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Asia-Pacific carriers to post US$29 billion in losses in 2020
June 12th 2020
Asia-Pacific carriers are forecast to lose US$29 billion in calendar 2020 as the coronavirus pandemic cuts a swathe through commercial airline revenue in the region, new figures show. Read More »
The International Air Transport Association’s (IATA) semi-annual economic performance of the airline industry report, published this week, said airlines were on track to collectively post an annual loss of US$84.3 billion in 2020.
The Asia-Pacific would suffer the largest absolute loss at US$29 billion, followed by North America (US$23.1 billion) and Europe (US$21.5 billion). The projected airline losses in the Africa, the Middle East and Latin America were in single digits.
The region’s forecast US$29 billion loss represented an average loss per passenger of US$30.90 and an average net margin of -22.5%.
The numbers were a steep decline into the red from a net profit of US$4.9 billion in calendar 2019.
"The Asia-Pacific was the first region exposed to the weakness coming from the disease outbreak and their losses will be larger compared with other regions as current demand recovery is not coming with profitability," the IATA report said.
IATA figures published this week showed passenger demand was down 95% in April, compared with a year earlier.
Demand, or revenue passenger kilometres (RPK), was forecast to fall 54.7% in 2020. Passenger revenues were tipped to plummet by 60%, to US$241 billion, from US$612 billion in 2019.
And while there were some indications traffic was improving – predominantly in domestic markets – IATA director general and CEO, Alexandre de Juniac, said the road to recovery was a long one, with airlines expected to collectively lose US$15.8 billion in 2021.
In addition to the challenge of rebuilding the travelling public’s confidence in flying, airlines will have much higher levels of debt and face operational challenges of more deep cleaning, increased cabin checks and revamped boarding and disembarking procedures that will decrease overall aircraft utilisation.
With a global recession predicted for 2021 or sooner, airlines also will have to offer price fare stimuli to persuade discretionary travellers to return to the skies.
“Airlines will still be financially fragile in 2021," de Juniac said this week. "Passenger revenues will be more than a third smaller than in 2019. And airlines are expected to lose about US$5 for every passenger carried.
"The challenge for 2022 will be turning reduced losses of 2021 into the profits airlines will need to pay off their debts from this terrible crisis."
