Good afternoon, everyone. I think you can see from Brian's presentation that there is good and bad news. The bad news shouldn't come as a surprise, because it has been clear that the pace of recovery in the industry is slower than we had expected and slower than most people had anticipated, versus what we were thinking back in December of last year.

I think back then there was some optimism that we might see a pickup in the second quarter in 2021. We are now looking at a recovery in the second half. The increase in losses and reduction of the airlines’ performance shouldn't come as a surprise. In fact, I think what might surprise some people is that we're not forecasting worse losses than Brian has shown in his presentation today.

On the good news side, the first thing I would say is that we are seeing a significant improvement in the financial performance, although still making significant losses. We've seen a 20-plus point move in margin. And that has come from hard work. Airlines have taken all of the right measures. They are beginning to see the benefit of the difficult decisions taken in 2020, coming through in the financial performance in 2021.

Airlines are continuing to look for opportunities to improve their financial performance, particularly given the slower pace of recovery. I think airlines and their management teams deserve great credit for what they've done so far, because it clearly has been a very challenging environment. This crisis is without question, the worst challenge, the greatest crisis, we've ever faced. It is much deeper and has extended longer than anybody had expected.

The other positives are when you look at the domestic markets. First and foremost, in these markets, there are very little if any travel restrictions. From Brian's chart you could see that domestic traffic in China is expected to be above 2019 levels and the US domestic market is broadly in line with 2019. Talking to some of the CEOs there, I think they are even more optimistic than the presentation that Brian has given you.

We do know with clear evidence that when travel restrictions are relaxed or removed, there is strong pent up demand for travel. That supports everything we've been saying. Once governments can manage the risks to better than they have been doing—balancing the risk to lives and livelihoods—then we should see relaxation in the restrictions that have been put in place. That will lead to a pickup in travel.

When we talk about demand, we have to remind ourselves that that demand is significantly suppressed and depressed by the travel restrictions that are in place. There is good evidence of this from the domestic markets. And there is good evidence where international travel is allowed too, like the travel bubble that we've seen now between Australia and New Zealand. I'm sure all of you looked at the fantastic images coming out of New Zealand when people were arriving and greeting friends and family that they haven't been able to see in a long time. There are good reasons to be optimistic.

Cargo performance has also been very good. Again, I think the industry deserves great credit on the way they've responded to the underlying demand for cargo, given the significant reduction in passenger activity. Airlines have been able to put sufficient capacity on to meet the critical demand and they have been a very important, if not a critical part of the supply chain in ensuring that suppliers of PPE and medical supplies have been transported to where they've been required.

The second half of the year certainly looks more positive than the first half. At this stage what we believe is necessary is for governments to work with the industry.

First, there needs to be a plan. We have years of expertise of managing risk and planning for these events. We know what is required, we know what work will need to be done to ensure that markets can be reopened as quickly as possible, to take full advantage of the potential economic recovery.

Risk management is in our blood. Airlines do it daily. That's why we have such a safe and secure form of transport. We identify risks. We put mitigating actions in place. We manage any residual risk. And we never take risks that are not required. And that's a feature of our industry.

We know how to do risk management better than governments, and we would appreciate the opportunity to work with them. If they're not ready to produce these plans, we can help them produce them. We are doing that in many countries where governments have looked to us for support and assistance in putting together a recovery plan.

Second, given that the crisis is extending longer than most people had expected, we need governments to continue to support the industry, particularly in the area of employee support schemes. It is critical that we retain the skills within the industry to enable the industry to recover, without question.

Similar to many other industries that have been heavily impacted by this crisis, the airline industry would not have been able to retain as many of those employees with critical skills if it had not been for the income support schemes that many governments put in place. The recovery is going to take longer than we expected and as some of these schemes will be unround as we go through the summer, I think it will be important for governments to recognize that it may be necessary to have sector specific schemes in place, particularly for the airline industry.

Third, and as I've talked on many occasions in my previous roles, and I will continue to do so in this role, cost containment and cost control/cost reduction, is going to be critical for the future success of the industry. The results you are seeing today, although disappointing, are much better than they would have been if it weren't for the tough decisions that airline managers have taken going through 2020 and into 2021.

We need our suppliers and partners in the industry to recognize that; we need them to be equally focused on cost control. But we are not seeing evidence of that, particularly with monopoly or quasi-monopoly suppliers.  It is unacceptable for these suppliers to believe that they can recover losses encountered in 2020 by price gouging from the airline industry. We've had to take very significant pain and they should have been doing that too; they should have been adjusting their cost base to reduce their losses through the year. It's unacceptable for people to believe that they can just sit back and then recover those losses from an industry that needs to retain all of the cash it can generate to address the debt burden that has built up through this crisis. As Brian has demonstrated $650 billion of debt is $220 billion more than when the crisis started. We want our partners and suppliers in the industry to recognize the role that they need to play.

I'm optimistic. I think there's good evidence to support recovery. We've demonstrated the resilience of the industry and that we are prepared to do what's necessary. We are going to continue to work with the industry to ensure that once volumes increase, they can operate efficiently.

That's where the IATA Travel Pass comes into play. We think this will be a critical facilitator to enable airlines and airports to function in an efficient manner. We cannot rely on paperwork to facilitate travel, when the customer checks-in at the airport or when the customer arrives at the destination. We have to have a digital solution.

As all of you will know, airports today have not been built to deal with the manual processing of every customer that flies. All of the airports that are operating today with high volumes of customers function using online check-in or with travel apps that enable customers to do all the routine transactions before they get to the airport. That's what the IATA Travel Pass will re-enable.

We are very pleased with our progress. We have the support of the airlines. We have signed a number of key medical labs who will have direct access to the app. We have good cooperation from many governments. They recognize the value of the travel pass. A lot of work that still needs to be done, but there is good reason for us to be optimistic about the future.

> Outlook press release
> COVID-19 Airline industry financial outlook update (pdf) from Brian Pearce, IATA's Chief Economist