Saudi airlines incur $9.6 bln losses on COVID-19: IATA official

Muhammad Albakri, regional vice president for Africa and the Middle East, IATA

Airlines in Saudi Arabia incurred $9.6 billion losses due to a 70% decline in passenger traffic in 2019, due to the COVID-19 pandemic, Muhammad Albakri, regional vice president for Africa and the Middle East, International Air Transport Association (IATA) told Argaam in an exclusive.

He said that these losses will reflect on decreasing jobs in the aviation sector by more than 360,000, directly impacting the gross domestic product (GDP), equivalent to $22.7 billion.

Saudi Arabia has offered over $61 billion economic subsidy to the private sector, including aviation, Albakri added.

Commenting on the resumption of flights, he said IATA forecasts a global improvement in demand for passenger traffic by 50.4% in 2021 compared to a year earlier, which will boost the industry globally by 50.6% compared to 2019.

Albakri noted that this positive scenario will take place if there is no change in the current situation and the vaccine continues to distributed fast.

"However, there is a severe risk to these forecasts if the governments continue to impose strict travel restrictions to combat the coronavirus," the official said, adding that if this scenario is achieved, the improvement in global demand might be limited to only 38% and 13% above 2019 and 2020 levels.

COVID-19 was a major challenge for the global aviation industry in 2020 as its revenue dropped to $328 billion from $838 billion in 2019.

Albakri said the recovery might take long but the sector is expected to improve in 2021 compared to 2019, noting that the passenger traffic would hit 2019 levels in 2024, driven by the potential recovery in local markets.

The $200 billion subsidy offered by the governments from around the world was not enough to bridge the huge gap between revenues and expenditures, the official said.

Albakri concluded that the aviation sector needs more support from governments, especially amid the repercussions of COVID-19 and the preventive measures imposed by the governments to combat the pandemic, which will lead to a slowdown in the sector's recovery.