Global airlines' outlook worsening in 2021 due to stricter travel restrictions, Iata says

Carriers are expected to burn through $75bn to $95bn of cash this year

Airlines' total cash burn is now forecast to increase to between $75 billion and $95bn this year. EPA

The outlook for global airlines in 2021 has worsened compared to forecasts in December as governments impose stricter travel restrictions to curb new variants of the Covid-19 virus, according to the International Air Transport Association (Iata).

Airlines' total cash burn is now forecast to increase to between $75 billion and $95bn this year, up from the $48bn projected in December due to delays in travel recovery, Brian Pearce, Iata's chief economist, said at an online press briefing on Wednesday.

The industry, which was earlier forecast to break even by the fourth quarter of 2021, is now expected to continue burning through its cash reserves through the year, he added.

"We are concerned now it will take much longer for the industry to stop burning cash, which obviously raises questions about survivability and the need for more rapid opening of borders, which hopefully the Iata travel Pass will facilitate, or the need for more cash," Mr Pearce said during his presentation.

The industry is unlikely to turn cash-positive before 2022, he said.

Iata also said on Wednesday that it plans to launch its Travel Pass by the end of March, heralding in a digital health system that will show proof of passengers' Covid-19 test results and vaccination certificates, which will help ease cross border-travel.

Earlier this month, Iata estimated that passenger traffic will improve just 13 per cent this year, compared to a December forecast of 50.1 per cent recovery this year.

Should the estimate for a 13 per cent improvement materialise in 2021, it leaves the industry at just 38 per cent of pre-pandemic levels.