Global airline chiefs must be even more careful about cash management as they revive operations amid signs of a recovery in air travel, the International Air Transport Association’s director general said.
Operators were urged to take a cautious approach to rebuilding their networks as they balance rising costs with lower revenue, Willie Walsh told aviation consultant John Strickland during an online session of the Arabian Travel Market conference in Dubai.
Mr Walsh said a cash crunch looms for some airlines, with the real challenge expected to start when they ramp up operations as “they don’t have the traditional cash reserves from sales in advance of carriage”.
The Covid-19 pandemic hit the aviation sector particularly hard, forcing airlines to conserve capital. Airlines were able to tighten their belts as fuel expenses declined due to fewer flights and wage bills fell because of staff furloughs and government payroll support.
Demand is beginning to recover in fits and starts due to the increased pace of vaccinations in many countries around the world. However, airline costs are expected to increase rapidly as operations resume.
“If you get an imbalance between the cost ramp-up and revenue build-up, then the cash burn will be quite significant,” said Mr Walsh.
“For undercapitalised, cash-poor airlines, they have to be really cautious as they see evidence of recovery in the industry.”
The airline industry’s debt burden is up by $220 billion and expected to increase further, according to Iata estimates.
Annual industry losses are expected to reach $47.7bn this year as airlines burn through a further $81bn of cash.
However, Mr Walsh is optimistic about a recovery in air travel demand in the second half of this year, once government-imposed restrictions are removed or relaxed.
“The amount of additional liquidity airlines had to raise has been phenomenal, which will play a significant part in how the industry develops post-crisis.”
The aviation industry will emerge from the global crisis smaller and more cautious, the Iata chief said, citing its reduced capacity, laid off or furloughed employees, grounded aircraft and lower potential for acquisitions, he said.
“It will be a smaller industry. It will not [be a] recovery of all of the capacity; it is just impossible,” he said. “They cannot build back up to the scale of 2019.”
Airlines will be also less willing to spend their money on acquisitions and mergers.
“I do not expect to see M&A activity, principally because people will be very guarded about the cash that they have,” said Mr Walsh.
“It is just risky to spend your valuable cash resources.”
However, consolidation will take place through some airlines shrinking and others failing, with stronger companies growing market share by filling any gaps left, he said.
In the short term, airlines will not be able to take the risk of operating unprofitable routes, he said.
“That caution is just right because no one wants to survive this crisis, only to fall over after the recovery starts,” said Mr Walsh.
“People have to be very careful about the pace at which you build up your network again.”
Demand is expected to outstrip capacity over the next few months, which will be a boon for airlines, he said.
Their immediate priorities will be to repair their balance sheets, strengthen their cash position and be “in a place to survive what may be a couple of cold winter months ahead”, said Mr Walsh.
UAE currency: the story behind the money in your pockets
Recent winners
2002 Giselle Khoury (Colombia)
2004 Nathalie Nasralla (France)
2005 Catherine Abboud (Oceania)
2007 Grace Bijjani (Mexico)
2008 Carina El-Keddissi (Brazil)
2009 Sara Mansour (Brazil)
2010 Daniella Rahme (Australia)
2011 Maria Farah (Canada)
2012 Cynthia Moukarzel (Kuwait)
2013 Layla Yarak (Australia)
2014 Lia Saad (UAE)
2015 Cynthia Farah (Australia)
2016 Yosmely Massaad (Venezuela)
2017 Dima Safi (Ivory Coast)
2018 Rachel Younan (Australia)
COMPANY%20PROFILE%20
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The National Archives, Abu Dhabi
Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.
Much of the material can be viewed on line at the Arabian Gulf Digital Archive - https://www.agda.ae/en
Chelsea 2 Burnley 3
Chelsea Morata (69'), Luiz (88')
Burnley Vokes (24', 43'), Ward (39')
Red cards Cahill, Fabregas (Chelsea)
UK-EU trade at a glance
EU fishing vessels guaranteed access to UK waters for 12 years
Co-operation on security initiatives and procurement of defence products
Youth experience scheme to work, study or volunteer in UK and EU countries
Smoother border management with use of e-gates
Cutting red tape on import and export of food
The specs: 2018 Nissan Patrol Nismo
Price: base / as tested: Dh382,000
Engine: 5.6-litre V8
Gearbox: Seven-speed automatic
Power: 428hp @ 5,800rpm
Torque: 560Nm @ 3,600rpm
Fuel economy, combined: 12.7L / 100km
Result
Tottenhan Hotspur 2 Roma 3
Tottenham: Winks 87', Janssen 90 1'
Roma 3
D Perotti 13' (pen), C Under 70', M Tumminello 90 2"
Why are you, you?
Why are you, you?
From this question, a new beginning.
From this question, a new destiny.
For you are a world, and a meeting of worlds.
Our dream is to unite that which has been
separated by history.
To return the many to the one.
A great story unites us all,
beyond colour and creed and gender.
The lightning flash of art
And the music of the heart.
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Universal ideals, visions of art and truth.
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Come with questions, leave with visions.
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Why are you, you?
Because we are mirrors of each other.
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We connect, we inspire, we multiply illuminations
with the unique light of art.
Ben Okri,
LA LIGA FIXTURES
Friday (UAE kick-off times)
Real Sociedad v Leganes (midnight)
Saturday
Alaves v Real Valladolid (4pm)
Valencia v Granada (7pm)
Eibar v Real Madrid (9.30pm)
Barcelona v Celta Vigo (midnight)
Sunday
Real Mallorca v Villarreal (3pm)
Athletic Bilbao v Levante (5pm)
Atletico Madrid v Espanyol (7pm)
Getafe v Osasuna (9.30pm)
Real Betis v Sevilla (midnight)
THE SIXTH SENSE
Starring: Bruce Willis, Toni Collette, Hayley Joel Osment
Director: M. Night Shyamalan
Rating: 5/5
Gulf Men's League final
Dubai Hurricanes 24-12 Abu Dhabi Harlequins
Killing of Qassem Suleimani
Killing of Qassem Suleimani
Killing of Qassem Suleimani
UAE currency: the story behind the money in your pockets
MEYDAN CARD
6.30pm Maiden Dh165,000 (Dirt) 1,600m
7.05pm Conditions Dh240,000 (D) 1,600m
7.40pm Handicap Dh190,000 (D) 2,000m
8.15pm Handicap Dh170,000 (D) 2,200m
8.50pm The Entisar Listed Dh265,000 (D) 2,000m
9.25pm The Garhoud Sprint Listed Dh265,000 (D) 1,200m
10pm Handicap Dh185,000 (D) 1,400m
The National selections
6.30pm Majestic Thunder
7.05pm Commanding
7.40pm Mark Of Approval
8.15pm Mulfit
8.50pm Gronkowski
9.25pm Walking Thunder
10pm Midnight Sands
RESULT
Copa del Rey, semi-final second leg
Real Madrid 0
Barcelona 3 (Suarez (50', 73' pen), Varane (69' OG)
TCL INFO
Teams:
Punjabi Legends Owners: Inzamam-ul-Haq and Intizar-ul-Haq; Key player: Misbah-ul-Haq
Pakhtoons Owners: Habib Khan and Tajuddin Khan; Key player: Shahid Afridi
Maratha Arabians Owners: Sohail Khan, Ali Tumbi, Parvez Khan; Key player: Virender Sehwag
Bangla Tigers Owners: Shirajuddin Alam, Yasin Choudhary, Neelesh Bhatnager, Anis and Rizwan Sajan; Key player: TBC
Colombo Lions Owners: Sri Lanka Cricket; Key player: TBC
Kerala Kings Owners: Hussain Adam Ali and Shafi Ul Mulk; Key player: Eoin Morgan
Venue Sharjah Cricket Stadium
Format 10 overs per side, matches last for 90 minutes
Timeline October 25: Around 120 players to be entered into a draft, to be held in Dubai; December 21: Matches start; December 24: Finals
