AFP

Air passengers are expected to hit 83 percent of pre-pandemic levels this year and the aviation industry’s return to profit is “within reach” in 2023 despite ongoing uncertainty, the International Air Transport Association said on Monday.

Industry losses are expected to drop to $9.7 billion this year, a “huge improvement” from $137.7 billion in 2020 and $42.1 billion in 2021, IATA said in an upgraded industry outlook ahead of its annual general meeting in Doha.

“Airlines are resilient. People are flying in ever greater numbers. And cargo is performing well against a backdrop of growing economic uncertainty,” the document quoted IATA director general Willie Walsh as saying.

The aviation industry was sent reeling by the pandemic, with passenger numbers plunging 60 percent in 2020 and remaining 50 percent down in 2021. Airlines lost nearly $200 billion over two years.

While some firms in the sector went bankrupt, others — backed often by states — have emerged from the pandemic with profits intact.

IATA said industry-wide profitability “appears within reach” in 2023, adding that North American airlines were expected to return an $8.8 billion profit this year.

More than 1,200 aircraft are expected to be delivered in 2022, while cargo volumes should reach a record 68.4 million tonnes “despite economic challenges”, it added.

“Strong pent-up demand, the lifting of travel restrictions in most markets, low unemployment in most countries, and expanded personal savings are fueling a resurgence in demand that will see passenger numbers reach 83 percent of pre-pandemic levels in 2022,” IATA said.

Airlines, desperate to put the coronavirus pandemic behind them, go into the talks in Doha ahead of a potential summer of chaos with shortages and strikes that could threaten their recovery.

While trade is roaring back to life, representatives from the aviation sector meeting until Tuesday in Qatar have a packed agenda with multiple geopolitical crises including the war in Ukraine and the environment.

Cracks are already showing in the sector’s recovery, though industry figures are optimistic about the future despite the issues.

In the past few weeks, delays and cancellations caused by a lack of staff at airports and strikes for better pay have wreaked havoc upon travellers.

The problems originate with the pandemic when airlines and airports laid off thousands of workers during its worst-ever crisis. Now, they are scrambling for employees.

Also reflecting the enduring disruption, IATA was forced to move its annual general meeting from Shanghai to Qatar as China continues to grapple with the pandemic.

The global association represents 290 airlines, accounting for 83 percent of air travel worldwide.

Markets were mixed Monday having pared earlier losses but sentiment continues to be clouded by fears that central bank moves to rein in soaring inflation will induce a recession.

The tepid performances come after a sell-off last week fuelled by the Federal Reserve’s sharp interest rate hike — the biggest in nearly 30 years — and a warning of more to come, while increases in Britain and Switzerland added to the gloom.

And while the S&P 500 and Nasdaq saw gains on Friday, there is a sense that indexes still have some way down to go before they find a bottom, with economic data suggesting economies are beginning to feel the pinch.

Cleveland Fed chief Loretta Mester added to the worry, saying that the risk of a recession in the United States was increasing and it would take several years to bring inflation down from four-decade highs to the bank’s two percent target.

She told CBS’s “Face The Nation” on Sunday that while she was not predicting a contraction, the Fed’s decision not to act sooner to fight rising prices was hurting the economy.

In Asian trade Monday, Tokyo, Shanghai Sydney, Seoul, Taipei, Bangkok and Wellington were all in the red, though there were gains in Hong Kong, Mumbai, Singapore, Manila and Jakarta.

London, Paris and Frankfurt edged up in early trade.

Analysts warned there was likely to be more pain ahead for traders as the Ukraine war drags on and uncertainty continues to reign.

“Central banks’ hawkish rhetoric and concerns over a global economic slowdown/recession (are) not helping sentiment and at this stage it is hard to see a turn in fortunes until we see evidence of a material ease in inflationary pressures,” said National Australia Bank’s Rodrigo Catril.

And Stephen Innes of SPI Asset Management added: “Most of these major central banks are praying for some relief from inflation and hoping the data falls in line, but unless there is a detent in the Ukraine-Russia war, escalation will continue to drive energy price fears so it could be a tough road ahead.”

Oil prices edged up Monday after suffering a hefty drop Friday over demand worries caused by a possible recession.

However, US Energy Secretary Jennifer Granholm said prices could continue to surge if the European Union cuts off imports of the commodity from Russia in response to the Ukraine war.

She said Joe Biden had called on global suppliers to ramp up output to help temper the price rises, with the president to discuss the issue at an upcoming visit to Saudi Arabia next month.

– Key figures at around 0720 GMT –

Tokyo – Nikkei 225: DOWN 0.7 percent at 25,771.22 (close)

Hong Kong – Hang Seng Index: UP 0.4 percent at 21,150.87

Shanghai – Composite: FLAT at 3,315.43

London – FTSE 100: UP 0.2 percent at 7027.78

Dollar/yen: DOWN at 134.86 yen from 134.99 yen late Friday

Pound/dollar: UP at $1.2243 from $1.2221

Euro/dollar: UP at $1.0529 from $1.0493

Euro/pound: UP at 85.98 pence from 85.83 pence

West Texas Intermediate: UP 0.4 percent at $109.98

Brent North Sea crude: UP 0.5 percent at $113.65 a barrel

New York – Dow: DOWN 0.1 percent at 29,888.78 (close)

— Bloomberg News contributed to this story —

Many European firms are rethinking their investments in China because of its strict Covid controls, a top business group said Monday, warning that disruptions had pummelled operations.

While the rest of the world has steadily removed coronavirus curbs, China has remained committed to its zero-Covid strategy, using lockdowns and mass testing to stamp out all infections.

But this strategy has hammered businesses and snarled supply chains — 60 percent of respondents in a survey of European businesses said it has become harder to do business in China, in large part due to Covid controls.

“We hope that China is really waking up,” Bettina Schoen-Behanzin, vice president of the European Union Chamber of Commerce in China, told AFP.

“(We hope) that they find a way to get out of this zero-tolerance Covid strategy because it causes huge uncertainty and this is for sure not good for investment.”

The chamber conducted the survey on over 600 member firms in February and March just as strict lockdowns were imposed in several areas to control China’s worst Covid outbreak in two years — from business hub Shanghai to the northern breadbasket province of Jilin.

The body also did a follow-up in April to assess the impact of the lockdowns and the Russian invasion of Ukraine.

It found that 92 percent of member companies were hit by supply chain problems, and three-quarters said their operations were negatively impacted by the Covid controls.

Further, 60 percent of respondents said in April that they had lowered their 2022 revenue projections.

The Ukraine war also impacted confidence — a third of the firms surveyed cited geopolitical tensions as a reason for the Chinese market becoming less attractive.

“The role China played over the last two years in bolstering European companies’ global revenues looks set to diminish,” the report released on Monday said.

“And recent events have led many to question just how many eggs they are willing to keep in their China basket.”

The Covid containment measures also hampered European firms’ ability to recruit international and local talent, the chamber said.

Its annual survey found that 58 percent of companies faced difficulties in recruiting international and local talent, pointing to the Covid controls and “a wealth of ever-changing visa and work permit procedures and extreme limitations on travel in and out of China”.

– ‘The world does not wait’ –

China is the world’s second-biggest economy with a huge market, however, making it difficult for firms to walk away.

“Companies, businesses are not leaving China, because the market is too big, the market is too important, and there are for sure many growth opportunities ahead,” Schoen-Behanzin told AFP.

“But they are localising, they are onshoring, and they are rethinking their footprint in China, in Asia,” she added.

“They are shifting, especially future investments.”

However, if the Covid restrictions drag on for another year, companies could start to feel even more pain.

“The world does not wait for China,” Schoen-Behanzin said.

“If there is no change, then definitely companies will start to think about backup plans and they obviously would go into other markets.”

Sri Lanka closed schools and halted all non-essential government services on Monday, beginning a two-week shutdown to conserve fast-depleting fuel reserves as the International Monetary Fund opened talks with Colombo on a possible bailout.

The country of 22 million people is in the grip of its worst economic crisis after running out of dollars to finance even the most essential imports, including fuel.

On Monday schools were shut and state offices worked with skeleton staff as part of government plans to reduce commuting and save precious petrol and diesel. Hospitals and the main seaport in Colombo were still operating. 

Hundreds of thousands of motorists remained in miles-long queues for petrol and diesel even though the energy ministry announced they will not have fresh stocks of fuel for at least three more days.

The country defaulted on its $51 billion foreign debt in April and went cap-in-hand to the IMF.

The first in-person talks with the IMF on Sri Lanka’s bailout request commenced in Colombo on Monday and will continue for 10 days, the lender and the government said in brief statements.

Prime Minister Ranil Wickremesinghe was also due to meet visiting Australian Home Affairs Minister Clare O’Neil to “deepen cooperation and assist Sri Lanka as the country faces very difficult economic times,” Canberra said in a statement.

It said O’Neil will also discuss strengthening engagement on transnational crime, including people-smuggling following a surge in would-be illegal immigrants by boat in the past month.

Sri Lanka is facing record-high inflation and lengthy power blackouts, all of which have contributed to months of protests — sometimes violent — calling on President Gotabaya Rajapaksa to step down. 

Police arrested 21 student activists who blocked all gates to the presidential secretariat building after declaring Monday, Rajapaksa’s 73rd birthday, a “day of mourning”.

The shutdown order came last week as the United Nations launched its emergency response to feed thousands of pregnant women who were facing food shortages.

Four out of five people in Sri Lanka have started skipping meals as they cannot afford to eat, the UN has said, warning of a looming “dire humanitarian crisis” with millions in need of aid.