20 Airlines Predicted to fail this year

 

 

We got back late last night and I had to go to work this morning and I was unable to get a post together

but I saw this in my email at work and thought it was worth posting.(The Pics are from my stash or what I have taken in my travels.)  it shows the effect of the lock downs on the world economy, when I was in California, I saw so many planes especially dreamliners and widebodies still in storage because of the pandemics

  

    Parts of the world has started to come back, but other areas like the far East and Europe and Africa are still heavily restricted for travel so many airlines have parked their airplanes.   Some countries are increasing the restrictions again because of the Omicron variant no matter the damage it does to the economy of their country and how many people they put out of work.   

UN aviation body ICAO, aircraft lessor Avolon and consultancy firm IBA have released their 2022 trend analyses, with IBA predicting another 20 airline failures in 2022 and ICAO lowering its 2050 growth forecast.

IBA estimates that there were 63 airline failures and restructurings in 2020 and 2021, which grounded 1,924 aircraft.

“With North America the only region forecast to have a profitable 2022, IBA predicts further failures. It forecasts that 20 airlines covering 200 aircraft will fail in 2022, bringing the three-year total to 83 carriers and 2,124 affected aircraft,” IBA said Jan. 17. 

The consultancy firm cited inflation, higher fuel prices and taxation as key headwinds.

Meanwhile, ICAO has reduced its compound annual RPK growth for the period 2018-2050. It is now predicting 3.6% growth, down from 4.2% pre-pandemic.

ICAO data shows that passenger numbers initially plummeted 60% in 2020 against the 2019 pre-pandemic baseline. This decline narrowed to 49% in 2021 and is expected to improve further in 2022. Around 68% of domestic traffic has returned, but international traffic is lagging at just 28%. 

In an optimistic scenario (95% domestic and 73% international recovery), ICAO said passenger traffic could reach 86% of 2019 levels by the end of 2022. Under a more pessimistic scenario (86% domestic and 58% international recovery), traffic might reach 75% of pre-pandemic levels by year-end.

The Americas are recovering at the fastest pace and Europe picked up noticeably during summer 2021. ICAO said the Middle East and Africa had seen moderate progress, but Africa plunged because of omicron coronavirus variant restrictions. Asia-Pacific is the weakest performing region.

 

The IBA forecast follows a similar geographical pattern. The consultancy firm believes a number of U.S. carriers will return to or exceed pre-pandemic capacity in 2022, with transatlantic flights recovering to 2019 levels. IBA also expects LCCs in the EU and U.S. to make a strong return, but airlines most exposed to the Asia-Pacific region will lag behind the rest of the industry.

IBA believes that leasing activity will strengthen in 2022, with lease-starts rising by over 20%, but aircraft disposals will appear to fall significantly. This is because the 2021 numbers for lessors were distorted by AerCap’s acquisition of GECAS.

Boeing 737 MAX values have rebounded strongly since the type’s grounding, rising by over 5% since the start of 2021, while Airbus A321neo values rose 2% over the same period. The weak long-haul market caused A350-900s and Boeing 787-9s to fall in value, but older widebodies took the greatest hit because of “considerable market oversupply.” IBA said 10-year-old Boeing 777-300ER values fell 25.6%, while A330-300s of the same era were down 33.2%.

“For 2022, IBA forecasts new generation narrowbody values will firm,” IBA said. “Widebody demand will remain suppressed, with values stabilizing at lower levels for out-of-production types. Regional jet value recovery is set to continue into 2022, with turboprop values and lease rates expected to strengthen as supply tightens.”

 

Aircraft lessor Avolon believes lessors will exceed more than 50% of the large commercial aircraft fleet in 2022, as airlines release aircraft liquidity to weather the crisis. 

Avolon predicts that international air traffic will return to 70% of 2019 levels by the end of 2022. “While we are confident in recovery, it will be a gradual and uneven recovery that will vary region-by-region,” Avolon head of portfolio management Jim Morrison said.

Sustainability will also be a key theme. Avolon is expecting 10 full-scale electric aircraft prototypes to fly in 2022 and the cost of carbon offsets to increase. “The global voluntary offset market could be worth $50 billion by the end of the decade, up from $300 million in 2018,” Avolon said.

Avolon also sees sustainable aviation fuel (SAF) getting stronger financial backing in 2022, quadrupling the lessor’s outlook for SAF production by 2030.

Meanwhile, air cargo will continue to play a key role in the recovery. Avolon said air freight accounted for more than a third of airline revenue over the past two years, three times its normal share. “Another strong year for air cargo paired with continued passenger market improvements may be enough to return the airline industry to profitability in 2022,” Avolon said.