IATA: African airlines to lose $2bn in 2020 on COVID-19 impact

International Air Transport Association (IATA), a trade association of the world’s airlines, says aviation industry in Africa will lose $2 billion in 2020 while global losses is expected to drop deeper at $118.5 billion in 2020.

This was contained in IATA’s report, released on Tuesday, titled: ‘Deep losses continue into 2021’.

The COVID-19 pandemic has had a significant impact on the aviation industry due to travel restrictions and a drop in demand among travellers.

IATA said Africa profits will decline to $1.7 billion in 2021 while globally, profits will fall to $38.7 billion in 2021.

For 2020, it said passengers demand and airline capacity in Africa will drop to 72 percent and 62.8 percent respectively.

Meanwhile in 2021, the report showed that passenger demand and airline capacity in Africa will increase by 35 percent and 21.5 percent respectively.

IATA said despite little government support for airlines in Africa, they still face a significant number of failures for them to experience recovery.

“The relative lack of cold chain facilities in Africa may delay the distribution of vaccines and this region is expected to experience a delayed recovery in financial performance,” the report read.

Globally, IATA said the aviation industry is expected to see improvements from second half of 2021 due to increase in demand, however, first half of 2021 will be difficult.

Alexander de Juniac, IATA’s director-general and CEO, said: “This crisis is devastating and unrelenting. Airlines have cut costs by 45.8 percent, but revenues are down 60.9 percent. The result is that airlines will lose $66 for every passenger carried this year for a total net loss of $118.5 billion.

“This loss will be reduced sharply by $80 billion in 2021. But the prospect of losing $38.7 billion next year is nothing to celebrate.

“We need to get borders safely re-opened without quarantine so that people will fly again. And with airlines expected to bleed cash at least until the fourth quarter of 2021 there is no time to lose.”

The report also showed that passengers are expected to reduce by 60.5 percent to 1.8 billion from 4.5 billion in 2019, while passenger revenues will fall to $191 billion, which is less than a third of the $612 billion earned in 2019.

IATA, however, said cargo revenues will perform better than passenger revenues as it is expected to grow by 36 percent in 2020 and cargo revenues are making it possible for airlines to sustain their skeleton international networks.