IATA "Global Airline Debt Expected to Increase by 150 Trillion This Year... Up 28% Since Early Year"

On the 18th, the departure hall of Terminal 1 at Incheon International Airport is deserted due to the impact of the novel coronavirus (COVID-19). Photo by Moon Honam munonam@

[Asia Economy Reporter Yu Je-hoon] Due to the impact of the novel coronavirus infection (COVID-19) pandemic, an analysis has emerged that the debt of airlines worldwide will increase by approximately 150 trillion won this year. For airlines, managing financial soundness will remain a challenge even after overcoming COVID-19.

The International Air Transport Association (IATA) announced on the 26th (local time) that the debt of airlines worldwide is estimated to increase by $120 billion (about 148 trillion won) compared to the beginning of the year, reaching a total of $550 billion (about 678 trillion won) by the end of this year. IATA is the world's largest private aviation organization with over 290 member airlines.

According to IATA, of the debt increase this year, $67 billion will be sourced from governments. Specifically, this includes government loans ($50 billion), loan guarantees ($12 billion), and various tax deferrals ($5 billion). The remaining $52 billion is expected to come from the private sector, including loans ($23 billion), capital market debt ($18 billion), and new operating lease liabilities ($5 billion).

Currently, governments around the world have pledged a total of $123 billion (about 151 trillion won) in financial support to airlines. Aside from the $67 billion that must be repaid in the future, the rest is provided through employment subsidies ($34.7 billion), capital injections ($11.5 billion), grants and tax reductions ($9.7 billion), among other methods. IATA explained, "This is essential for airlines that will burn through as much as $60 billion in cash in the second quarter alone."

Our government is also actively supporting airlines facing a crisis due to COVID-19. It has decided to supply liquidity of 1.2 trillion won to Korean Air, 1.7 trillion won to Asiana Airlines, and 300 billion won to low-cost carriers (LCCs). In addition, a fund for stabilizing key industries has also been established.

IATA analyzed that even after overcoming COVID-19, airlines will face the risk of financial soundness. Alexandre de Juniac, IATA Director General, stated, "The need to repay government and private debt means that this crisis will last longer than the recovery of air travel demand," adding, "After surviving the COVID-19 phase, airlines' next challenge will be to restore financial soundness."

This content was produced with the assistance of AI translation services.