IATA warns Airlines face ‘Risks’ to Recovery

IATA has warned carriers face increasing “downside risks” despite its latest Airlines Financial Monitor reporting declining losses, with the global spread of the Covid-19 Delta variant threatening a tightening of restrictions.

The association’s July-August monitor noted: “Concerns about the fast-spreading Delta variant resulted in a sharp decline in airline share prices at the beginning of August.”

IATA’s latest air passenger market analysis warned “risks are rising”, noting: “In international markets, the recovery observed since May stalled in August.

“Bookings for August travel have been falling . . . largely driven by China’s domestic market where the latest Covid outbreak resulted in a shutdown of many important routes.

“Passenger traffic on most of the largest international routes remains subdued since long-haul connections are still largely closed.”

IATA reported: “Europe showed the fastest capacity growth in July.” But it warned: “Risks to air travel are rising. The uncertainty about air travel recovery is rising sharply due to the fast spread of the Delta variant around the world. The number of confirmed Covid infections per week reached approximately 4.5 million in mid-August” almost double the rate in mid-June.

“The resurgence of the virus might bring back stricter travel restrictions and potentially also lockdowns in regions where measures started to be relaxed recently, such as Europe. This can stop or reverse the little progress in international travel we have seen so far.”

The association reported the approval of several Covid-19 vaccines in the US “brought some optimism” later in August, but noted: “The recovery in airline stocks has been limited since the full reopening of international travel remains uncertain.

“Q2 results show net losses of airlines diminished compared with Q1 2021.

“North American and Latin American airlines were the best performers as domestic and regional traffic has been improving . . . [but] improvement of Asia Pacific and European airlines was small due to still muted international travel.

“Downside risks are increasing for the coming quarters since new Covid-19 restrictions are affecting some domestic markets on the recovery track i.e. China [and] international travel restrictions remain tight.”

IATA reported global passenger revenues remained 60% down on 2019 in the three months to June, varying between 49% down in North America and 66% down in Europe.

It noted: “The fall in operating costs (-35%) remains short of the decline in revenues.”

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