The Cost of Covid19 to Airlines; recovery predictions

IATA has worked out the financial cost to airlines and used modelling to predict how they’ll come back.

I’m going to keep this simple as possible…

Global air traffic compared to April-June 2019 (100%)April-June 2020
April-June 2021
April-June 2022
Average Load Factors (seats occupied)
2019: 82.7%
2020: 62.7%2021: 75%2022: 80%
Losses in USD$ billions2020: $842021: $15.82022: $0
Loss per passenger flown2020: $65$37$0
Government Bailout debts in USD billions2020: $123 2021: $1002022: $90
Commercial debt in USD billions2020: $1102021: $1102021: $100
Cargo Traffic compared to 2019 (100%)2020: 103%2021: 104%2021: 102%

These are of course predictions, and they include an expectation of a recession globally during 2021. Yet there are worrying aspects that could change the way airlines recover, and who decides how they recover will also be an issue.

The amount of Government loans and bailout debt could be a huge bind. Many of these debts cannot be paid back in any decent amount of time, and the result will be that governments inherit substantial share holdings in airlines if the debts aren’t paid.

Many of the governments are using the pressure to shape political agendas – be they anti-democracy in Hong Kong through Cathay Pacific, or the insistence on swingeing environmental impact reductions in France. These will place costs on airlines and force changes. Environmentally, all to the better.

Another aspect is the possibility of a vaccine. If that does not happen in 2021, then these figures will become dramatically worse, by as much as 20%. Without a vaccine, people are far less likely to fly and the recovery will be slowed drastically.

Lastly there is the cost of fuel. Now running at $34 per barrels, its around 15% of airline costs – way less than the 50% it was 18 months ago when they were making profits anyway. That helps, but how long will it last?

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