Airlines face losses next year more than twice as deep as forecast and more government support will be needed to help them survive into 2022 when air travel is expected to take off.
This year they have lost an average of NZ$95 for every passenger they have carried.
The International Air Transport Association (IATA) says that around the world airlines have been saved so far with around US$173 billion ($248b) of government life support.
A "substantial" number of failures of medium and smaller airlines or a substantial increase of government ownership of airlines should they swap their debt for equity or nationalise.
In this country Air New Zealand has been rocked by the crisis and is drawing on a $900 million loan from the Government - which already owns 52 per cent of the airline - and has the option to sway debt for equity. The airline plans to go to the market in the first half of 2021 to raise capital too.
The Covid-19 crisis challenged the industry for its very survival in 2020, IATA says.
"The history books will record 2020 as the industry's worst financial year, bar none. Airlines cut expenses by an average of a billion dollars a day over 2020 and will still rack-up unprecedented losses. Were it not for the $173b in financial support by governments we would have seen bankruptcies on a massive scale," said Alexandre de Juniac, the association's director general and chief executive.
The crisis was devastating and unrelenting. Airlines have cut costs by 45.8 per cent but revenues are down 60.9 per cent.
The result is that airlines will lose US$66 for every passenger carried this year for a total net loss of $118.5b. This loss will be reduced sharply by $80b in 2021.
"But the prospect of losing $38.7b next year [deeper than the $15.8b forecast in June] is nothing to celebrate. We need to get borders safely re-opened without quarantine so that people will fly again. And with airlines expected to bleed cash at least until the fourth quarter of 2021 there is no time to lose," said de Juniac.
An economic outlook released overnight shows that the pace of recovery is uncertain, in spite of a series of positive reports on the effectiveness of vaccines for Covid-19.
''Even with an effective testing regime in place we are cautious about the extent to which this can quickly boost air travel.''
The association assumes that a vaccine(s) will be deployed in the second half of 2021, but it looks likely that there will be production and distribution challenges that mean it will only be in late 2021 and in 2022 when air travel rises back substantially.
"On this basis we don't expect 2019 levels to be regained until around 2024," the economists say.
"We should also acknowledge the huge amount of uncertainty over virus behaviour, vaccine effectiveness and government responses."
In this country, the Government has said some border restrictions could be in place for up to 18 months.
IATA says passenger numbers are expected to plummet to 1.8 billion (60.5 per cent down on the 4.5 billion passengers in 2019). This is roughly the same number that the industry carried in 2003.
Passenger revenues are expected to fall to $191b, less than a third of the $612b earned last year.
This was largely driven by a 66 per cent fall in passenger demand (measured in Revenue Passenger Kilometres/RPK).
International markets were hit disproportionately hard with a 75 per cent fall in demand. Domestic markets, largely propelled by a recovery in China and Russia, are expected to perform better and end 2020 49 per cent below 2019 levels. New Zealand domestic demand has recovered more strongly than expected.
Cargo is performing significantly better than for passenger demand but is still depressed compared to 2019 with the total carried expected to be 54.2 million tonnes this year, down from 61.3 million tonnes in 2019.
Cargo revenues are bucking the trend, increasing to $117.7b in 2020 from $102.4b in 2019.
"Cargo is performing better than the passenger business. It could not, however, make up for the fall in passenger revenue. But it has become a significantly larger part of airline revenues and cargo revenues are making it possible for airlines to sustain their skeleton international networks," said de Juniac.
In 2019 cargo accounted for 12 per cent of revenues and that is expected to grow to 36 per cent in 2020.
The "median airline" has just 8.5 months of cash to survive. Many have far less as the industry enters into the critical northern winter period, which is characterised by weak demand even in normal times.
While cash burn has diminished from the peak of the crisis, airlines are still expected to burn an average of $6.8b a month during the first half of 2021, before the industry turns cash positive in the fourth quarter of 2021.
"The financial damage of this crisis is severe," said de Juniac at the association's virtual annual meeting which had been planned as its showpiece in Amsterdam.
"Government support has kept airlines alive to this point. More is likely needed as the crisis is lasting longer than anyone could have anticipated. And it must come in forms that do not increase the already high debt load which has ballooned to $651b."
He said bridging airlines to the recovery was one of the most important investments that governments could make as it would save jobs and kick-start the recovery in the travel and tourism sector which he said accounted for 10 per cent of global GDP.