The Covid-19 pandemic has devastated the global aviation industry that brings people together, delivers 35% of global trade by value, foster commerce and makes the world a smaller and more accessible place.
Last year, the industry revenues totalled $328bn, around 40% of 2019 and in nominal terms, that’s the same as in 2000.
The sector is expected to be smaller for years to come, prominent management consulting firm McKinsey & Company says and projects traffic won’t return to 2019 levels before 2024.
Business travel will take longer to recover, and even then, McKinsey & Company estimates it will only likely recover to around 80% of pre-pandemic levels by 2024.
Remote work and other flexible working arrangements are likely to remain in some form post-pandemic and people will take fewer corporate trips.
As the pandemic hit really hard, many airlines have had to borrow huge sums of money to stay afloat and cope with high daily cash burn rates.
Tapping into state-provided aid, credit lines, and bond issuances, the industry collectively amassed more than $180bn worth of debt in 2020, McKinsey & Company says, a figure equivalent to more than half of total annual revenues that year.
And debt levels are still rising. Repaying these loans is made even harder by worsening credit ratings and higher financing costs.
Willie Walsh, Director General of global airline body International Air Transport Association (IATA) expects the industry to emerge from the coronavirus crisis smaller and more cautious, doubting airlines will try to expand through acquisitions.
The airline industry has been crippled by the pandemic, which continues to leave many aircraft around the world grounded or flying near-empty as demand limps towards a recovery.
“It will be a smaller industry. We are not going to recover all the capacity,” Walsh said in a pre-recorded online interview broadcast recently.
He cited the swathes of aircraft retired and employees laid off or placed on furlough.
“It will…