next year. Despite cutting close to 50% of operating costs, the airline industry is still facing strong headwinds with reports coming out that a few are already considering folding.
We need to get borders safely re-opened without quarantine so that people will fly again,” its director general and chief executive officer Alexandre de Juniac said. While the industry will see improved performance in 2021 compared to 2020, he said the road to recovery is expected to be long and difficult.
Painfully, the association remarked that passenger volumes are not expected to return to 2019 levels until 2024 at the earliest, with domestic markets expected to recover faster than international services. For the immediate term, airlines will have to initiate several critical challenges that will need urgent attention such as debt levels and financial support, closed boarders and quarantine as well as confidence.
