A study of the International Air Transport Association about the Impact of Covid-19.

1. Economics
COVID-19
Updated Impact
Assessment
Brian Pearce
Chief Economist
1
24th March 2020

2. Economics
Travel restrictions are closing down international aviation
Markets with severe* restrictions cover 98% of global passenger revenues
*Including quarantine for arriving passengers,
partial travel ban, border closure
Source: IATA

3. Economics
The impact has moved beyond our ‘Extensive Spread’
scenario* implying $113 bn loss of passenger
revenues (19%) worldwide in 2020
Market
Impact on
passenger
numbers
Impact on passenger revenue
(Billion US$)*
Australia, China, Japan, Malaysia,
Singapore, South Korea, Thailand,
Vietnam -23% -49.7
APAC excluding the above -9% -7.6
Austria, France, Italy, Germany,
Netherlands, Norway, Spain,
Switzerland, Sweden, the United
Kingdom -24% -37.3
Europe excluding the above -9% -6.6
Bahrain, Iraq, Iran, Kuwait, Lebanon,
the United Arab Emirates -23% -4.9
Middle East excluding the above -9% -2.3
Canada, United States -10% -21.1
*Published on March 5
Source: IATA Economics
* Note:
Revenue numbers do not
add up to the $113 bn
global total because of
route overlaps e.g. China
and Japan include
revenues on the China-
Japan market. We adjust
for overlaps in calculating
the worldwide total.
Revenues are base fare
revenues for all airlines
serving routes to, from
and within each country

4. Economics
Signs of a turning point in China domestic air travel
Compared to SARS the initial decline has been much more severe
*Months after COVID-19 outbreak is based on bookings data
Source: IATA Economics using DDS
0
10
20
30
40
50
60
70
80
90
100
110
120
130
-3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12
Passenger numbers
Asia-Pacific exc. China domestic -SARS
Asia-Pacific exc. China domestic- COVID 19
China domestic-SARS
China domestic- COVID 19
Index(crisismonth=100)
Months before and after the start of the crisis

5. Economics
Passenger yields stabilizing on China’s domestic market
Including international China passenger yields falling 25% yoy or more
Source: IATA Economics using DDS
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
First two weeks of
February
Last two weeks of
February
First two weeks of
March
Passenger Yields China Domestic
Year-on-Year Change
Booking
Date:
Travel Month: February February March
-55%
-45%
-35%
-25%
-15%
-5%
5%
First two weeks of
February
Last two weeks of
February
First two weeks of
March
Passenger Yields China
Year-on-Year Change
Booking
Date:
Travel Month: February February March

6. Economics
But dramatic case spread outside Asia Pacific hit bookings
And led to a surge of ‘imported’ cases in Asia
* Based on bookings data for the month of March
Source: IATA Economics using DDS
-80%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
Africa Australasia Europe Latin America Middle East United States
Number of Passengers* for Travel Month March
Year-on-Year Change

7. Economics
Even where containment successes bookings falling
Imported cases from Europe and Middle East driving border closures
-80%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
China Japan Singapore South Korea
Number of Passengers* for Travel Month March
Year-on-Year Change
As the end of February As of 19 March
*Cumulative numbers based on bookings data
Source: IATA Economics using DDS

8. Economics
Passenger yields down sharply as well as bookings
Airlines unable to fill seats by discounting in this crisis
Source: IATA Economics using DDS
-25%
-20%
-15%
-10%
-5%
0%
African Asia-Pacific European North-American Middle-Eastern Latin-American
Passenger Yields For March Travel (Year-On Year Change)
March Travel March Travel booked in March

9. Economics
This time recovery may not come 6 months after the crisis
All previous pandemics had a sharp V-shape, but there was no recession
Source: IATA Economics using data from IATA Statistics
10
20
30
40
50
60
70
80
90
100
110
120
-3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12
Impact of past disease outbreaks on aviation
Index(crisismonth=100)
Months before and after the start of the crisis
SARS (2003)
AsiaPacific
Airlines
RPKs
AvianFlu (2013)
AsiaPacific Airlines RPKs
MERS Flu (2015)
RPKs to, from and within South
Korea
AvianFlu (2005)
RPKs to, from and within
South-East Asia
SARS (2003)
North American
Airlines RPKs
SARS (2003)
China Domestic Market
RPKs

10. Economics
Deep economic recession will delay recovery
Fiscal stimulus expected to stop recession exceeding GFC in depth and duration
-3
-2
-1
0
1
2
3
4
5
6
2008 2010 2012 2014 2016 2018 2020 2022
%changeyear-on-year
Global GDP growth
COVID-19
Source: Oxford Economics March 2020 forecast
Global Financial Crisis

11. Economics
Governments implementing huge fiscal stimulus
Adding spending worth 10-20% of annual GDP
0%
5%
10%
15%
20%
25%
0
500
1000
1500
2000
2500
US Germany UK France Spain Australia
%ofGDP
US$billion
Announced Government fiscal stimulus , selected countries
US$ bn %GDP
%GDP
Source: Reuters, CNN, various media reports

12. EconomicsSource: IATA Economics
Region of airline registration 1Q20 2Q20 3Q20 4Q20
Asia Pacific -18% -50% -25% -10%
North America -8% -50% -25% -10%
Europe -10% -90% -45% -10%
Middle East -23% -80% -40% -10%
Africa -10% -60% -30% -10%
Latin America -9% -80% -40% -10%
Industry -14% -65% -33% -10%
Passenger yield (% change year-on-year) assumption
Forecast update assumptions
▪ Capacity:
▪ Based on announced airline plans
▪ Restrictions imposed assumed to continue
through the second quarter
▪ Demand and Yield Assumptions:
▪ Recession prevents V-shaped recovery
▪ Three months of lock down and then gradual
recovery
▪ Passenger demand is forecast to fall by more
than capacity is cut. Industry-wide load
factors are expected to be gradually
recovering towards year-end.
▪ Passenger yield is expected to decline on
average by 5% in these conditions. Given
recent declines this may be an
underestimate.
Capacity (% change year-on-year) assumptions
Updated forecast based on 3m lock-down & capacity plans
This is contingent on lock-downs not rising to European levels in all regions
Region of airline registration 1Q20 2Q20 3Q20 4Q20
Industry -8% -6% -4% -3%

13. Economics
Before any recovery the immediate impact will be severe
We now expect a 38% fall in RPKs and $252 billion pax revenue loss in 2020
Source: IATA Economics
Region of airline registration
RPKs
2020 % yoy
Passenger revenue
$ billion 2020 vs. 2019 levels
Asia-Pacific -37% -88
North America -27% -50
Europe -46% -76
Middle East -39% -19
Africa -32% -4
Latin America -41% -15
Industry -38% -252

14. Economics
Outside the top-30 balance sheets debt levels are high
So many airlines will have fixed obligations of debt to service and repay
Source: IATA Economics using data from the Airline Analyst, own estimates
0
1
2
3
4
5
6
7
8
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Netdebtadjustedforoperatingleases/
EBITDAR
Net debt adjusted for operating leases / EBITDAR
Investment grade
Top-30 airlines
Rest of the industry

15. Economics
Airlines will run out of cash before recovery arrives
The typical airline had 2 months of cash at the start of this year
Source: IATA Economics using the Airline Analyst
0
1
2
3
4
5
6
7
8
9
10
Africa Asia Pacific Europe Latin America Middle East North America
Balance Sheet Liquidity
(Cash and Equivalents Coverage of Revenues*)
Min Max MedianMonths
*Latest available 12 months cumulative revenues Africa, Latin America and the Middle East might not be representative due to small sample size.

16. Economics
Contacts
economics@iata.org
www.iata.org/economics