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News Article

Mexican Airlines Might Lose US$5 billion: IATA

By Alicia Arizpe | Tue, 04/14/2020 - 13:10

As COVID-19 continues to spread throughout Mexico, its effects in the country’s economic sectors keeps worsening. The forecast for Mexican airlines, some of which were already in a precarious position before the outbreak, turns darker as the International Air Travel Association (IATA) warns that the virus could cost the industry much more than it had predicted.

Efforts to contain the spread of the virus have dramatically hurt the tourism and travel industries. As a growing number of individuals, both in Mexico and abroad, choose to stay home, air travel has shrunk to levels not seen in many years. This situation is leading local airlines to cancel most of their flights, with local representatives of the industry warning that some airlines were operating at only 20 percent capacity and Mexico’s Federal Civil Aviation Industry (AFAC) warning that the halt in operation might cost local airlines up to MX$30 billion (US$1.3 billion).

On Monday, IATA warned that this figure might be optimistic. In an online press conference, Peter Cerdá, Regional Vice President for the Americas at IATA, informed that if the effects of the pandemic last much longer, Mexican airlines might lose up to US$5.3 billion and put 97,000 direct jobs and 437,000 indirect jobs at risk. For that reason, the association is requesting collaboration with Mexico’s presidency and its Ministry of Communications and Transport. On Tuesday, Alexander du Juniac, President of IATA, warned that airlines are now in an unprecedented situation where they might lose half their revenue for 2020. “In our latest scenario, full year passenger revenues plummet 55 percent compared to 2019, while traffic falls 48 percent. In other words, half our business disappears. That is catastrophic.”

For weeks, IATA has been calling for governments to support airlines to survive the crisis through immediate financial aid in the shape of financial support, loans and tax relief. However, the association added that it is seeing little support from Mexican authorities.

Alicia Arizpe Alicia Arizpe Senior Writer