Daily Management Review

IATA updates industry loss and recovery forecasts


The International Air Transport Association (IATA) has worsened its forecast for 2020 to $118.5 billion, which is the worst result in the industry's history.

At the same time, the IATA is more optimistic than before about the rate of recovery of the industry: according to new calculations, global airlines may return to profits in the fourth quarter of 2021, and the Chinese market may do it already this year. But the average airline, as calculated by IATA, has a safety margin of no more than 8.5 months, even in spite of government support.

IATA revised its net loss forecast for the airline industry for the year. While in June the organization estimated it at $84.3 billion, now the expected losses have increased to $118.5 billion. The IATA expects a 60.5% drop in passenger traffic this year, to 1.8 billion people, and a 17-percentage point drop in seat occupancy, to 65.5%. Passenger revenue is expected to drop to $191 billion, less than a third of last year's figure, while cargo revenue is expected to increase by almost 15% to $117.7 billion.

At a time of epidemiological restrictions and low demand for passenger transportation, airlines around the world have reoriented their operations to transport cargo, including passenger liners. IATA forecasts that in 2020 the share of revenue from cargo transportation will increase by 24 p.p. to 36%. 

Aggressive cost reductions, combined with strong demand, are expected to result in the industry becoming profitable as early as the fourth quarter of 2021, earlier than previously anticipated. But in 2021, IATA expects the airline industry to have a net loss of $38.7 billion, above its June estimate of $15.8 billion.

source: iata.org