IATA predicts airlines will burn through $77B in cash in second half of 2020

The International Air Transport Association has a dire warning about the industry. It predicts airlines will burn through $77 billion in cash between June and December of this year – nearly $300,000 lost every minute.

Those losses are on top of the $51 billion the industry already burned through in the second quarter. 

IATA predicts the negative cash flow is expected to continue into 2021 at a rate of $5 to $6 billion per month, and the industry will not turn cash-positive until 2022.

“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,” says Alexandre de Juniac, IATA director general and CEO.

De Juniac says IATA will continue to push for systematic pre-departure COVID-19 testing as a critical step to enable borders to reopen. And he urges governments to “be actively involved in supporting the entire sector’s finances” with more aid to supplement the $160 billion already provided in the forms of 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,” de Juniac says. 

“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.”

Just last week a report from IdeaWorks Company and Cartrawler predicted ancillary revenue for the world’s top 10 airlines – which was $46.6 billion in 2019 - will be down almost 50% in 2020, to about $23.7 billion.