IATA Says Financial Challenges Continue for Airlines in 2021

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According to an IATA Economics report, the latest Q4 financial results confirm that airlines around the world continued to experience deep losses due to the ongoing impact of the pandemic.

The losses were especially significant in the North America and Latin America regions where the ongoing health crisis will continue to put pressure on airlines’ revenues in the near-term.

Although vaccine rollout has been encouraging, there are large differences across regions, noted . In addition, Europe is facing a new virus wave, which worsens prospects of a summer travel recovery.

Because of growing optimism about growth in the wider economy, oil and jet fuel prices strengthened in March and hovered close to pre-pandemic levels for the second consecutive month. The higher fuel prices will add to the challenge of making the restart of air travel cash positive, the report stated.

IATA’s sampling of airline financial results confirmed that airlines experienced deep losses in Q4 2020. Profitability declines were broad-based across all regions, notably in the Americas. On a more positive note, IATA said the extent of losses was lower compared to the previous two quarters.

“This could be attributed to robust cargo revenues as cargo volumes continued to recover (back to pre-crisis levels in January) and yields remained elevated in Q4. Losses were also reduced thanks to dramatic cost-cutting measures and cash savings,” noted IATA.

The report said the stalling recovery in passenger demand continues to be the key obstacle for the faster rebound in revenues.

“The start of the year had been weaker than expected due to new virus outbreaks. Although vaccine rollout has been gaining momentum, there are large differences across regions and some countries are facing new spikes. This indicates a challenging time ahead for airlines’ financials,” said IATA.

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