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Costs slash not sufficient to neutralise cash burn - IATA

28 Oct 2020 / 12:43 H.

KUALA LUMPUR: The airline industry will not be able to slash costs sufficiently to neutralise severe cash burn and avoid bankruptcies and preserve jobs in 2021, according to the International Air Transport Association (IATA).

In its new analysis, IATA reiterated its call for government relief measures to sustain airlines financially and avoid massive employment terminations.

The trade association of the world's airlines also called for pre-flight COVID-19 testing to open borders and enable travel without quarantine.

Director general and chief executive officer Alexandre de Juniac (pix) said the fourth quarter of 2020 would be extremely difficult.

“There is little indication the first half of 2021 would be significantly better, so long as borders remain closed and/or arrival quarantines remain in place.

“Without additional government financial relief, the median airline has just 8.5 months of cash remaining at current burn rates and we can’t cut costs fast enough to catch up with shrunken revenues,” he said in a statement today.

The analysis revealed that total industry revenues in 2021 were expected to be down 46 per cent compared to the 2019 figure of US$838 billion.

The previous analysis was for 2021 revenues to be down around 29 per cent compared to 2019, based on expectations for a demand recovery commencing in the fourth quarter of 2020.

“Recovery has been delayed however, owing to new COVID-19 outbreaks, and government mandated travel restrictions including border closings and quarantine measures.

“IATA expects full year 2020 traffic to be down 66 per cent compared to 2019, with December demand down 68 per cent,” the association said. - BERNAMA

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