AviationIATA's regional VP flags more airline consolidations in 2021.

Airlines heading for the brink without further aid

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US$173 billion of financial aid from global governments is running out as the pandemic drags on, said IATA’s director general, Alexandre de Juniac.
US$173 billion of financial aid from global governments is running out as the pandemic drags on, said IATA’s director general, Alexandre de Juniac. Photo Credit: Getty Images/aapsky

The International Air Transport Association (IATA) has stepped up its calls for renewed government assistance to avert a Covid-related calamity of airline failures.

“There’s a very real risk that airlines will fail going into 2021,” said Conrad Clifford, IATA regional vice president Asia Pacific. “We need governments to step in and help airlines who are in very dire straits.”

Speaking at its annual meeting earlier this week, IATA’s director general Alexandre de Juniac said governments around the world had backed airlines with US$173 billion of financial aid, but the money was running out as the pandemic dragged on.

“Covid-19 has devastated the balance sheets of our member airlines and we need continuing government support to enable the aviation industry to restart and rebuild connectivity.

“Without the economic benefits that aviation delivers, the global economic recovery will be much weaker and slower,” de Juniac said.

Clifford said he expected mergers, acquisitions and consolidations would result if government support dried up.

“If you look at Korean Air and Asiana, who would have thought a year ago that the Korean government would have agreed to a merger between these two carriers?

“But that’s where we are today. It reflects a realistic approach to the fact that airlines around the world are in very poor financial conditions, so mergers and consolidations make a lot of sense.

“The pandemic has changed attitudes of governments and if we have to wait for a vaccine [before restarting aviation] we will see more consolidations.”

Clifford said IATA was hoping that the industry would get back to cash positive by the end of 2021, largely on the back of domestic aviation, but it would be “a long slog” to get the industry back to profitability, and probably not before 2024.

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