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December 16, 2009

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Airlines face US$5.6b loss in 2010

THE global airline industry will face another harrowing year in 2010, with losses expected to reach US$5.6 billion despite some recovery in passenger and cargo traffic, an industry group said yesterday.

Low yields and rising costs are a "continuing disaster" for world airlines, which have already lost US$49 billion since 2000, according to the International Air Transport Association. The industry group maintained its estimate of US$11 billion full-year losses for 2009.

"The worst is likely behind us," said IATA Chief Executive Giovanni Bisignani. "Some key statistics are moving in the right direction. Demand will likely continue to improve and airlines are expected to drive down non-fuel unit costs." Still, he conceded that "airlines will remain firmly in the red in 2010."

IATA attributed much of the pressure on the "extraordinarily low" yields airlines are currently generating ¨? the average price someone pays to fly one mile. Those will barely improve in 2010 because of a glut of planes on the market and lower corporate travel budgets, it said.

The group, which represents 240 airline companies worldwide, has been forced to lower its forecasts as the intensity and longevity of the economic crisis became clearer.

It had earlier forecast US$3.8 billion in losses for 2010, and only 12 months ago it was predicting that deep cost cuts by United States carriers would limit industry losses to US$2.5 billion for this year.

"2009 very quickly got much worse than we expected," said IATA chief economist Brian Pearce.

Passenger traffic fell 4.1 percent from 2008's already low levels and premium fares fell the hardest. Cargo traffic declined 13 percent.

IATA said it expects passenger traffic to bounce back by 4.5 percent in 2010 with nearly 2.3 billion people traveling.

Cargo demand will perk up by 7 percent, but remain significantly below the peak traffic of 41.8 million tons in 2007, IATA said.




 

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