European airlines: biggest capacity drop and fastest cash burn

European aviation is feeling the burden of the COVID-19 crisis even more heavily than other world regions. Its year to date cumulative seat capacity is down by 55% - worse than in any other region.

Moreover, according to IATA, its airlines generated negative free cash flow at -83% of revenue in 2Q2020, versus an average of -52% for all regions. Preliminary 3Q2020 results from the leading European airline groups, Lufthansa, IAG and easyJet, indicate that they have continued to burn through cash at a rapid rate.

Europe's year-on-year cut in seat capacity narrowed slightly to -62.1% in the week commencing 26-Oct-2020, the first week of the winter 2020/2021 season, compared with -63.4% in the previous week. This was the first improvement in the trend in 10 weeks, but Europe still has the equal biggest reduction in capacity, tied with Middle East on -62.1%. Africa is -58.4%, Latin America -57.4%, North America -51.5%, and Asia Pacific is -38.4%.

Globally, airlines are expected to continue to burn cash until at least the end of next year, but Europe's airlines may struggle for cash break-even for longer than that.