Airlines industry will burn cash until October: IATA | News | Airfinance Journal

Airlines industry will burn cash until October: IATA

Airlines will continue to burn cash for the next nine months, according to the International Air Transport Association (IATA).

IATA Economics has predicted that cash burn for global airlines in the first three quarters of 2021 will be about $25 billion, $17 billion and $5 billion, respectively.

But positive cash flow will return in the fourth quarter, when airlines will realise cash generation of approximately $2 billion, IATA predicted.

“While we still see airlines turning cash positive within the year, the near-term picture is bleak. Instead of a boost from the year-end holiday period, we got even more restrictions,” said Alexandre de Juniac, IATA’s director general and chief executive officer.

De Juniac said that the world's airlines need another $70 billion to $80 billion of government support to get through the crisis caused by the Covid-19 pandemic.

This sum is on top of $170 billion already granted, De Juniac noted.

Governments have provided different levels of support to airlines to weather the pandemic.

For example, Vietnam’s privately owned airlines have called for government support following approval of a government bailout for state-controlled flag carrier Vietnam Airlines.

Fast-expanding Vietjet is seeking up to VND10 trillion ($450 million) in loan support, according to chief financial officer Ho Phuong.

“Other domestic airlines want access to preferential loans over three to five years from the state to overcome the crisis,” she said, asking the government to simplify procedures to disburse support in a timelier manner.

The Finnish government is preparing a €400 million ($488 million) hybrid loan for flag carrier Finnair.

The fund is the unused part of a €700 million allocation of support granted by the Finnish parliament to the Oneworld carrier in the spring. 

The European Commission has approved a €73 million ($90 million) direct grant for Alitalia after concluding that Italian support for the national carrier was in line with EU state aid rules.

The measure aims at compensating the airline for losses suffered on 19 routes due to the coronavirus outbreak between 16 June and 31 October 2020.

The Egyptian government has granted EGP2 billion ($130 million) of loans for flag carrier Egyptair.

Building on a more than NTD16 billion ($570 million) package released in 2020, territory of Taiwan’s ministry of transportation is seeking another NTD5 billion government support package for its airlines.

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