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Friday, 30 October, 2020, 15 : 45 PM [IST]

Airlines' helpless to cut cash burn for saving jobs & bankruptcies: IATA

The airline industry is not capable of slashing costs sufficiently in order to neutralise severe cash burn, to avoid bankruptcies and preserve jobs in 2021, the International Air Transport Association (IATA) latest analysis has found.

IATA has called on Switzerland’s government to ease its preventive measures to sustain airlines financially and avoid the increase of the unemployment rate, SchengenVisaInfo.com reports.

The agency once again has urged for pre-flight Coronavirus testing to open borders and permit passengers to travel without being required to follow quarantine rules.

“Total industry revenues in 2021 are expected to be down 46 per cent compared to the 2019 figure of USD 838 billion. The previous analysis was for 2021 revenues to be down around 29 per cent compared to 2019. This was based on expectations for a demand recovery commencing in the fourth quarter of 2020,” the statement reads.


The agency has estimated that full-year 2020 traffic will mark a 66 per cent decrease compared to 2019, with December demand 68 per cent down.

“The fourth quarter of 2020 will be challenging, 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. 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,” Alexandre de Juniac, Director General and CEO, IATA pointed out.

About 50 per cent of airlines’ costs are fixed or semi-fixed, despite the fact that airlines have taken radical steps to reduce costs.
A report published recently by the Airports Council International highlights that 193 European Airports face insolvency in the coming months due to the current Coronavirus pandemic situation.

The European Union Council previously adopted a recommendation of the Commission for coordinated travel restrictions within the European Union Member States.

However, Europe’s aviation bodies called it a failure and insufficient to help revive travel within the European Union countries.

In September, the International Chamber of Commerce (ICC) and the World Travel & Tourism Council (WTTC) introduced several recommendations to help businesses to safely reopen to their customers and help them recover from the COVID-19 damages.

IATA has urged European governments several times to reopen borders and remove travel restrictions in order to get out of the financial crisis provoked by the outgoing COVID-19 outbreak. (Source: SchengenVisaInfo.com)

 
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