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IATA estimates Aircraft deliveries will increase to 1143 in 2021 following the huge drop-off in 2020, Africa airlines to post a $1.5 billion net loss in 2022

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TUE 05 OCT, 2021-theGBJournal- In 2020, commercial airlines took delivery of 805 new aircraft, which was approximately half of the number originally planned at the beginning of the year, says the International Air Transport Association (IATA) in their latest assessment of Economic Performance of the Airline Industry.

It said, for 2021, airlines are estimated to take delivery of 1143 new aircraft. In 2022, airlines are scheduled to receive 1622 aircraft, which is above the 2019 figure.

‘’However, as the industry faces a challenging outlook, we expect that airlines will consider further cancellations or postponements. The investment appetite for new aircraft is likely to remain subdued as the global demand for air travel (RPKs) is not expected to recover to pre-crisis levels before 2024.’’

The assessment also contains consumer confidence pulse which it reckons rebounded following the lockdown period last year, industry fuel bill, total employment by airlines, debt providers fortunes and government support to airlines following the shocking impact of COVID-19 on the industry, which caused a significant loss in air connectivity.

IATA noted that as a result of travel restrictions, unique city-pairs declined for the first time since the global financial crisis. In 2020, the number of unique city-pairs was reduced by 30%. In 2021, unique city-pair connectivity is expected to partly recover as airlines expand their networks with the easing of travel restrictions in some regions. However, it will be 15% below 2019 levels.

On support from governments, IATA said it took a variety of forms, including capital injections, loans, deferring the payment of taxes and reducing tax liabilities. Some governments also continued their wage subsidies ($81bn) to preserve jobs. Loans and loan guarantees have also provided support, $73 bn and $26 bn, respectively. As of the end of September, government aid totaled $243bn.

IATA forecasts that the industry fuel bill will increase by 28% compared with 2020 to reach $100 billion, which will represent 19% of average operating costs (compared with 23% in the pre-crisis period).

The expected rise in fuel consumption reflects the air traffic recovery, notably in domestic markets, and also a sharp rise in jet fuel prices (+60% vs. 2020).

In 2022, it forecast the industry’s fuel bill to rise further to $132 bn (+32% vs. 2021) as the air travel rebound also spreads into international markets. The jet fuel crack spread, which turned briefly negative during 2020, should widen with rising air travel demand but it will remain lower than in the pre-pandemic period.

‘’We base our 2022 fuel consumption forecast on $67/bbl for the Brent crude oil price and an average jet fuel price of $77.8/bbl.’’

Around the global, the industry is facing an uneven recovery from the pandemic, IATA said, noting that the Regions with large domestic markets, faster vaccination rollout and less restrictive government policy will continue to recover faster than the other parts of the world.

It expects financial performance in all regions to improve in 2022 compared to 2021. However, at the aggregated level, net losses will extend to 2022 but will be only around one fifth of losses in 2021.

Africa is lagging other regions in its vaccine rollout, which will impact international travel recovery. Airlines in the region are expected to post a $1.5 billion net loss in 2022 on top of a $1.9 billion loss in 2021.

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