Dubai: The International Air Transport Association’s (IATA) new chief Willie Walsh believes there won’t be many mergers and acquisitions in the airline industry as it recovers from the pandemic.
“I don’t expect to see… principally because people (airlines) will be very guarded about the cash that they have,” said Walsh, speaking at the virtual Arabian Travel Market event. “It’s just too risky to spend your valuable cash resources trying to acquire something at this stage. It’ll be a smaller, more cautious industry, and I think that caution is justified, because nobody wants to survive this crisis only to fall over when the recovery starts.”
The former British Airways CEO also said airlines are more likely to face a shortage of cash when they begin ramping up operations. “For some airlines, the cash crunch is ahead of them, because they will face the real challenge, when they start trying to ramp up because they don’t have the traditional cash reserves that you have from sales in advance of carriage,” said Walsh. “There’s nobody selling tickets.”
A second-half recovery?
Walsh is optimistic about air travel recovery in the second-half, given the pace of vaccination programmes in parts of the world. “Most airline executives probably expected to see a recovery starting in the first quarter and certainly we’re optimistic about a strong second quarter,” said Walsh. “There are reasons to be optimistic when we looked at the second-half. Nearly 70-80 per cent of the population will be fully vaccinated and that really does provide the opportunity.”
Gulf deserves credit
“I talk positively about the attitude of governments in the Middle East for they see the contribution of aviation as pretty significant for their economies,” said Walsh. “I’ve always held it up as an example of where an economic contribution is genuinely valued and cherished and not taken for granted. And you know what they say, ‘If you’re not at the table, you’re on the menu…’. That’s part of the problem.”