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IATA reiterates airlines will lose $84bn in 2020, but recovery will start in second half

Mohit Oberoi
Author: Mohit Oberoi

Last Updated: June 25, 2020
airline stocks

Airline trade body the International Air Transport Association (IATA) expects a recovery in the second half of 2020, despite the devastation coronavirus lockdowns have brought air travel.

The pandemic has hit airlines hard and in April, air travel fell 98% year-over-year as countries put restrictions on air travel in a bid to contain the spread of the virus.

But Brian Pearce, chief economist for IATA, said while international travel will likely remain volatile for now, countries like China, the US and Indonesia have resumed domestic air travel.

“We’re really only just starting to see countries negotiating bilateral openings of markets. For example, the Trans-Tasman bubble between Australia and New Zealand, China and Singapore, as well as China and Korea,” Pearce told CNBC on Thursday.

But he added: “It will be enough to kickstart the airline industry in some countries. For many airlines, they do depend on international air travel.”

The comes less than a month after the trade body said the industry had been hit by its worst ever year.  The disease is responsible for “the worst year in the history of aviation” and is set to cost airlines around the world more than $84bn in 2020, said IATA director general Alexandre de Juniac on 12 June.

Keith Mason, head of the Centre for Air Transport Management at Cranfield University, government support would be crucial for the beleaguered airline companies. Several governments indeed have come to airline companies’ rescue and announced stimulus packages.

IATA says that $200bn of support from governments would be required to bail out the sector from its worst slump.

The trade body along with with Airports Council International recommends a series of the best end-to-end practices for safely resuming flights. This includes contact tracing, the use of personal protective equipment and enabling contactless services at customs, among other measures.

However, despite theses measures, the pandemic is expected to take up to three years to return to 2019 levels, according to chief executive and analysts alike.

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Mohit Oberoi

Mohit Oberoi is a freelance finance writer based in India. he has completed his MBA with finance as majors and also holds a CFA charter. He has over 13 years of experience in financial markets. He has been writing extensively on global markets for the last six years and has written over 6,500 articles. He mainly covers metals, electric vehicles, asset managers, and other macroeconomic news. He also loves writing on personal finance and topics related to valuation.