Airlines bank on vaccine, cargo to recover

Thursday April 29 2021
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A Uganda Airlines Airbus A330ne plane. Airlines worldwide lost more than $126 billion last year as the Covid-19 crisis prompted countries to lock down cities, close borders and ban international flights. PHOTO | COURTESY

By Paul Murungi

Airlines continue to post deep losses, amid a Covid-19 resurgence and renewed restrictions, which are threatening travel demand.

However, the industry is hinging its recovery on increase in cargo and fast vaccine rollout.

This is contained in the April 2021 Airline Business Confidence Index authored by International Air Transport Association (IATA).

The survey, which was conducted among airline chief executive officers and heads of cargo, noted that at least 48 per cent of respondents said the first quarter of 2021 had not brought relief for the airline industry but expressed optimism about the next 12 months.

Whereas the vaccine rollout has been slow in some developing countries, a forecast by Airfinity indicates that in Europe and North America the high risk and healthcare population will all have been vaccinated by July.

Mr Badr Abbas, the Emirates Airlines senior vice president commercial operation Africa, in a recent interview with NTV said operators in the airlines industry remain optimistic, noting recovery is expected by the end of the second half 2021.

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“We expect consistent travel confidence among travellers.  Currently, we are seeing a slow recovery as many countries ramp up vaccination programmes,” he said. Emirates Airlines, in a statement recently said, had lost Shs3.5b in the first quarter of 2020/21 and has since diversified into cargo.  

The industry also expects cargo yields to continue improving due to demand for value added goods such as medical products and vaccines with forecasts expecting it to rise to $152b, which is one-third of the industry’s revenues.

“The strong rebound in economic activity has been positive for airlines. It has generated strong demand for air cargo services. Unfortunately, this is not large enough business for most airlines to offset the collapse of international air passenger revenues,” the Airline Business Confidence Index reads in part.

Airlines across the world made substantial losses last year due to Covid-19 with losses growing through the roof to more than 70 per cent.

Cost cutting and a strong cargo business helped reduce losses in the second half of 2020. However, many airline costs are fixed over short periods and hard to avoid. As a result, losses were reduced only to around 50 per cent by the last quarter of 2020.

The fourth quarter of 2020 worsened with the industry making net losses of more than $126b.

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