Latin American Airlines to Lose US$4 Billion: IATABy Alicia Arizpe | Thu, 07/16/2020 - 11:25
The COVID-19 pandemic brought the aviation industry to a standstill. Across the globe demand for flights is at a fraction of what it was before the start of the outbreak and expected to continue this way for some time. While the reopening of some regions has brought a measure of relief to the sector, recovery seems far off. Under these circumstances, the Latin America and Caribbean region faces significant trouble due to prolonged border closures in several countries in the region and little support from local governments. “Aviation across the continent is now going into its fourth month of standstill. Even with a few countries having allowed the resumption of service, most are still keeping us grounded,” said Peter Cerdá, Regional Vice President for the Americas at IATA.
The association warned that airlines in Latin America would close 2020 in the red, forecasting losses of US$4 billion for airlines in the region due to wage and tax payments, among other obligations. Moreover, the region’s reliance on tourism and other activities related to the aviation industry would translate to significant losses in other economic sectors. According to the World Travel & Tourism Council, the COVID-19 outbreak was on its way to cost the world’s travel and tourism industries US$2.7 trillion.
Mexico, warned IATA, would see US$8.13 billion in potential revenue evaporate due to the outbreak, a 57 percent reduction in comparison to 2019. This situation would put 148,500 jobs at risk. The outbreak has already led Aeroméxico to file for Chapter 11 bankruptcy protection in a US court, while Interjet undergoes a profound restructuration of its finances and operations. Due to low demand, Interjet, Volaris and Viva Aerobus have deferred orders for 175 new Airbus aircraft, while Aeroméxico agreed to return 19 aircraft (10 Boeing 737 and nine Embraer-170) to its lessors to reduce its debts.
Considering the challenges the sector is facing, IATA called on Latin American governments to support the sector, for instance, through the implementation of ICAO’s Takeoff measures. “As an industry we have worked with all stakeholders in the value chain to ensure that we can restart in line with the globally agreed Take-off guidelines published by ICAO. Unfortunately, we are not making the expected progress with governments implementing these and any further suspension of operations is placing the future of aviation in jeopardy,” said Cerdá. Mexico’s government has agreed to review the potential relief measures suggested by the industry, explained IATA. The country also waived slots for the upcoming 2020 winter season.