Dubai PR Network, Online Press Release from Dubai and Middle East
 
Aviation, Airline & Aerospace(Travel & Tourism)
Filter PR by
  
Looming Cash Crisis Threatens Airlines
 

United Arab Emirates,  October 07, 2020:  The International Air Transport Association (IATA) warned that the airline industry will burn through $77 billion in cash during the second half of 2020 (almost $13 billion/month or $300,000 per minute), despite the restart of operations. The slow recovery in air travel will see the airline industry continuing to burn through cash at an average rate of $5 to $6 billion 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. To date, governments around the world have provided $160 billion in support, including direct aid, wage subsidies, corporate tax relief, and specific industry tax relief including fuel taxes.


“We are grateful for this support, which is aimed at ensuring that the air transport industry remains viable and ready to reconnect the economies and support millions of jobs in travel and tourism. But the crisis is deeper and longer than any of us could have imagined. And the initial support programs are running out. Today we must ring the alarm bell again. If these support programs are not replaced or extended, the consequences for an already hobbled industry will be dire,” said Alexandre de Juniac, IATA’s Director General and CEO.


“Historically, cash generated during the peak summer season helps to support airlines through the leaner winter months. Unfortunately, this year’s disastrous spring and summer provided no cushion. In fact, airlines burned cash throughout the period. And with no timetable for governments to reopen borders without travel-killing quarantines, we cannot rely on a year-end holiday season bounce to provide a bit of extra cash to tide us over until the spring,” said de Juniac.
IATA estimates that despite cutting costs just over 50% during the second quarter, the industry went through $51 billion in cash as revenues fell almost 80% compared to the year-ago period. The cash drain continued during the summer months, with airlines expected to go through an additional $77 billion of their cash during the second half of this year and a further $60-70 billion in 2021. The industry is not expected to turn cash positive until 2022. 


Airlines have undertaken extensive self-help measures to cut costs. This includes parking thousands of aircraft, cutting routes and any non-critical expense and furloughing and laying off hundreds of thousands of experienced and dedicated employees. 


Sector Wide Action Needed


“Government support for the entire sector is needed. The impact has spread across the entire travel value chain including our airport and air navigation infrastructure partners who are dependent on pre-crisis levels of traffic to sustain their operations. Rate hikes on system users to make up the gap would be the start of a vicious and unforgiving cycle of further cost pressures and downsizings. That will prolong the crisis for the 10% of global economic activity that is linked to travel and tourism,” said de Juniac.


There will be little appetite among consumers for cost increases. In a recent IATA survey, some two thirds of travelers have already indicated that they will postpone travel until the overall economy or their personal financial situation stabilizes. “Increasing the cost of travel at this sensitive time will delay a return to travel and keep jobs at risk,” said de Juniac.


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 $1.8 trillion dollars of economic activity at risk.

 


Posted by : Dubai PR Network Editorial Team
Viewed 4666 times
PR Category : Travel & Tourism
Posted on : Wednesday, October 7, 2020  9:12:00 AM UAE local time (GMT+4)
Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of DubaiPRNetwork.com.
Previous Story : Airbus Corporate Jets Launches ACJ Twotwenty Business Jet
Next Story : Etihad Airways Launches Global Student Offers
Email this article Print this article

Share this article with your friends and followers
NewsVine
Back to Section Home

Related Stories



 
 
Most Viewed Press Release posted in the last 7 days
Devika Bulchandani Named CEO of Ogilvy North America & Global Chairwoman of Advertising [4416-Views]
Say Yes to Rejuvenated Skin with Filorga's Anti-Ageing Skincare Regimen [3612-Views]
What You Don't See [2632-Views]
Registrations Now Open for the 3rd Edition of the Dubai Festival City Santa Run [2460-Views]
National Geographic Premieres Virus Hunters: A Chilling Chronicle of the Heroic Experts on... [2374-Views]
Al Tayer Motors Wins Ford Trucks' Champions Award 2019 [2288-Views]
Persil Rewards Aspiring Abaya Designers With Scholarships [2202-Views]
MBRU-LED Genetic Study Reveals Crucial Insights Into Make-up of MRSA Superbug [2050-Views]
Discover Your Perfect Shade of Beige this Autumn/ Winter from Emilia-Romagna [1976-Views]
DHA Approves Saliva for COVID-19 Testing in Children [1870-Views]
UK Ambassador to the UAE Receives Latest Update on Covid-19 Vaccine From SEHA [1865-Views]
UAE Businesses Urged to Follow WHO Legionella Guidelines To Avoid Health Risks [1816-Views]
Invesco Analysis Shows Investors Using Futures for Gold Exposure May Be Overpaying [1800-Views]
Samsung Invites UAE Consumers to Experience the All New Air Dresser at Galeries Lafayette [1722-Views]
Philips World COPD Day Survey Reveals Global Shifts in Awareness and Action Surrounding Re... [1714-Views]
Karl Lagerfeld Introduces a New Style in the Fall-Winter 2020 Eyewear Collection [1714-Views]
Sanctuary Refined: New Lincoln Nautilus Brings Serene Design, Elevated Technology to Midsi... [1710-Views]
IATA Travel Pass Key to Reopening Borders Safely [1660-Views]
AquaChemie Breaks Ground on $40 M Petrochemical Terminal at Jebel Ali Port [1648-Views]
Dubai Health Authority Launches a New Stand-alone Laboratory Facility [1603-Views]
"Be Flawless" for the Perfect Complexion [1587-Views]
3 Day Super Sale Offers Up to 90 Percent Off Big Name Brands [1558-Views]
Emiratis Al Hassani and Al Zeyoudi Bag Men's Honours at Al Marmoom Dune Run [1546-Views]
Millions of Lung Cancer Patients See Gene Therapy and Immunotherapy Medical Innovations as... [1537-Views]
Preliminary Camel Race for the National Day Camel Marathon kick-off on Friday, 27 Nov [1537-Views]
 
RSS Facebook Twitter LinkedDin
 
Top Sections
 
Top Stories