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Published on Thursday, October 29, 2020

IATA forecasts bigger decline in 2021 airlines revenues

No amount of drastic cost-cutting will save some airlines without further government aid, says the International Air Transport Association.

It  issued a far more pessimistic forecast for the industry and expects next year's revenues to be less than half compared to 2019.

It had previously forecast s smaller decline of 29%, but that was based on a 'recovery commencing in the fourth quarter of 2020.'

Its full year forecast for 2020 is a 66% decline in passenger traffic compared to 2019.

"Even if we maximize our cost cutting, we still won't have a financially sustainable industry in 2021," IATA Director General Alexandre de Juniac said.

That will mean many more job cuts.

"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/or arrival quarantines remain in place."

"To survive, airlines will need to bring costs in line with revenues. Doing that is a difficult balancing act because airlines must also preserve the capability to be able to safely and efficiently ramp up operations when demand picks up," he added.

IATA called on aircraft lessors to lower aircraft rental costs, and airports and air navigation service providers to avoid cost increases to plug revenue gaps.

According to Brian Pearce, IATA's chief economist, the 'only bright spot' is low fuel costs but says this could start to rise in 2021 before a recovery is in full swing.

Airports Council International Europe says there is a risk about 200 airports across Europe could shut down in the coming months if passenger traffic does not recover.


Written by Ray Montgomery, US Editor

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