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Airline Debt Increases as COVID Continues to Affect Travel

By Kelly Hoggan


The fall season is typically a time when airlines experience a drop in passenger counts. Add in that the continuing coronavirus phenomenon has also depressed travel to a sometimes great extent, and a recipe for debt accumulation on the part of airlines is evident. Lately, air carriers have been adding more debt to deal with COVID and its effect on air travel. 

Global air carriers have been big players in the debt sales market in 2021.

Why It’s Happening 

Fall is always a time, after the busy summer travel season,when airlines experience a decrease in passenger travel, especially to traditional summertime leisure destinations. The COVID-19 pandemic has intensified the drop in travel, however, as businesses and leisure travelers continue to cancel travel plans and stay closer to home or the office.  

How Much Debt? 

According to various news sources, the airline industry’s total debt has increased 23% since 2020 and now comes in at around $340 billion. Global air carriers, mostly in Europe and Asia, have sold more than $63 billion in bonds and loans, both of which are debt instruments and carried as liabilities on their books. How much debt is too much to carry for any individual airline, however, is dependent on a wide variety of factors and, so far, analysts aren’t all that concerned about debt loads, which is a factor in carriers’ favor.  

The Road Ahead 

As nations continue to work to slow or halt the spread of the coronavirus, many border restrictions are still in place. The rise in COVID cases due to the virus’s latest variant, Delta, could also lead some countries to impose more stringent quarantine rules on visitors as well. As a result of continuing restrictions and quarantine rules, many airlines are likely to seek additional cash funding through the bond markets for some time to come. 

Debt Sales 

Fortunately for air carriers, the bonds they’re issuing are still being bought up by investors who seem ready and willing to provide ample support for the airline industry. It’s a mark of how strong today’s global air carriers are – even in the face of the coronavirus – that the bonds they’re offering for purchase are being snapped up fairly quickly. Twenty years ago, after the terror attacks of  9/11, such wasn’t the case and many carriers ended up insolvent, in bankruptcy, and in liquidation in the aftermath.  


Japan Airlines (JAL) is a notable air carrier in the Asia market that’s been taking on new debt through a recent stock and bond offering. The airline has secured $2.7 billion (300 billion yen) in new funding through a variety of bonds and loans. It plans to use some of the money to upgrade its fleet to better position itself to gain a larger share of the international travel market. The European Union is also holding a pandemic recovery bond sale, and air carriers within the EU will be major players.      

Long Term Health 

To date, stock and bond sales by airlines have been a success, indicating that investor confidence in air carriers is strong, and it’s likely to remain so for the foreseeable future. Airlines today are leaner and more agile than they were right after 9/11, for one. Carriers are better positioned to right-size fleets and employee rolls than they’ve ever been in the past as a result of hard lessons learned both because of 9/11 and this more recent coronavirus problem. The prospect for the airline industry’s long term health remains good, in other words.    

Kelly Hoggan, Founder and CEO of H4 Solutions, previously served as assistant administrator for operations at the Transportation Security Administration. In that role, he was responsible for aircraft and checkpoint security operations at the nation's 450-plus commercial airports.

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