Geneva: The International Air Transport Association (IATA) has warned that the global airline industry will burn through 77 billion dollars in cash during the second half of 2020 (almost US$13 billion a month or US$300,000 per minute) despite the resumption of operations.
The slow recovery in air travel will see the airline industry continuing to burn through cash at an average rate of five billion to six billion dollars per month in 2021. IATA called on governments to support the industry during the coming winter season with additional relief measures, including financial aid that does not add more debt to the industry's already-highly-indebted balance sheet.
So far, governments around the world have provided 160 billion dollars in support including direct aid, wage subsidies, corporate tax relief and specific industry tax relief including fuel taxes.
IATA's Director General and CEO Alexandre de Juniac said the Covid-19 crisis is deeper and longer than the industry could have imagined and initial support programmes are running out.
"We must ring the alarm bell again. If these support programmes are not replaced or extended, the consequences for an already hobbled industry will be dire," he said.
IATA estimates that despite cutting costs just over 50 per cent during the second quarter, the industry went through US$51 billion in cash as revenues fell almost 80 per cent compared to the year-ago period.
The cash drain continued during the summer months, with airlines expected to go through an additional US$77 billion of their cash during the second half of this year and a further US$60 billion to US$70 billion in 2021. The industry is not expected to turn cash positive until 2022.
According to the latest figures from the Air Transport Action Group, the severe downturn this year combined with a slow recovery threatens 4.8 million jobs across the entire aviation sector.
Because each aviation job supports many more in the broader economy, the global impact is 46 million potential job losses and US$1.8 trillion of economic activity at risk.