Total global airline industry debt could reach $550 billion by the end of 2020, the International Air Transport Association says.
Governments and commercial lenders have injected about $123 billion into struggling airlines since the start of the global COVID-19 pandemic.
State aid includes $34.8 billion in wage subsidies, $11.5 billion in equity financing and $9.7 billion in tax relief and subsidies.
These liabilities will hamper airlines’ ability to quickly get back to profitability after the pandemic, IATA said.
“The next challenge will be preventing airlines from sinking under the burden of debt that the aid is creating,” said Alexandre de Juniac, IATA’s director general and CEO.
IATA is ‘fearful that we are going to see a number of failures.’
Combined global airline debt could increase by 28 per cent.
IATA shows the majority of state financial support has been in the US and Europe, but South America could be vulnerable to airline failures.
It follows the filing for bankruptcy protection of Avianca and LATAM this month.
“Airlines particularly in Latin America need strong government support,” de Juniac said.
