Sucheta Dalal :Airlines losses to go up to $11 billion in 2009
Sucheta Dalal

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Airlines losses to go up to $11 billion in 2009  

September 16, 2009

 

The International Air Transport Association (IATA) has said it expects airline losses to go up to $11 billion in 2009, higher by $2 billion from its previous estimate, due to low demand and higher-than-expected fuel prices.
 
"The bottom line of this crisis—with combined 2008-2009 losses at $27.8 billion—is larger than the impact of 9/11," said Giovanni Bisignani, director general and chief executive, IATA. 
 
Bisignani said the combined projected losses for this year and 2008 would be $27.8 billion — bigger than for 2001 and 2002. Losses for 2001-02 were $24.3 billion, as 9/11 triggered a precipitous drop in air travel.
 
IATA said industry revenues for the year are expected to fall 15% or by $80 billion to $455 billion compared with 2008 levels. The optimism in the global economy has seen passenger and freight volumes rise, but that is the only bright spot as rising costs and falling yields have squeezed airline cash flows, it added.
 
"The sharp decline in yields will leave a lasting mark on the industry’s structure and revenues are not likely to return to 2008 levels until 2012 at the earliest,” Bisignani said.
 
European carriers are expected to face highest losses at $3.8 billion in 2009, followed by Asia Pacific carriers at $3.6 billion.
“This is not an airline-only crisis. There is less cash coming into the industry and the entire value chain must be prepared for change. All our business partners—including airports, air navigation service providers and global distribution systems—must be prepared to cut costs and improve efficiencies. Some airports have delivered cost reductions, but not in line with the magnitude of the changes to the industry cash flow,” said Bisignani.
 
"Conserving cash, careful capacity management and cutting costs are the keys to survival. The global economic storm may be abating, but airlines have not yet found safe harbour. The crisis continues,” Bisignani added.
 
IATA said it expects losses to continue into 2010 with the industry expected to report a $3.8 billion net loss. This is based on a limited revival of growth in traffic volumes of 3.2% for passenger and 5% for cargo; very little increase in yields of 1.1% for passenger and 0.9% for cargo and oil at $72 per barrel.
 

IATA represents some 230 airlines comprising 93% of scheduled international air traffic. - Amritha Pillay [email protected]


-- Sucheta Dalal



 



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