Airline cash burn could be double previous forecast, IATA warns

Airlines could burn through as much as $95 billion this year as new coronavirus strains lead governments to extend travel restrictions, close to double the industry body’s previous forecast.

Even under a scenario that sees flights restored between developed economies in 2021, carriers may still consume $75 billion, compared with the $48 billion estimated in December, the International Air Transport Association said Wednesday.

Passenger traffic could be limited to as little as one-third of pre-pandemic levels, according to the trade body, which had predicted a 51% recovery toward the end of 2020 as the approval of vaccines stoked hopes for a rapid rebound. That was before new Covid-19 flareups led to fresh lockdowns and tougher curbs.

“We are concerned now that it’s going to take much longer for the industry to stop burning through cash, which obviously raised questions about survivability,” IATA Chief Economist Brian Pearce said in a media briefing. Carriers may require more government funding as a result, he said.

Such has been the reversal in fortune that a significant recovery in domestic travel led by countries such as China and Russia has been eroded, Pearce said. Aviation cash burn for 2020 is estimated at more than $150 billion, he said.

First-half demand is now looking much weaker, with Easter set to show no significant border openings and summer travel in doubt, with forward bookings down 78% as of Feb. 18 compared with the same point in 2019.

IATA is pushing on with work on its Travel Pass, a so-called coronavirus passport that the trade group hopes will help airlines overcome restrictions as vaccination programs reach more people.