Carriers could continue to haemorrhage cash for two years beyond the end of 2020, airline association Iata has warned.

Iata’s latest financial monitor forecasts airlines will “continue to burn cash” not just through the remainder of this year and next but “through 2022”.

The association’s assessment, spelled out in its August to September Airlines Financial Monitor, is that: “The cash burn rate slowed in Q3 compared to Q2 with the help of cost-cutting measures and robust cargo revenues.”

But it warned: “Airlines are expected to continue to burn cash through 2022 as revenues are likely to remain soft.”

Iata reported: “Passenger demand continues to lag the rise in seat capacity [and] passenger yields declined in August as airlines sought to improve weak travel demand with price stimulation.”

The association noted Europe’s airlines suffered the biggest falls in share values anywhere in the world in September, making it potentially more difficult to raise private finance.

Iata recorded: “European airlines were the worst performer among all regions [on equity markets] as countries in Europe started to impose travel restrictions.”

Europe’s carriers recorded a collective loss of $8.7 billion in the second quarter, April to June, compared with $11.7 billion in North America and $6.6 billion in the Asia-Pacific region.

Global airline losses in the quarter hit almost $31 billion.

Iata noted capacity rose 27% month on month in August as airlines returned aircraft to service, but worldwide capacity remained 63% down year on year.

Noting that only about 30% of commercial aircraft remain in storage, Iata issued a double warning saying: “The return of the fleet to service has outpaced the recovery in travel demand. It will be a challenge to airlines to keep fleet costs under control.

“Airlines are trying to stimulate demand by cutting fares, [but] the recovery in passenger demand lagged capacity developments.

“With new waves of Covid-19 cases emerging, reviving passenger demand will be a challenge.”

Iata director general Alexandre de Juniac warned last week: “Many airlines will not make it through the winter without a second tranche of financial aid.”

He said: “We are grateful for government financial support. But we need another tranche.”

However, de Juniac added: “The level of indebtedness of airlines is already too high. We urge governments to use anything but debt.”

Iata chief economist Brian Pearce said: “Every airline and airport is struggling. Airlines are on life support.”