Report: Airlines Will Lose $100 Billion Because Of Coronavirus

A semi-annual report published Tuesday by the International Air Transport Association (IATA) forecasts that 2020 will be the worst year in history for airlines, as the industry is projected to lose around $100 billion dollars in the next two years.

Even without a second wave of the coronavirus, which would likely lead to further air service restrictions, the IATA report states that airlines are expected to lose $84 billion this year and an additional $15 billion in 2021.

A worker disinfects the cabin area of an Air France aircraft at Roissy-Charles de Gaulle Airport on the outskirts of Paris on May 12, 2020. - As the world emerges from a lockdown situation, it is imperative for airlines survival that their clients return to the skies as soon as possible. This does not seem to be a foregone conclusion: only 14 per cent of consumers would get back on a plane as soon as traffic restrictions are lifted, 40 per cent would wait six months or more, and the majority would wait one or two months, according to a survey conducted in 11 countries by the International Air Transport Association (IATA), which groups 290 airlines. (Photo by ERIC PIERMONT / AFP) (Photo by ERIC PIERMONT/AFP via Getty Images)

A worker disinfects the cabin area of an Air France aircraft (Eric Piermont/AFP via Getty Images)

The coronavirus has sharply reduced passenger and cargo demand, and airlines are also facing a high debt burden as competitive pressure on air fares have led to revenue losses, according to Forbes.

Airline travel in the United States dropped a record 96% following the outbreak, which has so far claimed more than 100,000 American lives and created an economic recession. In response to the devastating impact of the pandemic, airlines in the United States have cut 71% of their capacity in an effort to match lower passenger demand and save money.

Airlines started to receive parts of a $25 billion federal aid package in April, although that has not prevented companies from laying off employees and reducing compensation, according to CNBC. (RELATED: American Airlines To Cut 5,000 Jobs, Despite $25 Billion Bailout)

International Air Transport Association (IATA) chief executive Alexandre de Juniac (R) poses with Qatar Airways chief executive Akbar Al Baker (C) and Korean Air chief executive Walter Cho (L) during a press conference after the opening session of the annual general meeting of IATA in Seoul on June 2, 2019. - Intensifying trade wars and rising fuel prices will continue to bog down airline profits this year, the International Air Transport Association said on June 2. (Photo by Jung Yeon-je / AFP) (Photo credit should read JUNG YEON-JE/AFP via Getty Images)

IATA chief executive Alexandre de Juniac (R) poses with airline executives at an annual IATA meeting (Jung Yeon-je/AFP via Getty Images)

With most major airline carriers still grounded due to coronavirus restrictions, the IATA stated that industry revenue would likely fall to $419 billion, down from last year’s $838 billion. IATA Director General Alexandre de Juniac also said that “every day of this year will add $230 million to industry losses,” a number equal to almost $38 per passenger flown annually, Reuters reported.

A presentation by IATA chief economist Brian Pierce released Tuesday stated that by January 2021 passenger demand will still be 36% lower than what it was at the beginning of the year. Pierce also recommended that the industry reopen in phases, adding that the IATA is “expecting long-haul markets to take some time to open.”