Ongoing crisis: warning from IATA on airline bankruptcies

The aviation industry has been highly affected by the ongoing crisis of Covid-19. Even after partially opening the airspace in some countries, most airlines cannot fly the aircraft with full seats occupied. Right now, the airlines are paying around $13 billion per month which could lead to bankruptcy within a very short time, IATA give notice. Even the discover of the Covid-19 vaccine, it is expected that the payments will continue for the next few months.

“Initial support programmes are running out” De Juniac said. As he emphasized on If the support programmes are not replaced or extended, the consequences for an already hobbled industry will be dire. From the reports of the carriers the available cash could be enough for funding the airlines only for the next eight and half months. Thus, due to running out of liquid assets and cash soon.

Moreover, some airlines are limited by $160 billion as government support and it started to withdraw. The known thing is “the air travel is not strong enough to survive without assistance” says IATA chief economist Brian Pearce.

Chief economist Brian Pearce. Source IATA

And the biggest problem is that not only that the airlines are burning cash but also they are losing around 80% of revenues. “This is why airlines are burning through cash and still making significant losses,” notes Pearce. As the aviation sector is important because it reinforce 46 million jobs across the world and $1.8 trillion in economic activity, IATA estimates.

It does not only directly affect the airlines but also the airports and air navigation infrastructure partners. The situation “Pretty critical, otherwise the industry will run out of cash and you will see more and more bankruptcies. It is critical and urgent” De Juniac added.