News
The International Air Transport Association (IATA) has released its financial outlook for the global air transport industry showing that airlines are expected to lose $84.3 billion in 2020 for a net profit margin of -20.1%. Revenues will fall 50% to $419 billion from $838 billion in 2019. In 2021, losses are expected to be cut to $15.8 billion as revenues rise to $598 billion.
''On average, every day of this year will add $230 million to industry losses. In total that's a loss of $84.3 billion. It means that - based on an estimate of 2.2 billion passengers this year - airlines will lose $37.54 per passenger. That's why government financial relief was and remains crucial as airlines burn through cash,'' said Alexandre de Juniac, IATA's Director General and CEO.
Passenger revenues are expected to fall to $241 billon (down from $612 billion in 2019). This is greater than the fall in demand, reflecting an expected 18% fall in passenger yields as airlines try to encourage people to fly again through price stimulation. Load factors are expected to average 62.7% for 2020, some 20 percentage points below the record high of 82.5% achieved in 2019.
Cargo is the one bright spot. Compared to 2019, overall freight tons carried are expected to drop by 10.3 million tons to 51 million tons. However, a severe shortage in cargo capacity due to the unavailability of belly cargo on (grounded) passenger aircraft is expected to push rates up by some 30% for the year. Cargo revenues will reach a near-record $110.8 billion in 2020 (up from $102.4 billion in 2019). As a portion of industry revenues, cargo will contribute approximately 26% - up from 12% in 2019.
With open borders and rising demand in 2021, the industry is expected to cut its losses to $15.8 billion for a net profit margin of -2.6%. Airlines will be in recovery mode but still well below pre-crisis levels (2019) on many performance measures:
- Total passenger numbers are expected to rebound to 3.38 billion (roughly 2014 levels when there were 3.33 billion travelers), which is well below the 4.54 billion travelers in 2019.
- Overall revenues are expected to be $598 billion which would be a 42% improvement on 2020, but still 29% below 2019's $838 billion.
- Cargo's enlarged footprint in the air transport industry will remain. Cargo revenues will reach a record $138 billion (a 25% increase on 2020). That is about 23% of total industry revenues, roughly double its historical share. Air cargo demand is expected to be strong as businesses restock at the start of the economic upturn, while a slow return of the passenger fleet will limit the growth of cargo capacity, and keep cargo yields steady at 2020 levels.
