WASHINGTON (dpa-AFX) - Global Air Transport industry is expected to lose $84.3 billion in 2020 for a net profit margin of -20.1 percent, according to the financial outlook released by the International Air Transport Association (IATA), which represents some 290 airlines comprising 82 percent of global air traffic.
This will be the biggest loss in aviation history after the industry lost $31 billion with the Global Financial Crisis and oil price spike in 2008 and 2009.
In February, IATA had projected total revenue loss of $29.3 billion for the global airline industry, assuming the loss of demand is limited to markets linked to China. However, it updated the outlook in early March, saying the losses could be between $63 billion and $113 billion for the passenger business.
IATA noted that 2020 will go down as the worst year in the history of aviation, with the industry losing $230 million every day on average this year.
Revenue in 2020 is projected fall 50 percent to $419 billion from $838 billion in 2019. In 2021, losses are expected to decrease to $15.8 billion on revenue increase to $598 billion, IATA said.
Passenger demand evaporated as international borders closed and countries locked down to prevent the spread of the coronavirus (COVID-19) pandemic. At the low point in April, global air travel was roughly 95 percent below 2019 levels. There are indications that traffic is slowly improving.
Last week, IATA said demand for air services is beginning to recover after hitting the bottom in April, with global passenger traffic rising by 30 percent in May from a very low level in April. Passenger demand in April had plunged 94.3 percent compared to the same month in 2019, as the COVID-19-related travel restrictions virtually shut down domestic and international air travel.
IATA noted that passenger demand will fall between 52 to 59 percent in all regions in 2020, with North America registering the lowest fall of 52.6 percent and Africa reporting the highest with a 58.5 percent drop.
Looking ahead to 2021, IATA said the global airline industry is expected to see reduced losses, with the industry expected to cut its losses to $15.8 billion given the opening of borders and rising demand.
For 2022, IATA says the challenge will be turning reduced losses of 2021 into the profits that airlines will need to pay off their debts from this terrible crisis. Although losses will be significantly reduced in 2021 from 2020 levels, the industry's recovery is expected to be long and challenging.
Copyright RTT News/dpa-AFX