The Slump in Airline Businesses, IATA Expects a Recovery to Pre-Covid Level by 2024!
The Slump in Airline Businesses, IATA Expects a Recovery to Pre-Covid Level by 2024!
The Slump in Airline Businesses, IATA Expects a Recovery to Pre-Covid Level by 2024!
19 ส.ค. 2563

The second quarter of 2020 is one of the worst quarters for aviation and other airline-related businesses as measures imposed to contain the coronavirus outbreak refrained people from both domestic travel and international travel.
 
Thailand’s economy heavily relies on tourism as the sector contributes 17% to the nation’s GDP. The country reported a contraction of 12.2% in 2Q20 GDP. Meanwhile, exports in 2020 is expected to contract by 10% from earlier forecast of 8% contraction, and imports in 2020 were forecasted to contract by 15.4% from a 13.2% contraction earlier.
 
Aside from airline businesses, airport operators such as Airport of Thailand Public Company Limited (AOT) and Bangkok Aviation Fuel Services Public Company Limited (BAFS) also recorded losses in 2Q financial statements.
 
Thai Airways International Public Company Limited (THAI) reported a net loss of 5.3 billion baht in 2Q20 and 28 billion baht for the first half of 2020. Total revenues of THAI were 2,492 million baht, lower than the same quarter of last year by 40,017 million baht or 94.1%. The main reason was that both revenue from passenger and cargo transportation decreased by 37,604 million baht (96.4%). The company filed for bankruptcy on May 27, 2020.
 
Bangkok Airways Public Company Limited (BA) reported a net loss of 2,974 million baht in 2Q20, representing an additional contraction of 328% from its net loss of 693 million baht in 2Q19. The operating revenue of BA for the second quarter of 2020 and 2019 was 800.4 million baht and 5,645.9 million baht, respectively, representing a decrease by 85.8%.
 
Asia Aviation Public Company Limited (AAV) had a net loss of 1,141.3 million baht in 2Q20, increased by 136.55% from a net loss of 658.8 million baht in 2Q19. The decrease was mainly due to the coronavirus (COVID-19) pandemic that triggered the global economic recession globally during the second quarter of 2020 and lockdown measures were introduced to contain the spreading of the pandemic.
 
Airports of Thailand Public Company Limited (AOT) reported a net loss for its 3Q20, ending June 30, 2020, at 2,933 million baht, compared to a net profit of 5,883 million baht in the same period of last year and a net profit of 3,647 million baht in the previous quarter. The losses in 3Q earnings were mainly due to the closure of air traffic due to the coronavirus outbreak, causing AOT to significantly lose its revenue.
 
Bangkok Aviation Fuel Services Public Company Limited (BAFS) had a net loss of 228 million baht in 2Q20, contrasted to its net profit of 176 million baht in the same quarter last year. BAFS stated that the pandemic affects the company in terms of services revenue as the total revenue in 2Q20 was of 229.9 million baht, decreased by 711.3 million baht or 75.6% YoY.
 
Meanwhile, Nok Airlines requested a postponement of the 2Q financial statement to a later date. The company also filed for bankruptcy on July 31, 2020.
 
The International Air Transport Association (IATA) forecasted that global enplanements will fall 55% in 2020 compared to 2019. Passenger numbers are expected to rise 62% in 2021 off the depressed 2020 base, but still will be down almost 30% compared to 2019. A full recovery to 2019 levels is not expected until 2023, one year later than previously forecast.
Meanwhile, since domestic markets are opening ahead of international markets, and because passengers appear to prefer short haul travel in the current environment, RPKs (revenue passenger kilometers) will recover more slowly, with passenger traffic expected to return to 2019 levels in 2024, one year later than previously forecast. Scientific advances in fighting COVID-19 including development of a successful vaccine, could allow a faster recovery. However, at present there appears to be more downside risk than upside to the baseline forecast.
 