World airline losses to exceed $2.5bn
March 19, 2009
By EILEEN NG
Kuala Lumpur, Malaysia - The world's airlines are collectively expected to lose more than $2.5 billion in 2009 and could remain in the red for years amid the deepening global economic slump.
The International Air Transport Association will raise its forecast for 2009 industry losses next week as the deteriorating global economic conditions further hit demand for air travel and cargo
Director-General Giovanni Bisignani said: "Unfortunately, it will be a significant increase - just look at the numbers. January passenger traffic was down 5.6 percent. Premium traffic, where airlines make their money, was off 16.7 percent and cargo is a disaster with a 23.3 percent fall."
In December 2008, IATA forecast a $2.5 billion loss for 2009 based on fuel price of $60 a barrel, a three percent drop in passenger demand and a five percent drop in cargo.
The group said recently that airline losses exceeded $4 billion in the fourth quarter of 2008, pointing to total losses in 2008 of up to $8 billion, far more than the $5 billion it previously estimated.
Bisignani said a global economy recovery could take place in 2010 but it would be tough for airlines to be profitable.
Crude oil prices had plunged and world airlines expected to save $30 billion in fuel cost in 2009 year but he said there was no immediate relief for some carriers who had hedged fuel at higher prices.
He said the industry remained in red ink for six years after the September 11, 2001 terrorist attacks in the United States and it could take longer for them to recover from the current global economic crisis.
Asia was expected to be the worst performing region as its carriers, which account for 44 percent of the world cargo market, were badly hit by sharper-than-expected slump in its three key markets - China, India and Japan, he said.
IATA, a Geneva-based group that represents 230 airline companies worldwide, repeated its call for greater industry liberalisation to give greater commercial freedom for airlines to serve global markets more efficiently.
"Government protection has made air transport vulnerable to economic shocks. Today's crisis should send a strong message to governments that we must modernise the rules of the game," Bisignani added.
More than 700 industry leaders would gather in Kuala Lumpur in June for IATA's annual meeting and a world air transport conference to discuss plans to speed up recovery for the sector, he said.
"Fasten your seat belt. There is turbulence ahead but we will land safely," he added. - Sapa-AP
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