Airline association Iata has issued a fresh call for state aid, warning carriers are “unable to cut costs deep enough” to prevent further job losses.
Iata warned: “The airline industry cannot slash costs sufficiently to neutralise severe cash burn to avoid bankruptcies and preserve jobs in 2021.”
It repeated previous calls for government financial relief to avoid “massive employment terminations”.
The association has revised its forecasts for revenue losses next year. It now forecasts airlines worldwide will see revenue remain 46% down on 2019’s level in 2021.
Iata previously forecast a 29% shortfall on 2019 next year based on expectations of a recovery commencing in the fourth quarter of this year.
As Travel Weekly has previously reported, Iata now expects 2020 to end with full-year traffic figures down 66% on 2019.
Iata director general Alexandre de Juniac said: “The fourth quarter of 2020 will be extremely difficult and there is little indication the first half of 2021 will be significantly better so long as borders remain closed and quarantines in place.
“Without additional government financial relief, the median airline has just 8.5 months of cash remaining at current burn rates, and we can’t cut costs fast enough to catch up with shrunken revenues.”
He said airlines could not keep pace with the 73% fall in revenue in the second quarter of this year despite collectively slashing costs by half (48%).
Iata data suggests sharp reductions in capacity in response to the collapse in travel demand have also pushed up unit costs by about 40% compared with a year ago.
The association estimates costs will need to fall by a further 30% for carriers to break even next year.
It noted that 60% of the world’s aircraft fleet is leased and aircraft rental costs have fallen less than 10% over the past year.
Iata added: “It’s critical that airports and air navigation service providers avoid cost increases to fill gaps in budgets.”
De Juniac said: “There is little good news on the cost front. Even if we maximise cost cutting, we won’t have a financially sustainable industry in 2021.
“The writing is on the wall. Unless governments act fast, 1.3 million airline jobs are at risk, and that would have a domino effect putting 3.5 million additional jobs in the aviation sector in jeopardy.”
He said: “Governments must take firm action to avert this impending catastrophe.
“They must step forward with additional financial relief measures, and they must use systematic Covid-19 testing to safely re-open borders without quarantine.”
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