Airlines worldwide are forecast to lose US$118bn in 2020 due to COVID-19, clawing back to US$88bn next year, according to industry trade body IATA.

It is a worse projection than June’s estimate of US$87bn, which was deemed a conservative expectation by the group’s director-general Alexandre de Juniac last week.

READ: Coronavirus: Travellers to England can halve quarantine after taking private tests from December

The airline industry has been virtually grounded by travel restrictions and recovery has been muted in most markets due to lockdowns, deep recession and weak consumer confidence.

Global revenue passenger kilometres (RPKs) are estimated to slump by 66% this year, its largest decline since World War II.

The availability of a vaccine in the second half of 2021 is anticipated to be a turning point but the recovery will be gradual since phased distribution of the jabs will take time.

Last week, IATA noted that earlier predictions of a return to pre-crisis traffic levels in 2024 might also be too optimistic with passenger numbers at best to be 50-60% at best at the end of 2021.

On Tuesday, UK airlines got a boost after the government announced that passengers arriving into England will be able to halve the mandatory quarantine if they take COVID-19 tests.

However, the situation remains dire as IATA reckons the industry will need US$70-80bn of financial aid otherwise some carriers will not survive.

In fact, Lufthansa is to raise £890mln through its first conventional bond issue since the start of the coronavirus crisis, Reuters reported, adding to a £534mln convertible bond issue from earlier this month.

The new five-year bond was priced at a yield of 3.125% on Tuesday.

Boeing 737 Max cleared in Europe

Separately, Boeing’s controversial 737 Max jets have been given clearance to fly again in Europe by the EU’s aviation regulator.

Approval was expected after the US FAA conditionally agreed for the plane to re-enter service in the US last week, though that was subject to software upgrades and agreement on a pilot training programme.

News of the clearance will be a boost for Europe’s beleaguered air sector and Ryanair in particular, which has been waiting for a batch of the new aircraft for more than 18 months.

That was when the plane was grounded following a fatal crash of Ethiopian Airlines Flight 302, its second accident in six months.

EASA, the EU regulator, said it would carry out its own assessment of the airworthiness of the planes before giving a final all-clear, though assuming no issues flights are likely to resume early in 2021.

By that time, Britain will have left the EU but a spokesman for the Civil Aviation Authority told Sky News it would work closely with EASA on all issues relating to the 737 Max.